Beyond Due Diligence

While the role of many environmental consultants often ends with property acquisition, more often than not your property consulting needs extend beyond the due diligence and compliance period.

Most firms claim to offer comprehensive solutions, but what does that actually entail? What does it mean to be a “full-service” property consulting firm? For our Beyond Due Diligence series, we’ll look at how forward-thinking firms are going beyond due diligence and compliance to deliver value to their clients.

Incentives to Support Project Financing

In Michigan the typical loan-to-value ratio is currently at 60-70%. This loan structure requires greater equity participation from developers at a time when capital is scarce. These terms are even less favorable for projects with legacy costs, significant Brownfield conditions, or environmental concerns.

The end result: many projects never get off the ground because developers can’t meet their equity requirement.

Incentives help to fill this gap in the credit industry. Financing can range from thousands of dollars to many millions, and programs can take the form of cash grants, low interest or forgivable loans, tax increment financing, and tax abatements and credits.

Gap Financing Programs

An increasingly popular financing mechanism in which developers can secure a loan to finance their equity requirement within a larger loan structure, gap financing is a vital component of loan structures where the developer would not otherwise be able to meet their equity obligation. However, negotiating Federal, State and local incentives is often a daunting task for those without intimate legislative and policy/procedural experience.

Transforming Traverse City’s Old Warehouse District: The Hotel Indigo

In 2011 we were selected by Grand Traverse County’s Brownfield Redevelopment Authority to help with the The Hotel Indigo mixed-use project, a $16M redevelopment $16M redevelopment of The Hotel Indigo in Traverse City’s Old Warehouse District. The project will construct a 107,862 square foot boutique hotel with 105 rooms, a 3,000 square foot conference space, restaurant, and underground parking. We were able to help secure over $2M though the following gap financing incentives.

• $1 million — Community Revitalization Program Loan (pending).
• $620,000 — US EPA Revolving Loan Fund Loan
• $455,000 — Local Site Remediation Revolving Loan Fund

We were also able to assist in securing and maintaining additional funding for the project valued at nearly $5 million. The Hotel Indigo opens it’s doors in the Spring 2014.

While incentives like gap financing can be a powerful tools for development, they require expertise to structure the loans effectively. Extensive knowledge of the programs is required, and most firms don’t yet have the experience with the application process, different types of financing, and timing that it takes to make these programs loans work.

What To Look For

When selecting a firm to help you guide you through the incentives process, make sure to look for certified full-time economic development specialists with the extensive experience integrating incentives. Economic development financing professionals should be able to navigate the complexities of existing legislation and policies for securing appropriate incentives to make your project financially viable. This requires the expertise to evaluate each potential incentive’s true value as well as package it together with others in order to reduce your project cost and limit lender risk.

What to Avoid

The most common shortcoming we find in economic development consulting services is inexperience. You’ll want to make sure your consultants aren’t learning as they go (and on your dime). Ask about similar projects they’ve worked on in the past and pay attention to how they’ve structured and managed those incentive programs. Experience matters.

Our Firm

In order to help our clients get their projects out of the ground, we built a team of full-time economic development and financing practitioners with the skill and experience to maximize incentive and project financing opportunities. Our certified specialists have longstanding relationships with federal, state and local program decision-makers and include former managers of public incentives programs.

Contact us today to learn how we can help with your next project.

By the end of summer, visitors to downtown Midland will notice a different landscape at the northwest end of downtown.

The $2.8 million Midland County Courthouse project, already under way, will continue at the beginning of April with three Midland County departments moving from the Midland County Courthouse to the fourth floor of the Midland County Services Building. That move will be followed by demolition of the old jail, which abuts the courthouse, during the height of summer and the construction of holding cells for inmates at the courthouse.

“The (fourth floor) facility is going to be really nice,” said Midland Prosecuting Attorney Mike Carpenter. “It is a much quieter building. Traveling back and forth between there and the courthouse is something we will have to work with. But, the facilities are going to be good. It will give us more work space to deal with things.”

Plus the move will open up space in the courthouse.

“It will give us much needed space for people in the courthouse to meet,” said Carpenter. “This will give people some privacy to discuss complicated matters.”

