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Innovative Solutions Prove the Value in Brownfields Lending
While developing brownfields makes environmental sense, often the deciding factor in returning abandoned properties to productive use is whether a particular deal makes financial sense. Financial institutions make that determination based on a number of factors, including a firm understanding of the potential returns and a fair characterization of the risks. The cities of Des Moines, IA and Wheeling WVA have each collaborated in a unique way to complete both a picture of the risks and rewards and a financing package for redevelopment. The results of these innovative collaborations not only include cleanup and redeveloped properties, new businesses, and new jobs, but also increased confidence for financing entities that brownfields lending can make sense.
For Des Moines, IA, a $2 million injection from the Federal Home Loan Bank (FHLB) is what private lenders and developers needed to make the city's Riverpoint West project more viable. Des Moines received an EPA Brownfields Assessment grant in August 1998, and started performing environmental assessments on more than 100 properties throughout the Des Moines area. With the objective to redevelop blighted and underutilized industrial tracts of land, the city set out to leverage funding to complete redevelopment on targeted properties.
South of downtown Des Moines, a former steel foundry, chemical manufacturing facility, and rail yards scar approximately 300 acres along the Raccoon River. A $200 million redevelopment project that will create more than 750 housing units and 450,000 sq. ft. of commercial and retail space is expected to rejuvenate the 125-acre developable area, helping to extend the diversity of services offered and support commercial uses for downtown.
The FHLB's equity investment will make the financial breakdown more attractive to lenders because the loan to value (LTV) ratio will be more favorable and less risky. Brownfields properties often appraise at lower dollar amounts due to perceived or potential environmental risks or the often-deteriorated condition of nearby properties. It is not until the redevelopment area truly starts to turn around that properties appraise for high amounts and LTV ratios become more favorable to lenders and borrowers. Other financing may include tax abatement, tax increment financing, the EPA Brownfields Cleanup Revolving Loan Fund, Enterprise Zone tax credits, and other sources.
This innovative financial approach by the FHLB is essential to the Des Moines Brownfields Pilot, just as creative financing approaches have been to the Wheeling, WVA Pilot. The city partnered with the Ohio Valley Industrial and Business Development Corp. (OVIBDC) to assemble a unique brownfields-financing package for the Wheeling Stamping Building project.
In May 1998, the city of Wheeling was awarded a $200,000 EPA Brownfields Assessment Pilot to assist the city in assessing brownfields for potential redevelopment opportunities. The Wheeling Pilot has focused its redevelopment efforts on an industrial and warehouse-laden area, south of the central business district, that has blighted the banks of the Ohio River for decades. Although many structures have deteriorated beyond repair, the Wheeling Stamping Building, a series of three warehouses constructed between 1890 and 1905, retained its architectural integrity. Local leaders believed that the 88,000 sq. ft. structure and surrounding area could be renovated, becoming an economic engine and community cornerstone.
The city and a number of nonprofit groups assembled a financing assistance package that included a $1 million Brownfields Economic Development Initiative (BEDI) grant and a $2.25 million Section 108 loan guarantee from the U.S. Dept. of Housing and Urban Development (HUD); $2 million from the Wheeling National Heritage Area Corp.; and a $3 million loan secured by the OVIBDC. Stakeholders realized that in addition to public improvements and historic preservation activities, specific improvements, such as interior building and telecommunications upgrades, necessary to attract a tenant would need to be made. The flexibility of HUD's Section 108 loan program helped to overcome this barrier and was used for interim financing until a private tenant was recruited.
Despite this successful financing approach, a funding gap still remained. A consortium of faith-based organizations in the Wheeling area pooled their resources to provide the necessary gap financing. The consortium loaned $1 million to the project at a below-market rate. If the tenant is still in the facility after 10 years, the loan converts to a market rate. This arrangement allows sufficient time for the project to put itself on stable financial footing. Once financing was in place, the Office of the Governor and the West Virginia Development Office increased their tenant recruitment efforts, securing the San Francisco-based international law firm of Orrick, Herrington & Sutcliffe. Orrick located their Global Operations Center in Wheeling's new Celeron Plaza in April 2002 and has leveraged half of the committed 250 financial and technology-related jobs with average annual salaries exceeding $37,000.
