[DJC]
[Environmental Outlook]
August 20, 1998

California Superfund site shows what Greenfield can do

By DAVID KIMBALL
Greenfield Development

Greenfield Development began as a brainstorm between James C. Towne and George Blackstone as they sat talking in the Bellevue Club in January, 1996.

Both men are Seattle area entrepreneurs. Jim was Microsoft's first recruited president and chief operating officer from 1982 to 1983. Since that time he had established a winning record at a number of high-tech startups.

George came from a manufacturing background but during the previous five years he held executive positions within the environmental industry. His interest in the environmental business began in the mid-1980's when he found himself personally ensnared by "joint and several" liability for contamination discovered at his manufacturing facilities, a problem caused by previous owners.

Greenfield Advisory Board

Greenfield Advisory Board Members William D. Ruckelshaus (left) and Robert J. Holmes (standing, right) review an OII Superfund redevelopment plan with James C. Towne, chairman (standing, center) and George Blackstone, president and chief executive officer (seated).


As the two men discussed the opportunity for an environmental startup, a simple but contrarian concept emerged for a new real estate venture: rather than avoid properties that were plagued by contamination and liability issues, the company would actively seek out and purchase contaminated sites. The firm would indemnify the sellers and the buyers. The cleanups would be managed in cooperation with leading environmental engineering firms.

Greenfield's concept has not changed since that conversation. It is a concept which has been pursued by several "brownfield redevelopment" companies that have emerged during the last three years. Like Greenfield, these firms were responding to state and federal legislation that began to provide mechanisms for dealing with liability in a more rational way.

Of course, the boom in real estate values also helped draw common sense attention to contaminated inner city sites with the quality of location and infrastructure that caused their development in the first place.

But if the company's concept was simple and widely shared by other firms, the results for many brownfield redevelopment companies have been sketchy at best. Although the "brownfield industry" is only four years old, dating from the 1995 U.S. Environmental Protection Agency's Brownfield Initiative, consolidation has already begun. Smaller brownfield redevelopment firms have begun to disappear. Some have been absorbed by larger entities -- an example is the purchase of Denver-based Land Bank by International Technologies Corporation.

Seminars on brownfields have become more frequent than actual cleanups. According to Charles Bartsch, project director for the Northeast/Midwest Institute, a Washington D.C. public policy research organization, about one percent of the country's 450,000 contaminated sites have been remediated. What seemed like a great opportunity to go bottom fishing for discounted properties has emerged as an enormously demanding enterprise, requiring a multi-disciplinary team of professionals.

The Greenfield team is, in fact, the reason our firm has survived and even thrived during this early phase for the brownfield industry. Jim Towne, chairman, and George Blackstone, president and CEO, assembled a board of advisors which included William D. Ruckelshaus, a Seattle resident who was twice administrator of the EPA and also served as acting FBI director and as deputy U.S. attorney general.

Robert J. Holmes, president and CEO of Harbor Properties in Seattle, joined the Greenfield board of advisors with the kind of broad-based real estate acumen that can only come from a 30-year career in both major private sector developments as well as public sector activity which includes his experience as executive director of the Portland Development Commission.

John Funderburk joined Greenfield as environmental director in mid-1997, following 11 years as director of Industrial Development Services for Seattle-based Hart Crowser. Lewis Norry joined last year as a Greenfield partner in the East, bringing his depth of experience as a third-generation redevelopment specialist. And in April, Ernie Velton came to Greenfield as chief financial officer, leaving his position as vice president and senior project lending officer for Seafirst Bank in Seattle. Elliott Laws, the former deputy administrator of the EPA, has provided guidance from his new post as a partner at Patton Boggs in Washington D.C.

This team has allowed us to find our niche position: we strive to be the best at dealing with the most complex properties -- sites with multiple layers of environmental, political and economic challenges. Every Greenfield project involves the management of significant risk. Patience is required.

Greenfield's niche is best defined by our work on the OII Superfund, a landfill in Monterey Park, Calif., near Los Angeles. For more than 10 years, it was an example of Superfund conflict and congestion.

By working to align the interests of all parties involved with the property, Greenfield has been able to separate a 45-acre parcel from the 195-acre site. We will remediate and install infrastructure under a series of agreements with the EPA, the steering committee for more than 2,000 "Potentially Responsible Parties," (Superfund-speak for parties being held responsible for the cleanup), two city governments, the estate for the owner/operators, the current tenants and the future developer.

In 1999, construction will begin on a retail center which will generate property and sales taxes and hundreds of new jobs on a site which has been noteworthy mainly for its years of environmental blight on the surrounding communities.

We are now working on a number of other brownfield projects such as a 40-acre site near Princeton, N.J., and a 175,000-square-foot contaminated industrial building in Toledo, Ohio. We have projects pending in Indianapolis, Chicago, Baltimore and northern Maryland. Two projects are also under negotiation in Seattle.

But the OII Superfund site is the clearest paradigm for our business: if contamination has destroyed an otherwise promising location, and if the problem has set off some challenging legal and community conflicts, then Greenfield has the chance to show that the worst can become the best if you have perseverance and the right team.


David Kimball is executive vice president of Greenfield Development.

Copyright © 1998 Seattle Daily Journal of Commerce.