Revitalization Opportunities of Missouri Brownfields: Approaches to Attracting and Leveraging Funds

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• Revitalization Opportunities of Missouri
  Brownfields Approaches to Attracting and
  Leveraging Funds
• Charlie Bartsch
• www.nemw.org/brownfields.htm

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Following the money.What this presentation will
cover

• Existing financing gaps, and why public-sector
  support is needed
• Commonly leveraged federal programs
• Low-cost/no-cost tools that can enhance
  brownfield transactions
• Examples

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The Brownfields Red Zone

• What Impact Does Contamination Have on Financing?
• Conceptualizing and Planning the Project
• Economic Analysis for Marketing the Project

• Dealing with Stigma
• for Site Assessment
• Additional Underwriting/Site Development/R.O.R.
  Costs
• for Preparing a Cleanup Plan and Taking It
  Through
• VCP/State/Local Regulatory Agencies
• for Cleanup

Regular Real Estate Construction/Development
Costs When Site is Shovel Ready
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Brownfield Support Can Take Many Forms, Have
Various Goals

• Reduce lenders risk
• loan guarantees companion loans
• Reduce borrowers costs
• interest-rate reductions or subsidies due
  diligence assistance
• Improve the borrowers financial situation
• re-payment grace periods tax abatements
  training and technical assistance help
• Provide comfort to lenders or investors
• loan guarantees performance data
• Provide resources directly
• grants forgivable/performance loans

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Where Can You Get the Green for Brownfields?
Federal Financial Assistance Programs

• Grants (continued)
• DOT (various system construction and
  rehabilitation programs)
• DOTs transportation and community system
  preservation (TCSP) pilot grants
• Army Corps of Engineers (cost-shared
  services)
• Equity capital
• SBAs Small Business Investment Companies
• Tax incentives and tax-exempt financing
• Targeted expensing of cleanup costs (through
  12/31/05)
• Historic rehabilitation tax credits
• Low-income housing tax credits
• Industrial development bonds
• Tax-advantaged zones
• HUD/USDA Empowerment Zones (various
  incentives)
• HUD/USDA Enterprise Communities (various
  incentives)

• Loans
• EDAs Title IX (capital for local revolving loan
  funds)
• HUD funds for locally determined CDBG loans and
  floats
• EPA capitalized brownfield revolving loan funds
• SBAs microloans
• SBAs Section 504 development company debentures
• EPA capitalized clean water revolving loan funds
  (priorities set/ programs run by each state)
• HUDs Section 108 loan guarantees
• SBAs Section 7(a) and Low-Doc programs
• Grants
• HUDs Brownfield Economic Development Initiative
  (BEDI)
• HUDs Community Development Block Grants (for
  projects locally determined)
• EPA assessment grants
• EDA Title I (public works) and Title IX (economic
  adjustment)

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Where Can You Get the Green for Brownfields?
Federal Programs Most Commonly Used

• Loans
• EDAs Title IX (capital for local revolving loan
  funds)
• HUD funds for locally determined CDBG loans and
  floats
• EPA capitalized revolving loan funds
  
• Grants
• HUDs Brownfield Economic Development Initiative
  (BEDI)
• HUDs Community Development Block Grants (for
  projects locally determined)
• EPA assessment and cleanup grants
• EDA Title I (public works) and Title IX (economic
  adjustment)

• Grants (continued)
• DOT (various system construction and
  rehabilitation programs)
• DOTs transportation and community system
  preservation (TCSP) grants
• Army Corps of Engineers (cost-shared
  services)
• Tax incentives and tax-exempt financing
• Targeted expensing of cleanup costs (through
  12/31/05)
• Historic rehabilitation tax credits
• Low-income housing tax credits

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Federal Financing Programs EPA

• SITE ASSESSMENT GRANTS
• Funds pre-cleanup environmental activities for
  example, site assessment, inventories, planning,
  design, and outreach
• SITE CLEANUP GRANTS
• Funds cleanups by cities, development agencies,
  non-profits, and similar entities at sites that
  they own
• BROWNFIELD CLEANUP REVOLVING LOAN FUND GRANTS
• Provides capital to establish RLFs to make low/no
  interest loans for cleanup recipients may use up
  to 40 of capitalization award for cleanup
  sub-grants

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Firebarn St. Anthony Falls, MN

