Marathon Florida Real Estate Foreclosure - PDF

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					Real Estate for
Environmental
Regulators

    Taking on the Tough Sites
      2007 NARPM National Conference

              Baltimore, MD
              May 22, 2007
     Real Estate for Environmental
              Regulators
• Course Goals
  – To provide regulators with knowledge of the following:
        Basic real estate principles
        The redevelopment process
        How to work effectively with real estate developers
        How state and federal environmental programs impact the
        real estate development process.
       Module I




Real Estate Development:
  Making Deals Work
Real Estate/Environmental Value
            Pyramid


                   Real Estate value exceeds
                   remediation cost


    Marginal


                            Upside down projects
    Determining Reuse
Who will actually use this property?
                 residential
                 institutional
                 industrial
                 mixed use
  Regulatory Basis for Integration of
    Cleanup and Redevelopment


• Land use in the Remedy Selection process-
  directive 9355.7-04, May 1995
• Each state has its own enabling regulatory
  framework
Conceptual Site Model
Reuse Assessment Overview
             Reuse Assessment
• Property Characteristics
  –   Acreage
  –   Topography
  –   Existing improvements
  –   Infrastructure
  –   Zoning
• Physical setting
  – Property features
  – Property location and Access
  – Neighboring land use and municipal development plans
• Ownership and Use
  – Current and historical of past uses
  – Ownership
  – Current owner or purchaser preferences and plans
  Identify Potential Constraints
            • Evaluate Property Access
                 – Indirect
                 – Secondary roads




                                               Downtown


                              Site
                                     Exit 26         Route 8



Current Access
Identify Potential Constraints

• Evaluate Current Circulation
  – Municipal truck traffic
  – Access to eastern side
        Reuse Assessment
• Site Assets and Constraints
  – Property features
    • Topography, natural features
  – Property location and access
    • Relation to highways and traffic patterns
  – Relationship in region
  – Stigma – not just environmental
  – Environmental constraints
       Reuse Assessment
• Economic Synergies
  – Economic trends
    • Growing industries
    • Changing markets
  – Demographic trends
    • Population changes and patterns
  – Opportunities for public/private
    partnerships
    • Available incentives and programs
  – Real Estate Market
                            Land Use Matrix
                                                   Property Asset
                            Location   Buildings    Rail   Highway   Water    Available   River
                                                                     Supply    Power

      Land Use
Industrial

Power Generation


Office / Light industrial


Commercial Retail


Recreational

Government / Public


Residential
Develop Land Use Scenarios
  Market Analysis and Feasibility

• Who will be the end-user
• What price will end-user pay
• The impact of
 stigma
• Predevelopment
 marketing
• Build-to-Suit
         Conceiving the Project

• Highest and best use
  – Mixed use/commercial/residential
• Reuse Assessment
  – Developers start with the current planning and
    zoning
  – Historic use patterns
• Objectionable uses (LULUs)
• Creativity
Real Estate Life Cycle


   Recovery     Peak




    Trough    Downturn
Not…
       Location,
       Location,
       Location



 … Location, Accessibility, Visibility
Project Costs:
          Acquisition, Soft Costs, Hard Costs, Remediation, Carry Costs
                     Total Project Costs of           $100,000
                                                                          Real
Net Operating Income (NOI)
          Gross Income                      $14,000
                                                                          Estate
          Operating Expenses
          Net Operating Income
                                             ($4,000)
                                            $10,000
                                                                          Finance
Cash on Cash Operating Return                                             Basics
         NOI/Project Costs $10,000/$100,000               10%
                                                                          • Introduction
Leverage 20% Down (Equity of $20,000), 80% Mortgage ($80,000) at 6%         to Leverage
          Gross Income                   $14,000
          Expenses                       ($4,000)
          Debt Service (Carry)             $4,800
          Net Cash Flow                   $5,200
Leveraged Return
          Net Cash Flow/Equity
          $5,200/$20,000                              26%

