The Leland Township Board concurs with proposed plans by two local developers to clean up the county courthouse property using tax dollars provided through the state's Brownfield Redevelopment process.

At its meeting Monday, the board unanimously approved a resolution of concurrence supporting an application by Varley-Kelly Properties, L.L.C., for a proposed Brownfield Redevelopment plan for the county courthouse property. The county’s Brownfield Redevelopment Authority has already endorsed the Varley-Kelly plan, and the county Board of Commissioners will hold a public hearing at 7 p.m. on Tuesday as part of its regular monthly meeting. The county board is expected to take action that evening on recommending the plan for approval to the state’s Brownfield Redevelopment Authority.

Mac McClelland, an engineer with Otwell Mawby, P.C., of Traverse City, represents county residents Gene Kelly and Jim Varley in the Brownfield Redevelopment process. An environmental assessment conducted on the property earlier this year shows groundwater for part of the property is contaminated above acceptable levels. According to McClelland, the assessment also show the presence of metals fairly close to the surface of the ground at different sites around the property.

“The contamination in the ground most likely came from an iron works and slagging operation on the property during the 1880s,” he said. The groundwater contamination is believed to have come from an underground storage tank located near the former county jail site that developed a leak.

McClelland said to make the property usable again, Varley-Kelly must go through the Brownfield Redevelopment process. “We will either have to remove the contamination, or cover it up,” he said as to how they will handle the excess metals in the ground. With the groundwater contamination, the developers will have to install a central water system rather than have individual wells for each proposed dwelling unit.

The maximum cost for addressing the environmental concerns is $963,125. Kelly said the cost includes demolition of the existing buildings, other than the historic jail, once the county government moves to its new center off of M-204 in Suttons Bay Township sometime early next year.

Developers originally thought they would pay for the demolition by applying for a Michigan Department Environmental Quality (DEQ) grant. Kelly said it was later learned the grants are only given to projects where job creation is the main objective. Instead, the two men are applying for a low interest loan through the DEQ to pay for the demolition and site restoration.

If the state approves the proposed Brownfield Redevelopment plan, the county Brownfield Redevelopment Authority will recover the costs using tax increment financing and repay the state.

McClelland said the plan calls for the state to “capture” all state and most local tax revenues to be generated by the property over a 13-year period. Currently, Leland Township receives no property tax revenues from the courthouse property since its is owned by the county government.

If sale of the property is completed to Varley-Kelly in the spring of 2008 and they proceed with their proposed plans to develop the land into a residential project, the county authority would not start capturing tax revenues until 2009. McClelland said once the project is fully built out, which is expected to take four years starting in 2008, the property will generate $120,000 in tax revenues in 2012.

The authority may only capture tax revenues on the property until the $963,125 debt is paid off. McClelland said it could take as long as 13 years to pay the debt. During that time the only local government body that would receive any property tax revenues from the Varley-Kelly project would be Leland Public School for its debt-retirement millage.

McClelland said if it looks like 13 years will not enough time to cover this cost, the county authority may extend the tax revenue capture period up to an additional five years without any other approval required.

Leland Township Board members made no comment about this caveat in the Varley-Kelly redevelopment plan. But, District No. 5 county Commissioner David “Chauncey” Shiflett, who is a member of the county Brownfield Redevelopment Authority, said it is highly unlikely the county would do that.

Clerk Jane Keen asked McClelland why the township should endorse a plan that includes having public tax dollars pay for a private property’s central drinking well system.

McClelland said if the Brownfield Redevelopment plan is not approved, odds are Varley and Kelly would not proceed with purchasing the property and the township would not receive any new property tax revenues now or in the near future.