Feature
What incentives does your state offer?
When you look at state-sponsored incentives created to get brownfields cleaned up, programs vary from state to state as much as the sites themselves.
In EPA Region 10, Oregon and Washington have older, more established incentive programs. Idaho has come up with some unique programs, but is still in a fledgling stage when it comes to putting its state-sponsored incentives to work. And Alaska is still in the process of developing state incentives, although there are some local government tax benefits to develop distressed properties. Just last month, a coalition of economic development and environmental management organizations submitted for the second consecutive year an application to EPA. The application requests $3 million to capitalize a revolving loan fund (RLF) for the cleanup of brownfield sites, similar to the RLFs available in Washington and Oregon.
“Through the work of our Alaska Brownfield RLF Coalition, we have verified the importance of financial incentives to increase the viability of brownfield redevelopment,” says John Carnahan, brownfields coordinator at the Alaska Department of Environmental Conservation. “We hope a successful RLF application to EPA significantly elevates the visibility of the brownfield problem across Alaska and potentially leads to more state financial support, with regards to reinvestment in our brownfields."
The following is a list of state incentives targeting brownfields in Region 10:
Idaho
Idaho Community Reinvestment Pilot Initiative:
Created last year, this pilot program will provide up to $1.5 million in state funds to 10 private and non-profit entities completing cleanups approved by the Idaho Department of Environmental Quality (IDEQ). Upon cleanup completion, the state will issue a Community Reinvestment Rebate equaling 70 percent of cleanup costs incurred, with a maximum rebate of $150,000 per brownfield. As of mid-December, IDEQ had received 20 applications for the new program. The state expects to have about 30 by the Jan. 17 application deadline.
Idaho Land Remediation Act:
Established in 1996, this act provides a property tax incentive that can be utilized if a property owner is enrolled in Idaho’s Voluntary Cleanup Program. For example, if a brownfield property is worth $100,000 before cleanup and the property value jumps to $200,000 after cleanup, the owner pays no property taxes for seven years on half the appreciated amount, or $50,000. No business has yet to use the property tax incentive; however, the state expects that to change soon because projects around the state are nearing completion, says Aaron Scheff, IDEQ brownfields program manager.
Washington
Washington Coalition Brownfield Revolving Loan Fund:
The Washington Department of Community Trade and Economic Development (CTED) received $2.5 million dollars from EPA to capitalize an RLF for cleanup. Private and publicly owned properties throughout the state are eligible. Cleanups must be done through the State Voluntary Cleanup Program and meet additional federal cleanup and public involvement requirements. Government jurisdictions and non-profit entities can receive a loan/grant combination. Sharon Kophs, brownfields program manager for CTED, reports that nearly all of the RLF monies have been allocated at this time. About $890,000 is left of the $6.8 million fund, she says.
Brownfield Site Assessment Funding:
CTED and the Washington Department of Ecology (DOE) provide $120,000 to work with prospective purchasers to determine eligibility and assist them through completing Phase I and Phase II site assessments prior to entering the RLF loan process.
Coastal Revolving Loan Fund and Coastal Technical Assistance Loan Fund:
Available only in Clallam, Jefferson, Grays Harbor, Pacific and Wahkiakum counties, this RLF offers up to $150,000 to businesses conducting cleanup that will lead directly to the creation or retention of at least one job for each $50,000 in loans. The technical assistance loan fund offers local governments and businesses up to $50,000 for cleanup-related projects, such as local municipality feasibility studies, that will lead to job creation or retention.
Remedial Action Grant Program:
This program is available to public entities that are potentially liable, own a site but are not liable, or are facilitating an area-wide groundwater cleanup caused by the contamination on a brownfield. Money is used for assessment and cleanup. Washington’s DOE will award about $60 million in the 2005-2007 biennium.
Oregon
Oregon Coalition Brownfields Cleanup Fund:
This program offers a low-interest and grant financing option for projects on properties impacted by the existence of hazardous substances and for which cleanup of the contaminants is necessary before development or redevelopment can occur. The Oregon Economic and Community Development Department (OECDD) administers the program.
Oregon Brownfields Redevelopment Fund:
The redevelopment fund is a direct loan and grant program to conduct environmental actions on brownfields, primarily industrial and commercial properties. Created in 1997, the program helps private parties and local governments evaluate, clean up and redevelop brownfields. In 1999, the fund allocated $500,000 to about a dozen projects. The fund was recapitalized early last year to $9 million.