Project Value and Capitalization
          NOI/Cap Rate = Project Sale Value
          $10,000/.10                                 $100,000
    Finance: Value & Cap Rates

Value (V) = Net Operating Income (NOI)
               Capitalization Rate (R)
            $1,000,000 = $120,000
                           12 %

            $1,500,000 = $120,000
                            8%

            $ 857,143 = $120,000
                           14 %
    Finance: Value & Cap Rates
• Rate for typical property types
    Downtown office             8.5%
    Suburban Office             9.1%
    Industrial                  8.9%
    Research & Development      9.2%
    Apartments                  8.5%
    Full-service Hotel          9.8%
    Limited-service hotel       11.1%
    Community Shopping Center   9.1%
    Regional Mall               8.5%
           Example: Sarasota
• Site Location
    Sarasota, Florida
    along I-75
• Size
    84 acres
• Improvements
    284,000 ft2 industrial building
• Historic Use
    Manufacturing
               Example: Sarasota
• Redevelopment Plan:
  – Renovate existing
    building for office and
    light industrial use
  – Frontage to be
    restaurants, hotel and
    highway oriented retail
  – Back acreage to be big
    box retail or distribution
             Example: Sarasota
• Environmental
  Issues:
  – Active RCRA, HSWA
    permits and consent
    order
  – Groundwater & soil
    contamination on
    and offsite
  – 45 acre TCE plume
  – Removing Stigma
            Example: Sarasota
• Acquisition Deal:
  – Acquire land and building for $10 million
  – $3 million remediation
  – Seller provided with insurance-backed
    indemnification
  – Seller achieved appraised value – remediation
    costs
            Example: Sarasota
• Exit Strategy:
  – Improve groundwater treatment system to
    reduce cleanup time to under five years
  – Sell retail and industrial parcels when clean
  – Lease existing building
  – Refinance or sell when fully occupied
Category     Item                                     Amount

Purchase Price (Appraised value - remediation cos$10,200,000

Insurance, Attorneys                                    $200,000

Total Acquisition Cost                                             $10,400,000

Hard Costs
        Remediation                                   $3,000,000


                                                                                 Example:
        Rehabilation of Existing Building
                          270,000 SF @ $15 PSF        $4,050,000
        Sudivision Roads and Utilities                $2,200,000



                                                                                 Sarasota
Soft Costs
         Architects, Engineers, Land Use Attorney       $937,500
         Real Estate Brokers                            $300,000

Carrying Costs
         8 % of Acquisition Cost for two years        $1,664,000
         10 % of all other costs, average one year    $1,048,750
Total Development Costs

Total Project Costs
                                                                   $13,200,250

                                                                   $23,600,250
                                                                                 • Pro forma
Project Sale Price Upon Completion

Sale price of existing building
         Income              270,000 SF @ $18 PSF $4,860,000
         Expenses                                 $2,860,000
         Net Operating Income                     $2,000,000
         Capitalization Rate                           8.5%
         Sale Price                              $23,529,412

Land Sales               50 acres @ $250,000/acre $12,500,000

Total Sale Price of Project                                        $36,029,412

Net Profit (Total Sale Price of Project - Total Project Costs)     $12,429,162

Cash on Cash return                                                    52.67%

Simple annual return over two years                                    26.33%
            Financing Phases

• Land Acquisition
  – Special terms for contaminated sites
  – Purchase money mortgages/joint
    venture
• Construction
  – Including remediation
• Permanent Sources of Capital
Pro Forma Analysis

   • How much
   • When
   • The time value of money
   • Scenarios analysis /
     Sensitivity analysis
   • Yield
   • Internal rate of return
Category     Item                                        Amount

Purchase Price (Appraised value - remediation cost) $10,200,000

Insurance, Attorneys

Total Acquisition Cost
                                                          $200,000