Across the country, brownfields projects are finding creative financing options to back their redevelopment efforts. These projects allow the financial services community to see new opportunities associated with brownfields financing. In recent years, many major banks have created environmental lending products and insurance companies have developed secured creditor policies to protect brownfields lenders. Together, communities and private interests are realizing the value in lending on brownfields.
For more information on brownfields financing, visit http://www.epa.gov/brownfields .
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Six Brownfields Training, Research and Technical Assistance Grants Announced
The Environmental Protection Agency (EPA) named six organizations as recipients of a combined $1.4 million in Brownfields Training, Research and Technical Assistance Grants. The purpose of these grants is to focus brownfields attention on environmental and human health conditions in low income and socio-economically disadvantaged communities to enable these communities to stimulate economic and beneficial uses. EPA will fund successful applicants for periods ranging from 1-5 years up to a total of $300,000 each. Brownfields Training, Research and Technical Assistance Grants are available to eligible government applicants and nonprofit organizations, including public and nonprofit private universities.
Of the 26 applications received by EPA, the following organizations have been chosen to receive grants:
- The University of North Carolina - Charlotte: Working with the city of Charlotte to establish a new methodology to empirically assess the multi-dimensional impacts of brownfields projects on communities.
- National Center for Neighborhood and Brownfields Redevelopment, Rutgers University: Focusing on training and technical assistance to community-based organizations in low-income communities across the country to encourage greater involvement in brownfields.
- American Planning Association: Partnering with Bethel New Life in Chicago, IL to create a “workbook” and training program for community development corporations.
- University of Louisville: Targeting historically challenging areas to redevelopment and conducting workshops on building constructive community participation in brownfields redevelopment.
- Northeast Midwest Institute: Identification of strategies, methods, and tools for disadvantaged communities.
- Duke University: Examining state public participation approaches to develop additional tools to assist decision-makers and enhance community involvement in brownfields.
For additional information contact Enesta Jones at jones.enesta@epa.gov .
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First of its Kind Program to Help Cities Reclaim Abandoned Properties, Reverse Blight
In the first such systematic, multi-city effort, a consortium of national organizations will provide expert assistance to seven cities working to reclaim vacant and abandoned properties, restoring vitality and livability to city neighborhoods.
With funding from the Surdna Foundation, the National Vacant Properties Campaign will bring national experts to help local officials, nonprofits, and residents adopt cutting-edge strategies for reclaiming their streets and neighborhoods. The cities are Baltimore, MD, Bridgeport, CT, Buffalo, NY, Indianapolis, IN, Richmond, VA, Spartanburg, SC, and Tucson, AZ. The Campaign is a collaboration of four leading national organizations, Smart Growth America (SGA), Local Initiatives Support Corporation (LISC), the International City/County Management Association (ICMA), and the Metropolitan Institute at Virginia Tech (MI).
The assistance program comes at a time when many cities are recognizing abandoned properties as a formidable obstacle to stabilizing neighborhoods and stimulating their renewal. Vacant and abandoned properties occupy about 15 percent of the area of the typical large city, more than 12,000 acres on average. This is usable land already connected to urban infrastructure. For metropolitan areas looking to accommodate growth without consuming the surrounding countryside, these properties amount to a large reservoir of land for well-planned development.
In Baltimore, for example, where the city recently has taken action to acquire 5,000 of its vacant properties, the Campaign's consultation will help the city develop stronger systems to manage its inventory of properties, prepare them for redevelopment, and track progress. In Richmond, the assistance will support the city's efforts to promote reuse of abandoned properties, while also establishing a preventative program. The assistance will build on successful programs like Neighborhoods in Bloom, which has already returned 200 vacant properties to productive use.
The value of the technical assistance ranges from $15,000 to $70,000 per city, and could include roundtable discussions with national experts, consultations by public officials from cities leading effective local programs, and implementation of specific strategies.
