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Public Testimony
Testimony of Stephanie Shakofsky, Executive Director of the
California Center for Land Recycling, to the Little Hoover
Commission
June 28, 2001
Good afternoon, Honorable Chair and members of the Commission.
My name is Stephanie Shakofsky. I am Executive Director of
the California Center for Land Recycling (CCLR or "see clear").
I appreciate the opportunity to share our perspective on brownfields
and their impact on the affordable housing crisis.
How CCLR Helps Communities Revitalize
CCLR helps those who
have the biggest stake in revitalizing their neighborhoods,
including community development corporations, affordable housing
developers, redevelopment agencies and local governments.
We accomplish this work through training, technical assistance
and small grants for communities who are attempting to turn
around environmentally distressed properties, or what are
more commonly known as brownfields.
CCLR was founded in 1996 as a project of the Trust for Public
Land with funding from the James Irvine Foundation. Our mission
is to create sustainable communities by promoting brownfield
redevelopment as an alternative to sprawl. Impact of Brownfields
on Urban Revitalization.
In our work we witness every day the devastating effect that
brownfields can have on a community's landscape. The very
existence of these derelict properties shrouded in some toxic
mystery can have a suffocating effect on the community spirit.
Everyone of the estimated 90,000 brownfields in California
is a missed opportunity for an affordable housing development,
a public park or a commercial complex that most likely will
be built elsewhere. Consequently, unrestored brownfields serve
only to fuel development on our remaining open landscapes.
Redevelopment of brownfields is discouraged because of the
liability risks, uncertainty and cost of cleanups, complicated
and confusing regulatory requirements, difficulty obtaining
project financing and the lure of agricultural and open land.
Although these regulatory and financial roadblocks are bad
for all, they are particularly hurtful for low-income communities,
where brownfield sites are often found in abundance. The failure
to redevelop these sites translates into potentially more
exposure to toxics and loss of the economic and housing benefits
of appropriate redevelopment.
Moreover, it is increasingly problematic to build affordable
housing units on brownfields, because of the higher cost of
cleanup resulting from requirements to meet the most stringent
remediation standards because of residential exposure scenarios
and; the lower potential profit as compared to mixed-use and
other types of brownfields development. The net result is
that affordable housing is not being built on brownfields
at any significant level. Public support is needed; especially
in light of strong views in many low-income urban cores about
gentrification displacing long-time residents and about conflicts
between urban revitalization and environmental justice goals.
Obstacles to Brownfield Redevelopment and Strategies to
Remove Them
The list of reasons for why brownfield projects are avoided
is long. Yet, by focusing on three essential legislative proposals
this commission could assist in fostering an efficient and
economical state brownfield program:
1. Liability Concerns
Potential purchasers, developers and lenders should not be
held legally liable for past environmental pollution to which
they have neither contributed nor caused. At the heart of
the brownfields debate is the federal Comprehensive Environmental
Response and Compensation and Liability Act of 1980 (CERCLA),
commonly known as "Superfund." The U.S. Congress passed the
Superfund Law in response to the Love Canal situation, in
which an entire neighborhood was destroyed by toxic contamination.
Shortly after passage of CERCLA, most states-including California-followed
suit with equivalent state cleanup laws.
The most important thing about these laws is that liability
attaches to any current or past property owner (with some
exceptions), regardless of who was actually responsible for
contaminating a site. While they were created to address nation's
most polluted sites, these laws caught in their web upwards
of a half million mildly contaminated or uncontaminated sites.
This caused a widespread chilling on most real estate transactions
that involved even a hint of environmental contamination.
Although designed with noble goals, this law has caused unintended
consequences for urban areas resulting in recyclable urban
sites across the nation, with even the possibility of contamination,
becoming dead zones.
In lieu of comprehensive Superfund reform (which remains critical),
federal and state agencies have clarified through a variety
of administrative remedies that liability should not apply
to truly innocent parties; this has provided some level of
comfort for lenders and developers, but clear and comprehensive
liability relief is needed.