                                                                        $10,400,000
                                                                                                    Example:
Hard Costs
        Remediation
        Rehabilation of Existing Building
                                                   $5,000,000 <-- Two years & 67% more,             Sarasota
                              270,000 SF @ $15 PSF $4,050,000

                                                                                                    • Impact of
        Sudivision Roads and Utilities             $2,200,000

Soft Costs

                                                                                                      Environmental
         Architects, Engineers, Land Use Attorneys        $937,500
         Real Estate Brokers                              $300,000

Carrying Costs
         8 % of Acquisition Cost for four years
         10 % of all other costs, average two years
                                                         $3,328,000 <-- Four years instead of two
                                                         $2,497,500 <-- Two years instead of one.
                                                                                                      Cost Increases
Total Development Costs

Total Project Costs
                                                                       $18,313,000

                                                                        $28,713,000
                                                                                                      and Delay
Project Sale Price Upon Completion                                                                    – The remediation
Sale price of existing building
         Income                 270,000 SF @ $18 PSF    $4,860,000
                                                                                                        costs $2,000,000
         Expenses
         Net Operating Income
                                                        $2,860,000
                                                        $2,000,000                                      more and is
         Capitalization Rate                                 8.5%
         Sale Price                                    $23,529,412                                      estimated to take
Land Sales                    50 acres @ $250,000/acre $12,500,000
                                                                                                        2 years longer.
Total Sale Price of Project                                             $36,029,412

Net Profit (Total Sale Price of Project - Total Project Costs)           $7,316,412

Cash on Cash return                                                          25.48%

Simple annual return over two years                                          12.74%
                                                                                                      Example:
 Category      Item                                              Amount

Purchase Price (Appraised value - remediation cost)          $10,200,000



                                                                                                      Sarasota
Insurance, Attorneys                                               $200,000

Total Acquisition Cost                                                          $10,400,000


                                                                                                      • What if the
Hard Costs
             Remediation                                         $5,000,000 <-- 2 yrs & 67% more
             Rehabilation of Existing Building

                                                                                                        remediation
                      270,000 SF @ $15 PSF                       $4,050,000
             Sudivision Roads and Utilities                      $2,200,000

Soft Costs
             Architects, Engineers, Land Use Attorneys
             Real Estate Brokers
                                                                   $937,500
                                                                   $300,000
                                                                                                        takes longer
Carrying Costs
           8 % of Acquisition Cost for four years
           10 % of all other costs, average two years
                                                                 $3,328,000 <-- 4 yrs instead of 2.
                                                                 $2,497,500 <--2 yrs instead of 1.
                                                                                                      • What if the
Total Development Costs

Total Project Costs
                                                                              $18,313,000

                                                                                $28,713,000
                                                                                                        market softens
Project Sale Price Upon Completion                                                                        Rental rate drops
Sale price of existing building
            Income               270,000 SF @ $15 PSF         $4,050,000 <-- Rents drop $3/sf
                                                                                                          to $15 PSF from
                                                                                                          $18 PSF.
            Expenses                                          $2,860,000
            Net Operating Income                              $1,190,000
            Capitalization Rate                                    9.5% <-- Cap rate rises 1%.

                                                                                                          The capitalization
            Sale Price                                       $12,526,316

Land Sales                       50 acres @ $250,000/acre $12,500,000

Total Sale Price of Project                                                     $25,026,316               rate on sale rises
Net Profit (Total Sale Price of Project - Total Project Costs)                  -$3,686,684               to 9.5% from
Cash on Cash return                                                                 -12.84%
                                                                                                          8.5%.
Simple annual return over two years                                                   -6.42%
      Structuring the Deal

• 3: Due Diligence
  –Buyer/ Seller Agreements
     •Informal
        – Term Sheet
     •Formal
        – Option
        – Purchase and Sale Agreement (Deposit)
        – Letters of Confidentiality
         Fatal Flaw Analysis
• Cleanup approach not quantified
• Extraordinary construction costs
• Major regional employer leaves
• NIMBY
• Stigma
• Developer identifies “early” and moves on
              The Process
          Contract Negotiation

