Leelanau County on Tuesday became the first non-urban municipality in Michigan to take advantage of new brownfield redevelopment rules that help communities clean up "functionally obsolete, blighted or contaminated" properties.

The property in question is the former county courthouse campus in Leland, which is slated to be sold by next month to a local development company, Varley-Kelly Properties L.L.C., for redevelopment into a 2.4-acre residential neighborhood in the heart of downtown Leland.

A decision made Tuesday afternoon in Lansing by the Michigan Economic Growth Authority (MEGA) board will allow the developer to tap into some $350,750 in “tax increment financing” to clean up the site before it is developed. District No. 5 county commissioner David “Chauncey” Shiflett, who also serves on the county’s Brownfield Redevelopment Authority (BRA) board, attended the MEGA board meeting in Lansing this week along with an engineer representing Varley-Kelly Properties, Mac MacClelland.

In a news release issued from Lansing, Gov. Jennifer Granholm announced the approval of plans for four major brownfield redevelopment projects in Michigan – two in the Grand Rapids area, one in the Detroit area, and one in Leelanau County. Under previous legislation, only “core communities” with heavily industrialized sites could seek tax increment financing for demolition and cleanup under state brownfield redevelopment rules.

However, a change in legislation last year allowed rural communities such as Leelanau County to employ the financing arrangement. The change resulted in the county board holding an additional public hearing on brownfield plans for the Leland courthouse campus earlier this year in time to submit an updated applicaton to the MEGA board earlier this month.

The head of the Leelanau County Planning and Community Development Department, Trudy Galla, who also works with the county BRA, noted that the approval of tax increment financing for the Leland project may be just the beginning of funding the county can employ for the cleanup and redevelopment of the old county courthouse campus.

Tax increment financing will allow the Leelanau BRA to utilize tax money in anticipation of an increase in value expected from redevelopment of the site. When cleanup and redevelopment of a property increases its value – and thus the revenue it generates – the increased tax revenues (known as captured taxes) are used to pay the cost of many of the environmental response and redevelopment activities at the site. In the case of the Leland courthouse campus, its taxable value has been zero because it was government property and not carried on tax rolls. The higher taxes that will be collected on the property in the future will ultimately be paid by the developer and future residents and owners of properties in the neighborhood.

In addition to gaining authority to employ tax increment financing to clean up the property, Galla said the Leelanau BRA learned last week that the Michigan Department of Environmental Quality had approved a nearly $1.2 million loan that may also be used as part of redevelopment efforts on the property. The BRA will administer the $1.2 million loan which will be repaid over time by the developer as the property is developed.

The loan will pay for water sampling and other environmental assessments on the former courthouse campus, and may be used to help pay for a community water system that may be required if pollution is discovered. In addition, the loan may be used to help construct a stormwater management system for the redeveloped property.

R. Gene Kelly of Leelanau County – one-half of Varley-Kelly Properties, L.L.C. – said he attended the BRA meeting at the new Leelanau County Government Center in Suttons Bay Township last week, and was encouraged to see that members of the BRA and other county officials appeared to be solidly behind his and Dr. James Varley’s plans to redevelop the courthouse campus in Leland. Kelly said he planned to appear before the Leland Township Planning Commission on Wednesday evening, and expressed hope that Leland Township officials would be as supportive as county officials have been.

According to the news release from Lansing, the “state and local tax capture” will allow the Leelanau County BRA “to demolish the former Leelanau County Complex comprising the Court House, Sheriff’s Department/Jail and two other office buildings to make way for six single and 20 multiple family housing units. Capital investment in the project is estimated at $10.4 million,” according to the state’s news release.