2. Complicated Regulatory Environment
Coping with the maze of laws and requirements that apply for
most brownfield projects can be daunting. Cleaning up and
redeveloping sites can involve a morass of vague, overlapping,
and sometimes even conflicting requirements at the state,
federal and local level. Jumping through these various hoops
is time-consuming, and project proponents often must hire
specialized lawyers and consultants simply to understand what
is required. Reducing this red tape should be a major priority
for state agencies who are trying to encourage brownfield
redevelopment. Due to engineering and economical feasibility,
California, like many other states, no longer requires all
cleanups to meet the residential-level standards. In many
cases, the California Environmental Protection Agency (Cal/EPA)
allows parties to tailor the degree of cleanup to the site's
intended use. This type of end-use cleanup should be codified.
3. Financing Challenges
For a number of reasons, it can be difficult to secure front-end
as well as long-term financing for brownfield projects. Banks
are nervous about the possibility of high cleanup costs, loan
defaults, and loss of collateral. Further, with the exception
of larger financial institutions, most banks do not have the
in-house expertise needed to properly weigh environmental
risks. There are, however, some bright notes. Concerns about
lender liability under Superfund, once prominent barriers,
have been largely diffused by the passage of recent state
and federal laws.
We appreciate that the state last year enacted a state loan
program for brownfield cleanups. However, brownfield sites
that will become affordable housing developments, public parks
or other non-economic uses cannot generate the income needed
to repay loans. Therefore, funds in the form of grants should
be made available for cleanups.
Despite the efforts of state agencies and the legislature,
the brownfields program in California seems more like a patchwork
of solutions than a multi-faceted, coordinated program that
sufficiently meets the needs project proponents.
The Role of Public/Private Partnerships
Uncertainty and risk translates into a reluctance, or hesitancy,
of capital providers to lend money, which inhibits redevelopment
and environmental cleanup. Project proponents are often asked
to take a risk that, for example, a $500,000 investment could
become a $10 million cleanup liability. Public/private partnerships
help share this risk burden and provide the resources and
cooperation to work through the many challenges. Many states
have set up successful finance programs that fill the funding
gaps that the private sector will not bridge. California,
however, has yet to join this trend. Yet, we know that public
investment in cleaning up sites can produce a ripple effect;
stimulating private sector interest and investment in the
community. Effective Brownfield Programs in Other States
Five states leading the way with aggressive brownfield programs
are: Maryland, Massachusetts, Michigan, New Jersey and Pennsylvania.
These states have made a compelling economic case for state
spending on brownfields--arguing that a dollar of state spending
produces about 10 to 100 times more dollars in economic benefits.
Success in these states is being driven by several factors:
* Having state leaders provide clear and public support for
the importance of brownfields in advancing the state's quality
of life and economy.
* Working to eliminate all remaining barriers to brownfield
redevelopment and improving the full package of incentives,
assistance, and liability reduction offered to project proponents.
State actions to address liability concerns are working, but
the federal liability under the Superfund statute still biases
some decisions in factor of greenfields developments and sprawl.
* Broadening state brownfields programs to include involvement
of state planning agencies and other appropriate state and
local government agencies. It is imperative to have strong
involvement of state organizations besides environmental regulatory
agencies.
* Ensuring the protections of public health while shifting
emphasis to the broader economic development value of brownfields
sites.
Conclusion
At CCLR, we have witnessed first-hand how economic engines
can breathe new life into old properties, rebuild local economies
and lift community spirit. Our work at the community level
affirms the desperate community need for assistance with the
costs, liabilities and uncertainties that accompany cleanup
responsibilities.
All of us here today are responsible parties. Before you get
too excited I don't mean that in the legal sense but rather
that as state and civic leaders we have a responsibility to
remove all remaining barriers to brownfield development and
build California's needed housing while rebuilding whole communities
at the same time. We at CCLR are ready to help.
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