Brownfields: property cleanup and redevelopment incentives By LORI COHEN Environmental Protection Agency The Environmental Protection Agency launched a new, non-regulatory initiative in 1995 to encourage cleanup and redevelopment of underutilized industrial properties, or "brownfields." In a short time, the Brownfields Initiative has shown successes, received bipartisan support and created business opportunities. It has sparked a lively debate in Congress which will determine how this country will proceed to clean and revitalize the estimated 500,000 brownfields sites throughout the country. The early years of the EPA's Superfund program focused on investigation, technology development and cleanup of severely contaminated hazardous waste sites throughout the country. As the program evolved, two things became clear: the potential for Superfund liability jeopardized the reuse of contaminated or potentially contaminated properties, and cleanups are often most efficient if future land use could be incorporated into the cleanup decisions. With recognition of these issues and increased growth management efforts throughout the country, the Brownfields Initiative quickly gained momentum. Although redevelopment of contaminated sites is not a new idea, the emphasis the federal government placed on the Brownfields Initiative has spurred a flurry of activity. In June, the U.S. Conference of Mayors identified brownfields as one of three key agenda items that face the nation's cities. What is the Brownfields Initiative? The Brownfields Initiative offers support to states and communities to clean and redevelop sites that have perceived or known contamination. The EPA's efforts have focused on clarifying liability issues under Superfund, creating partnerships and outreach to other governmental agencies and the business community and establishing brownfields pilot projects throughout the country. In May, Vice President Al Gore expanded the federal commitment to Brownfields redevelopment and announced a federal partnership of more than 15 agencies to address brownfields issues. This represents a $300 million federal investment for brownfields redevelopment. The investment is expected to leverage from $5 billion to $28 billion in additional private investments to revitalize these properties. The most recent development in the federal program came on Aug. 5, 1997, when President Clinton signed the Brownfields Tax Incentive. The tax incentive is part of the Taxpayer Relief Act of 1997 and provides a three-year tax incentive plan that will reduce the cost of cleaning up thousands of contaminated, abandoned sites in economically-distressed areas. Cleanup costs at many brownfield sites are now tax-deductible in the year paid or incurred. This allocated $1.5 billion tax incentive is expected to leverage more than $6 billion in privately-funded cleanups at an estimated 14,000 sites throughout the country. Sites must satisfy certain requirements and must be certified by the state environmental agency to qualify for the tax relief. With federal impetus for the program, there have been many innovations to promote economic development by the private sector, and by state and local governments: New companies have been created solely for the purpose of buying, cleaning up and selling brownfields properties. Insurance products have been designed for brownfields redevelopment. State and local governments have set up tax incentive and loan programs to promote brownfields reuse. State agencies have established new environmental partnerships and policies to address brownfields concerns. Many states have new voluntary cleanup programs to encourage and expedite private party cleanups. EPA seed money for pilot projects The EPA's commitment to the Brownfields Initiative is approximately $125 million this year. Numerous policy changes have been made to remove some of the legal uncertainties under the Superfund law that are often associated with brownfields properties, and affect real estate transactions throughout the country. One such policy is the Prospective Purchaser Agreement Guidance that enables EPA to negotiate settlements with buyers of contaminated property that give up-front certainty and a limit to their liability. Similar policies are in effect in a number of states, including Washington and Oregon. Thirty-five agreements with prospective purchasers have been negotiated in the last several years in these two states combined. EPA's program also offers a variety of financial assistance to states, municipalities and tribes for Brownfields related activities. Financial assistance includes monies for brownfields pilot projects and monies for state voluntary cleanup programs to oversee and expedite cleanups. The cornerstone of the brownfields program is the 113 brownfields pilot projects that EPA is funding nationwide. Each project is funded up to $200,000 for a two-year period. Successful cleanup and redevelopment strategies identified under these pilot programs are being shared throughout the country. EPA's budget request to Congress calls for additional pilot projects to be funded next year. Port of Bellingham waterfront cleanup We are already seeing early success in the Northwest with the "seed money" that EPA is providing for these pilot projects. The Port of Bellingham pilot is a good example. The Port has facilitated discussions between the Georgia Pacific Company, the City of Bellingham and the Washington Department of Ecology for the phased cleanup and redevelopment of a 20-acre landfill in Bellingham's central waterfront. Under the current proposals, the commitment of $10.6 million in the first phase of the project would include