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<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'><!-- Converted from text/rtf format -->Barry,</span></font></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'> </span></font></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'>I agree with you 100%. You will note my email
suggested the absurdity of further compensating the developer if his rate of
return was below the target. Yes, it is totally unworkable in practice
and theory. When a public agency makes a deal with a developer, the
developer needs the certainty of knowing that it is final and that he or she
can make decisions based on the subsidy agreement. The burden is on the
agency to be knowledgeable about conditions in the financial markets so that it
will make a subsidy agreement with the developer that fairly weighs the public
benefits and private costs of the developer. </span></font></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'> </span></font></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'>The key is for the agency to understand that conceptually the
appropriate subsidy should make the developer whole for the additional environmental
and other risks in terms of a target market rate of return. We should <u>always
assume</u> that any given developer will ask for the maximum subsidy permitted.
It should be noted that many transactions involving environmental contamination
are still so lucrative that a developer may not need any subsidy (Bob Paterson’s
point), but it is the agency’s responsibility to ascertain that
information without looking into the pocket of the developer.</span></font></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'> </span></font></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'>All lookbacks are unworkable since there are many factors
that determine the developer’s final rate of return on a project and it
is impossible to separate out any particular risk. All we can hope is
that public agencies will gain the market expertise to be considered as
knowledgeable “sellers” of subsidies on behalf of the public.</span></font></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'> </span></font></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'>Bruce</span></font></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'> </span></font></p>
<div>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'>Bruce-Sean Reshen</span></font></p>
<p class=MsoNormal><font size=3 face=Arial><span style='font-size:12.0pt;
font-family:Arial'>CEO, The MGP Group</span></font></p>
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<p class=MsoNormal><font size=2 face=Tahoma><span style='font-size:10.0pt;
font-family:Tahoma'>-----Original Message-----<br>
<b><span style='font-weight:bold'>From:</span></b>
brownfields-bounces@list.cpeo.org [mailto:brownfields-bounces@list.cpeo.org] <b><span
style='font-weight:bold'>On Behalf Of </span></b>Trilling, Barry<br>
<b><span style='font-weight:bold'>Sent:</span></b> </span></font><font size=2 face=Tahoma><span style='font-size:10.0pt;font-family:Tahoma'>Wednesday,
October 25, 2006</span></font><font size=2 face=Tahoma><span style='font-size:
10.0pt;font-family:Tahoma'> </span></font><font size=2 face=Tahoma><span
style='font-size:10.0pt;font-family:Tahoma'>4:24 PM</span></font><font size=2
face=Tahoma><span style='font-size:10.0pt;font-family:Tahoma'><br>
<b><span style='font-weight:bold'>To:</span></b> Bruce-Sean Reshen; Frink,
Neal; Robert Paterson; lsiegel@cpeo.org; Brownfields Internet Forum<br>
<b><span style='font-weight:bold'>Subject:</span></b> RE: [CPEO-BIF] Petoskey
Pointe (MI) tax credit debate</span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'> </span></font></p>
<p><font size=3 face="Lucida Sans Unicode"><span style='font-size:12.0pt;
font-family:"Lucida Sans Unicode"'>Bruce, I agree with Neal Frink to the extent
that requiring a "look back" in every transaction would probably kill
the desirability of such subsidies from the outset because it would destroy the
foreseeability and finality needed to accomplish financial planning, as well as
impose a likely unwieldy bureaucratic hand, where "process" usually
dominates "product" or "result." On the other hand, I
have no similar reservation about random "non-recourse" audits which
would provide the information needed to make necessary program adjustments.</span></font></p>
<p><b><i><font size=5 color=black face="Book Antiqua"><span style='font-size:
18.0pt;font-family:"Book Antiqua";color:black;font-weight:bold;font-style:italic'>Barry</span></font></i></b><br>
<font size=2 face="Arial Black"><span style='font-size:10.0pt;font-family:"Arial Black"'>Barry
J. Trilling</span></font> <br>
<font face="Arial Black"><span style='font-family:"Arial Black"'>Wiggin <font
color="#ff8000"><span style='color:#FF8000'>and</span></font> Dana LLP</span></font>
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<br>
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<p><font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>-----Original
Message-----</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>From:
brownfields-bounces@list.cpeo.org [</span></font><a
href="mailto:brownfields-bounces@list.cpeo.org"><font size=2 face=Arial><span
style='font-size:10.0pt;font-family:Arial'>mailto:brownfields-bounces@list.cpeo.org</span></font></a><font
size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>] On Behalf
Of Bruce-Sean Reshen</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>Sent:
Wednesday, October 25, 2006 12:48 PM</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>To:
'Frink, Neal'; 'Robert Paterson'; lsiegel@cpeo.org; 'Brownfields Internet
Forum'</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>Subject:
RE: [CPEO-BIF] Petoskey Pointe (MI) tax credit debate</span></font> </p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'> </span></font></p>
<p><font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>I
think the issue that Bob Paterson and I were emphasizing is that rarely do the
public agencies that grant the subsidies incorporate a "look back"
requirement. Thus, it becomes difficult to ascertain whether or not the
public benefits were appropriately distributed.</span></font></p>
<p><font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>Bruce-Sean
Reshen</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>p.
