Brownfields as a Mainstream Investment

Core to Land Use Decision Making

ARTICLE | Nov 27, 2017

By Tad McGalliard

It can be argued that one of the most innovative and successful outcomes to emerge from the past 30 years of sustainability are the policies, programs, public private partnerships, and more that have been created to help clean up and reuse brownfields.

During this time, local governments have increased their knowledge about brownfields and have begun to mainstream their cleanup and redevelopment as part of their core responsibilities. Local governments lead or support brownfields redevelopment in a number of ways, as described next.

Planning for Better Places

Local governments are incorporating brownfield redevelopment goals and objectives into their commonly used plans and strategies, including those that are focused on sustainability and livability, economic development, region-al transportation, disaster and hazard mitigation, small-area designations, parks, and recreation and open space.

The community of Russellville, Kentucky, for instance, met several goals in various plans through redevelopment of a former car dealership to create a new fire station and sports and recreation fields as well as green infrastructure.1

The award-winning Mecklenburg Livable Communities Plan (Mecklenburg County, North Carolina, http://livablemeck.com/plan/mlcp.pdf) includes key strategies, actions, and measures focused on brownfields and vacant land (see Figure 1).

Facilitating Engagement

Tools to connect community stakeholders—residents and businesses alike—in robust engagement approaches are more widely used now for brownfields projects than ever before. While such traditional approaches as public meetings are still available, it is far easier to reach constituents through online, social media, and specialized digital approaches.

The city of Pleasant Prairie, Wisconsin, for instance, used an online platform to solicit comments for a planning process involving the redevelopment of a former drive-in theater property. The city's platform received more than 335 comments on the various plan alternatives that were proposed for the project.2

Using and Adapting Local Financing Tools

Local governments continue to suggest that some of the biggest challenges for cleaning up and reusing brownfield properties are those associated with financing. Because of their location, contamination, and other factors, many brownfield properties remain upside down—that is, the site's value is less than the cost of cleaning it up for productive reuse.

Creativity in leveraging and layering financing is often required to make the economics of a redevelopment project work. Local governments have long used financial tools for economic development and have adapted many to support local brownfields priorities.

By far the tool local governments use most widely to mitigate financial challenges is tax increment financing (TIF). The Pittsburgh Technology Center, a $104 million development project that had struggled to get off the ground, is now one of the showcase redevelopment projects in the city of Pittsburgh, Pennsylvania. In addition to various sources of local and state government funding, a $7.4 million TIF program was used to finance the remainder of the project.3

In many places, communities have established other financial approaches to foster redevelopment, including property and income tax credits or adjustments, special tax districts, loan guarantees and revolving loan funds, direct grants, and municipal bond programs.

Many local governments have worked with development financing institutions to secure new market tax credits to help propel brownfields projects forward. While not widespread, some communities have begun to look toward foundation and philanthropic organizations as possible financial partners for redevelopment projects.

A project to redevelop a municipal dump into a library in Shepherdstown, West Virginia, received several hundred thousand dollars in foundation grants to support the initiative.4

Some communities have also created public-private partnerships (P3) to meet the goals of a local project. In Owensboro, Kentucky, the city's need for a new convention center led local developers to become partners on a local riverfront brownfields project that has stimulated redevelopment across the city's core, creating a robust pace of new public and private investments.5

Exercising Nonfinancial Tools

A variety of nonfinancial tools have been adapted or developed to support brownfields development. In many places, for example, local governments offer some level of support to conduct environmental site assessments of properties.

Tampa, Florida's brownfields program offers targeted environmental site assessments.6 Other commonly used tools include infrastructure improvements to improve the value of areas, neighborhoods, and communities ripe for redevelopment; assistance with land aggregation and land banking; expedited permitting; planning, design, and engineering assistance; and density allowances.

The Value of Investing in Brownfields Redevelopment

According to recent ICMA survey data (forthcoming Brownfields and Local Governments 2018 Survey Report), local government practitioners have these reasons to believe that their jurisdictions should invest human and financial resources in local brownfields actions:

• Protecting the environment as well as the public health of local and regional residents.

• Eliminating blight and increasing local tax bases.

• Creating jobs and economic opportunity.

• Prepping land for new commercial activities to develop.

• Creating more livable communities.

Across the U.S., thousands of brownfield properties have been redeveloped; however, there are likely hundreds of thousands more to go in large and small communities. Although precise numbers are hard to come by, most communities have some level of brownfields or redevelopment challenges.

The continued maturation of local expertise in dealing with these kinds of community issues is likely to be necessary for the foreseeable future. Local governments—in tandem with residents, elected leaders, and community organizations—have a lot at stake, and even more to gain.

The creativity, resourcefulness, and all-around management and leadership skills of the typical professional local government practitioner are just what the situation calls for . . . and reason to be hopeful about the future.

