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					Brownfield Redevelopment
       and Reuse
                          Charlie Bartsch
         Vice President/Brownfield Expert
                         ICF International
                            July 18, 2007




            www.icfi.com
 Redevelopment with an Environmental
  Twist -- Emergence of “Brownfields”
• Redevelopment takes place on sites that have been used
  before
• Given the economic history of so many places,
  redevelopment sites are often former older industrial or
  commercial facilities with at least some degree of real or
  perceived contamination – including…
   –   Big former chemical, steel, other industrial sites
   –   Small manufacturing sites – foundries, tool-and-die shops, tanneries
   –   Mining, timber, and food processing in rural areas
   –   Rail yards, utility sites
   –   Commercial facilities such as gas stations, dry cleaners – even old
       supermarkets, restaurants
  1 Million Brownfields May Exist…

                             Bend, OR




Baraboo, WI




 Somerville, MA    New London, CT
50,000 Successes and Counting….


                                Bend, OR



   Baraboo, WI




   Somerville, MA   New London, CT
           Process and Funding Barriers to
                        Brownfield Reuse
What steps need to be worked through for the
 brownfield redevelopment process to work?

Identifying contamination
• Unknown contamination
• Known contamination with unknown cleanup cost
  and time
Addressing contamination
• Determining end user to decide “how clean is clean”
• Defining cleanup plan to know when cleanup is
  complete
           Process and Funding Barriers to
                 Brownfield Reuse (cont.)
What steps need to be worked through for the
 brownfield redevelopment process to work?
Meeting project economic challenges linked to
  environmental cleanup
• For site assessment, remediation, underwriting
  expenses, institutional controls, environmental
  insurance
Finding redevelopment financing for brownfields
• Leveling financial playing field between greenfield
  and brownfield development in the face of real or
  perceived environmental risks
       “Liability” – In a Financing Context
 The issue of "liability" is evolving in practice --
  from liability in the traditional legal sense to
       lender and new owner concerns over:
• reduced value of collateral because of environmental
  factors and perceptions
• borrower inability to pay both cleanup costs and loan
  obligations simultaneously -- cash flow capability of
  the project to absorb remediation
• lender having to assume cleanup costs in the event of
  foreclosure, in order to dispose of the property
• lender having to forfeit collateral in the face of
  cleanup that exceeds asset value
 Voluntary Cleanup Programs/Voluntary
           Response Programs (VCPs)
At brownfield sites – state VCPs rule!!
Federal Brownfield Redevelopment Act (2002)
  put final authority with states that have VCPs or
  comparable voluntary response programs
• Brownfield sites addressed thru VCPs are protected from
  EPA enforcement and cost recovery action (except in the
  case of a few statutorily defined re-openers)
• All 50 states now have these programs in place
• VCPs/voluntary response programs are a new effort –
  half these programs are less than 5 years old
                   VCPs and Redevelopment
      Increasingly, VCPs are a Key Economic
              Development Facilitator

VCP process certainty brings comfort and closure
VCP assurances increase willingness of developers
  to consider contaminated sites, innovative
  technologies, and institutional controls -- all of
  which encourage them to go forward with re-
  development
VCPs foster state and local redevelopment
  partnerships
Redevelopment process through a
             “brownfield” lense
 Step 1 – identifying a brownfield site, its
       options

 Step 2 – learn about your state VCP
 • Process, costs, time-frame

 Step 3 -- identifying interested parties
 • Direct parties – buyers, sellers, PRPs,
   technical/transaction support
 • Indirect parties – citizens and other stakeholders
 • Environmental regulators
Redevelopment process through a
             “brownfield” lense
Step 4 – defining the contamination plan of attack
• Excluding contaminated portion
• Capping
• Innovative technologies possible?
Step 5 – preparing a brownfield feasibility analysis
• Determine costs for environmental consultants and tests, legal
  fees linked to contamination
• Prepare cleanup plan
• Satisfy lender requirements
• Establish prospective purchaser liability relief
• Define ongoing environmental monitoring needs
Redevelopment process through a
             “brownfield” lense
Step 5 (cont) – preparing a feasibility analysis
• Identify factors that could limit project feasibility,
  such as diminished market demand, high cost of
  cleanup, stigma
• Consider sources of funding for site assessment
  and cleanup