203-259-1850</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>c.
917-757-5925</span></font> </p>
<p><font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>-----Original
Message-----</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>From:
Frink, Neal [</span></font><a href="mailto:NFRINK@DINSLAW.com"><font size=2
face=Arial><span style='font-size:10.0pt;font-family:Arial'>mailto:NFRINK@DINSLAW.com</span></font></a><font
size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>] </span></font><br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>Sent:
Wednesday, October 25, 2006 12:23 PM</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>To:
Bruce-Sean Reshen; Robert Paterson; lsiegel@cpeo.org; Brownfields Internet
Forum</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>Cc:
Frink, Neal</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>Subject:
RE: [CPEO-BIF] Petoskey Pointe (MI) tax credit debate</span></font> </p>
<p><font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>Yikes
- I have to chime in:</span></font> </p>
<p><font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>A
"look-back" with a positive or negative true-up eats away at the
benfits of privatizing the effort, reducing the economic risk and reward, not
to mention making the process just that much more complex (and less
efficient). This is not to say that there is not a responsibility on the
part of Grant authorities assess redevelopment proposals on the front end to
make sure the risk/reward balance is appropriate. The broad C/B analysis
essential to public policy questions -- how to allocate public funds to
brownfields redevelopment, public schools, or defense spending --- occurs at
the legislative levels where appropriations (funding) decisions are made.
Once at the administrative/program level, the C/B analysis is appropriately
focused on achieving the policy objectives of the specific program. Here,
it seems, the scoring criteria for awarding grant money needs to be reflective
of the program's policy objectives. Perhaps the key thing that is missing
is post-project assessments to determine the extent to which awarded grants
actually deliver the results they projected (e.g., in terms of pollution
reduction, jobs, public space/use, or whatever caused the project to be scored
out as a "winner"). The review process then needs to feed back
into the selection/award criteria for subsequent rounds of funding (if any)
and/or back to the legislature to shape either the amount of funding
appropriated or the policy objectives sought to be achieved through this
particular use of public funds (again, weighed by the legislature against
competing uses for public funds). Doesn't the legislation authorizing
most of the brownfields grant programs have just such requirement to report
back on the benefits realized from the program for just this reason? One
can almost visualize the process flow diagram for fine-tuning (or eliminating
or</span></font></p>
<p><font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>expanding)
brownfields redevelopment grants (or tax incentives, or other governmental aid)
through such an iterative process.</span></font></p>
<p><font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>Neal
Frink</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>Dinsmore
& Shohl, LLP</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>1900
Chemed Center</span></font> <br>
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East Fifth Street</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>Cincinnati,
OH 45202</span></font> </p>
<p><font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>(513)
977-8359</span></font> <br>
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<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>(513)
744-3168 (e-fax)</span></font> </p>
<p><font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>This
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<p><font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>-----Original
Message-----</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>From:
brownfields-bounces@list.cpeo.org [</span></font><a
href="mailto:brownfields-bounces@list.cpeo.org"><font size=2 face=Arial><span
style='font-size:10.0pt;font-family:Arial'>mailto:brownfields-bounces@list.cpeo.org</span></font></a><font
size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>] On Behalf
Of Bruce-Sean Reshen</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>Sent:
Wednesday, October 25, 2006 11:34 AM</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>To:
'Robert Paterson'; lsiegel@cpeo.org; 'Brownfields Internet Forum'</span></font>
<br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>Subject:
RE: [CPEO-BIF] Petoskey Pointe (MI) tax credit debate</span></font> </p>
<p><font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>Bob,</span></font>
</p>
<p><font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>I
agree with you that our area of disagreement is narrower than it would
seem. The fundamental point I was stressing is that subsidies are not
wrong in themselves. However, unnecessary subsidies are wasteful and
misdirect "social" resources. </span></font></p>
<p><font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>As
economists we learn that it is possible to measure market rates of return at a
given time, provided there are other projects in development at the same time
that are unsubsidized. While precise measurement is impossible, general
ranges of market rates of return are attainable. The key to the process is that
