Detroit’s Toxic Legacy –Bankrupt City Faces Environmental Challenges

Source DC Bureau.org

Sitting silent and decaying in its own polluted waste, The Packard Plant awaits a new future in post-bankruptcy Detroit. It is little more than a home for the homeless, a canvas for graffiti artists and vandals alike.

The Packard Plant  was not always so dirty and dystopic. Once it turned out millions of sedans, coupes, war weapons and paychecks. Founded in 1903, it began manufacturing its high-status cars just as Henry Ford started building mass-market cars in a nearby one-story factory.

The Packard grew to a 35-acre industrial powerhouse, revolutionizing the American economy along with Ford and other auto titans.

But as it did, so it left a legacy of lead, chrome, nickel, PCBs and other pollutants deposited only a few yards from residential neighborhoods. Tastes and economics changed, and in the 1950s The Packard’s auto assembly lines stopped, and the property slowly slid into decay.

It is tempting to look at The Packard Plant as a symbol of the rise of Detroit as a world economic power, its industrial pollution and its descent into bankruptcy. While The Packard may be one of the larger and more historic examples of this arc, it is by no means the only one.

Detroit’s Toxic Assets

On July 18, 2013, claiming a liability of at least $18 billion in debt, the Emergency Manager of Detroit filed for a Chapter 9 bankruptcy reorganization, the largest municipal bankruptcy in America by nearly a factor of five.

A host of factors contributed to the bankruptcy: a fading manufacturing sector and a serious population decline in Detroit are among the most cited.

But a closer look shows that the toxicity in Detroit’s real estate has played a role as well.

“The large factor is the overall drag on the economy that the large inventory of contaminated land has had on property values,” said Guy Williams, president of Detroiters Working for Environmental Justice (DWEJ).

Contaminated and polluted parcels sit idle throughout the city with no one paying property taxes on them. They host no economic activity that would provide Detroit with municipal income tax.  Homeowners often find that they cannot earn enough from the sale of their properties to move out of blighted areas.

Detroit’s emergency manager has started the process of placing a value on the city’s assets. While many innovative projects are cleaning up parcels in Detroit, there is still a great deal of pollution on the books.

No one has a single, solid count of how many contaminated parcels are weighing down the Detroit economy. But no one doubts the number is large.

“There are clearly contaminated commercial properties, but no one has a true list,” said Kim Homan, executive director of the Michigan Land Bank Fast Track Authority, an agency that helps governments return distressed property to the tax rolls by acquiring and then returning them to productive use. The Michigan Department of Environmental Quality tracks some properties, while the city’s similar environmental office tracks others, she said.

In one of its filings to the bankruptcy court it stated that there are over 70 Superfund sites in the city.

The EPA has said that more than 40,000 contaminated parcels have been forfeited to the city for failure to pay taxes. Wayne County, in which Detroit lies, has its own inventory of tax-reverted properties inside the city limits, many with bad environmental records.

Sites that might qualify for brownfields remediation and redevelopment keep moving on to eligibil lists and then off again when the work is complete. The State of Michigan’s list of leaking underground storage tanks says that about 120 are owned by a governmental agency and a roughly equal number have no recognized owner or no known address of the owner.

Contamination Near People

There are severe human costs as well. The polluted sites are subjecting residents and city employees to health and other hazards.

Half of Michigan’s young children with elevated blood levels of lead live in Detroit, according to a 2012 study by the Michigan Department of Community Health.  Detroit hospitalizations for asthma are three times the state level. There are 602 cancer cases, adjusted for age, per 100,000 people in Detroit. That compares with 544 in Michigan and 523 in the United States, according to the National Program of Cancer Registries, part of the Centers for Disease Control.

In one case about 100 firefighters were exposed to hazardous fumes while subduing a fire in a chemical storage area.

There have been some success stories in cleaning up and redeveloping formerly contaminated sites. And the city, county, and state do have plans, programs, and efforts to redevelop more.  The Packard is the most imminent of these plans at the moment.

The Polluted Packard Plant

The Packard is a good place to begin the catalog of how contaminated parcels have been tax losers rather than providers for Detroit, which can ill afford to forego the revenue.

The Packard Plant has been assessed as an environmental health hazard by a CDC office and was studied by the EPA as a potential Superfund site. Officials estimate it will cost millions of dollars to clean up before it can be returned to productive use, and, importantly for Detroit, the tax rolls.

