VICKSBURG — The Michigan Strategic Fund board today approved Paper City Development LLC for the second project under the state’s transformational brownfield program.
Paper City plans to transform the former Lee Paper Mill site in Vicksburg, a village of 3,400 people that’s located about 15 miles south of Kalamazoo. Developers submitted a 190-page transformational brownfield plan detailing their nearly $80 million undertaking to rehabilitate the site, which has sat dormant for about two decades.
Jackie Koney, chief operating officer for Paper City, told MiBiz the approval is a major milestone for the project. Developers have been working on the project for about five years now.
“It’s exciting for a small town to get some recognition,” Koney said. “The word ‘transformational’ is there for a reason. It’s going to have a major impact on the whole region.”
The board gave approval for transformational brownfield incentives valued at $30 million, with most coming from local and school property tax capture at more than $19 million. Following the completion of construction and occupancy of the buildings, the project plan will undergo a re-evaluation based on the construction costs and post-construction property tax assessments, which could require the incentive to be adjusted.
According to the Michigan Economic Development Corp., the project needs the full $30.1 million incentive to be economically viable.
The mixed-use project would transform the mill, which is listed on the National Register of Historic Places, to include a brewery, distillery, beer garden, restaurants, various commercial and residential spaces, boutique hotel, and a museum dedicated to the American brewing industry. As well, the developer’s plans call for multiple event spaces and an outdoor courtyard for music and other events that can fit up to 10,000 people.
Paper City was founded by Vicksburg native Chris Moore, who lives in Seattle and owns software firm Concord Technologies. Executives at Paper City believe the project will have significant economic impact on the entire Southwest Michigan region. They estimate it will result in the creation of 221 full-time jobs.
“Today’s approval, and the entire process of working with our local, regional and state entities, is a wonderful example of how public and private sectors can partner to transform communities,” Moore said in a statement. “We are excited to be Michigan’s second transformational brownfield project and look forward to showcasing the impact The Mill at Vicksburg will have on Southwest Michigan.”
Chief Operating Officer of the MEDC Amanda Bright McClanahan said the approval of the transformational brownfield highlights how Michigan’s economic development tools can be used to help communities of all sizes.
“We are so excited we can help preserve this historic space and breath new life into the community,” she said Tuesday on a call with reporters.
The state has used the transformational brownfield program for just one other project: Bedrock Management Services LLC’s $2.1 billion development of four sites spanning 6 acres in downtown Detroit. Quicken Loans founder Dan Gilbert, also the founder of Bedrock Management, helped push the legislation that created the transformational brownfield program, which allows for the capture of additional taxes to fill funding gaps that would prevent a development from moving forward.
The transformational brownfield program allows for the capture of five new sources of tax revenue associated with a project, in addition to incremental revenue from property taxes. The additional tax revenue includes various income, sales, use and withholding tax captures, which are limited to up to 20 years.
Brownfield dollars go toward expenses, such as remediation and contamination assistance, that would not be incurred if developing on a greenfield site. The transformational brownfield program includes activities beyond what a traditional brownfield allows, including sampling and demolition.
Koney said developers need to handle contaminated soil at the site and demolish some detached non-historic buildings, as well as complete asbestos abatement.
Developers anticipate a four or five-year construction period. They expect the first completed projects, including Old Stove Brewery and Old Stove event space, will open as early as 2021.
Without the state incentive, the mill development would not be possible for Paper City, or likely any private developer, Koney said, noting the extent of remediation and demolition on the site.
“The TBP is really the difference between the project happening and not happening,” Koney said. “We didn’t even go down the road to figure out how to make it work without it.”