Redevelopment and Reuse: Conquering Brownfields

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Redevelopment and ReuseConquering Brownfields

• Michael Prager
• Land Recycling Team Leader
• Wisconsin DNR

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Brownfields

• Abandoned, idle or underused industrial or
  commercial facilities or sites, the expansion or
  redevelopment of which is adversely impacted by
  actual or perceived contamination.

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Brownfields

• Real Estate development with environmental issues
• Challenges of redevelopment

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Why Wisconsin?

• One of the top manufacturing states in the
  nation.
• Have been hit hard by manufacturing flight from
  state and country.
• These properties reside in key locations in
  Wisconsin, or if not, need to be addressed due to
  public and environmental health issues.

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A primer

• State of the
• Brownfields Market

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Why brownfields?

• Estimate 8,000 brownfields in Wisconsin
• Location location location
• Close to jobs
• Waterfront properties
• Downtown
• Utilities, transportation infrastructue
• Financial incentives TIF, CDBG

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Why the hesitation?

• Federal environmental liability
• State environmental liability
• Upside down real estate deals
• Continuing liability concerns
• Abundance of green space

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Why the hesitation?

• State and Federal Liability - bottom line in WI
  New owner may be held responsible for cost to
  cleanup site
• Schedule delay
• Increased cost

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Why the hesitation?

• Brownfields Real Estate Pyramid

Property value greater than cleanup costs
Needs some pubic sector assistance
Increasing public sector investment
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Redevelopment Market Today

• Significant changes in last decade
• Federal and state governments have initiated
  brownfields programs - Financing Incentives
• Technical assistance
• Liability protections
• Emergence of local governments as developers

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Wisconsin Market Place

• Can be in any community
• Small rural towns, Milwaukee and inner-ring
  suburbs (West Allis), medium size cities
  (Sheboygan, La Crosse, Wausau, etc. )
• Commercial, Green Space, Residential, Industrial,
  Mixed Use, Anything......

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Milwaukee Journal Sentinel
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Fond du Lac georgetown cleaners
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sun prairie cannery square
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Wisconsin Market Place

• Hundreds of properties have been cleaned up and
  redeveloped across state
• 91 Certificates of Completion
• 440 Site Assessment Grants - 15 Million
• 178 Brownfields Grants Dept. Commerce - 65
  Million
• Thousands Have Yet to be Addressed
• Increase in number of plants closing
• 2008 84
• 2009 195

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Midwest Market

• Developers chose brownfields due to
• Location
• Low land prices
• Subsidies
• Available comprehensive plan
• Proximity to public transit highways
• Experience with brownfields
• (Professor Chris DeSousa UWM)

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Midwest Market Place

• DevelopersThe more experienced developers
  consider brownfields management as just another
  aspect of development. While those with less
  tend to react more cautiously, but are willing to
  do it again.
• (Professor Chris DeSousa UWM)

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The Art of the Deal

• Team find your advocates
• Due diligence quantify risk
• Financing move up the pyramid
• Balancing integrate clean up reuse
• Managing risk liability protections and
  insurance
• Timing dont underestimate it

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Form a team

• Find the partners
• Identify roles and responsibilities
• Find a vision for project
• Look for non-traditional partners
• Public Private

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Sheboygan
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Due Diligence

• Prior to purchase, conduct environmental
  assessment
• Quantify risk
• Clarify state and federal liability
• Figure out liability exemption options
• Due diligence can protect your investors and make
  you eligible for federal funds

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Databases

• BRRTS - data
• dnr.wi.gov/org/aw/rr/brrts/
• RR Sites Map GIS
• dnr.wi.gov/org/aw/rr/gis/

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Financing

• Moving your project up the pyramid key is to
  flip it to the private sector
• State sources grants, loans
• Federal sources grants, loans, tax incentives
• Local government TIF
• No single, magic solution
• Key is to layer financial incentives

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Why the hesitation?

• Brownfields Real Estate Pyramid

Property value greater than cleanup costs
Needs some pubic sector assistance
Increasing public sector investment
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Balance Clean up and Reuse

• Must determine depth and width of contamination,
  including what types
• Design a remedy that fits the reuse of the
  property
• Do I have legal limitations?
• Do I have environmental/health limitations?
• Do I have technical/engineering limitations?
• These limitations will affect the end use

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Managing Risk

• Liability exemptions
• Private parties
• Local governments
• Lenders
• Investors
• Private Insurance
• Structured clean up deals

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• Voluntary Party Liability Exemption
• VPLE allows a property owner to work with DNR to
  clean up a site.
• When completed, it gives the owner a reprieve
  from future liability.

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VPLE ExampleOutpost Natural Foods Wauwatosa

• Before
• Vacant former chemical supplier

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VPLE ExampleOutpost Natural Foods Wauwatosa

• After
• 3.2 Million -14,000 sq. ft. green grocery
  store

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Timing

• Its not as easy as a farm field development
• It will take time build it into your
  development schedule
• Creative thinking- concurrent activities
• Its worth it

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Germantown - Washington Square Mall Installation
of Injection System
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Germantown - Washington Square Mall Development
Built on Remedial System
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Its clean, right?

• Since its been cleaned up, I can do just about
  anything with this project, correct?
• Well, not really.
• Check the database for continuing obligations

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Thoughts

• Groundwater contamination
• Think about vapor issues with respect to your
  development
• Most developments on public water
• Soil contamination
• Excavation costs
• Control use of property for plantings, green
  space, etc.

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A brief tour of Wisconsin brownfields

• .despite the challenges, people coming together
  and making great places

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west Milwaukee Mobile blasting
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west Milwaukee Mobile blasting

• Extensive contamination at former sand blasting
  and painting business with large amount of
  delinquent taxes
• Project received 1.8 million in State Funded
  Response funding 390, 000 Department of
  Commerce Brownfields Grant
• Real Estate Recycling built new green building
  (Stadium Business Center) housing multiple
  office/ showroom businesses
• Increased tax base by more than 2.5 million

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west Milwaukee Mobile blasting
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Sheboygan - South Pier

• Confluence of Sheboygan River and Lake Michigan
• Over 100 years of industrial use, coal handling,
  fuel storage, lumbar yard, fertilizer
  distribution, more.
• PAH, lead, arsenic chloride
• PCB sediment contamination in river (Superfund
  site)

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Sheboygan - South PierMixed Use Plan

• Dune restoration area, eco-park with trails and
  beach access w/ prairie grass and wood plank
  cordwalk
• Blue Harbor Resort - Private development with
• - hotel - water park - conference center
• - restaurant - residential condos

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Sheboygan - South PierPrivate Public Financing

• 12 Million City of Sheboygan TIF
• 262,000 Coastal Management Grant
• 67,000 Rotary grant for trail
• 21,333 County Stewardship grant
• 135,741 DNR Stewardship grant
• 2.6 million DNR Land Recycling Loan
• 1.1 million Commerce Brownfields Grant

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Sea-wall River-walk restoration Lakefront
promenade
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Sheboygan, now
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Oshkosh Riverside Park

• Former Manufactured Gas Plant
• WPS undertook huge remedial action
• City bought property in 2003
• Expanded existing park built new amphitheater
• Private Donations, 500,000 in various state
  grants, City investment

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Oshkoshs Riverside Park
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2010 and Beyond

• Build on Success
• Learn from Others
• Invest in Future
• Plant Recovery Initiative

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Questions??

• Michael Prager
• 608-261-4927
• michael.prager_at_wisconsin.gov
• http//dnr.wi.gov/org/aw/rr/