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SEMCOG UNIVERSITY Using the Municipal Tool Box: A Case Study on The Redevelopment of Manufacturing Properties to Hig PowerPoint Presentation
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SEMCOG UNIVERSITY Using the Municipal Tool Box: A Case Study on The Redevelopment of Manufacturing Properties to High Tech Research and Development Luke Bonner Economic Development Manager City of Sterling Heights 586-446-2386 lbonner@sterling-heights.net www.sh-econdev.com.

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slide1

SEMCOG

UNIVERSITY

Using the Municipal Tool Box:

A Case Study on

The Redevelopment of Manufacturing Properties to High Tech Research and Development

Luke Bonner

Economic Development Manager

City of Sterling Heights

586-446-2386

lbonner@sterling-heights.net

www.sh-econdev.com

manufacturing strategy
Manufacturing Strategy
  • City of Sterling Heights
    • 26 Million Square Feet of Industrial Space
    • Manufacturing and Auto Industry Contracting
    • Need to Recycle Manufacturing Space/Land with Longer Term more Viable Industry
  • Strategy
    • Create Strong Business Retention Program Focusing on the Following Areas:
      • Defense
      • Aerospace
      • Alternative Energy
      • Advanced Automotive (Robotics, Batteries, Materials, etc.)
      • Medical Device and Supply
defense
Defense
  • True assets available to promote Sterling Heights as a location
    • Skilled Engineering Workforce
    • Automotive Capital
    • TACOM/TARDEC/NAC
    • General Dynamics Land Systems
bae systems
BAE Systems
  • 3rd Largest Global Defense Contractor in World
  • 6th Largest Defense Contractor in United States
  • Two Sterling Heights Facilities
    • 1st opened in 2005 with 5 employees
    • 2nd came through acquisition of Armor Holdings (25 employees)
    • January 2008 total employment reached 80 (engineers)
    • 4 retention visits took place with company in 2007-Defense is a primary industry focus
bae s investment
BAE’s Investment
  • Total Investment
    • 200,000 s.f. research and development facility
      • $70 million (includes personal property)
      • 600 new jobs created-average wage $70k to $80k
bae s growth
BAE’s Growth
  • BAE’s growth in contracts with the US Army (TACOM) provided a growth opportunity in the land systems division
  • BAE had several options
    • Expand in Santa Clara, CA
    • Expand in York, PA
    • Expand in Southeast Michigan
sterling heights
Sterling Heights
  • BAE Systems eventually committed to Michigan due to availability of workforce and relationship with TACOM.
  • But were they committed to Sterling Heights?
  • Not necessarily, the only property that ultimately worked for BAE was a site under contract with another developer.
former trw site
Former TRW Site
  • Contract with Developer finally lapsed
  • BAE was lukewarm on the idea of taking on a site with so many perceived issues.
  • Facility Built in the 50’s
  • Former Manufacturing Plant
using incentives
Using Incentives
  • Sterling Heights makes a commitment to use incentives
  • Put together several scenarios for BAE’s consultants
  • Sterling Heights makes the first step in good faith effort to set up a Local Development Finance Authority for the TRW site prior to site being under contract.
local development finance authority
Local Development Finance Authority
  • Uses Tax Increment Financing to provide reimbursement incentive to BAE for eligible activities (primarily infrastructure)
    • Roads
    • Water
    • Sewer
    • Demolition
    • Environmental cleanup
    • Site Preparation
brownfield authority
Brownfield Authority
  • Site qualifies as a facility
    • LDFA would be approved first therefore giving priority of local taxes to that Authority
    • City of Sterling Heights petitioned the State to collect the school taxes and reimburse BAE for eligible brownfield activities
      • Environmental
      • Demolition
      • Asbestos Abatement
incentives come together
Incentives Come Together
  • Local Development Finance Authority
    • Site Infrastructure Improvements
      • $1,145,391
    • Environmental
      • $1,667,215
    • Total
      • $2,812,606
  • Brownfield Redevelopment Authority
    • Demolition
      • $996,980
    • Asbestos Abatement
      • $500,000
    • Total
      • $1,496,980
  • City of Sterling Heights 12 Year Tax Abatement
      • $4,600,000
  • Total Value of Incentives
      • $8,909,586
        • Payback for TIF Incentives not expected to go beyond 13 years