The first week of April, which coincides with spring break for Midland Public Schools, the Friend of the Court, Prosecuting Attorney’s Office and 42nd Circuit Court Probation will move to the County Services Building.

“Hopefully, (the first week of April) is a slow week for the court,” said Kevin Beeson, county manager of facilities. “If everything goes well (they) should be able to get back in the second week in April.”

Three Rivers Corp. submitted the low bid of $637,183 to renovate the approximately 12,000 square feet on the fourth floor that became vacant when Community Mental Health for Central Michigan consolidated its operations to Fast Ice Drive.

“In talking to Three Rivers, the original contract had them being finished by March 16 and they’re pretty confident,” Beeson said. “There is not any falling behind that we’ve seen. They’re in the homestretch.”

Environmental issues and electrical challenges need to be addressed before the demolition takes place. The county has agreed to pay AKT Peerless $30,000 to handle environmental issues.

“AKT will help shepherd the tear down from beginning to end on the environmental side,” Beeson said. “They will help you find bid contractors. You can’t just knock down a building. You have to make sure that the dust going into the air is not hazardous.”

The courthouse, which was built in 1925 and underwent renovations in the mid-1950s and late 1970s, has electrical circuits that will be a challenge.

“Electricity is a problem in that building because we have radio towers and all the public service radios on that tower we will have to maintain even during the demolition and after the demolition,” said Beeson. “The switchgear used for the 1957 addition is a GE brand and obsolete.”

The county will pay Blasy Electric $5,000 to prepare the electrical bid documents.

The county expects the demolition to be done by mid-August and then will begin work on the holding cells for inmates, along with a new ramp to connect the cells to the courthouse.

“If everything goes well, AKT can submit paperwork to the State Historic Preservation Office (SHPO) by the end of the month,” said Beeson. “They can finish the hazardous material survey by March 15, receive clearance from SHPO in six weeks around the first of April. The specs can be done by mid-April, contracts awarded the first of May, followed by a 10 day notice, which is required by the state. That would put you into mid-May. Demolition would take 30-45 days going to about the end of June. By the time you get stabilization in there and grass seed, it will be Aug. 15.”

Beeson is well aware of the impact the demolition project will have on downtown during the height of summer.

“We need to plan ahead now, especially with the courts trying to work on one side and H Hotel guests trying to sleep on the other side,” he said. “It is just going to get ugly for about 30-45 days. We may have to reschedule some court times so that you can be closed Thursday, Friday, Saturday and Sunday.”

Committee member Judge Doreen Allen was concerned with the noise.

“A major coordination needs to be done by this committee to make contact with the H and make sure their life is easy as possible,” said Allen. “I think it is a good time to communicate with those entities. We need to warn them that this is coming.”

Click here for the full article.

Mr. McCallion’s presentation Getting Started outlined the first steps Comerica’s customers can take towards energy efficiency. Selected topics included:

• Energy auditor selection
• The energy audit process
• Capital improvement analysis examples
• Implementation assistance

Click here to view the full presentation.

The council is made of 23 professionals representing Michigan’s diverse water use and conservation organizations, as well as eight other ex-officio in technical and research support roles.  Brian was elected to serve on the council’s executive committee and will serve as co-chairman along with Rebecca Humphries, the director of Ducks Unlimited, and Wayne Wood, the president of the Michigan Farm Bureau.

Brian’s role on the council is in representing the  interests of The Michigan Chamber of Commerce and it members.

AKT Peerless has offices located throughout Michigan,  Ohio and Illinois dealing with environmental related water issues for both public and private clients.

1. RCRA Liability

At the top of our list is liability from the Resource Conservation and Recovery Act (or RCRA). RCRA regulates the generation, transportation, disposal and storage of hazardous waste, as well as municipal landfill activity after May 1980. RCRA was created to regulate waste from “cradle to grave,” and includes detailed regulations for investigation, remediation, and closure of contaminated sites.

