Financing brownfields redevelopment
The climate for brownfields redevelopment is more favorable today than it ever has been. However, fear and uncertainty keep many communities – and especially lenders and developers in those communities – from redeveloping sites. Local government officials, however, can encourage brownfields redevelopment in their communities by 1) educating developers and other stakeholders about the new regulatory environment, 2) identifying potential funding sources, and 3) helping to launch a successful project.
Voluntary cleanup programs can lower project costs by releasing lenders, developers and new site owners from liability. (The agreements typically incorporate conditions to which the developers must agree. Those conditions may include remediation to a set level; deed restrictions limiting reuse to industrial or commercial applications; cutting off contaminant exposure pathways; not exacerbating present contamination; and conducting ongoing remediation as the project progresses.)
Environmental insurance also can provide a measure of comfort to redevelopment participants. A wide variety of insurance products can be purchased to cover cleanup cost overruns, discovery of greater levels of contamination after the project is initiated, and costs of legal defense against civil liability claims.
Since much of the state and federal money devoted to redevelopment is not directly accessible to private sector individuals, local governments must act as intermediaries. When those funds can be used in the predevelopment phases for site investigations, they can remove uncertainties that deter private sector investors and developers.
Federal money available for redevelopment projects includes Community Development Block Grants (CDBGs) and EPA pilot program funds. CDBGs can be used for remediation, assessment or demolition activities as long as the project meets CDBG objectives. EPA’s Brownfields Pilot Grants are available to communities making redevelopment a priority.
Many regional EPA offices have funds or staff to help with site assessments and provide technical assistance. (EPA’s brownfields web page (www.epa.gov/swerosps/ bf/index.html) contains federal and regional brownfields contacts. It also contains information to help communities identify funding sources and understand how to apply for and use them.)
Non-brownfields-specific funding also may be tapped for redevelopment projects. Historic Rehabilitation Tax Credits offer significant financial incentives, and brownfields sites that include older buildings often qualify. Additionally, Department of Transportation funds can be used to provide infrastructure improvements at sites where transportation access is inadequate. Finally, state economic development or international trade zones and business development districts also can help.
Still, redevelopment is not easy, no matter how much financial assistance the federal and state governments offer. Local government officials can lessen the strain with initial projects by looking for those that have a good chance of succeeding but cannot proceed without public investment. By first targeting sites with the greatest potential, local officials not only increase the chance of success, they also develop staff and community stakeholders with redevelopment expertise that can be applied to more challenging projects.
With growth management in the national spotlight, the time is right for communities to tackle redevelopment projects and begin reining in urban sprawl. Identifying federal and state funding programs, and encouraging development of the most manageable projects first allow local officials to take advantage of the issue.