×

Payments for Delta Plaza approved

ESCANABA — The Escanaba Brownfield Redevelopment Authority approved two reimbursement payments Wednesday to Dial Companies, owners of the Delta Plaza Mall, for costs related to the mall’s redevelopment, but the total payment to Dial is only a fraction of what the real estate company had requested.

The authority designated the mall site a brownfield last year after an environmental assessment revealed tetrachloroethylene in the groundwater in excess of the Michigan Department of Environment, Great Lakes, and Energy (EGLE) 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.

While the tetrachloroethylene was only discovered near the former dry cleaning site, the Delta Plaza Mall brownfield site consists of four separate parcels all owned by Dial Companies. It includes Hobby Lobby and a portion of parking lot on all sides of the building, the rest of the mall as a whole and some adjacent parking, and two outlots.

The brownfield designation opens developers like Dial Companies up to a number of tax incentives and grants, but for the authority the key issue is the property’s access to tax incremental financing (TIF) reimbursements. In the case of brownfield sites, this means that 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 for a set period of time 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.

On Oct. 18, 2018, the city council approved a redevelopment plan for the mall that includes $1,564,058 of eligible expenses including demolition work and asbestos abatement in the buildings that now house Hobby Lobby and Marshall’s, parking lot work, and additional environmental assessments. The plan does not include any actions to address the groundwater contamination, but does include plans for measuring and abating any vapor intrusion from the tetrachloroethylene. The reimbursement of the TIF capture would take place over a maximum period of 30 years.

However, at Wednesday’s meeting, Dial Escanaba Mall I, LP — a limited partnership established by Dial Companies to manage the property and its redevelopment — made two requests for payment in the amounts of $354,325 and $449,282. The authority approved only $56,726 and $322,202, which is $424,679 less than requested.

The difference in the requested amount and the amount approved by the authority was so substantial that Authority Chairperson Randy Godlewski raised concerns Dial would seek some sort of “retribution” for the reduced payment. However, City Assessor James McNeil said he felt that was unlikely.

“An invoice that was not included and we did not approve could possibly be included in a subsequent request for reimbursement — I do believe that would be a possibility — but no I don’t see retribution as a possibility,” said McNeil.

The amounts approved were just one of a series of options developed by McNeil and City Controller Melissa Becotte after both officials reviewed the invoices submitted by Dial near the end of September.

The first option presented allowed the authority to approve all invoices as presented and categorized by Dial. Under that option, the city would have paid $361,601 for the first request and $449,282 for the second request. According to McNeil, these numbers were higher than the requested payments due to mathematical errors in the initial request from Dial.

For the second provided option, the city used guidance from EGLE and the Michigan Economic Development Corporation (MEDC) and the brownfield plan approved by the city last year to recategorize invoices and exclude items that were deemed ineligible for reimbursement. That further reduced the payments to $328,444 and $322,202 respectively.

The third option, which was recommended by McNeil and chosen by the authority, pared down the invoices approved in the second option even further by eliminating all invoices for work that took place before the brownfield redevelopment plan was approved except invoices that were for items considered “pre-approved expenses.” Pre-approved expenses included any expenses EGLE and MEDC have stated do not need their agency’s approval to be included in the plan.

“I do believe we are very confident in option number three, and if measures need to be taken down the road about invoices that were not taken action on I believe that we’ll have the opportunity to do so,” said McNeil.

The authority chose option three with no votes against the measure. Godlewski abstained from the vote because of a perceived conflict of interest due to his professional work on the mall building. Authority Member Monte Morrison was absent.

NEWSLETTER

Today's breaking news and more in your inbox

I'm interested in (please check all that apply)
Are you a paying subscriber to the newspaper? *
   

Starting at $4.62/week.

Subscribe Today