Land Recycling 101: Part 2 – Challenges and Remediating Brownfields
View the first part of the blog post here – Land Recycling 101: Definitions, Objectives, and Benefits.
While land recycling has great economic and environmental benefits, without the right tools, skills, and knowledge, reusing land can produce certain challenges. Obstacles to redevelopment may include lack of funding and increased scrutiny. These can particularly impede projects on brownfields, which carry the stigma of contamination. Because of these concerns, the perceived ease of developing on open land, or greenfields, is alluring to many.
Factors that hinder land recycling include:
Every developer knows that in real estate only three things matter: location, location, location. Because idled and underused infill sites are often located in distressed urban areas concerns arise about crime, safety, and access to quality education and services. These and other market factors frequently pull development to open land near traditionally desirable communities and away from urban infill sites.
Environmental Liability Risks:
Although recent changes in federal law provide some liability relief to new purchasers of contaminated properties, the law is very complicated and many state laws still have strict liability covering real property. Thus, in many cases, any current or past property owner can potentially be legally and financially liable regardless of who is responsible for contamination. This liability web continues to throw a chill on many brownfield projects even in the presence of regulatory reforms designed to encourage redevelopment. A common belief among many brownfield owners is that it is less risky and cheaper to abandon or “mothball” a facility than to conduct a site assessment that could trigger large cleanup costs and potential liability.
Uncertainty & Cost:
Assessing whether or not a site is contaminated can be a costly process that deters land reuse. Potential purchasers are often unwilling or unable to risk an investment in a site assessment for a property that may require cleanup they cannot afford. Even if a site has been purchased, concerns over cleanup costs may further stall redevelopment. Uncertainty over time, cost or a high price for cleanup leaves many brownfield sites in development limbo.
Complicated & Confusing Regulatory Requirements:
The process of redeveloping an infill site, particularly a brownfield, can be complicated and confusing. The current morass of vague, overlapping and sometimes conflicting requirements at the federal, state, and local levels often intimidates developers. Making sense of legal and regulatory requirements may be daunting and discouraging. Guidance from lawyers and consultants is often needed to guide a project through the legal and regulatory framework.
Difficulty Obtaining Project Financing:
Obtaining private front-end financing for brownfield cleanup can be a difficult process. Since financing is more readably available for development on greenfields, infill and brownfield sites are often passed over.
The Lure of Greenfields:
Brownfields and infill sites must compete with attractive, undeveloped suburban and rural land, also called greenfields. When considering the real or perceived risks and costs of land recycling, a greenfield development may seem more economically sensible as the immediate costs are typically less than developing on an infill or brownfield site. However, it is important to consider the long-term economic gain of land recycling and the added social and environmental rewards of sustainable development.
5. HOW CCLR CAN HELP
CCLR can help land recycling projects overcome obstacles and solve problems.
Our work is accomplished through training, technical assistance, and grants and loans for communities and other interested parties attempting to turn around vacant, environmentally distressed, or infill properties.
CCLR has a strong record of helping community development corporations, affordable housing developers, and municipalities overcome the challenges to cleaning up and redeveloping infill sites including brownfields and contaminated properties. CCLR promotes the reuse of already used lands and discourages urban sprawl through creative public, private, and nonprofit partnerships.
As a provider of the US EPA’s Technical Assistance to Brownfields (TAB) Communities program, CCLR provides technical assistance and training to brownfields communities throughout the Western United States. As part of the TAB Program, CCLR has also created this online resource center to better serve our communities.
6. REMEDIATING BROWNFIELDS
Brownfield cleanup and redevelopment follow a unique set of processes that are not always linear. There are several paths to remediating a distressed property, the following are key components of the process:
Legal & Regulatory Framework:
There are a myriad of regulatory and legal considerations at the federal, state, and local levels for land recycling and brownfield redevelopment. Because state and federal statues are administered by a number of different regulatory agencies, it is important to understand these regulatory bodies. Establishing a strong working relationship with regulators and maintaining open communication throughout the redevelopment process is key for a successful project. It is highly beneficial to obtain appropriate legal advice and guidance early in the planning process to develop an effective strategy for enhancing cost effectiveness and minimizing project risks.
Phase I Environmental Site Assessment:
Evaluating a site for potential contamination is an important first step in approaching a brownfield redevelopment project. The Phase I Environmental Site Assessment (Phase I ESA) is a widely-used, industry-accepted approach used to assess environmentally challenged properties. The Phase I ESA relies heavily on site visits, interviews with relevant parties, and historical documents and public records. The goal is to understand previous site use to help determine whether and what kind of contamination may exist. A Phase I ESA is required in order to qualify for federal liability defense protections and certain state protections. A Phase I ESA must be conducted by a certified environmental consultant.
Phase II Environmental Site Assessment:
Conducting a Phase II ESA is useful in filling remaining data gaps when recognized environmental conditions are identified. This assessment further characterizes a site in terms of the nature and extent of contamination. Phase II ESAs rely on direct field-based sampling and analytical techniques to identify and quantify actual concentration of contaminants in soil and groundwater. They additionally provide background information necessary to develop a cleanup strategy and estimate costs. A Phase II ESA is typically conducted by a certified environmental consultant.
Following completion of environmental assessments, project managers typically work with environmental consultants to determine a remediation or cleanup strategy. Results of a Phase II ESA typically include a site conceptual model determining contaminant exposure pathways. Contaminant clean-up goals are then identified based on existing regulatory guidelines and statues. Additional analysis and a variety of additional reports may be necessary based on the regulatory agency and complexity of the cleanup. An appropriate cleanup plan is then designed, taking into account unique site features. Cleanup may involve soil or groundwater removal or safe encapsulation of contaminants on site. Regulatory agencies may provide guidance throughout the process. In some cases, final approval from a regulatory agency certifies the cleanup process is complete. In other cases, there may be additional requirements to ensure safety from any residual levels of contamination, which were not technically or economically feasible to remove.
A major challenge faced when approaching a redevelopment project on environmentally impaired sites is unknown risk. Environmental insurance assists sellers, buyers, developers, and lenders in defining the costs associated with known and unknown contamination at a site. It can also serve as a powerful risk transfer technique. Understanding the project’s financial and timing constraints, as well as stakeholders’ risk tolerance drives the selection of various risk management and insurance solutions. Input from legal, engineering, and risk professionals should be sought early in the redevelopment process to allow maximum flexibility for your project. Environmental insurance is an effective tool bridging the risk gap on complicated brownfield redevelopment projects.
Securing front-end and long-term financing for brownfield projects can be difficult. Banks are often nervous about the possibility of high cleanup costs, loan defaults, and loss of collateral. Except for larger financial institutions, most banks do not have the in-house expertise needed to properly weight environmental risks. For these reasons, public financing at the local, state, and federal levels plays an important role in the funding of most brownfield projects. Despite the challenges with securing financial resources for environmental properties, given our strong record of providing funds, CCLR is here to help.