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SEMCOG UNIVERSITY Using the Municipal Tool Box: A Case Study on The Redevelopment of Manufacturing Properties to Hig

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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SEMCOG UNIVERSITY Using the Municipal Tool Box: A Case Study on The Redevelopment of Manufacturing Properties to Hig

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  1. 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

  2. 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

  3. Defense • True assets available to promote Sterling Heights as a location • Skilled Engineering Workforce • Automotive Capital • TACOM/TARDEC/NAC • General Dynamics Land Systems

  4. 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

  5. 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

  6. 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

  7. 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.

  8. 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

  9. 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.

  10. 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

  11. 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

  12. 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

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