• Vacant former car dealership and auto
  services/body work facilities
• Prospective new user demanded clean site
• Hennepin County Health Dept. made a 240,000
  BCRLF loan for soil and groundwater cleanup
• Leverage -- 30 million mixed-use complex built
  on clean site -- 78 housing units, 45,000 square
  feet of commercial/retail/ office space

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Consumers Energy Headquarters Jackson County, MI

• In 1999, Jackson proposed a downtown brownfield
  site composed of 36 abandoned and underused
  parcels on 15 acres for Consumer Energys new
  corporate headquarters an EPA assessment grant
  helped the city to prioritize target sites for
  this project .
• Other financing sources include an 8.6-million
  Single Business Tax credit from the state to
  Consumers Energy and a 1-million Brownfields
  Cleanup Revolving Loan Fund grant and a 150,000
  Brownfields Supplemental Assistance grant from
  U.S. EPA.
• Leverage -- Consumers Energys relocation to
  downtown retains 600 Jackson jobs while bringing
  750 new jobs into the downtown area.

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Federal Financing Programs HUD

• COMMUNITY DEVELOPMENT BLOCK GRANTS (entitlement
  and state/small cities)
• Activities locally determined
• Can include coping with contamination as part of
  financing for site preparation or infrastructure
  development
• Can be lent to private companies under some
  circumstances

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How Can CDBG Funds Be Used For Brownfield
Projects?

• Eligible activities include
• planning for redevelopment or revitalization of
  brownfields sites
• site acquisition
• environmental site assessment
• site clearance/preparation, including demolition
• removal or remediation of contamination from
  sites or structures
• rehabilitation of buildings
• construction of real estate improvements

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Visiting Nurses Assisted Living -- Somerville, MA

• Former mattress factory, vacant 2 years.
• Contaminants included barium, lead and petroleum
• The project's redeveloper, the non-profit
  Visiting Nurses Association, remediated the site
  and demolished the existing structures
• VNA constructed an assisted-living facility and
  health center, containing 97 units for
  low-to-moderate income seniors.
• Leverage -- 100,000 in CDBG was used as a
  cost-containment reserve.

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Chevy Place Rochester NY

• Former downtown auto dealership and service
  garage UST and other contamination
• CDBG used for site assessment, partial cleanup
  (including tank removal)
• Leverage -- 77 new residential units, coffee
  house, and restaurant

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Shaws Supermarket Bangor, ME

• Bangor acquired and cleared the 6-acre Bangor
  Gas Works site 25 years ago, doing a partial
  cleanup
• Site cleanup was completed when the Boulos
  Company proposed building a 60,000 sq. ft. Shaws
  Supermarket
• Bangor used 350,000 in state/small cities CDBG
  and 975,000 in TIF financing for final cleanup
• Leverage -- Boulos invested 7 million in the
  building and associated site improvements, and
  Shaws spent 1.8 million on equipment and
  furnishings for the supermarket.

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Federal Financing Programs HUD

• SECTION 108 LOAN GUARANTEES
• Finances site clearance, property acquisition,
  infrastructure, or rehabilitation (including
  cleanup) activities too big for single-year block
  grant funding
• Block grant recipients may borrow up to 5 times
  their entitlement, for up to 20 years
• Requires pledge of future CDBG funds as
  collateral
• Small cities must work through state CDBG agency

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Federal Financing Programs HUD

• BROWNFIELD ECONOMIC DEVELOPMENT INITIATIVE (BEDI)
  
• Established to provide additional financial
  assistance for brownfield development projects
  supported by Section 108
• Must be used in tandem with Section 108 guarantee
  
• Competitive grant application process
• Non-entitlement small cities not eligible on
  their own

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Old Montgomery Ward Distribution Center Fort
Worth, TX

• Historic, 800,000-square-foot building on a
  45-acre site
• Damaged in March, 2000 tornado
• Proposed reuse mixed light industrial/commercial
  /office
• Leverage -- mix of financing tools including
• 13 million Section 108 loan
• 2 million BEDI grant
• Historic rehab tax credits
• State tax abatements and fee waivers
• DOT (CMAQ) used for related road sidewalk
  infrastructure

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Federal Financing Programs EDA

