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Brownfield Funding Legislation Enacted

5 Jan 2017

law

The bills passed.  At last.  As you may recall from two years ago, I served on an MDEQ-led task force to  review and improve the “patchwork quilt” of statutes and rules regarding brownfield redevelopment incentives, grants and loans.  A CSI II group (of which, in full disclosure, I chaired the Legislative Committee) met regularly in 2014.  The changes certainly would’ve been introduced earlier but the Flint Water Crisis happened and everyone’s attention was diverted. Earlier this year, a package of six bills was introduced in the Legislature; on the 15th they were passed and on  January 5, 2017, the Governor signed them.  They take effect in 90 days and are now 2016 Public Acts 471-476.

These changes streamline, simplify and speed up the process for loan, grant and TIF approvals to enable projects to get started faster than ever before while supporting a greater range of eligible activities than previously available.

The most significant changes include:

  • demolition, lead abatement, asbestos abatement dredging and excavation of uncontaminated but unusable soils may be eligible for grant and loan funding, subject to certain criteria and prerequisites (such as a threshold that at least 51% of the eligible activities are part 201 type expenses);
  • one can be technically liable under Part 201, TSCA or RCRA and still be eligible for grant, loan or TIF funding – previously, even someone who submitted a technically deficient BEA was barred from eligibility – with a renewed emphasis on remediation and redevelopment, only those who actually caused contamination are barred from eligibility, again, subject to certain criteria and prerequisites;
  • while the definition of “eligible property” was changed very little, activities eligible for funding through TIF are broadened to include such things as due care expenses, UST removals, solid waste disposal, sediment removal and disposal (where either the sediments or the upland are contaminated), plan preparation and implementation costs (subject to certain conditions and caps), including the costs to track plan compliance and a clearer set of sheeting and shoring costs;
  • overall streamlining of the application and review processes in an effort to speed up the TIF process including giving greater authority to the Michigan Strategic Fund to approve plans of up to $1 Million without waiting for a Fund Board meeting.

There was some tension between those championing redevelopment and those focusing on environmental remediation but, ultimately, the set of changes to the rules and statutes clarifying the process for obtaining loans, grants and tax increment financing for brownfield redevelopment. Not every issue was agreed upon and there was a list of so-called “parking lot issues” (either because they were discussed at length in the parking lot after the meetings or because we “parked them” there as we couldn’t reach consensus).  Hopefully some of these will be addressed in the near future but these changes should streamline, simplify and speed up the process for loan, grant and TIF approvals to enable projects to get started faster than ever, while supporting a greater range of eligible activities than previously available.  Given the Legislature’s unwillingness to approve other similar bills, this was a real accomplishment for brownfield redevelopment in the State of Michigan.

Reduce, Reuse and Recycle Homes in Detroit

4 Jan 2017

table1“Would you cut down an old growth forest just to put the lumber in a landfill? That’s what typical demolition of a neighborhood does.” This was our introduction from Kevin at Workshop  – a Detroit-based furniture manufacturer that uses lumber reclaimed from Detroit’s vacant and abandoned building stock.  Detroit has been trying to save homes that can be saved but is moving quickly to demolish homes which are beyond repair to stabilize the remaining neighborhoods as the City continues to reinvent itself.

Detroit has reportedly demolished 10,700 homes since 2014 and has another 2,436 in the pipeline.  The bulk of these homes are demolished the way you’d expect – wrecking ball, dumpster, landfill.  However, some houses are being “deconstructed” rather than demolished. Reclaim Detroit is working to fight blight, create jobs for Detroiters, and prevent resources from being landfilled by using deconstruction and reuse techniques.  Their crews dismantle parts of buildings that would otherwise be destroyed, saving antique doors to old growth lumber, while training workers in the green construction and demolition industry. I’ve been told that the average Detroit house has some 10,000 board feet of reusable lumber which would normally go to waste.  Some sources I’ve read indicate that would equal some 20 tons, or roughly  1-3 acres, of trees.

My family and I have been trying to live our espoused values and, while separating our recyclables, trying to be more energy efficient and composting is a start, when we decided to get a new kitchen table (don’t worry, the old one has a new home), we explored options and found Workshop.  The table is old made new again and even is stamped with the address that was the source of the wood.   We’re looking forward to using it for many years to come.

Michigan alternative electrical generation – Henry Ford is not a good analogy

5 Oct 2015

utility workA recent op ed in Crains Detroit Business argued that legislation pending in Lansing regarding Michigan’s electrical system is wrongheaded. The authors focus on the proposed elimination of the renewable portfolio standard (RPS requiring 10% of Michigan’s electricity be generated by renewables by this year) by the legislation and argue that the legislation will cost Michigan energy jobs. They argue that  Henry Ford wouldn’t have built his automobiles here if there wasn’t a legislative infrastructure to support buyers of his cars.  I think I agree with the authors that we should retain the RPS, but their argument doesn’t persuade me. I believe that the future will include a greater mix of sources of electricity. It will not be simply large power coal-fired plants owned by large utilities providing us electricity.