Throughout Region 10, incentives vary and other funding options exist. In some cases, state officials also have become savvy when it comes to locating other funding for brownfields projects. There are a number of grants and resources used in the redevelopment of contaminated lands that aren’t specifically earmarked for brownfields, Kophs says. For examples, see the August 2005 issue of Building on Brownfields. Washington also has a new program called the Local Infrastructure Financing Tool that may be useful. More information about alternative programs in Oregon are at econ.oregon.gov.
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Problem Solver
Oregon conference promotes brown as the new green
The Oregon Brownfields Conference has grown to become that state’s premiere brownfields learning and networking opportunity for people looking to redevelop contaminated industrial and commercial lands into economically viable properties.
Now in its sixth year, the two-day conference has grown every year, says Karen Homolac, brownfields program and policy coordinator for OECDD. This year, up to 300 people are expected to attend.
“I want people to walk away from the conference feeling like it has added to their ability to redevelop a brownfield in some way,” Homolac says, “even if it’s as simple as knowing whom to call.”
Presented by the Oregon Economic and Community Development Department (OECDD), Oregon Department of Environmental Quality, the Northwest Environmental Business Council and the City of Salem, the conference will be held March 1 and 2.
The 2007 conference, titled “Brown – It’s the New Green,” is being held at Salem’s new conference center, which is only six blocks from the state Capitol, in hopes of attracting some legislators to the event. The state Legislature will be in session, so this will be an opportunity for leaders to attend a few conference sessions, Homolac says. Some conference sessions, including those on eminent domain and keeping industrial lands industrial, are especially timely for Oregon right now, she adds.
“Our hope is to be able to get a broad range of participation, from the legislators themselves to their staff members to the private owner of a property impacted by contamination,” Homolac says.
The conference will cover a variety of topics to appeal not only to those new to the field, but also to those who have been working with brownfields for years. For the newcomers, sessions focused on petroleum sites, environmental insurance and financing strategies will be helpful. More cutting-edge sessions will appeal to experienced participants, including one on electronic tools for data research and another on the current dialogue surrounding the issue of vapor intrusion. The session “Next Generation – Maintaining Environmental Constraints” also looks at how local jurisdictions can continue to safeguard their communities as these properties, now cleaned up, change hands. Other sessions include the redevelopment challenges of former landfills, new environmental insurance products and their application, and redeveloping brownfields to biofuels.
The keynote speaker during the March 1 luncheon will be Bill Lunch, professor and chairman of the political science department at Oregon State University and political analyst for Oregon Public Broadcasting. The conference will also feature several national speakers. Among them will be Mary Hashem, a partner with Brownfield Partners LLC in Denver, Colo., a private brownfields real estate investment and acquisition company. Hashem will join Paul Benoit, the city manager of Astoria, in a discussion about how to market a brownfield. Charlie Bartsch, vice president of ICF International in Fairfax, Va., and a national expert in the brownfields realm, will be on a legislative panel discussing issues emerging around paying for brownfields cleanup and redevelopment.
New this year is an exhibit hall showcasing the Northwest’s best technologies and services and an awards ceremony. The Oregon Brownfields Awards will recognize the efforts and achievements of communities around the state, Homolac says. The awards honor individuals or groups that have implemented innovative cleanup projects that stimulated economic development through job creation or retention, addressed a critical community development need or resulted in significant protection of human health and the environment. The Unsung Hero Award also will be given to a person or organization that has made brownfields redevelopment a reality.
Scholarships are available to offset hotel costs and conference fees. Applications will be taken through January. Anyone who deals with brownfields and lives in Oregon is eligible to submit a scholarship application for consideration.
For a complete list of sessions or to register, or for more information about the scholarship application and the Oregon Brownfields Awards, go to www.nebc.org/brownfields. Or contact Homolac at 503.986.0191 or Karen.Homolac@state.or.us.
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Groundwork
Property transactions often the hard part
Many a developer has described feeling frustration when, after working on a brownfield property transaction for months, maybe even years, the environmental cleanup phase took less than 12 weeks.
It’s often true the property transaction phase of a brownfield can take more time than the cleanup phase, says Claudia Powers, an attorney and chair of Environmental Practice at Ater Wynne LLP in Portland. This deal-making phase requires some finesse and lots of skill and thought. Powers warns that everyone involved must stay focused on the process because there are many hurdles along the way that can stymie the property transaction.
At a recent brownfields networking meeting of the Oregon Department of Environmental Quality, Powers led participants through the process she follows when working with clients on property transactions:
Identify key stakeholders and their risk tolerance
Powers first asks potential property owners how much risk they are willing to take on. If the answer is nothing, than the transaction isn’t going to happen. You can’t get to zero risk in a brownfield, she says. “Everybody has to be able to take a little risk,” she says. And that includes everyone involved in the process, from the current owner and regulators to the lender and developer. Once you understand this, you’re in a place to move forward, she says.
