@water Lofts South Development

Owner: @water Loft South, LLC

Location:  1470 E. Atwater Street, Detroit

Markets:  Brownfield Redevelopment

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THE PROPERTY

The Property is located at 1470 E. Atwater Street, in an area of Detroit known as the "East Riverfront District."  The Property currently consists of vacant undeveloped land that historically, over the last 100 years, has been used for industrial operations that included lumber storage, a coal-driven powerhouse, machine shops, a blacksmith shop, lime kilns, coal storage, a dump for tailings from the  powerhouse, a lighting substation, railroad spurs, and most recently a concrete mixing plant and warehouse.  The Property encompasses approximately 3 acres of vacant land and is situated between Atwater Street to the north, vacated Riopelle Street followed by 1500 E. Atwater Street to the east, followed by the Detroit River to the south, and 1420 E. Atwater Street to the west.

THE PROJECT

@water Lofts, LLC will begin a $116.8-million redevelopment of @water Lofts South in mid-2007.  @water Lofts South will be the first of a three-phased development and will be recognized as one of Detroit’s premier neighborhoods, providing street-level retail space, decked parking and mid-rise residential units.  The site offers easy access to the state’s first urban Tri-Centennial State Park.  Residents will enjoy an ample garden court with unrestricted views of the Detroit River.  @water Lofts will be the nexus project of the East Riverfront District.  Strategically, the site will serve as a vital activity center along Atwater Street, linking the outdoor GM Plaza and Promenade with the Tri-Centennial State Park and Harbor.  This development will be executed with a dedication to quality that will help fulfill the vision shared by the City of Detroit, the Wayne County Port Authority, General Motors, the Detroit Riverfront Conservancy (DRC), and the State of Michigan, which together have stepped forward together to support these extraordinary projects.

The DRC’s creation of the Detroit Riverwalk, a pedestrian and bicycle pathway will provide unrestricted public access to the Detroit River from Hart Plaza to Belle Isle.  The transformation of Detroit’s East Riverfront zone has been envisioned, and is being executed, on a scale rarely seen before.  The link between the @water Lofts South development and the master plan will create an anchor development of a 24-hour urban neighborhood where residents can live, work, and play.  This reclaimed waterfront warehouse zone redevelopment is seen as the new core of this area and it will set a standard to promote further growth within the district.

AKT PEERLESS’ ROLE

AKT Peerless Environmental Services was selected to support the project team and identify Brownfield and other incentive programs necessary to offset the massive costs to redevelop the property.  In addition, AKT Peerless conducted various due diligence investigations that included: Phase I Environmental Site Assessment (ESA), Phase II ESA, Baseline Environmental Assessment (BEA), Due Care and Additional Response activities.

The program incentives selected for this project have been provided under (1) Public Act 381 of 1996, as amended, the Brownfield Redevelopment Financing Act, (2) Public Act 382 of 1996, (3) Public Act 143 of 2000, which amended the Single Business Tax Act of 1975 to provide an incentive in the form of a Single Business Tax credit for a qualified taxpayer who owns or leases eligible property; and (4) under Public Act 147 of 1992 as amended, The Neighborhood Enterprise Zone Act, and are as follows:

• Brownfield Redevelopment Plan - AKT Peerless prepared and submitted a Brownfield Redevelopment Plan (BRP) to the Detroit BRA and its members.  The purpose of the plan was to qualify the redevelopment project for brownfield redevelopment financial incentives available under the authority of the Brownfield Redevelopment Financing Act, P.A. 381 of 1996, as amended. 

• A Tax Increment Financing (TIF) Plan - was also included within the BRP.  The purpose of the TIF plan is to allow the BRA to capture the available increase in property taxes resulting from the development.  The captured taxes may be used to reimburse development costs for eligible activities, which may include, to the extent they are eligible, the following:

§  Preparation of environmental and non-environmental work plans

§  Completion of a Phase I Environmental Site Assessment (ESA)

§  Completion of a Phase II Environmental Site Investigation

§  Completion of a Baseline Environmental Assessment (BEA), Section 7a Compliance Analysis, and associated due care activities, if necessary

§  Completion of additional response activities, if necessary

§  Site preparation and infrastructure improvements

§  Demolition

§  Lead and Asbestos Abatement

§  Other eligible costs identified during the planning and preparation of the brownfield plan

·         Brownfield Redevelopment Single Business Tax Credit – equal to 10% of the cost to redevelop the property up to a maximum $9.7 million dollars for this Project.    Eligible investment costs may include the following:

§  Demolition, construction or improvement of a building

§  Addition of machinery/equipment

§  Environmental cleanup costs

§  Act 381 Work Plans for State Tax Capture - AKT Peerless prepared the appropriate Act 381 Work Plans and submitted one to the (Michigan Department of Environmental Quality (MDEQ) and one to the Michigan Economic Growth Authority (MEGA) for approval of approximately 3.2 million dollars in Eligible Activities for this Project.

§  EPA Hazardous Substance Assessment Grant – The Wayne County Port Authority authorized $75,000 of dollars under the EPA Hazardous Substance Grant for this Project.  Activities that were supported by the Grant and completed by AKT Peerless included:  Brownfield Redevelopment Plan, the Single Business Tax Credit applications, the Baseline Environmental Assessment work, and preparation of a Neighborhood Enterprise Zone application.

§  Neighborhood Enterprise Zone District (NEZ) - The Neighborhood Enterprise Zone (NEZ) Program provides tax incentive for the development and rehabilitation of residential housing.  AKT Peerless established an NEZ District for the @water Lofts Project.  The main advantage of this program is to provide 12-year tax abatement for investors and residents within the District.  An example of the savings this provides is estimated below: 

o    Purchase Price:  $350,000

o    Taxes Without NEZ:  $11,677 per year

o    Taxes With an NEZ:  $3,133 per year

RESULT

In total, Brownfield and other financial incentives secured for this project are estimated to be $34.5 million dollars or nearly 30% of the overall project costs.

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For more information, please contact Mark Van Doren

in our Farmington Office at 248.615.1333.