The 35 acres constitute an internationally recognized symbol of urban decay, and the property is the subject of an upcoming auction to collect unpaid taxes. It is so dangerous that the Detroit Fire Department refuses to enter its structures to extinguish the fires that break out in the debris, although the Department does spend about $1 million a year to spray water from the sidelines into the interior to put out fires.

After producing its last automobile in 1954 the property housed various businesses and in time came into the hands of a company called Bioresources. In 1993 the city and Wayne County foreclosed on the property for unpaid taxes. The following year the company named Edward Portwood its new president, and he soon owned the company and managed the property for the city.

In 1996 the EPA discovered a host of contaminants, including PCBs, and began a $1 million cleanup.

Portwood, 36, died of a heart attack at the plant in 1998, and a local businessman, Dominic Cristini, acquired Bioresources from Portwood’s widow for $3,000. A few months later, Detroit decided to terminate its relationship with Bioresources.

For the next decade legal and environmental battles plagued the property and the parties involved. As many as 500,000 trashed tires were removed from the site. A demolition was planned but then cancelled due in part to asbestos removal. New companies emerged trying to acquire the property, but the city’s 1993 foreclosure was deemed invalid because it had not notified a mortgage holder. Bioresources was eventually recognized as owner of The Packard while Cristini was sitting in a federal prison on drug charges.

Cristini was released in 2011, but by then property taxes were mounting and the EPA was back removing more hazardous material.

In December 2012, Wayne County initiated a new foreclosure proceeding. The Packard is slated to go to the tax auction block in September with a minimum bid of at least $970,000 (interest grows continually on the tax debt).

An Illinois businessman has entered into negotiations with the county to buy the property and hopes not only to develop the 35-acre area, but also to lead a revitalization enterprise for the surrounding neighborhoods.

When asked if the proceeding could affect the sale of The Packard Plant, Nowling of the Emergency Manager’s office pointed out that under Michigan law the manager would have to sign off on the sale of any property.

Whoever acquires the property will face a major demolition and cleanup bill that has been estimated as high as $20 million. Some say that half of that would be attributable to environmental remediation. Studies have shown that asbestos levels in some of the materials in The Packard Plant were as high as 40 percent.

Other Detroit Superfund Sites

The Packard is just one of the fiscally troublesome Detroit properties that have travelled through the Superfund process.  Others have cost the taxpayer some if not all of the cleanup bill, and others have wound up in the government’s hands.

In the 1980s the EPA and the State of Michigan identified Carter Industrials at 4690 Humboldt Street as a contaminated site. The 3.5 acres there had been used partially as a salvage yard, and electrical equipment spilled liquids containing PCB into the soils. In addition to the on-site contamination, run-off, wind-borne dust and tracking by foot or vehicle spread the PCBs through the surrounding area. In 1988 1.5 acres of the property was deeded to the city of Detroit in lieu of a foreclosure, according to Detroit tax records.

The next year the site went on the Superfund National Priorities List, a roster of the worst pollution zones in the country. A multi-year clean up and stabilization culminated in EPA delisting it from the NPL in 1996.

Another Superfund site that captured national attention was 11032 Shoemaker Street, known as the Federal-Mogul site after one of several companies that operated there. The site is owned by the city now and was used by the Water and Sewer Department to park vehicles.

More than a decade ago the site was suspected of having hosted a lead smelting operation in its past, setting off a series of studies. One study noted that properties upwind and downwind had limited exposure to lead. But there were other environmental problems.  Leaking underground storage tanks had released PCBs and other pollutants in the soil; former owner Federal-Mogul cleaned up that contamination, removing the tanks along with more than 4,000 tons of soil.

Later the EPA found that lead levels in adjacent properties were 10 times higher than health standards. The EPA began looking at a number of properties throughout the surrounding community and began its own work.  Only in August 2013 did the EPA complete a $940,000 cleanup operation, removing 3,000 tons of soil from nearby residences. The site at 11031 Shoemaker may finally be heading towards revitalization, but for years it was toxic, unused, and as bankruptcy proceedings get underway, it remains an untaxed property.

ChemServe Corp. of 9505 Copland Street, a manufacturer of soaps and dyes,  sits not far from the confluence of the Rouge and Detroit Rivers, also wound up on the Superfund list.