Understand the primary sources of risk
Try to determine what kind of risk you will be taking on. Look at regulatory liability as well as third-party liability. Don’t forget to assess the project’s impact on current and future property values. If the property was never a valuable, viable piece of real estate, many times it still won’t be after cleanup, Powers says. You also must determine the kind of impact contamination will have on financing and future operations. And keep an eye on your local economy, she adds. No matter how good a property may be, if the economy isn’t doing well, the risk of developing at that time may be too big.
Determine a strategy
Understand and control your risks early in the process, Powers says. Obviously, you need a cost-effective investigation and remediation. Try to think about how you would build the answer to your problem into the goal of your project, she says. You also need to understand your local regulatory and political landscape. Determine reasonable liability protection and preserve cost recovery options.
Develop an owner/operator and prospective purchaser/developer relationship
Do this by identifying the scope of the environmental issues. Reach an agreement on basic cost and information sharing and determine any off ramps for the project, Powers says. Begin contact with regulators but be mindful of confidentiality and timing issues. This is the stage where the environmental attorney and consultant will collaborate to manage confidentiality, documentation, costs and liability.
Complete preliminary investigation and development planning
Remember, the more you know, the less the risk you take and the better position you will be in, Powers says. Sophisticated players have been held up because they didn’t have all of their information. “If you don’t know what you have your arms around, it will be slow,” she says. This means understanding the history of the site. Complete those Phase I and II environmental site assessments. Begin pulling in more outside help. Integrate the professional disciplines to enhance the development and cleanup options. Begin consultations with your local government’s land use and economic development agencies. And identify people who can be your champion in the community to move this project forward, Powers says.
Find the right tool for the job
There are several tools to be used in the property transaction phase. Contractual risk control tools include cleanup escrows, future site use restrictions, time limitations on liability, liability caps, insurance and indemnities. Don’t forget to look into a Prospective Purchaser Agreement as well as institutional and engineering controls and land use incentives.
How long it takes to complete the property transaction varies with each brownfield site, Powers says. But if you have experienced buyers, sellers and regulators, you can bring the property transaction together fairly quickly. If the players are less experienced, it will take more time.
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News and Events
The "tax extenders" bill that Congress recently approved included a provision to extend the Brownfields Expensing Deduction through 2007 and to expand the program to include petroleum cleanups. The brownfields tax expensing law makes cleanup expenditures deductible in the year the expenses were incurred. This approach, originally adopted in the Community Renewal Act of 2000, treats cleanup of hazardous substances as a repair to the land, rather than a capital expenditure that must be depreciated over time. For more information about the credit, see http://www.epa.gov/swerosps/bf/bftaxinc.htm.
Discussion has begun across the Pacific Northwest to form chapters in Oregon and Washington of the Chicago-based National Brownfield Association (NBA) www.brownfieldassociation.org. The only association dedicated to representing the diverse interests of brownfield stakeholders, the NBA has 18 chapters in the United States and Canada and more than 1,300 members. Needed are people who are interested in being nominated to serve on the chapters' first executive committees. This would include people from leading public agencies, economic development organizations, law firms, real estate development and brokerage companies, environmental engineering and consulting firms, utilities, non-profit advocacy groups, property owners, investors, finance and other brownfields professionals. An informal meeting with the executive committees will be held early this year and an announcement will be made in March at the Oregon Brownfields Conference. NBA Executive Director Robert Colangelo will attend to discuss the NBA vision for the region. For more information, contact Brad Hill at 541.617.6106 or bradleyahill@gmail.com. Or contact Stephanie Schultz at NBA headquarters at 773.714.0407, extension 24, or at stephanies@brownfieldassociation.org.
EPA funding opportunities are available for projects focused on training and research to support tribal cleanup programs. Grant applications must be postmarked by Jan. 26. Information about “Solid Waste Management Assistance Grants – Support for Tribal Response Programs Focused on Brownfields Redevelopment” is available at http://www.epa.gov/oswer/docs/grants/07-05.pdf. Information about “Training, Research and Technical Assistance Related to Methamphetamine Contaminated Brownfield Sites in Indian Country” is at http://www.epa.gov/oswer/docs/grants/07-04.pdf. If you have questions, contact Joseph Bruss at 202.566.2772, or bruss.joseph@epa.gov.
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