Step 6 – negotiating and structuring the deal
• Determine responsibility for cleanup, financial
  incentives, allocation of private liability incentives
  such as insurance or indemnifications
• Secure public liability assurances
Redevelopment process through a
             “brownfield” lense
Step 7 -- purchasing or selling the contaminated
  property
• Establish site access and environmental information
  provisions
• Define time frames for pre-development activities

Step 8 -- carry out cleanup
• By “who” depending on step 7
• Goal is to win VCP and market approval, provide
  comfort to lender, protect health and the
  environment
Redevelopment process through a
             “brownfield” lense
Step 9 -- monitoring ICs, preserving NFA
• Defining who will do it, who will pay for it, how
  it will be ensured over time

Step 10 -- doing it again!
• Communities and developers often build on their
  experience and initial success – level of effort
  economies of scale
Public Redevelopment Support Can Take
      Many Forms, Have Various Goals…
 Reduce lender’s risk
    loan guarantees; companion loans
 Reduce borrower’s costs
   • interest-rate reductions or subsidies; due diligence
     assistance
 Improve the borrower’s financial situation
   • re-payment grace periods; tax abatements; training and
     technical assistance help
 Provide comfort to lenders or investors
   • loan guarantees; performance data
 Provide resources directly
   • grants; forgivable/performance loans
Federal Financial Assistance Programs
Loans               for Redevelopment
 EDA’s Title IX (capital for local revolving loan
  funds)                                               Grants (continued)
 HUD funds for locally determined CDBG loans           DOT (various system construction and
  and “floats”                                         rehabilitation programs)
 EPA capitalized brownfield revolving loan             DOT’s transportation and community
  funds                                                system preservation (TCSP) pilot grants
 SBA’s microloans                                      Army Corps of Engineers (cost-shared
 SBA’s Section 504 development company                services)
  debentures                                           Equity capital
 EPA capitalized clean water revolving loan            SBA’s Small Business Investment
  funds (priorities set/ programs run by each state)   Companies
 HUD’s Section 108 loan guarantees                    Tax incentives and tax-exempt financing
 SBA’s Section 7(a) and Low-Doc programs               Targeted expensing of cleanup costs
                                                       (through 12/31/07)
Grants                                                  Historic rehabilitation tax credits
 HUD’s Brownfield Economic Development                 Low-income housing tax credits
   Initiative (BEDI)                                    Industrial development bonds
 HUD’s Community Development Block Grants             Tax-advantaged zones
   (for projects locally determined)                    HUD/USDA Empowerment Zones
 EPA assessment grants                                (various incentives)
                                                        HUD/USDA Enterprise Communities
 EDA Title I (public works) and Title IX
   (economic adjustment)                               (various incentives)
       State Brownfield Innovations

