SHELBY - Monday, Jan. 26 the Shelby Village Council approved two resolutions moving them closer to the possibility of a renovated and revitalized downtown.
Because the village is looking at brownfield agreements for future development within the village, Kirk Perschbacher, of the Fishbeck consulting firm working with the county brownfield authority, presented an informative update on Brownfield Tax Increment Financing (BTIF) and how it works.
“Education is a big part of my job,” Perschbacher began. “There are several misconceptions about brownfields - that they result in lost tax revenue, that they defund schools and that they are always contaminated sites.”
“The Brownfield TIF statute has historically focused on traditional brownfields - contaminated, blighted, functionally obsolete and historic property. Then (in) 2023, a major amendment began to address the statewide housing shortage,” Perschbacher’s report stated. “Property is no longer required to be traditional brownfield if it’s going to be used for housing.”
How tax increment financing works is, once a base property value is established and redevelopment takes place, Perschbacher's presentation continued, “The new (incremental) taxes are used to reimburse the party that financed the ‘eligible activities’ described in the brownfield plan. These eligible activities can be anything from environmental assessment and remediation to infrastructure and safety improvements. The ‘tax increment’ equals the property’s ‘new’ taxable value, less the ‘initial’ taxable value. Plans limit the cost of eligible activities to be reimbursed and the amount of time for reimbursement. Once a plan reaches one of these limits, it is ended, and all future tax increments accrue to the individual taxing jurisdictions.”
It is important to note that eligible activities are different for “core communities” and “non-core communities.” Shelby is considered a non-core community, however, when it comes to housing development, certain eligible activities, only open to core communities, become available to non-core communities.
Not only would a Brownfield TIF help assist developers, but tax abatements and EGLE (Environment, Great Lakes & Energy) grants, among other incentives, could be utilized to fill the gap, Perschbacher explained.
“BTIF is a tool,” Perschbacher concluded. “The key is knowing what tools you have in your toolkit and making it work for both sides.”
His presentation also noted that the whole process takes time and coordination; therefore, a developer needs to begin the process early.
For the council, the first step was to consider whether or not to enter into a Memorandum of Understanding (MOU) with Shelby Holdings, a developer interested in investing in redevelopment projects within the village limits. Before committing any significant investment in preparing a brownfield plan for consideration, Shelby Holdings needs to know whether the village was in support of future redevelopment. The MOU basically states the village understands the upfront investment required and is willing to work with said developer and consider multiple BTIF plans for future redevelopment.
While development of the empty lot at the corner of Fourth and Michigan has been mentioned in previous meetings, Village Administrator Phil Morse said the developer wasn’t ready to talk about any other redevelopment projects just yet.
He reassured council that the biggest selling point of the proposed MOU was that it does not obligate the village in any way to approving future redevelopment plans. It simply means the village is willing to have a conversation and cooperate in good faith going forward.
Perschbacher added that any BTIF project would need to be approved not only by the village but also by the county’s brownfield committee and the county commissioners. Numerous community stakeholders would consider if a future brownfield redevelopment project met legal requirements, was for the public good, was supported by the municipality, if the ask was reasonable, if the municipality would incur costs from the development and can the municipality leverage other benefits by approving incentives.
However, as a word of caution, Morse added, “If the village decides it doesn’t want to play, word will get around… developers won’t even look at Shelby.”
Council member Dan Zaverl challenged that statement, saying, “You’re just trying to scare us.”
To which Morse replied, “With all due respect, it’s not to scare anyone. The reality is it doesn't pencil out (for potential developers).”
Village President John Sutton weighed in, saying that if and when a redevelopment project starts, lots of skilled labor will be in town, utilizing local services and patronizing local businesses. “In past council workshops, where we’ve made lists of village priorities, affordable housing and our downtown have always been the top two,” he said.
“It seems like the only way to get these properties fixed up and bring in new business,” added council member Steve Crothers.
“And once you start, developers will see you are willing to work with them (and) momentum builds,” Perschbacher concluded.
At the vote, all council members voted in favor of adopting the proposed MOU between the Village of Shelby and Shelby Holdings.
The second approval was no less important than the first, when the village gave authorization to fund Phases 3 and 4 of the proposed Downtown Renovation Plan. According to Morse's memo to council, Phase 3 and 4 would involve detailed construction drawings, assistance with contractor bidding, provide recommendations to the Review Committee and support construction administration. The combined cost of the two phases would be between $108,000 and $180,000, or nine percent of the overall project cost, depending on the final project size. A private donor has committed to a 50 percent match, reducing the village’s share to between $54,000 and $90,000. This amount would come from the $500,000 the village committed toward the downtown renovation project at their last council meeting.
Morse’s memo also stated the village has $1.1 million committed in writing toward the project thus far and the committee is nearly certain they can reach $1.2 million, allowing for a very meaningful project. “However, there is strong potential to reach the full $2 million through sources such as the housing TIF and other appropriations now in progress.”
While Morse did say the council could wait until the first meeting in February to approve the expense, that would be the latest date he recommended. He stated that later than that would put off construction until 2027, most likely resulting in higher costs and risking the momentum of current funding and community support.
All council members, with the exception of Crystal Heykoop, who had to leave the meeting early, authorized the approval and funding of Phases 3 and 4 for the Downtown Renovation Project.
In addition to the aforementioned approvals, Morse and the council gave kudos to the village DPW staff for the extra work they’d been putting in throughout this wintry stretch of weather. When asked if the village had sustained any frozen pipes, DPW Superintendent Jeremiah Helenhouse said, “Knock on wood, we haven’t had any yet.”