“While nonprofit community organizations have made great strides in redeveloping vacant properties, they can achieve far greater impact as part of a city's systematic effort to overcome the legal and economic barriers to reclamation,” said Michael Rubinger, LISC's president and CEO. “The campaign is designed to help cities create those systematic approaches.” A summary of each city's program will be posted at the Campaign's website listed below.
Source: National Vacant Properties Campaign, http://www.vacantproperties.org/press061505.html
Media Contact: David Goldberg (202) 412-7930 Back to Table of Contents
Phytoremediation Part of Final Remedy for Del Monte Site
By Cleanup NewsII
The Environmental Protection Agency (EPA) approved a final remedy to address ground water and soil contamination at the Del Monte Corp. Superfund site in Oahu, HI. The remedy includes using Koa Haole plants to treat shallow ground water. Since 1998, shallow ground water in the source area has been extracted and delivered to the root zone of the lined phytoremediation treatment cells via subsurface irrigation. The data thus far show that this remedy is effective for removing contaminants.
In addition to continuing phytoremediation for the shallow ground water, contaminated soil will be cleaned through soil vapor extraction. Vapor will be filtered through a carbon filter to remove contaminants and the contaminated soil will be capped to help prevent seepage into deep ground water. Air stripping and carbon filters will be used to treat deep ground water in the source area. The downgradient plume will be monitored for three years to determine if monitored natural attenuation (MNA) is effective at reducing contaminant concentrations. If MNA is not effective, then additional extraction wells will be added to ensure the entire plume is captured and treated.
In 1977, Del Monte Fresh Produce (HI), Inc., which has grown pineapples on the site since the 1940s, spilled 450 gallons of pesticides near the Kunia Well, a drinking water source for 700 people. The first tests of the well conducted immediately after the spill showed no signs of contamination. However, a test performed in 1980 revealed the presence of ethylene dibromide (EDB) and 1, 2-dibromo-3-chloropropane (DBCP). Del Monte immediately removed the well as a drinking water source. The spill, along with pesticide storing and mixing that occurred in the source area, caused soil and ground water contamination in addition to contamination of the well. EPA added the site to the National Priorities List in December 1994.
For additional information, contact Dean Higuchi at higuchi.dean@epa.gov , or Janet Rosati at rosati.janet@epa.gov . Back to Table of Contents
Settlements Will Help Clean up Centredale Manor Restoration
Two proposed settlements worth approximately $3.6 million will help clean up contamination at the Centredale Manor Restoration Project Site in North Providence, RI. The owners of the Centredale Manor and Brook Village apartment buildings - which provide low-cost housing to the elderly - agreed to the settlement through separate consent decrees. Both proposed decrees are subject to a 30-day public comment period. If the consent decrees are finalized, the Environmental Protection Agency (EPA) will release the apartment complex owners of any further responsibility related to the existing contamination at the site. The settlements will be paid to EPA, the State of Rhode Island, and the Department of the Interior. A portion of the settlement will also be placed in an escrow account. The settlement agreements should ensure that the settlers remain financially viable; thereby ensuring that low-cost housing will continue to be available for 223 residents.
From 1943 to 1971, Atlantic Chemical Company (renamed Metro-Atlantic, Inc. in 1953) operated a woolens mill on the site. The New England Container Company ran incinerators on the site as part of its drum-reconditioning operation at different times from 1952 to 1971. In 1972, a fire burned almost all of the existing buildings. The Brook Village and Centredale Manor apartments were constructed on the site in 1977 and 1983, respectively. Dioxin contamination was identified in the adjacent Woonasquatucket River in 1996, and the site was added to the National Priorities List on February 4, 2000.
Designated as an American Heritage River in 1998, the Woonasquatucket River has been the focus of cleanup efforts for several contaminants since 1996. To date, EPA has completed several initial removal actions to limit exposure to the contaminants and reduce downstream migration. These actions include constructing soil caps, reconstructing a dam, and fencing off contaminated areas. EPA continues to conduct its remedial investigation for the long-term cleanup of the site and seek assistance in cleaning up the site from other responsible parties.
For additional information, contact Eve Vaudo at vaudo.eve@epa.gov . Back to Table of Contents
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