April 21, 2003
MiBiz West
By Tim Gwozdz

MUSKEGON - The Muskegon location of Home Depot stands as a shining example of how the do-it-yourself home improvement retailer has taken an environmentally friendly approach to expansion.

The 107,097-square-foot store anchors a strip mall built on the former CWC Foundry site on Henry Street and Sherman Boulevard. It is one of three brownfield redevelopment projects undertaken by Home Depot in Michigan over the past decade. Nine years ago the retailer built a store in Southfield on an unregulated garbage dump. It recently finished another dumpsite build in Jackson.

According to Home Depot Real Estate Manager Tim Platt, the one intriguing aspect about the CWC property was the fact that it was right in the heart of the population center. When the company began seriously considering the site in early 1999, its two main competitors - Lowe's and Menards - were already firmly entrenched in the market. However, their stores were located on the eastern fringes of the metro area. That's why the CWC location held the key to Home Depot's arrival, said Platt. "The only way that it made any sense was to locate in the heart of the population. Trying to find a 12-acre site in the heart of the population is pretty tough without getting involved in a big assemblage (of land)."

The former foundry site was promising, but Platt admitted that he first felt the site would not work because of the environmental challenges involved with its reuse. Before a commitment from Home Depot was given, 417 borings were made on the 30-acre site to search for contamination.

"The testing was the longest, hardest part (of the development process), especially with the way our company likes to manage that type of risk. They'd rather spend that kind of money up front than have a problem," said Platt.
"The site looked like Swiss cheese when we were done with it, but at least we know everything there is to know about it and there's no surprises at the end."

A baseline environmental assessment (BEA) was done and the Michigan Department of Environmental Quality (MDEQ) decided the best thing to do was to cap the site to stop the circulation of water through the contaminated soil and into the water tables. About 2,000 tons of contaminated soil were hauled off the site and taken to a landfill.

Though there are now incentive programs available for brownfield redevelopment in Michigan, the only break Home Depot received on the Muskegon site was the Single Business Tax (SBT) credit. The credit is available to qualified developers through Public Act 143, which put in place a new brownfield credit under MCL Section 208.38g of the Single Business Tax Act. Credits are issued by the Michigan Department of Treasury and are designed to cover the cost of eligible investments incurred by the developer of a brownfield site. These investments include the demolition, construction, restoration, alteration, renovation, or improvement of buildings or site improvements on eligible property as well as the addition of machinery, equipment and fixtures to eligible property. Environmental response activities like baseline environmental assessments and due care plans are not eligible. Reimbursed costs and land costs are also not eligible investments.

Platt said that without the SBT credit he most likely would have passed on the Muskegon location. "The Single Business Tax credit has been a real boon. It's been a real incentive for us to go on this kind of site."
Platt is responsible for Home Depot's real estate acquisition and development in Michigan, Minnesota, North Dakota and South Dakota. While the SBT credit is enticing, Platt said he does not let the incentive sway his final decision on store location.

"Internally we say, 'Find the place you want to be and create a location there.' It doesn't matter if it has something on it or not. I try to follow that philosophy," Platt said. "If there are sites that are equally appealing and one has an incentive like (the SBT credit), I'll certainly go toward that site. But location is first and foremost. Incentives are the frosting."
Platt has no qualms in redeveloping contaminated land. Reuse of a brownfield site is tough, but it's not unmanageable, Platt told MiBiz. "With the cooperation between MDEQ and the Feds as far as working on environmentally challenging sites, the risk can be mitigated."

As for the Muskegon store, Home Depot began working on the project in Feb. 1999 and closed on the property in Dec. 1999. The store opened in August 2000 and has proven to be a consistently top performing outlet, said Platt. "It's been a real success for us."

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This article appeared in the April 21, 2003 issue of MiBiz, read by upper management executives in West and Southwest Michigan. Print subscriptions are free to qualified individuals who do business in West and Southwest Michigan. For further information about MiBiz Network, visit www.mibiz.com.