the developer must be willing to "open his books". If actual
achieved rates of return prove to be well above the target market rate, then
the developer should either return the subsidy pro rata or provide equivalent
social development value. The willingness of developers to allow such a
"look back", should be an absolute requirement of the process to
protect society. An interesting further question is whether society
should be willing to further subsidize a developer who does not achieve the
target market rate of return. In fairness, if we require a "look
back", it should allow either a positive or negative adjustment.</span></font></p>
<p><font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>The
key point here is that one should not be outraged by the concept of subsidies
in general. We both agree that over subsidizing a private developer is a
waste of public resources. Likewise, I believe that under subsidizing
that same developer makes no sense if we want to efficiently achieve our social
goals (environmental cleanups, jobs, community revitalization). Much
greater effort needs to be focused on the design and measurement of appropriate
subsidy levels to achieve our public goals.</span></font></p>
<p><font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'> </span></font>
<br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>Bruce</span></font>
</p>
<p><font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>p.s.,
My kind thanks to Peter Meyer for helping me to clarify these issues.</span></font>
</p>
<p><font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>Bruce-Sean
Reshen</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>CEO,
The MGP Group</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>733
Summer Street - Suite 405</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>Stamford,
CT 06901</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>203-327-2888,
X18</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>email:
breshen@mgppartners.com</span></font> <br>
<a href="file:///\\www.mgppartners.com"><font size=2 face=Arial><span
style='font-size:10.0pt;font-family:Arial'>www.mgppartners.com</span></font></a>
<br>
<a href="file:///\\www.theguardiantrust.org"><font size=2 face=Arial><span
style='font-size:10.0pt;font-family:Arial'>www.theguardiantrust.org</span></font></a>
</p>
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12.0pt'> </span></font></p>
<p><font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>-----Original
Message-----</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>From:
brownfields-bounces@list.cpeo.org [</span></font><a
href="mailto:brownfields-bounces@list.cpeo.org"><font size=2 face=Arial><span
style='font-size:10.0pt;font-family:Arial'>mailto:brownfields-bounces@list.cpeo.org</span></font></a><font
size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>] On Behalf
Of Robert Paterson</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>Sent:
Wednesday, October 25, 2006 10:02 AM</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>To:
'Bruce-Sean Reshen'; lsiegel@cpeo.org; 'Brownfields Internet Forum'</span></font>
<br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>Subject:
RE: [CPEO-BIF] Petoskey Pointe (MI) tax credit debate</span></font> </p>
<p><font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>I
don't think we disagree here, IMO based on economic development incentive
programs across the US, not much "calculation" has gone into
"packages" and in many cases (e.g., public stadia for example for
private use) almost no serious B/C analysis with any sophistication is done at
all....societal opportunity costs are real but often not recognized in any meaningful
way as incentive packages are assembled. Not all brownfield sites need
substantial public subsidy, and some get too much, which does translate into
greater private profit at public expense (that subsidy might be better used for
other social, economic and environmental programs elsewhere in the community
with a greater societal return on investment), the question is how do we do a
better job of assigning incentive packages where they are most needed? If
others on the list are involved in such packaging, it would be interesting to
hear what they have to say about "qualifying" sites for incentives
(e.g., property tax abatements, TIF financing etc.,) and examples of where the
package was not enough or too much? In their opinion....</span></font></p>
<p><font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>Kind
regards</span></font> </p>
<p><font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>Bob
</span></font></p>
<p><font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>Robert
G. Paterson</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>Associate
Professor</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>Co-Director,
Center for Sustainable Development</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>1
University Station B7500</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>School
of Architecture</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>The
University of Texas</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>Austin
TX 78712-1160</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>512-471-0734</span></font>
<br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>Fax
512-471-0716</span></font> <br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'>rgfp@mail.utexas.edu</span></font>
<br>
<font size=2 face=Arial><span style='font-size:10.0pt;font-family:Arial'> </span></font>
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