A Phase I ESA does not provide RCRA liability protection to new purchasers. Property owners can limit their RCRA liability by obtaining any of the following from the EPA:

• Prospective Purchaser Agreements
• Comfort Letters
• No Further Action Letters
• No Further Interest Letters

CASE STUDY: River Raisin Battlefield Brownfield Development

2. Compliance With Other Environmental Regulatory Bodies

Our government has produced over 10,000 pages of federal regulations designed to protect public health and the environment.  Property owners need to consider potential for liability beyond the CERCLA protection that a standard Phase I ESA provides.

This list is by no means comprehensive. Often an inspection for these “out of scope” concerns can be added to your Phase I ESA upon request.

CASE STUDY: Environmental Regulatory Compliance for Automotive Supplier

3. Continuing Obligations

If a Phase I ESA is completed that identifies the potential presence of contamination at a property, the user’s responsibilities don’t end there.  The user of the Phase I ESA may have continuing obligations to properly manage the property in light of that contamination.  These obligations may include evaluation of materiality of the environmental concern identified (i.e., evaluation of exposure risk), legal notices, etc.

CASE STUDY: Piquette Square Brownfield Redevelopment

Conclusion

To learn more about how to protect yourself from these and other environmental liabilities contact us.

According to a recent report by the Appraisal Institute:

Various factors affect the value of real property – location, the composition and condition of structures, operating history and potential future use, and many others. Each factor affects the income and investment potential of property. Each has its own influence on investor and occupant preferences, which ultimately determine how money flows for financing, purchasing, and rental in the real estate market.

Energy consumption is one of these factors. It usually has significant effects on net income from buildings – effects often higher than any other operating expense, and at times higher than property taxes. Therefore buildings that are energy efficient can create significantly greater net income for owners than otherwise similar buildings that are not so efficient.

-Recognition Of Energy Costs and Energy Performance in Real Property Valuation

At AKT Peerless we offer a comprehensive suite of energy solutions for property owners and managers. Learn more.

From an article on mLive.com:

The Saginaw Centre was built in 1972, at a time when asbestos was commonly used for fireproofing, Londrigan said.

“It’s very common in buildings from that time period,” he said. “We find it in almost every building we survey.”

Londrigan said he expects the abatement of the material will run through sometime in November.

Click here for more on how we can put these solutions to work for you.

Practical redevelopment case studies will include the example of a troubled Leelanau County property, which, although located within a commercial corridor, has been overlooked for years, due in large part to Brownfield conditions. The site comprises a former elementary school and tax foreclosed properties. A second example site will be discussed which is a small vacant parcel in Branch County. Even though this site is situated on a major commercial corridor and near a highway interchange, several tons of buried construction debris to depths of 12 feet has impeded redevelopment for at least 15 years.  Topics discussed will include economic and redevelopment challenges, proper environmental assessment/due diligence and cleanup, and finding the right financing tools to allow for redevelopment.

Panelists

Dale Swift
Chair of the Branch County Board of Commissioners & Chair of the Branch County Brownfield Redevelopment Authority

Trudy Galla, AICP
Leelanau County Planning Director & Director of the Brownfield Redevelopment Authority;

Eric P. Helzer, EDFP
Regional Manager & Economic Development & Incentives Director at AKT Peerless

Dave Van Haaren
Senior Project Manager of Economic Development & Incentives at AKT Peerless

After assuming ownership of a vacant building in a prime downtown location, the City of Saginaw recently elected to redevelop the 60,000 square foot property. Unfortunately, the former retail space contained dangerous building materials such as PCBs, lead, and asbestos. The presence of these materials increased the cost of demolition considerably.

With limited time and resources available, the city of Saginaw explored additional financing methods. Due to our extensive redevelopment experience, AKT Peerless was retained to help secure funding and provide environmental and economic development consulting services.

To help fund this project, we leveraged Tax Increment Financing (TIF) incentives, a method by which the future increases in property tax revenues are used to finance project activities. TIF is a powerful financing tool that local communities can use to boost economic development without experiencing a loss to any taxing jurisdiction.

By employing the TIF incentives offered by the Downtown Development Authority and the Brownfield Redevelopment Authority, we were able to secure over $850k for Saginaw’s redevelopment project. This is just one example of how Michigan’s local governments are leveraging economic incentives to revitalize their community infrastructure.

View a time-lapse video of the demolition.

Considering a similar project?

Contact us today to learn how we can put these solutions to work for you.