• Tax credits, abatements, other incentives
 linked to site reuse (22 states)
• Targeted financial assistance (19 states)
• Direct grants/financial assistance (13 states)
• Process initiatives to enhance/support
 brownfield revitalization (14 states)
Common Local Financing Tools
Putting a Brownfields “Spin” on the Tried-
               and-True…
   • Tax increment financing/TIF-type financing
   • Tax abatements
   • Tax forgiveness
   • Special service areas or taxing districts
   • Revolving loan funds (RLFs)
   • General obligation bonds
   • Property transfers
Housing projects on vacant properties
       and brownfield sites – diverse
        situations, places, types, and
                          financing …
 Project Freedom – Lawrence, NJ
 Charleston Place -- Seaford, DE
 Berkey and Gay Building – Grand Rapids, MI
 Mills of Carthage – Cincinnati, OH
 Victor Building – Camden, NJ
 Visiting Nurses Assisted Living – Somerville, MA
 American Can – New Orleans, LA
               Project Freedom – Lawrence, NJ
• Project Freedom at Lawrence is a 54-unit
  apartment complex and community
  center designed and constructed
  especially for adults with disabilities.
• This 13-acre site was a vacant lot owned
  by the New Jersey Department of
  Transportation (DOT) for 50 years.
• Lawrence Township acquired the
  property from DOT; Project Freedom
  negotiated a 75-year lease with a deed
  restriction for affordable housing.
• Unexpected contamination, ash and
  demolition debris from historic fill, was
  addressed with an engineering control –
  the building’s concrete slab serves as a
  cap
• New Jersey DEP has issued a No Further
  Action (NFA) letter
• Project Freedom opened in November
  2003; by January 2004 it was fully
  occupied
     Charleston Place – Seaford, DE
• Abandoned sewing
  factory, built in 1920s
• Developed by non-profit
  Better Homes of Seaford
• $600,000 USDA rural
  development loan, plus
  DE Housing Authority
  and private bank
  participation
• Ribbon cutting 1/9/06;
  fully occupied by March
     Berkey and Gay Building -- Grand
•   Former downtown furniture Rapids, MI
  manufacturer, abandoned in 1960s
• $35 million cleanup/conversion to
  mixed use
                                            r
   – 242 apartments                         e
                                            t
   – 100,000 sq ft commercial               f
      (restaurant, retail, prof. offices)   A

   – 450 space parking ramp
• Rehabilitation tax credits key to
  attracting individual equity
  contributions
• 90 permanent jobs created
             Mills of Carthage – Cincinnati, OH




• Abandoned industrial property
  transferred to new owner at below
  market value
• As part of deal, owner agreed
  to take site through Ohio VCP,
  clean it up, and reuse it
• First new housing in Carthage
  neighborhood in 40 years
                Victor Building – Camden, NJ
• Abandoned former RCA Victor Building
  on Camden’s waterfront, with pervasive
  PCBs
• Site intended for residential re-use;
  challenge was keeping $7 million cleanup
  manageable
• NJDEP provided t.a. to developer,
  working with him on remedial and
  monitoring applications, ICs, entombment
  of residual PCBs – strategies that allowed
  cleanup and redevelopment to go forward
  concurrently, all with considerable cost
  savings
• Result – $60 million private investment in
  341 units, 1st market rate housing built in
  Camden in 40 years, landmark “Nipper
  Tower” saved
             Visiting Nurses Assisted Living --
•   Former mattress factory,  Somerville, MA
    vacant 2 years.
•   Contaminants included
    barium, lead and petroleum
•   The project's redeveloper, the
    non-profit Visiting Nurses
    Association, remediated the
    site and demolished the
    existing structures
•   VNA constructed an assisted-
    living facility and health
    center, containing 97 units for
    low-to-moderate income
    seniors.
•   Leverage -- $100,000 in
    CDBG was used as a cost-
    containment reserve.
American Can Company – New Orleans, LA
• Developer transformed this National
  Register landmark, abandoned
  warehouse on 6.6 acres
• Converted to 268 new apartments
  (20% affordable) with retail and
  parking space
• Total project cost -- $42 million
• Financing included -- $5 million
  HUD Section 108 loan, $1 million
  BEDI loan, $1 million city economic
  development loan; $29 million
  LIHTC allocation
• Rehab tax credits critical component
• Kimberly-Clark Corporation,
  through its subsidiary Housing
  Horizons, provided tax-credit equity
  for approximately $7.8 million in
  historic tax credits.
     For further information………..
For additional examples and information….

            cbartsch@icfi.com
              (202) 862-1134

          www.icfi.com

				
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