In 1997 the fire department responded to a call during which 100 firefighters were exposed to hazardous fumes and four suffered chemical burns. The smoke pervaded nearby neighborhoods of Southwest Detroit and I-75 was closed.

A 2008 report by the Agency for Toxic Substances and Disease Registry, an arm of the CDC, in recounting the fire, said that the owner at the time was unable to help identify many of the chemicals stored in the plant.  That same report said that about 3,300 drums of chemicals were present on the site.

Later in 2008 the EPA completed a cleanup of the plant. The government took the owner to court, and in May 2013 the owner agreed to reimburse the EPA for that cleanup and for the cleanup of another of his companies.

Along the Detroit River

The Detroit riverfront is a story in and of itself of pollution, redevelopment and dreams.  A tour from south to north shows a series of parcels that add to the problems Detroit faces with contaminants that are either costing it money or keeping tax dollars out of reach. But it also gives a picture of how Detroit is trying to solve these problems.

A mile north of ChemServe is 7819 W. Jefferson Avenue, the former Detroit Coke Site, which was discovered as a potential hazard in 1979 and first assessed as a Superfund site on Jan. 1, 1983.  Sitting a few blocks from the river, it was remediated to the point where it was removed from the active Superfund site list in 1991. But it is the first of three sites listed by Detroit on it bankruptcy petition as representative of various brownfields under city ownership.

Just north of the coke plant is the Revere Copper & Brass site. Here a major metallurgical facility once sat on 28 acres on the banks of the Detroit River. It operated for most of the 20th Century and during World War II it extruded uranium and similar material for the Manhattan Project. Later, the federal government invested millions of dollars monitoring the radioactive legacy of that operation. In 1985 Revere closed its doors. Three years later the EPA began cleanup operations for PCBs and abandoned electrical equipment, and Michigan continued other remediation efforts.

Now the property, another alumnus of Detroit’s Superfund sites, sits empty along the Detroit River waterfront just north of historic Fort Wayne.

While Revere may be a long-abandoned property, there is a nearby public amenity that has had to be shut down recently due to pollution. The 20-acre Riverside Park was closed in March 2012 due to contamination found in the site.

A substance containing hydrocarbons, nickel, chrome and lead lies several feet below the site, remnants of a facility that manufactured a type of heating and cooking gas from 1867 to 1954. MichCon operated that plant during the 20th Century and in the 1980’s performed a remediation project on the property. MichCon merged with DTE, another electric utility, and DTE transferred the property to Detroit, which converted it to a park with playing fields and fishing areas along the banks of the Detroit River.

But the new discovery has left former owner DTE with a legacy cleanup expense for two parts of the park. These include the family playing fields. As a city park, Riverside is already off the tax rolls. Cleanup of a third part, which includes the fishing area, is still in question.

Riverside Park affords a view of the Ambassador Bridge, adjacent to the north. But to the northeast of that bridge lays a pile of petroleum coke.  (This is different from the older Detroit coke plant mentioned above.) Though not central to the bankruptcy, it is a high-profile environmental controversy that arose in the midst of contaminated properties that have been affecting public finances in Detroit and shows that contamination is an ongoing source of concern.

A Marathon Oil refinery in Southwest Detroit is generating the coke as a byproduct of tar sands production. The coke is then sold to Koch Carbon, owned by the well-known conservative Koch brothers, who are then shipping it away to be converted into fuel for sale overseas.

But the coke was piled up in high mounds along the river. Winds frequently whip up the fine black dust, blowing it on the neighborhoods of Southwest Detroit and across the river to the Canadian town and environs of Windsor. The petroleum coke piles were established without a permit, and after operators applied for a permit the city said the piles must be removed by August 27, 2013.

Two miles north of downtown is a 40-acre parcel that Detroit views as a potential crown jewel for the revitalization: known as either the Belleview or Uniroyal property.

The site derives the Uniroyal name from a tire company that once operated on the site and the Belleview name from its location across from Belle Island, a recreation area and nature preserve sitting wholly in U.S. waters in the Detroit River. MacArthur Bridge connects the island to East Grand Boulevard, which starts between two parks and then continues north through the heart of Detroit, at one point passing by The Packard.