However, without any historical discussion, they suggest that Henry Ford located his operations in Michigan because somehow the regulatory climate supported buyers of his cars, because in their words Lansing didn’t “kowtow” to the horse and buggy industry and paved streets and put up traffic lights. That’s simply not true.  Detroit’s mayor Hazen Pingree began a push to pave streets in the 1890’s and Ford didn’t begin production of his Model T until 1908 (making over 10,000 of them in 1909).  The traffic light wasn’t patented until 1918 and reportedly the first one was installed in Detroit in 1920 – again, well after Mr. Ford had begun his operations (in 1920, Ford reportedly manufactured 1 Million cars worldwide).

As most students of Detroit history know, the automobile industry focused on Detroit because Henry Ford was from here, there was a history of manufacturing, and there was easy access to raw materials. There was no amazing roadway system which led Ford to conclude “this is the place to build the automobile.”  In short, it was an accident of luck, history, geography and economics. I think a better analogy is the railroads, which required a dedicated infrastructure as Congress wanted to open the western United States to commerce and did so by granting rights, privileges and land so that the railroads could establish their “grid” at a lower cost.

The authors of the op ed pay short shrift to the discussion of the legislation’s other major change – elimination of net metering, but it appears that they view this as problematic also. Net metering is the current system whereby individuals and small businesses that generate their own electricity can sell it back to the grid.  The net metering issue is not over whether individual electricity generators can or should sell power back to the grid – rather, it’s what should be the price of that sale. Currently, individual generators can sell power back to the grid at the retail price of electricity charged by the utilities. This has been a boon for encouraging individuals and others to put up wind turbines and solar cells. The ability to sell excess electricity at the same price that the utility charges certainly means a faster payback which means more people will invest in it.

Utilities argue that this is a subsidy and they’re right.  Individual generators do not have to meet regulatory requirements relating to the power that they generate, nor do they have the costs of ensuring long-term reliability or the overhead costs of delivering power to consumers.  If you took your home-grown tomatoes to Kroger or Meijer, would you expect the law to require the store to buy them from you and at the same price the store sells tomatoes? Of course not.  In my view, the question is not whether there should be an incentive for individuals to create distributed power but, rather, how much of an incentive is fair to incentivize distributed power generation and fair to those who will continue to depend on the existing grid that will need upkeep.

We have an infrastructure in place that requires maintenance and upgrading for the 21st-century.  This is not a problem with a simple one-size-fits all-solution. The Legislature needs a more nuanced approach than simply blowing up the current system, but let’s get the arguments right.

Detroit’s Carbon Footprint – now what?

18 Nov 2014

Not a carbon footprint

Not a carbon footprint

A couple of years ago, my son was watching a cartoon where one character discussed his villainous carbon foot print (a giant foot).  This showed me both how widespread the use of the term “carbon footprint” had become and how little anyone seems to know what to do with or about that information.  A group at the University of Michigan recently released findings calculating the City of Detroit’s cumulative carbon footprint and presented their report to Mayor Duggan’s office.

Not surprisingly, the study reported that some 66% of the City’s emissions come from stationary sources including residential and commercial buildings and another 30% result from transportation. Those are known to be large sources of emissions.

What I found interesting is that 41% of the city’s total emissions are produced in just 4 of the City’s 33 ZIP codes – primarily from the City’s southwest, midtown and downtown areas. Citywide, greenhouse gas emissions totaled 10.6 million metric tons of CO2 equivalents in 2011 and 2012. According to the report, if you drove from Detroit to Ann Arbor 60 times, your car would emit roughly one metric ton of CO2.  Also interesting is that, on a per capita basis, Detroit’s 2012 emissions are below average when compared to data previously collected from 13 other U.S. and Canadian cities. Detroit’s per capita emissions ranked 9th-lowest among that group—below Cleveland, Denver, Pittsburgh, Ann Arbor and Washington, D.C.  Per capita emissions were lower in Baltimore, Boston, Minneapolis, Chicago, Philadelphia, Toronto, Seattle and New York City. That one always surprises, but New York with its many tall buildings is surprisingly efficient on a per-capita basis. The report shows that electricity use contributed 45% to 2012 citywide emissions, in large part because of DTE Energy’s fuel mix, which includes 76% coal.

