Hobby Lobby, Marshalls may locate at Delta Plaza Mall

ESCANABA — After nearly four years of inactivity, the Escanaba Brownfield Redevelopment Authority met Tuesday to discuss designating the Delta Plaza Mall and former Super One grocery store as brownfield properties. The board opted to designate the mall as brownfield eligible, but the fate of Super One is still undecided.

The meeting also disclosed that two new businesses — Hobby Lobby and Marshalls — are planning to locate in the Delta Plaza Mall.

Being designated as a brownfield property in the state of Michigan opens up a number of financial benefits to property owners for the improvement or development of a site. One way that a property can benefit is through tax incremental financing, which in the case of brownfields, allows a taxing jurisdiction to receive property taxes on a property at the current level and collect the incremental tax capture resulting from the redevelopment of the property. Those captured funds can then be reimbursed to the property owner over time to help offset eligible expenses that are part of a plan approved by the authority and the city council.

“Ultimately, we get to decide what we’re going to give relief for,” said authority member Joseph Kaplan.

Tuesday’s meeting was the first step for Dial Companies, which owns the Delta Plaza Mall, and its parent company, which owns the old Super One Foods building, to begin working towards reimbursements from the city and the state.

“At this point you’re not approving any action, you’re not approving any plan or anything, you’re just saying ‘yes, this is a brownfield,’ and what this does is this sets the date for which the base tax, for when you start your tax increment financing, this sets the date for which the base tax will be set,” said Myron Berry, a consultant from Mountain Engineering, who spoke on behalf of Dial Companies at the meeting.

While both the Delta Plaza Mall and the old Super One Foods buildings were discussed, the major concern for the authority board was whether or not to designate the mall as a brownfield.

A recent environmental assessment conducted at the mall showed there was tetrachloroethylene in the groundwater in excess of the Department of Environmental Quality’s minimum reporting and clean-up levels.

A dry cleaning facility was once located in the mall near where the chemical was found, and tetrachloroethylene is widely used for dry-cleaning fabrics. The chemical is known to cause a number of health problems if inhaled and is considered by the Environmental Protection Agency to likely be carcinogenic.

Because the groundwater is contaminated beyond an acceptable level, the mall itself qualifies as a “facility” under the Natural Resources and Environmental Protection Act, Act 451 of 1994, which opens the mall up to financial reimbursements under the Brownfield Redevelopment Financing Act, Act 381 of 1996. However, Dial Properties is looking to have three outlots designated as brownfield as well. Under Act 451, properties that have been lawfully split, subdivided, or divided from a facility that are not contaminated are not eligible for facility designation, but according to Berry, the lots still qualify.

“Under the brownfield act we can include all four parcels in the brownfield, because while the one is a facility, the other three are adjoined parcels, owned by the same people, the redevelopment or development of which will increase the ability of the main parcel to increase tax revenue,” said Berry.

In addition to the mall itself, the request included the northeast outlot, where a new Starbucks is being constructed; the east outlot between Saykilly’s Confectionery and Hudson’s Grill, where Aspen Dental recently opened; and the former Menards building and the adjacent lots, including a portion between Menards and the mall and Bowl-A-Rama.

The Menards building has its own contaminants. The floor tiles in the building are known to be made of asbestos, but the removal of the tiles may already underway by the soon-to-be tenant, Hobby Lobby.

“Hobby Lobby requires they remove it all, and they don’t want to have any asbestos material in the building,” said Berry, adding the retailer would avoid needing an asbestos management plan and additional employee training by removing the tiles rather than covering them.

It was also noted during the meeting that Dial Properties negotiating a rental agreement with Marshalls for the portion of the mall formerly used by J.C. Penney. Extensive renovations will be needed in that storefront as well, which may also include asbestos removal.

A finalized plan from Dial Properties for renovating and repairing the site — which would include the costs of all reimbursement eligible activities — is not yet complete, but designating the site as brownfield does more than just set the tax rate. The designation also sets the date whereby any upgrades are eligible for reimbursement at all. Development that takes place before the designation is made does not qualify, unless the property owner can prove the improvements had to happen immediately because they were life threatening. That means that Starbucks, Aspen Dental, and even the future Hobby Lobby store may be ineligible for reimbursement for some of the projects that have already been completed.

The authority board ultimately decided to designate the four parcels as brownfield eligible, and set a second meeting for Wednesday, Sept. 26 at 9 a.m. to review a plan finalized by Dial Properties.

No action was taken on whether or not to designate the Super One building as a brownfield. Unlike the mall, no contaminants have been discovered at the site, but its owner has had a difficult time finding a tenant for the building. In Michigan, a site can be designated a brownfield based on being “functionally obsolete,” which is the claim of the building’s owners.

If the designation is granted, the plan for the Super One property is two-fold. First, roughly two-thirds of the building will be torn down with the remaining third being converted into retail space. Then, the a hotel would be constructed on the newly cleared area and existing parking lot. The entire project would is anticipated to cost between $10 million and $12 million.

“Ultimately it’s the council that wants to determine if they want to subsidize an obsolete or depreciated property to be developed for brand new use,” said Kaplan.