But for years the Belleview (Uniroyal) site sat empty and polluted right beside these recreation areas, grand memorial bridges and natural areas. Legends and jokes about glowing landmasses and melting people haunt the urban folklore about the Belleview property.

But what was neither legend nor laughable was the brew of toxins, pollution and contamination that lay in the soils of Belleview. A history of iron works, ammonia production, and coal gasification deposited its toxic residue on the site. Land reclamation poured fill dirt from other parts of Detroit and Michigan 800 feet into the Detroit River at some points, and assessment has shown those sections are contaminated as well. Volatile organic compounds, oil, tar, and cyanide are among the many contaminants that were buried in Belleview.

In 2011 former owners of the site (DTE, E.I. du Pont Nemours and Michelin) embarked on a $20 million cleanup campaign for 14 of the acres. The contamination was so bad that the strategy was simply to remove 30 feet of dirt and replace it with healthy soil.  Officials now say it will cost $25 million. A cleanup strategy for the remainder is still being determined.

Participants are not giving a completion date for the current cleanup operation but a development group led by a former NFL football star Jerome Bettis is hoping to start developing the property into a mixed-use project in late 2014.

The High Financial Cost of Contamination

In addition to depriving Detroit of tax revenues, the contaminated land also costs the city dearly to clean up.

Millions of tax dollars from local collections and from state and federal grants have been diverted to clean up this backlog of dirty properties. These cleanup projects, as important and necessary as they are, compete for funds needed for other government services.

What pressures the bankruptcy filing will add to the remediation of Detroit are uncertain. “Everything is up in the air,” said Donele Wilkins, president of the Green Door Initiative, a nonprofit group that works with communities to clean up properties, and a member of the Detroit Brownfields Redevelopment Authority.

“There are problems not only on the environmental level, but also on the economic level,” she said. “The issue of contaminated sites is not a new one.  The funding had been under a lot of pressure for the last few years.  State funding levels have been reduced.

“A year or two ago the resources began to dwindle, and now the bankruptcy puts in jeopardy the ability to pursue remediation projects,” Wilkins added.

Williams of DWEJ also has noticed the financial pressures. “In past years Michigan had innovative financial strategies for remediation, but that has changed. The governor has new strategies about tax incentives,” he said.  “There has not been as much activity lately.”

The programs of those strategies remain largely in place, even if the funding levels may have dropped.

For instance, Michigan allows local governments to reimburse eligible developers for remediation work out of the increased ad valorem property taxes that results from the added value of the redevelopment.  This “capture” of the tax dollars, done in accordance with a plan approved by a local authority, encourages remediation and building that may not have been done otherwise.

The city or county may miss some of the tax revenues, but it can still collect enhanced municipal income taxes and other revenues. The strategy pulls a property out of blight. But while it is good for the environment, public health and economic development, this financial response to the legacy of contamination does put a damper on the flow of property tax into Detroit’s treasury.

Other strategies for cleanup place the cost on the polluter. In cases where it is known who contaminated the land, the responsible private party reimburses the government for some or all of the public funds used in the cleanup. But occasionally the reimbursement only comes after the expense of a legal fight.

“It is a long process just to get the responsible parties to say they are responsible,” said Wilkins.

Bankruptcy Proceedings and Contamination

Although it has introduced uncertainty into Detroit’s functions, the bankruptcy is not expected, in and of itself, to stop any remediation efforts.

“None of the normal functions of the city’s government are shut down because of the bankruptcy,” said Bill Nowling, spokesman for the Emergency Manager’s office.

If there is a claim or litigation against the city, that would be stayed until the bankruptcy court ruled on the claim, he said. But if grant monies have already been approved and are in the pipeline for remediation, those projects would move forward.

Nowling said Detroit is expected to receive $52 million soon in “Hardest Hit Funds” from the federal government’s stimulus program, and that money would be put to use clearing blighted properties in the neighborhoods.

The Land Bank will play a role in this.  “We are planning between 2,000 and 4,000 demos in coordination with the Hardest Hit funds, of which some will be MLB owned, more will be city owned and tax reverted, and a lesser amount will be privately or bank owned,” said Homan.

The Emergency Manager’s office is paying attention to these areas, Nowling said. “It’s a public safety issue first and foremost,” he said. “To make a dent in the violent crime and the traffic to the crime that is occurring in these blighted properties, you have to help the neighborhoods clean them up.”