• Addressing Liability Protection
  – Contractual/Private Mechanisms
  – Regulatory assurances
  – Environmental insurance
  – Institutional controls
              The Process
          Contract Negotiation
• Environmental Insurance
  – policies can be used stand alone or
    supplement an indemnity agreement
    • Third-party bodily injury and property damage
    • Remedial action costs
    • Legal defense expense
    • Business interruption and costs of project delay
    • Remedial action cost cap or stop loss
    • Collateral value or secured creditor loss
    • Environmental condition(s) at third party disposal sites
      resulting from wastes generated at property
             The Process

• 2: Refinement
  –Redevelopment analysis
  –Time analysis
  –Market Analysis
  –Government Incentives
  –Exit Strategy
 Re- Positioning the Site
•Role of Upfront Planning
•Overcoming Stigma
•Financial Incentives
  Use Community Planning
– Design
Workshops


–Demonstrate
 compatibility
 between
 cleanup and
 redevelopment
Visioning
     Brownfield Redevelopment and
             Green Building
•   Green Opportunities
•   Political Influence
•   Cost limitations/effects
•   Marketing Opportunities
•   Benefits of Enviro Public Relations
 Benefits of Green Landscape
• Greenwalls
   – Cuts down on heat and glare, holds and slows
     rainwater, traps air pollutants
• Eco-Roofs
   – Reduces the “heat island” effect, produces O2, absorbs
     CO2, and filters air borne pollutants, absorbs up to 75%
     of rain water
• Pave Less
   – decreases run off which causes erosion, flooding,
     depleting soil water
• Bioswales
   – Filters runoff instead of flowing directly to storm drains.
Example of a Green Landscape




      Eco Roof




                              Green Retaining Wall




                 Green Wall
Examples of Linear Buffers



 Existing Conditions   With Buffers




Existing Conditions    With Buffers
Example of a Sustainable Landscape
      Cashing Out Options
• Take cash, keep site, buy another
• Sell site to end user
• Sell site to long-term holder:
  –Private owner
  –REIT
                   Cashing Out
Acquisition: Purchase Price             $ 9,000,000
             Insur., Attorneys, etc.        200,000    $ 9,200,000

Hard Costs: Remediation                    300,000
            Rehab of Existing Bldg
             (270,000sf x’s $15/sf)     $ 4,050,000
            Roads & Utilities               200,000     4,550,000

Soft Costs: Architects, Land Use           650,000
            Real Estate Brokers            100,000       750,000

Carrying     8% of acquisition costs(2yrs) 1,472,000
Costs:       10% of all other costs (1yr)    530,000    2,002,000

Total Project Costs:                                   $16,502,000
              Cashing Out
Value: Gross Income (270,000sf x $18/sf)    $4,860,000
       Operating Expenses ($10.59sf)        (2,860,000)
       Net Operating Income (NOI)           $2,000,000

Sale Price = NOI/Cap. Rate = $2 MM/8.5% = $23.5 MM
Project Cost                              $16.5 MM
Potential Profit on Sale:                 $7 MM

Should the Developer Sell? Is There Another Option?
             Cashing Out
NOI/Debt Coverage = Cash Available for Debt
 Service
2.0 MM/1.2 = 1.65 MM
Interest rate of 6.0%, 25 year amortization
  period
Maximum achievable mortgage        = $21.3 MM
Total Cost:                $16.5 MM
Total Mortgage             $21.3 MM
Equity in Property         $0
Cash Taken Out of Deal     $5.2 MM
       Institutional Controls and
         Permanent Financing
• Does the Control place a burden on the
  lender in the event of foreclosure?
• Does the Control limit resale options in the
  future?
• Is the Control communicated to all
  stakeholders?
• Is the Control easily modified based on
  changed conditions?
                              Property Life Cycle Process
                           Current
Environmental Condition




