| 3 min read | by Seth Kinker, firstname.lastname@example.org
The city of Chelsea held a work session on Sept. 23 on the proposed redevelopments for the Federal Screw Works (FSW) and Rockwell buildings.
With developers from both parties, Truth North Development (TND) for FSW and JP Commercial Real Estate for the Rockwell Building, in attendance, Chelsea Community Development Director Julia Upfal gave a presentation to the council before taking questions from council and the developers.
Included in the presentation developed by Upfal was information for both projects such as challenges and barriers to development, tools and resources, developer requests, and the Commercial Rehabilitation Act.
Here’s what is known.
JP Commercial has submitted a proposal to redevelop the Rockwell Building to create 36 new high-end rental units in downtown Chelsea. Built in the early 1900s, the building has been vacant or partially occupied by non-industrial users since 1987.
The total project investment would be between $6-8 million and key points with the investment including preserving and restoring the historic character, the remediation of the brownfield “facility,” and an increase in downtown foot traffic.
Challenges and barriers to development include remediation (vapor mitigation system, lead paint and asbestos abatement), the building being part of a condominium association and having to comply with the condominium association, the existing lot being unable to meet parking needs, the structure is old and blighted, and the developer indicating there is a significant financial gap.
“For these complexities and others, many developers have looked at this building and moved on from it because they could not make a project work and get a reasonable financial return for their investment risk,” said a statement from JP Commercial in the presentation.
For FSW, the site was once home to a facility that produced nuts, bolts, knobs and other parts for Michigan’s automotive industry. The building has been vacant since the company vacated the building in 2005.
TND has had preliminary talks about potentially purchasing and redeveloping the FSW site as residential or mixed-use development.
The thought is it could be an incubator for co-working space, as well as being a “gateway” to downtown.
Upfal’s presentation also noted the need for substantial brownfield remediation and blight removal.
With the residential deed restriction conversation being once again, preliminary, with the FSW attorney, that remains one of the outstanding challenges and barriers to development.
Others include contamination exceeding residential standards; needing further remediation, height and density requirements, rezoning of the site from industrial, demolition of the existing structure, and onsite parking.
Upfal then went over tools, resources, and opportunities for both projects. There were four resources listed for both projects that included Brownfield Tax Increment Financing, the Michigan Department of Environment, Great Lakes, and Energy (EGLE)/Washtenaw Country Brownfield Redevelopment Authority (WCBRA) grants and loans, the Michigan Economic Development Corporation (Community Development Block Grants) and Community Revitalization Program, and the Commercial Rehabilitation Act.
Councilmember Peter Feeney asked if any of those resources were mutually exclusive, or if the two projects would be competing for the same grants.
Upfal answered that to her knowledge, they wouldn’t, and City Manager John Hanifan added that access to the programs is based on a case by case basis and that the amount from one city wouldn’t matter.
For FSW, Upfal expanded more on the Opportunity Zone. It’s a program enacted in the 2017 Tax Cuts and Jobs Act that is designed to incentivize patient capital investments in low-income communities nationwide that have been cut off from capital and experienced a lack of business growth.
“It’s really exciting Chelsea has an Opportunity Zone,” said Upfal. “We’re the only Opportunity Zone in Western Washtenaw County, so it does have the opportunity to attract new investment.”
Any businesses located in the zone are eligible for the program, the state worked with local development economic organizations to determine the zones in Washtenaw County.
When Upfal was a part of Ann Arbor Spark prior to joining the city of Chelsea, she worked on that team.
“It was partially based on geographic diversity which was why Chelsea was included because it’s so far from the others (Opportunity Zones) in Washtenaw County,” said Upfal.
Other opportunities for the Rockwell Building included accommodations for bicycles and the chance to generate additional activity and foot traffic downtown and at the Clocktower Complex.
Developer requests for the Rockwell Building included waiving/mitigating fees for building permits, water connection fees, and all other utility connection fees, collaborating with utility providers to deliver updated and appropriate capacity of utilities into the building at no cost to the developer, providing seven parallel parking spaces adjacent to the Rockwell Building along N. East Street to include replacing the grass between the road and building with parking spaces to enable 24 hour parking, having property taxes frozen at current levels for a period of time to be determined, and to support applications to State Agencies for incentives, such as CRP and WCBRA.
Finally, Upfal went over the Commercial Rehabilitation Act. Communities create “Commercial Rehabilitation Districts” or areas where commercial rehabilitation projects are eligible to receive an abatement from incremental property taxes for up to ten years.
Local governments can approve or deny a Commercial Rehabilitation Exemption Certificate before referring the application to the state tax commission. The developers also were given a chance by Johnson to ask council any questions they had up to this point and vice versa.
Two came from TND with the most important pertaining to the PUD restrictions. In order for TND to build the most economical viable building, it would have to be four stories according to a representative at the meeting.
Councilmember Jane Pacheco asked what the project might look like and representatives answered that they had no idea at this point until they can define the environmental exposure and additional money that would be needed to spent on the site to clean it up as well as if they could build a project that would create the necessary tax increment to recover those costs.
With the federal deed restriction being the first and foremost thing to be addressed before any plans can be drawn up, Pacheco asked if they had a crystal ball with what type of development could be in the works.
The answer came back 80-90% residential.