Homan added, “The EM team is very focused on the value of land banks and the importance of getting properties back on the tax roles and into productive use.”

“The land banks are clearly aware of the issue of valuation and assessments, and the discrepancies that exist,” she continued. “We are carefully following the lead of the Emergency Manager’s team.”

Contamination and required remediation are needed on a parcel by parcel basis, Homan said. “Those tests are expensive; more expensive than most properties are worth without having a serious development plan, and funding, in place,” she said. “None of the public landholders can afford to just test without reimbursement, and, of course, testing costs lead to remediation costs.

“EPA grants are getting smaller and less available, and most funding is only available if there is an approved development ready to go,” Homan said.

Some are willing to consider the bankruptcy itself as a potential step in the right direction.

“The bankruptcy may put light on issues that people have not been paying attention to,” said Wilkins of the Green Door Initiative and the Brownfields Redevelopment Authority.

Williams of Detroiters Working for Environmental Justice also sees a possible silver lining. “The bankruptcy may have a positive impact because the city is going to come out stronger,” he said. “Its finances and its balance sheets will be improved in the next year or two. That will put the city in a better light with investors. It will improve the confidence that the city will be able to hold up its end of the bargain in redevelopment plans.”

Success Story for Detroit and its Homeless Veterans

While Detroit looks to the future to redevelop Belleview into an anchor of its riverside redevelopment, it can also look to a recent accomplishment that has helped get homeless veterans off the street and near health and social services.

Piquette Square for Veterans, at 6221 Brush Street in Southwest Detroit, was a former automobile plant. Studebaker manufactured cars there across the street from the original Ford Model T factory.

Where as the Ford factory had been preserved as a museum for the Model T, the Studebaker site at 6221 Brush fell into disrepair. Like many of its counterparts throughout Detroit, it suffered from a pool of contaminants. Leaking underground tanks and an oil pit spewed petroleum products into the soil. Volatile organic compounds were prevalent on its premises.

And in 2005 the building went up in smoke in a catastrophic fire.

Southwest Housing Solutions, a local nonprofit, working with over a dozen public, private, and other nonprofit entities and receiving financial support from scores of donors, set about rebuilding it as a service-supported permanent home for homeless veterans in Detroit. It selected the location in large part because of its proximity to a Veterans Administration hospital.

But first Southwest Housing had to clean up and remediate the land. In order to meet the requirements of multiple regulators at both the state and federal levels, Southwest contracted to have 50,000 tons of soil removed. It installed a subterranean ventilation system to abate intrusion of other vapors and has installed a geothermal HVAC system to reduce its own operational emissions.

The four-story facility opened in 2011, and in the same year won the Phoenix Award for National Community Impact, a competition for brownfields redevelopment projects.  It was a finalist in the green buildings concept category of the National Association of Homebuilders Multi-Family Awards. In addition to housing 150 homeless veterans, the first floor is leasing 5,000 square feet to commercial enterprises.

Southwest established a recognized best-in-class development in a section of Detroit that had long been regarded as blighted. The success came at a cost; the price tag was $20 million. Among the financial incentives and resources used were a $1.9 million brownfields tax credit, a $500,000 EPA brownfield cleanup loan/grant, a $480,000 Michigan brownfield cleanup grant and a $60,000 EPA brownfield assessment grant.

Just as The Packard Plant is a case study of how Detroit’s land went from world-class economic power to ruin, Piquette Square for Veterans illustrates the ways Detroit is seeking to revitalize its many assets and operate as a major metropolis. (Despite its serious decline in population, it is still the 18th largest US city.)

But the challenges of its cleanup show how much effort must be expended to bring Detroit’s contaminated parcels up to their potential. Plus the contamination requires a significant outlay of public resources paid for out of tax dollars at the local, state or federal level.

Nonetheless, at Piquette Square, Detroit has begun collecting taxes from the commercial spaces and more taxes will flow in later years as incentive program periods expire.

How well Detroit can overcome the toxicity of its land and restore its finances and credit standing will play itself out in future years. But the long record of contamination shows that, left unchecked, pollution is a factor in lower property tax collections, blighted neighborhoods, and public health hazards.

The community and its government have worked to clean and redevelop many of these properties, but as it undergoes the nation’s largest municipal bankruptcy, Detroit still faces thousands of contaminated properties.