Government Funding Sweetens Site Redevelopment
With grants and incentives available from the federal to the local levels, brownfields are attracting businesses seeking well-positioned sites.
Mark Crawford (2011 Directory)
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Dermatology Associates of Wisconsin redeveloped a brownfield in Manitowoc, Wisconsin, with $310,000 in state funds.
"Many states use tax credits as their principal incentives, so developers must front the money and hope to have successful project," Reidy says. "In Ohio, however, $3 million is available for a brownfield redevelopment project. Up to $1 million of that money can be used to buy the property. The rest is used for demolition and environmental remediation. The developer can then use other state programs to receive as much as $8 million to cover additional development costs, including constructing facilities and installing new equipment."
The largest potential downside for a brownfield project may be the time it takes to complete the remediation and demolition. However, this is frequently offset by the presence of all needed infrastructure.
EPA Leads the Way
The EPA Brownfields Program was established in 1995 to encourage the cleanup and re-use of an estimated 450,000 abandoned and contaminated U.S. waste sites. The EPA has awarded 1,702 assessment grants totaling over $401 million, 262 revolving loan fund grants totaling over $256 million, and 655 cleanup grants totaling $129 million to date.
With another $100 million destined for brownfield redevelopment through the ARRA, state and local governments are competing for cleanup grants, revolving loans, and job training. As of March 2010, the EPA program had leveraged more than $14 billion in cleanup and redevelopment funding.
Not only are properties being cleaned up, jobs are being created, from the business and legal services that identify and manage the complex environmental risks and liabilities, to the construction labor and ancillary industrial, commercial, and residential interests that arise.
Additionally, the Brownfields Economic Development Initiative (BEDI), HUD's competitive grant program, promotes economic and community development. BEDI helps cities target abandoned, idled, and underused industrial and commercial facilities for redevelopment. Properties are typically located in economic development zones, boosting near-term economic opportunities for low- and moderate-income people there, which HUD weighs considerably when approving BEDI funding. HUD does not consider applications for projects that are limited to site acquisition or remediation (dubbed land banking) where there are no plans for immediate redevelopment.
States: All In
State levels and structure of financial support for brownfield development vary. In Wisconsin, developers first undertake remediation, submit proof of work completion, and receive state grant money to defray clean-up costs.
"The state of Wisconsin established its brownfield program because it was getting increasingly difficult for companies to finance environmental cleanup through traditional means," Hozeny says. "Sites weren't being developed because there was an uncertainty about how much it would ultimately cost. Now the state steps up to provide the funding for remediation, often through the establishment of TIF [Tax Increment Financing] districts, which then makes it easier for these projects to get financing for construction through conventional methods."
In 2009, Dermatology Associates of Wisconsin purchased a brownfield site in downtown Manitowoc to build a five-story administrative headquarters and create 124 jobs. The state of Wisconsin contributed $310,000 for environmental clean-up costs to the $6.7 million project.
"We considered both brownfield and greenfield locations," says Tricia Wagner, Dermatology Associates vice president. "We wanted to be in the city and help revitalize downtown Manitowoc. The brownfield grant made this option more affordable. Developing this property was great public relations for us. We are also eligible for Wisconsin Economic Development tax credits totaling about $540,000 for the new jobs we will create over the next three to five years."