                          Condition
                                               Stakeholder Involvement
                                               Communication
                                               Indemnification
                           Future
                          Condition
                                                            Stakeholder Involvement
                                                            Communication
                                                            Indemnification
                           Future
                          Condition
                                                                                     Stakeholder Involvement
                                                                                     Communication
                           Original                                                  Indemnification
                          Condition
                                                                                        Corrective
                                                                         Operation




                                                                                                     Operation




                                                                                                                              Operation
                                             Industrialization




                                                                                                                 Corrective




                                                                                                                                          Corrective
                                                                                         Action




                                                                                                                  Action




                                                                                                                                           Action
                                                                Time


                          Source: Sage Risk Solutions LLC
The Role of Institutional Owners
• Institutional Owners
  – REITs (Real Estate Investment Trusts)
  – Pension Funds
  – Insurance Companies
• Common Elements
  • Long term time frame (10 years or more)
  • Well capitalized
  • Professionally Managed
Electric Industries
        Urban Infill: Manufacturing
• Description:        2 adjacent parcels of vacant land
• Acreage:            8.2+ acres total; Parcel A: 3.75 acres;
                      Parcel B: 4.4 acres
• Site Features:      Parcels separated by street
• Improvements:       14 Buildings comprising former Electric
                      Industries Factory complex were razed by
                      the city.
• Ownership:          local Economic Development Authority
• Current Value:      $1,025,000
• Land Value:         $125,000 per acre
• Acquisition Cost:    $750,000
• Zoning:             M-2 Industrial
• Location:           Urban Area near major east coast highway
• Demand:             relatively high demand
DirectionsFill in the cells bordered in red

Property Costs
          Property Acquisition Costs                                0
          Remediation Costs                                         0
          Total Property Costs                                          0

Development Costs
        Hard Costs - Construction or renovation cost by usage
             Sq feet             0      $ / sq ft / use         0   0
             Sq feet             0      $ / sq ft / use         0   0
             Sq feet             0      $ / sq ft / use         0   0
                                                                    0
           Soft Costs (architects, brokers, etc)
                   20% of hard costs                                0
           Total Development Costs                                      0

Carry Costs
          Land Cost    2 years                      10%             0
          Development Costs 1 yr                   7.5%             0
          Total Carry Costs                                             0

           Total Project Development Costs                              0




Net Operating Income
               Sq feet           0 net lease $ / sq ft          0   0
               Sq feet           0 net lease $ / sq ft          0   0
               Sq feet           0 net lease $ / sq ft          0   0
               Ongoing Environmental Costs                          0

           Net Operating Income                                     0

Project Valuation and Capitalization

                          NOI/Cap Rate = Project Sale Value             0
                          Cap Rate                10.0%

                          Profit                                        0
           Module II




Real Cases: The Making or Breaking
     of the Development Deal
Tough and Isolated Site Example
Marketable Site
  • Redevelopment                           San Jose

    – Diversified
                                            Airport


      commercial
      and industrial

                               Coleman Avenue
                                                       CTC




                                                       Plant
                                                         12
        Water
                 Santa Clara
        Supply
                 Substation
        Tank
                  Operating Industries, Inc.

North Parcel Remediation & Redevelopment


                                             Case Study
                                             NARPM 2007
    North Parcel              South Parcel


     City of
  Monterey Park
              North Parcel - Layout




                                      Leachate & Landfill Gas
                                         Treatment Plants
City of Monterey Park
                                                                35 acres
                                                                 Clean
                            10 acres
                        Needs Remediation
                Site Background

• Location:
       Site is located in the City of Monterey Park and surrounded
       by the City of Montebello along the southern boundary

       Pomona Freeway (Highway 60) divides the site into two
       distinct parcels

         • North Parcel – North of the Pomona Freeway
         • South Parcel – South of the Pomona Freeway


       Site is surrounded by homes, shopping areas, and
       commercial buildings
                 Site Background
• Operational Period:
    Started accepting wastes in 1948
    Stopped accepting wastes in 1984

