For sale—a 19-acre site in Dearborn, Michigan, with an abandoned automotive plant, contaminated with polychlorinated biphenyls (PCBs), lead, and carcinogens left by assorted tenants since 1920.

Few developers would have expressed interest 6 years ago. Today, thanks to recent amendments to state environmental cleanup laws, Michigan is revolutionizing brownfield redevelopment. Brownfields are idle or underused industrial and commercial sites in which documented or suspected environmental contamination hinders redevelopment. "The hardest part of redeveloping these sites is getting prospective developers in the door. Once we explain all the advantages, the rest of the sales job is much easier," explains Fred Weiss, assistant director of Dearborn’s Department of Economic and Community Development.

Michigan enacts sweeping cleanup laws. In 1995 Michigan adopted amendments to the state’s Natural Resources and Environmental Protection Act (Part 201), which encouraged redevelopment of brownfields. Key provisions of the amendments included the following:

• Basing the cleanup standards on future use of the property—a brownfield site to be redeveloped as a school would face stricter cleanup standards than one with a planned manufacturing plant.

• Holding only the party that caused the contamination responsible for the cleanup—the "polluter pays" provision exempts new property owners from paying for cleanup of contamination they did not cause.

If the original polluter is bankrupt or cannot be identified, the state may provide assessment and cleanup funding through a competitive grant program. Because brownfields often have successive owners, it can be difficult to determine which company is responsible for each contaminant. An agreement between Michigan Department of Environmental Quality (MDEQ) and the Environmental Protection Agency (EPA) ensures that the federal government supports Michigan’s "polluter pays" doctrine and exempts the new owners from federal liability for existing pollution. State law further requires that future restrictions be recorded on property deeds and that owners post a permanent placard at the site to disclose deed restrictions.

According to MDEQ, the most important factor in facilitating redevelopment is the liability protection that new buyers receive by completing a baseline environmental assessment to determine the amount and type of hazardous materials on the site at the time of purchase. Fear of liability prevents many developers from investing in brownfields. As proof of the effectiveness of Michigan’s approach, EPA has worked out similar polluter liability policies with dozens of other states.

Dearborn launches brownfields renaissance. Since passage of Michigan’s environmental amendments in 1995, Dearborn officials have worked with private investors to redevelop seven abandoned or underutilized brownfields. "Prior to these amendments, people were reluctant to approach industrial sites for redevelopment," asserts Weiss. Under the new cleanup regulations, Dearborn’s brownfields are now attractive to developers. First, the new law removes liability for contamination that the new investor did not cause. Second, the city can provide funds to offset the costs of cleaning up the site. Equally important, Dearborn’s existing streets, utilities, and railroad spur are attractive to prospective businesses. With these incentives, redeveloping the brownfields site will cost the same or less than developing a greenfield or an undeveloped site farther from the city.

The contaminated 19-acre site described at the beginning of the article is actually a Dearborn brownfield, which Kenwal Steel Products Company purchased and redeveloped. Passage of the 1995 cleanup laws was central to the city’s ability to convince Kenwal to invest in this site. Phase I of this project began with a $711,000 grant to Kenwal for site reclamation. In return for this public investment, Kenwal invested $20 million to build its 140,000-square-foot world headquarters and created 130 new jobs in Dearborn. Both EPA and MDEQ agreed PCBs could be contained rather than removed from the site because of its future industrial use. Removing the contamination would not have been cost effective for Kenwal.

Kenwal recently began phase II to expand the steel processing facility. Because of refinements and financial incentives that Michigan recently enacted, Kenwal will receive business tax credits totaling $1 million. Weiss estimates that redevelopment of 7 brownfields in Dearborn increased city property values by $62 million and will generate $470,000 in additional tax revenues in 2001 and $5.2 million over a 10-year period.

Assessing the impact of Michigan’s new brownfield regulation. The MDEQ Resource Guide 2001 highlights the positive economic impact of the amended environmental regulations in 33 Michigan communities. Private investment in brownfield properties rose from $2.2 million in 1996 to $1.75 billion in 2000. Brownfield redevelopment created more than 10,000 jobs during the same years.

The May 14, 2001, issue of Business Week applauds Michigan’s new approach to brownfield redevelopment. The state’s seminal 1995 redevelopment law has so far launched nearly 3,000 brownfield projects. Michigan’s brownfield program is clearly a compromise, but most people are willing to accept that. The public wants clean development but not at any cost. The alternative to redevelopment is a patchwork of dead sites that no one will buy. Like Michigan, most states would replace these polluted sites with new industry on old land that has been made clean enough for the new use.

For additional information, see: Brownfields Redevelopment: Performance Evaluation, 1999. Center for Urban and Economic Development.

Or contact: Fred Weiss, Assistant Director, Department of Economic and Community Development, Dearborn, MI, City Hall – Third Floor, 13615 Michigan Avenue, Dearborn, MI 48126–3586, (313) 943–2180; or the Environmental Response Division, Michigan Department of Environmental Quality, P.O. Box 30426, Lansing, MI 48909–7926, (517) 373–9837, or www.deq.state.mi.us/erd/.