• ECONOMIC DEVELOPMENT ADMINISTRATION
• Two major programs
• (1) public works grants finance industrial
  development site and infrastructure preparation,
  and
• (2) economic dislocation program capitalizes RLFs
  for distressed areas
• EDA also supports rural planning
• 2/3 of all resources traditionally go to small
  towns and rural areas

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Bates Mill Lewiston, ME

• Textile mill, shut down in 1993, redeveloped in
  stages as small business incubator
• EDA funding supported site cleanup and
  infrastructure upgrading activities, part of 41
  million financing package
• Leverage
• 19 tenants occupying 284,000 sq. ft
• Less than 100 employees in 1993 today, 1,000
• Mill generated 160,000 in taxes in 1993 today,
  543,000 per year even with tax incentives in
  place

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Cimarron Center Sand Springs, OK

• Former zinc smelter, abandoned rail spur in small
  OK community
• Challenge was structuring a cleanup plan that
  made the site was economically competitive for
  big-box retail with nearby greenfield
• Financing included EDA planning resources, local
  TIF
• Leverage Cimarron Center, with Wal-Mart
  Supercenter as anchor, has created 350 new jobs,
  added 3.5 million in annual city sales tax
  revenues..

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Federal Financing Programs DOT

• DOT highway and transit construction programs
• Can support brownfields by
• (1) upgrading existing facilities
• (2) offering transportation amenities that
  improve access to and marketability of sites
• (3) funding facilities and structures that serve
  as part of the remedial solution

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Riverfront redevelopment -- Moline, IL

• largely abandoned riverfront
• converted to residential and marina/mixed use
  complex and commercial space
• Leverage -- 3.2 million in state and federal
  funding included DOT funds for roads and
  enhancements

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Marsh Island Carry Old Town, ME

• Transformation of an under-used contaminated
  warehouse site to a revitalized waterfront park
  and commercial property
• Funding included a 400,000 Enhancement Grant
  from Maine DOT for the park and walkways
• Leverage funding sources include
• 400,000 CDBG for infrastructure
• 24,500 from the National Trails Recreation Act
  for trails, walkways, and river stabilization
• 8,000 from ME Forest Service for tree planting.

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USDA Rural Development Programs With Possible
Brownfield Links

• Community facility loans and grants can support
  development activities that include industrial
  park sites or access ways
• Business and industry loans are available to
  public or private organizations to improve the
  economic and environmental climate in rural
  communities.

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USDA Rural Development Programs With Possible
Brownfield Links

• Intermediary Re-Lending Program intermediaries
  such as local governments are loaned money to
  re-lend to companies, in order to finance
  business facilities
• Rural development grants given to provide
  operating capital and finance emerging private
  business and industry, including conversion,
  enlargement, or modernization of buildings,
  plant, and equipment.

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East Coast Steel Greenfield, NH

• 2.54 acre site in Greenfield, NH (pop. 1,519)
  abandoned by East Coast Steel
• Cleanup completed in late 2003
• In 2004, the town redeveloped the site as a
  community septic system and open space park
• USDA Community Facilities Loan was a critical
  part of the 2.1 million in project funding,
  along with G.O. bond proceeds

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Federal Financing Programs Tax Incentives

• BROWNFIELD EXPENSING TAX INCENTIVE
• Deduction pegged to cleanup costs, which allows
  new owners to recover cleanup costs in the year
  incurred only incentive targeted to private site
  owners.
• Expired 12/31/03 Congress re-renewed to
  12/31/05, retroactive to the first of this year

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Inryco and Babcock Wilcox Milwaukee, WI


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Federal Financing Programs Tax Incentives

• REHABILITATION TAX CREDITS
• Taken the year renovated building is put into
  service
• 20 credit for work done on historic structures,
  with rehab work certified by state
• 10 credit for work on non-historic structures
  build before 1936 no certification required

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Sherman Perk -- Milwaukee, WI

• Abandoned gas station, closed since 1989
• Issues of financing/addressing cost of petroleum
  contamination 9 years tax delinquency
• Financing included state forgiveness of back
  taxes linked to VCP participation, rehabilitation
  tax credits
• Leverage reuse of historically significant
  building as successful neighborhood retail anchor

After
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Federal Financing Programs Tax Incentives

• LOW-INCOME HOUSING TAX CREDITS
• Can encourage capital investment in affordable
  housing projects on brownfield sites
• States get a population-based allocation for
  distribution to communities and non-profits

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Circle F Senior Housing Project Trenton, NJ