• Acreage:
    Approximately 190 Acres
       North Parcel – approximately 45 Acres
       South Parcel – approximately145 Acres

• Types of wastes (mostly in the South Parcel):
    Municipal Solid Waste: approximately 38 Million Cubic Yards
    Liquid Industrial Waste: more than 300 Million Gallons, including
    a wide range of hazardous waste.
             Site Complexities
• More than 4,000 PRPs
    Approximately 350 Major Parties
    Approximately 2,000 De Minimis Parties
    Approximately 1,650 De Micromis

• More than 100,000 Waste Manifests

• Number of enforcement actions:15 settlements;
  2 UAOs etc.

• Four RODs

• A large number of Work Defendants
                  Background
• Only 10 acres on the North Parcel require remediation
  (primarily Construction and Debris Waste)

• Initial integrated cleanup & redevelopment project fell
  through in November 2002

• As a result, PRPs lacked incentives to sell the property
  soon

• EPA has no authority to require integration of
  redevelopment with cleanup

• In 2003, the City of Monterey Park wrote to EPA urging
  us to the undertake integrated cap.
Site Redevelopment – Good Candidate
• Location, location, location…
  –   Ten miles east of downtown Los Angeles
  –   Easy freeway access
  –   Visible from the freeway
  –   Freeway has high commuter traffic
  –   Surrounded by large residential area
• Local government very keen development
• EPA is committed
• Relatively small risk to the human health and the
  environment
• Mostly construction and debris waste
          Redevelopment Scenarios
Scenario #1 – Sequential Cleanup & Development
    • First build Remedy-only Cap
         Simple design, short construction period
         Construction cost is relatively low

    • Next begin development
         Change the grading of the cap
         Construct development-related components


Scenario #2 – Integrate Cleanup & Development
    • Incorporate development components into the cap
         Design is more complicated
          - Includes components to support buildings
         Construction period is longer
         Financing for the construction of development-related
         components (>$10 million) is complicated
Implementing Redevelopment Scenarios

Sequential Cleanup & Development
  • EPA has full authority to require remedy-only cap
  • Funding for construction is straightforward


Integrated Cleanup & Development
  • EPA does not have authority to require integrated cap
  • Financing for the construction of development-related
    components (> $10 million) is complicated
  • Complex negotiations between multiple parties
      (PRPs, Zelman, Home Depot, NCI, Caltrans, City)

  • EPA does not have any control over the pace of negotiations
        Various Agreements and Permits –
        Integrated Cleanup & Development

                             EPA Role     Status
Mixed Benefit Agreement      Party        Completed (August’ 06)

Letter Agreement             Party        Completed (November’ 06)
Purchase Agreement           Review and   EPA has not received the
(OII Trust and Developers)   Approve      package
Term Sheet                   Review       EPA has not received the
(OII Trust and Developers)                package
Environmental Easements      Review and   EPA has not received the
(OII Trust and Developers)   Approve      package
Land Exchange (AHAS, OII     Review       EPA has not received the
Trust, and Developers)                    package
       Various Agreements and Permits –
      Integrated Cleanup and Development

                                  EPA Role   Status
Caltrans Encroachment             Review     EPA has not received the
Permit (NCI and Caltrans)                    final version
Parcel Map (City of Monterey      Review     EPA has not received the
Park and OII Trust)                          package
Disposition and Development       N/A        -------
Agreement (City of Monterey
Park and Developers)
Paramount Blvd Expansion          N/A        -------
(City of Monterey Park and
Caltrans)
Access Road Easements (City Review           Draft package is under
of Monterey Park and OII Trust)              review
   Why is the Letter Agreement needed
                                and
                   What does it say?
It is needed because the Consent Decrees:
   - only require the PRPs to implement the Superfund remedy
   - do not require near-term sale of the property for development
   - do not give EPA the authority to require integration of cleanup and
      development of the North Parcel

