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Brownfield status sought for hotel project

ESCANABA — Members of Escanaba’s Brownfield Redevelopment Authority and Downtown Development Authority (DDA) heard an update on Proxima Management’s plans to establish a hotel at the site of the former Delta County Correctional Facility Thursday. Manager – Brownfield Redevelopment Mac McClelland of Otwell Mawby, P.C. delivered a presentation about the project during a joint meeting of the authorities that morning.

Proxima has entered into a development agreement with Delta County and the City of Escanaba to acquire the former correctional facility and additional nearby property. The first phase of the project will focus on development on and around the correctional facility site, while the second phase will focus on development at the site of the old Delta County Chamber of Commerce building and adjacent city property.

“As part of that, Proxima’s going to be demolishing the former jail and developing an $18 million hotel,” McClelland said.

Costs for environmental work, demolition and development associated with the project will likely be high. Based on preliminary estimates, environmental activities eligible for brownfield funding are expected to cost $454,515. Non-environmental activities eligible for brownfield funding are estimated to cost $7,337,930.

“We can’t do it without these kinds of incentives and being reimbursed for these extraordinary costs, and that’s where the brownfield comes in,” McClelland said.

According to McClelland, project sites can meet four criteria to be considered eligible for brownfield funding. These criteria cover contaminated, blighted, functionally obsolete or historically designated properties. Parcels adjacent to eligible properties can also be supported by brownfield funding.

“Obviously, it’s functionally obsolete — Delta County went through an evaluation, said ‘we can’t use this jail for its intended purpose, and so we’re going to build a new one,'” McClelland said of the former correctional facility.

Sampling included as part of a Phase Two environmental site assessment at the correctional property could lead to contamination being found there, as well. The assessment will begin next week, with results expected to be available in two weeks or so.

Brownfield projects also need to provide public benefits. Among other benefits, Proxima’s project will cover the costs of demolishing the former correctional facility.

“Otherwise, more than likely, the county would have to figure out the funds to pay that — to have that done,” McClelland said.

The project is also expected to create jobs and private investments, increase the area’s tax base, encourage “spinoff” redevelopment and enhance public infrastructure.

For the project to move forward, McClelland said Proxima will need participation from both the DDA and the brownfield authority in the form of an interlocal agreement under the Urban Cooperation Act.

“The state won’t approve state tax capture without this tool, so we really don’t have a project unless that happens,” he said.

Under the agreement, the DDA will forgo tax capture on the property until brownfield-eligible environmental and non-environmental activities –such as lead/asbestos abatement, demolition, and, in “core communities” like the City of Escanaba, site preparation and infrastructure — are reimbursed.

McClelland also provided a timeline of future brownfield-related project milestones during Thursday’s meeting. The project will be presented to Escanaba City Council on Aug. 20.

On Aug. 27, the Brownfield Redevelopment Authority and DDA are expected to vote on the interlocal agreement. The former authority is also set to vote on a brownfield plan that day, and a public hearing for the plan is set for Sept. 17 before the brownfield authority considers giving the plan its approval.

If all goes well, the brownfield plan could be approved at the state level by Nov. 7. After the meeting, McClelland said he is “not particularly” expecting the COVID-19 pandemic to have a significant impact on the timeline for local approvals, but approval from the state could be delayed.

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