May 30, 2014

Brownfields Reclamation: From Blight To Building Site

The International Harvester Warehouse in Council Bluffs, Iowa had been abandoned for years by the time the city recognized its historic value and decided to preserve it. An environmental assessment subsidized by EPA Brownfields Assessment grants disclosed the presence of Polycyclic Aromatic Hydrocarbons (PAHs) in the surrounding land. Funding provided by a brownfields redevelopment program sponsored the soil cleanup and Artspace USA, a not-for-profit, raised more than $7 million in redevelopment funding or tax credits — using the funds to transform the warehouse into living quarters and artists’ studios.

What is a brownfield?

A brownfield is a property that may have suffered environmental contamination and consequently presents unique challenges to the developer. At the same time, its re-development may hold substantial rewards for that developer and local governments, community groups, nonprofits, investors, lenders and insurers who have a stake in its reclamation.

Challenges to the development of a brownfield

A number of hurdles must be jumped before the stakeholders can see results in a brownfield project. Nonetheless, the rewards for the various stakeholders, which include the stimulation of economic and community development and the realization of a suitable return on the investment, are well worth the effort. An Atlanta environmental law attorney can provide guidance in this process.

To address the unique challenges presented by this sort of project, the developer must be able to:

  • Create strategies for dealing with existing and potential environmental liabilities.
  • Procure loans in the face of lender aversion to funding blighted properties.
  • Reckon with cleanup costs that can sometimes exceed the value of the property.
  • Deal with re-development time frames that are extended beyond the norm by assessment and cleanup operations.

Meeting the challenges

As a developer, you can prepare yourself for the unique challenges of brownfields development by planning and preparing appropriately, including:

  • Obtaining environmental assessments
  • Researching title documents
  • Making reuse assessments that take into account the available funding, stakeholder concerns, existing environmental attributes and market demand

Funding for brownfields projects

Public sector funding sources for brownfields development include The Department of Housing and Urban Development’s Community Development Block Grant (CDBG), Section 108 loan guarantee programs and Brownfields Economic Development Initiative (BEDI).

Funding for private sector redevelopment comes from corporations and non-profits that leverage public funding with private sources and use revolving funds that recycle the monies. Revolving funds will usually finance the site cleanup, tempting private lenders and developers to finance the redevelopment. Venture capital firms will usually provide capital only after funding is obtained for the remediation and preparation of the site. Commercial banks may partner with other creditworthy investors in the financing of the development.

The attorneys at Hartman Simons and Wood LLP offer sound, practical advice in all legal matters related to remediation and permitting at commercial-development and industrial sites.

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