The Letter Agreement between EPA and the PRPs has the
  following basic components:
   – financial incentives for the PRPs to expedite
     remediation/redevelopment of the North Parcel
   – Deadlines by which certain milestones must be achieved
 North Parcel Cleanup and Development
                Summary
• EPA has provided significant financial
  incentives to PRPs to assume the
  responsibility and expedite the North
  Parcel remediation and redevelopment

• If all else fails, EPA is considering to direct
  the PRPs to proceed with the remedy-only
  cap – hence - sequential redevelopment.
 Site redevelopment - Complexities

• More than 4,000 PRPs
• A large number of Work Defendants
• EPA has no authority to require integration
  of redevelopment with cleanup
• Financing for the construction of
  development-related components (> $10
  million) is complicated
             EPA’s Commitment

• EPA will continue to work closely with the
  stakeholders including the City of Monterey Park

• EPA will expeditiously review submittals to:
  – Make sure the development will not compromise the
    protectiveness of the remedy
  – Support the remediation/redevelopment staying on
    schedule
3617 Baer Street,
 Houston, Texas
     MDI Superfund Redevelopment

• Clinton Gregg Investments

• Agreed Order and Consent and Covenant-
  not-to-sue

• 36 acre site purchased from bankruptcy
  for 7.9 mm/agreed to cleanup for 6.6mm
MDI Site offers new model for Superfund redevelopment


 • Site in bankruptcy since
   1991
 • Site listed on NPL in 1999
 • ROD for OU1-36 acre on
   site cleanup issued in 2004
 • Bankruptcy trustee orders
   auction of site in 2005

 • Site sold at auction in 2005- Purchaser signs agreed
 order on consent 2006 to perform OU1 cleanup as set out
 in ROD
        What makes MDI unusual
• First site to be cleaned up at the expense of a
  non-PRP who will foot the bill for 6.6 mm

• Site was in bankruptcy and developers
  contacted trustee with interest in purchasing site.

• Site was the only asset in the bankruptcy-
  Trustee made over 1.2mm on sale- Sale
  contingent on purchaser paying for cleanup
               What makes MDI unusual
• Site in one of poorest areas in Houston, close to major
  highway, across the street from a grade school,
  surrounded by both residences and commercial activity
  BUT site 10 minutes from downtown Houston, close to
  new residential development.
• During course of 6 years from time of listing to ROD a lot
  of community activity related to site.
   – Site Redevelopment Grant to City- conducted charette and many public meetings
     about what future of site should be. Developers, neighbors, civic leaders
     participated
   – Bankruptcy Trustee participated in all of community activities and sought to work
     with EPA and community
   – Community supported residential redevelopment
   – Gradually other areas close to site began to be redeveloped
   – Large Haliburton Campus (120 acres) close to site put up for sale
   – Potential for large scale neighborhood redevelopment became possibility
   – MDI becomes redevelopment opportunity instead of community albatross.
            Advantages of MDI Deal
•   EPA wins: site cleaned up
    faster and at a savings
    that can be applied to
    other, less marketable
    sites.
•   Community wins: New
    development to area that
    has had little new
    development in decades
    and stigma of Superfund
    site largely removed.
•   Bankruptcy Trustee wins:
    a property which was only
    a liability turns into an
    asset
   Tough and Isolated Site Example
• Superfund
  Redevelopment
• Site in
  Receivership
• Low-level
  groundwater
• 12 acres in
  town center
• Need owner for
  property
   Tough and Isolated Site Example
• Strategies for Redevelopment
  –Capitalize on assets
    • 7,610 cars pass the site per day
    • Center of commuter route
    • High tourist traffic
  –Overcome constraints
    •   Remote Area: Pop. 1,310
    •   Excess available land
    •   Limited industry
    •   No drinking water on site
      Tough and Isolated Site Example