Endnotes and Resources

1 http://dca.ky.gov/Case%20Studies%20Library/CaseStudy2012RussellvilleFireStation.pdf

2 http://www.pleasantprairieonline.com/openvillagehall/index.asp?pd_url=http%3A%2F%2Fwww.peakdemocracy.com%2Fp%2F173#peak_democracy

3 https://www.cmu.edu/steinbrenner/brownfields/Case%20Studies/pdf/pittsburgh%20 technology%20center%20-%20LTV.pdf 

4 https://www.epa.gov/sites/production/files/2015-11/documents/shepherdstown_ success_story.pdf

5 http://www.lanereport.com/22530/2013/07/owensboro-new-downtown-riverfront

6 https://www.tampagov.net/economic-and-urban-development/programs/brownfields-assessment-grant-program

 

Figure 1. Mecklenburg Livable Communities Plan.

Mecklenburg County, North Carolina, has been concerned about brownfield redevelopment goals and objectives for some time and developed a specific plan (http://livablemeck.com/plan/mlcp.pdf) to address them. Here's an excerpt from that plan:

Strategy

• Promote the redevelopment, reuse, and rehabilitation of declining and vacant properties.

Actions

• Adjust and adopt local government policies and zoning regulations to provide flexible redevelopment of declining and vacant properties.

• Develop a temporary infill strategy, including audit of locations and countywide map to encourage infill and redevelopment.

• Preserve history through the repurposing of older structures and analyze architecture in communities to identify well-designed and culturally significant structures.

• Support developers' integration of local plans and use of other local government tools.

• Promote well-designed, artistic, and iconic structures in developed areas.

Measures

• Infill and redevelopment activity: Number of residential and commercial building permits in targeted reinvestment areas in Mecklenburg County, North Carolina.

 

Brownfields Conference 21 Years in the Making

For more than two decades, ICMA has partnered with the United States Environmental Protection Agency (EPA) on the National Brownfields Conference. Roughly equal in size to ICMA's own annual conference, the brownfields conference attracts several thousand registrants, more than 100 exhibitors, and offers more than 125 educational sessions, special events, and networking opportunities.

In 1996, a cross-section of stakeholders came together in Pittsburgh for the very first brownfields conference. The conference's return to Pittsburgh in December 2017 (www.brownfields2017.org) offers an opportunity to reflect on the maturation of the brownfields sector, as well as the continuing importance of local government policies, programs, and partnerships that support the clean-up and production of formerly used manufacturing and commercial properties.

Brownfields Roots

The period from 1965 to 2008 brought a series of national laws into existence that have basically established the framework for today's national, state, regional, and local environmental management system. During the 1960s, the Solid Waste Disposal Act and the National Environmental Policy Act were signed into legislation. In 1970, President Richard Nixon's administration founded EPA. The Clean Air Act of 1970 established regulatory requirements for air emissions from stationary and mobile sources of pollutants.

The Clean Water Act (1972), as the name suggests, set guidelines for the discharge of contaminants into U.S. waters. Other key legislation included the Endangered Species Act (1973), the Safe Drinking Water Act (1974), the Resource Conservation and Recovery Act (RCRA) (1976), the Pollution Prevention Act (1990), and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) (1980).

CERCLA, or Superfund as it's often called, provides mechanisms to clean up uncontrolled or abandoned hazardous sites and to protect environmental and public health from toxic exposures.

As of 2017, more than 1,000 sites remain on the National Priorities List (NPL), an EPA-maintained database of the dirtiest former commercial and government (e.g., former military bases) properties across the country.

The Conundrum

A key element of Superfund established that a polluter pays principle, which opened the door for regulatory agencies to define potentially responsible parties, or PRP, that could be on the hook for cleanup costs associated with sites listed on the Superfund NPL.

In the years after Superfund authorization, local governments across the U.S. took note that lenders for real estate deals, particularly in urban areas, were increasingly risk averse to investment on formerly used properties, citing a fear of becoming a PRP.

Interpretations of the regulatory framework associated with the Superfund law suggested that all past, present, and future property owners of formerly used sites could be liable for contamination. With this mindset, many owners of various kinds of properties—even such small parcels as gas stations—abandoned their sites and declared bankruptcy rather than face the prospect of expensive lawsuits. And, because future property owners were held liable, the sites remained undesirable to developers and investors.

In the early 1990s, EPA created the national brownfields program to develop research, programming, and grant funding to help local communities overcome the challenges of potentially contaminated properties. In a significant move, the Small Business Liability Relief and Brownfields Revitalization Act (2002) amended Superfund by clarifying CERCLA liability protections and providing funds to support various state, tribal, and local partners.

Tad McGalliard is director, research and policy and strategic development, ICMA, Washington, D.C. (tmcgalliard@icma.org).

 

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