ESCANABA — Despite not receiving the blessing of the Escanaba Brownfield Redevelopment Authority to blight its own property, Dial Companies permanently disconnected the sewer at the former Super One building in hopes of having the site named a brownfield. Hesitant to approve the designation, the authority tabled the issue at the meeting Wednesday until it can get more information and meet with the city council.

In December, the authority board heard a unique proposal from Dial Companies. The property owners were prepared to permanently disconnect a city utility to make the building fit the definition of “blighted” under Public Act 381, which would allow it to be classified as a brownfield. The designation opens the property up to tax incremental financing (TIF) reimbursements. In the case of brownfield sites, this means the difference between a property’s taxable amount at the time it was designated a brownfield and the value of the property once it has been developed is captured by the authority and returned to the developer to pay for specific eligible expenses that are included in a plan approved by the authority and the city council.

However the authority was hesitant to recommend Dial go through with its plan, with some arguing self-created blight could violate the law — or at least be against the spirit of the law — and doing so would set an unwanted precedent. Ultimately, a motion was made at the December meeting stating “if a property falls under the act definition of blight in the city of Escanaba, whether created or already done, that this board will consider that as a potential brownfield.” The motion failed.

That didn’t stop Dial Companies from going through with the plan. A memo sent March 22 from Myron Berry of Mountain Engineering, which is assisting with the project, indicated the sewer had been permanently disconnected. Berry indicated Wednesday the sewer had been capped by the city because it was believed to be the safest utility to permanently disable.

“This isn’t something we came up with. This is something the city’s lawyer actually proposed as an alternative,” said Berry, referencing a prior attempt at reaching brownfield status that was rejected by the authority board.

City Manager Patrick Jordan later specified the attorney in question was not City Attorney Ralph BK Peterson, but rather the attorney the city is using for an ongoing dispute with Menards over dark store theory.

“It was our Menards’ attorney that I had some phone discussions with that led to this, and I don’t want to involve him in this any more than he already is. … He knows these issues back and forth and he suggested that they go this route,” said Jordan.

Initially, Dial Companies approached the city requesting the brownfield designation based on “functional obsolescence.” A letter from Level 4 Assessor Juli Kolbe stated “The building does suffer from functional obsolescence with the lack of ability of the improvements to satisfy market standards of demands.”

The authority chose not to accept the designation, in part because multiple authority members felt the letter was broad, short, and did not provide enough information for a decision.

However, the greater reason for the authority shying away from the functionally obsolete designation was the fear doing so would be damaging to the ongoing dark store lawsuits by suggesting vacant buildings were somehow less valuable. The dark store case dates back to 2014 when Menards won a state appeal with the Michigan Tax Tribunal stating the retailer’s property taxes should be based on the value of a closed and empty building, also known as a “dark store.” The decision forced the city to adjust the retailer’s 2012 property taxes, and resulted in ongoing legal battles.

Dial Companies is currently seeking a developer to construct a hotel at the site of the building, but only minor details of the working plan are known. The project would probably cost upwards of $10 million and include an 83 room, 55-foot-tall hotel, without any attached restaurants or conference centers. Early plans for a portion of the Super One building to remain intact as commercial space at the site have been scrapped.

According to Dial, finding a developer for the project hinges on the brownfield designation to offset the redevelopment costs, but even with reassurance from Jordan that the self-blighting was legal, the authority was still hesitant.

Concerns were raised that capping the sewer had already reduced the property’s value, reducing what the city would be able to keep in property taxes once the designation went into effect.

“If this sits there for five years, is this the same building?” said Authority Chair Randy Godlewski.

Once a property is designated a brownfield, it remains a brownfield property until it is redeveloped, but the Act 381 plan approved by the city is only valid for five years. Connected utilities add roughly $2,000 to $5,000 to the value of a property, which in the case of the Super One building is considered negligible by city staff.

The greatest concern was whether or not approving a self-blighted property was legal or a precedent the city wanted to set.

“The easiest thing to do is hire an excavator and cap your sewer — I mean, that would become the standard in Escanaba if you want to (be a brownfield),” said Authority Member Joseph Kaplan.

Berry was unable to cite examples of other cities allowing brownfield designations for properties that were self-blighted at the meeting, but was directed by the authority to find examples and provide them at a special workshop with the city council on the issue. The meeting was scheduled for April 3 at 10 a.m.