• Reuse Process
   Meet with
      Key
  Stakeholders
                  Reuse
   • TAG         Planning    Meet with
   • Town        Meetings    Regulators

                 • Two (2)   •State AG
                             •Town
                              Attorney
                             •Maine DEP
                             •USEPA
                                            Formal
                                           meeting
                                          with Board
                                              of
                                          Selectmen
       Tough and Isolated Site Example

• Agreement to Develop Property
   Selectman
   establishes
     ad hoc                Town             State takes      State sells
   committee              meeting            matter to           to
                           held              Superior        developer
 • Committee                                   Court
   determines
                        • Town            • Presents Court
   acceptable uses
                          approval to       with
 • Determines             ask state to      institutional
   marketing process      sell property     controls and
                                            town request
 • Works with town to
                                            for sale of
   market property
                                            property
 • Town identifies
   developer
    Tough and Isolated Site Example
• Strategies for
  Redevelopment
  – Create a vision
     • overcome stigma
     • engages politicians

  – Public / Private
    Partnership
     • town-owned
       adjacent site for
       water supply
                          Real Estate 200

Real Estate Development and Contaminated Sites




      Achieving Success in Today’s
        Regulatory Environment
Breakout Case Study
Marathon Battery Site
          Marathon Battery Site
• 12 acre site located in Cold Spring, NY
• Located next to the West Point Foundry National
  Historic site.
           Marathon Battery Site
• Site has been ready for redevelopment since
  1996.
• It has deed restrictions, access restrictions, and
  is zoned light industrial which the current owner
  wants to change to residential.
         Marathon Battery Site

• The Town has been fighting every
  proposal the now bankrupt owner has
  presented.
The Halaco Site
                The Halaco Site
• Located in coastal Ventura
  County at 6200 Perkins
  Road, Oxnard, CA 93033
• Halaco Engineering
  Company operated a
  secondary metal smelter at
  the site from 1965 to 2004

•The site includes an 11-acre parcel containing the former
smelter, and a 26-acre waste management area
•Ormond Beach wetlands border site, home to several
endangered or threatened species.
          Halaco: Site Ownership
• The Haacks own the smelter parcel
• Alpha and Omega Development LLC owns the
  waste management area and leases the smelter
  parcel
• Chickadee Remediation is
  Alpha and Omega’s consultant
• Superfund liability: “PRPs”
  and “BFPPs”
       Halaco: Local Environment

• Adjacent Ormond Beach
  wetlands provide critical
  habitat
               The Halaco Site
• During their 40 years of operation, Halaco produced a
  large quantity of waste that included metal oxides, metal
  salts, and more.
• An estimated 500,000 to 700,000 cubic yards of waste
  remain onsite.
• In 2002, Halaco filed for
Chapter 11 bankruptcy
•In 2006, after Halaco ceased
operations, the bankruptcy
was converted to a Chapter 7
(liquidation) bankruptcy.
    Halaco: Extent of Contamination
• Wastes have moved into adjacent soils, sediments,
  and surface water, and underlying groundwater
   Halaco: EPA Removal Activities in 2006

• Feb 2006: State requested
  EPA assistance

• July 2006: EPA reached
  agreement with site owners
  to implement “removal
  action”

• Aug-Dec 2006: Removed
  drums and chemicals,
  consolidated wastes
 Halaco: EPA Removal Activities in 2007

• In Feb 2007, EPA and its contractors began
  second removal.

• Work includes:
  – Regrading waste pile
  – Placement of erosion control
     matting
  – Stabilizing OID banks
  – Consolidation of wastes on waste
     pile
  – Removing waste from wetland area
  – Improved site security
   Halaco: Status of Superfund Listing

Step                                   Status
Assess site (“PA/SI”)                  Done

Score site (“Hazard Ranking System”)   Done

Seek State concurrence                 Done

Propose listing in Federal Register    Done


Public Comment                         In progress

				
DOCUMENT INFO
Description: Marathon Florida Real Estate Foreclosure document sample