Now that we know where the City’s “low hanging fruit” of CO2 emissions can be found, the City may be able to work on assisting its property owners and businesses to reduce those emissions, which typically go hand-in-hand with cost savings.  That’s often the best way to sell such changes – not based on an environmental change, but based on an economic one.  One more thing for Mayor Duggan’s team to work on.

Earth Day at 44…. still crying?

22 Apr 2014

Earth Day brings me right back here

Earth Day brings me right back here

Happy Earth Day 44.  We have come a long way from the challenges and problems that led to the first Earth Day –  a 1969 oil spill in Santa Barbara, California; the dead zone in Lake Eriesmog in Los Angeles and burning rivers in the Midwest.

The first Earth Day led to the creation of the US Environmental Protection Agency and the passage of environmental laws like the Clean AirClean Water, and Endangered Species Acts.  As the EPA and its state counterparts have continued to regulate, there has been a backlash of business and media outcry which certainly impacts the public’s views.

The challenges we face today are more complex and likely more daunting than those of 44 years ago.  We still have oil spills, but they are from rail cars, pipelines, larger ships and deeper wells.  Lake Erie and many other bodies of water are still challenged by more diffuse and “below the radar” sources of contamination.  While reducing the impacts of asbestos, lead and NOx from our daily lives, and healing the ozone hole, we now face questions regarding greenhouse gasses, smog impacts from and in China unlike anything LA ever faced, and the challenges and benefits posed by fracking.

Once the “low hanging fruit” of easy cleanups were “picked,” what we were left with was less shocking or engaging than dead fish and burning rivers.  Consequently, there’s much more debate about the best way to address them or whether they need to be addressed at all.  The issues are just as important – maybe more so, but it’s unlikely that our polarized nation would agree on what changes would be best, if any.

Payback is a b*tch

12 Jun 2013

As regular MichiganGreenLaw readers know, about 18 months ago, we added insulation to our home.  While three years of data (one before, one of and one after) is not a big enough database, I spent time evaluating at the last three years of our DTE and Consumers Power invoices.  What I learned is that our sense that our house was warmer in the winter and stayed cooler in the summer appears to be accurate.  We saw a reduction in our usage and, while rates vary over time, it does appear that we are saving money.  Now we find ourselves asking how long before this improvement pays for itself in savings?

This is the question that many businesses ask before making alternative energy investments – “How long before I recoup my investment?”  Often, in the post-2007 era, businesses will insist on less  than three years.  Savvy investors know that there are many different methods used to analyze capital projects including net present value (NPV), internal rate of return (IRR), cash flow, profitability index (PI), and payback period.

The payback period method does not take into account the time value of money, the likely increase in costs of energy ($4.30 a gallon of gas, anyone?) and this method doesn’t consider cash inflows after the initial investment is recovered (except the recognition that it’s “all gravy” conclusion).  The payback method’s biggest advantage is it is easy to apply and understand.  However, as more and more authors are writing, this method is misleading and often unfair – as this author notes, no one asks for the payback on home amenities. In short, when making these investments, one must treat them as investments and, taking into account incentives, cash flow, cost of money, projected increases in the cost of energy, (not to mention the ability to market the greener approach or the societal value of a smaller carbon footprint)  consider whether investing in greener equipment or processes is the best use for the company’s funds when compared to other investment opportunities. In many cases it may be the best investment, despite a longer than desired payback period.

What can one man do against climate change?

9 May 2013

So, the President said in January and in February, that climate change was one of his priorities and Congress could either work with him or he’d go it alone.   What might the President do on sustainability and climate change without Congress ? Well, the Armed Forces are thinking about, talking about and planning for heightened conflicts caused by climate change and the challenges of waging war in a more intense environment.

What else might the President do? He could:

1.  Impose heavier regulations on existing power plants, which reportedly account for 1/3 of U.S. greenhouse gas emissions.

2.  Fully disapprove the Keystone XL Pipeline which many have said will result in few permanent jobs but perhaps the “dirtiest” oil available.

3. Attempt to regulate fracking – which will be difficult under the current Congressional regime.

4. Ramp up government procurement – making sustainability a mandate; retrofitting government buildings and pushing renewable power for government operations.

5. Attempt to require methane capture during natural gas production.

6.  Continue pressure on automakers to improve gas mileage.

7. Adopt even more energy efficiency standards for household appliances and industrial equipment.

8. Promote planning and codes for resilience in design and construction to guard against catastrophic harms from events like Hurricane Sandy.

Interestingly, without governmental involvement, the market itself appears to be pushing companies to assign monetary value to their impacts on the environment as part of an overall drive toward “sustainability.”  Once you start measuring the impacts, it becomes easier for shareholders and the marketplace to drive less efficient companies toward efficiencies.  So, perhaps the President doesn’t need to do anything.