• Former industrial building converted to 70 units
  of senior housing
• Developed by non-profit housing organization,
  partnering with bank
• LIHTCs a key piece of financing package

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Low-Cost/No-Cost Tools That Enhance the Climate
for Brownfield Transactions

• Institutional controls
• California Speedway
• Home Depot, Honolulu
• Innovative remedial technologies
• Williamsport retail
• Cost saving technical assistance/project support
• Victor Building, Camden
• Environmental insurance
• Office building, Cambridge
• Creative revenue generators/offsets
• Golf course, Wyandotte
• Riverfront revitalization, Stamford
• Mills of Carthage, Cincinnati

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California Speedway Fontana, CA

• Institutional controls
• Speedway on a portion of 23-acre former Kaiser
  Steel Mill site (from 1942 to 1983)
• Raceway and interior facilities used as an
  environmental cap, saving hundreds of thousands
  in cleanup costs
• The California Speedway opened in June 1997
• In 2004, Speedway generated 12.5 million in
  economic activity, 2.5 million in new tax
  revenues and 1200 new jobs.

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Home Depot Honolulu, Hawaii

• Institutional controls
• First site through Hawaii VCP
• Anchor for new commercial redevelopment area
• Institutional controls venting, capping,
  monitoring wells key to economic viability of
  project

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Downtown retail, Williamsport, PA

• Innovative technologies
• former airplane engine factory, abandoned nearly
  50 years, with groundwater contamination that
  proved too costly to treat by conventional means
• state and local governments worked with
  developer to identify innovative cleanup
  technology that would work within standards of
  VCP
• Result retail complex and parking facility

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Victor Building Camden, NJ

• Cost saving technical assistance and project
  support
• Abandoned former RCA Victor Building on Camdens
  waterfront, with pervasive PCBs
• Site intended for residential re-use challenge
  was keeping 7 million cleanup manageable
• NJDEP provided t.a. to developer, working with
  him on remedial and monitoring applications, ICs,
  entombment of residual PCBs strategies that
  allowed cleanup and redevelopment to go forward
  concurrently, all with considerable cost savings
• Result 60 million private investment in 341
  units, 1st market rate housing built in Camden in
  40 years, landmark Nipper Tower saved

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Genzyme Building Cambridge, MA

• Environmental insurance
• Century-old former Cambridge Gas Light MGP
  site, vacant 20 years, significant subsurface
  contamination
• State subsidized environmental insurance key to
  leveraging private financing
• Result -- contaminated brownfield site now home
  to new mixed-use 1.3 million sq. ft.
  transit-oriented development that is transforming
  Cambridges Kendall Square neighborhood.
  Signature 12-story Genzyme Building is seeking
  LEED certification

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Chemical Site on Detroit River Wyandotte, MI

• Creative finance
• Defunct, 84 acre chemical manufacturing plant
  along the Detroit River, converted into a public
  recreation area and a 9-hole golf course
• User fees have allowed the golf course to be
  self-supporting and pay for maintenance of the
  park.
• The nine-hole, par 36 golf course cost
  approximately 5.2 million in public
  funds--supported primarily from Wyandotte's tax
  increment finance district and the issuance of
  tax increment bonds.

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Stamford, CT Riverfront Revitalization

• Creative finance
• Earmarking of tax revenue from brownfield
  successes
• Public investment in first site, rolling tax
  revenues into subsequent sites

After
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Mills of Carthage Cincinnati, OH

• Creative finance
• Abandoned industrial property was transferred to
  new owner for 1, in exchange for an agreement to
  take
• site through Ohio VCP, clean it up, and reuse it
• First new housing in Carthage neighborhood in 40
  years

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Charlies Web Site

• www.nemw.org/brownfields.htm
• Federal Legislative Proposals to Promote
  Brownfield Cleanup and Redevelopment - whats
  happening in Congress
• State of the States - profiles of state VCPs,
  including new information on financing
  incentives, economic benefits, eligible
  contaminants, cleanup standards, and
  institutional controls
• Guide to Federal Brownfield Programs - detailed
  information on programs throughout the federal
  government that can promote and support
  brownfield cleanup and redevelopment
• Financing options for brownfield cleanup and
  redevelopment
• Contacts in state and federal brownfield programs
  
• Link to EPA brownfield home page
• Links to brownfield databases and organizations