construction of a 250,000-square-foot storage warehouse for Georgia Pacific on the old landfill site. This proposal is a major turn of events where concerns about environmental liability in the Bellingham Central Waterfront area have discouraged new business development. Mike Stoner, environmental manager for the Port of Bellingham, says, "The Port's redevelopment proposal is designed to overcome this impasse by addressing the environmental issues within the context of large-scale property development." The project will accelerate the cleanup and reuse of the landfill, allow Georgia Pacific to maintain its 800 local employees, and dramatically increase the city's tax base. Northwest brownfields pilot projects WASHINGTON: Port of Bellingham -- Cleanup and redevelopment of a 20-acre landfill site, in partnership with Georgia Pacific Company and the City of Bellingham. City of Tacoma -- Revitalization of 27 acres of urban waterfront in downtown Tacoma. Puyallup Tribe -- Evaluation of the purchase and redevelopment of a large industrial site in the Tacoma Tideflats area. Duwamish Coalition -- Development of appropriate cleanup levels for total petroleum hydrocarbons (TPH), a common contaminant on brownfields sites in Washington state. OREGON: City of Portland -- Development of local partnerships and tools for brownfields redevelopment in the Portland Waterfront and Enterprise Community of North/Northeast Portland. Oregon Mills Project -- Development of generic remedies and financial strategies for redevelopment of vacant mill sites. IDAHO: Panhandle Health District -- Providing business development information in light of ongoing cleanup and institutional control requirements in a 21-square-mile area. ALASKA: Ketchikan Gateway Borough -- Evaluation of reuse strategies for the recently closed 163-acre Ketchikan Pulp Mill site. EPA has also supported the development and implementation of state voluntary cleanup programs (VCPs). These programs provide an alternative to the approach where agencies enforce cleanups at the "worst sites first," and instead encourage site owners to come forward to cleanup their property. It is expected that most brownfields cleanup and redevelopment projects will be approved through state cleanup programs. This year, $10 million dollars has been allocated by EPA for funding to states for their voluntary cleanup programs. In the Northwest region, Oregon, Washington, Alaska and Idaho all have voluntary cleanup programs. It is important to recognize that state programs vary widely in site eligibility, administrative process and cleanup requirements. Should the Brownfields Initiative be expanded, and if so, how? This question is being hotly debated in Congress. There are at least 15 bills before the House and Senate regarding brownfields redevelopment. The debate revolves around some key issues including whether and how to: Renew and expand federal programs for brownfields efforts. These programs include support to state and local efforts to revitalize brownfields such as: the federal grant monies to state and local communities; monies for state voluntary cleanup programs, brownfields site assessment funds; and monies for loan funds for site cleanup. Promulgate brownfields legislation as a "stand alone" piece of legislation or have the brownfields program be a part of comprehensive revisions to the Superfund law. Establish the role of EPA with regard to oversight and/or approval of state programs. State voluntary cleanup programs vary widely and there has been much discussion about EPA's role of setting minimum guidelines or criteria for these programs. Related issues to consider are the overall role of the EPA in protecting human health and the environment, and the level of EPA involvement in low vs. high risk sites. One final issue that must be considered as well is the effect brownfields redevelopment has had with regard to "flexibility" in cleanup standards. This "flexibility" can consider future industrial uses at a site, and require a less stringent cleanup standard than a residential use. This "flexibility" can also allow wastes to remain on site where redevelopment will essentially "cap" or contain the wastes. Two concerns emerge with these flexible approaches. One is the need for long-term assurances that the site use does not change and that site controls to manage the on-site wastes remain in place. Another concern is the loss of Superfund's preference for treatment of wastes which may be ignored in the efforts to be quick and cost-effective. Treatment of wastes, the removal of source of contamination, and the removal of "hotspots of contamination" should continue to be considered as part of cleanup plans so that long-term protectiveness is assured and long-term liability is minimized. No one will argue that steps taken to encourage and expedite cleanup are a good thing -- but we must be careful in our approach making sure that our desire for efficiency does not compromise protection of human health and the environment. We believe that it is important to work with business, local and state government and communities to redevelop brownfields sites. Lori Cohen is the EPA Region 10 brownfields coordinator. If you see opportunities to work together on these matters, have success stories to share, or would like more information, call her at (206) 553-6523. The second annual EPA Brownfields Conference is scheduled for Sept. 3-5 in Kansas City, Mo. For more information, call (888) 795-4684. Brownfields information can be obtained on the Internet. For a summary of legislative proposals to promote brownfields redevelopment, call (202) 544-5200, or visit the Northeast Midwest Institute homepage.