August 3, 2006
Spokane does brownfields on a grand scale
By CHRIS BREEMER
In early 2005, 78 acres of contaminated land overlooking the Spokane River in downtown Spokane lay idle. The land had been neglected for nearly half a century because it was contaminated by railroad maintenance activities. A year later, the site, now known as Kendall Yards, is cleaned up and plans are being laid for construction of 2,600 residences and 1 million square feet of commercial space, worth up to $1 billion.
Cleaning up properties such as Kendall Yards is not easy, but with booming in-fill redevelopment in many urban areas, and the availability of millions of dollars of federal funds supporting these projects, there has never been a better time.
Brownfields are everywhere, in cities big and small and in rural areas. Common brownfields include former gasoline stations, dry cleaners, lumber mills and other industrial properties that are no longer in productive use. They vary from quarter-acre lots to 100-plus-acre properties. In many cases, brownfields are located in high-value areas such as central business districts or along riverfronts.
Despite the abundance of brownfield properties, many developers have, until recently, resisted investing in them. Common reasons for avoidance include: 1) cleanup costs can be difficult to determine; 2) public involvement is mandatory; 3) fear of a contaminated stigma on the redevelopment; and 4) federal funds are only available for prospective purchasers — not polluters or other liable parties.
Brownfield funds include below market-rate loans and grants. Loans are available to public and private groups. Grants are generally only available for government agencies and nonprofits.
The city of Spokane, recognizing the potential benefits of the Kendall Yards project, used a federal grant to assist with the redevelopment of the site.
The financial and community payback from a brownfield redevelopment can be significantly greater than the challenges. Some benefits that can be achieved include:
• A community is sustained through a stronger local tax base and job growth.
• The site is cleaned and public health is protected.
• Greenspace (undeveloped land) is preserved and growth is centered closer to existing infrastructure.
• Prime land is made available for redevelopment, stimulating activity in adjacent and nearby properties.
• Social costs associated with crime on abandoned or underused property are reduced, positively impacting municipal budgets.
• Local tax incentives, federal grants and below-market rate loans are available for assessment and cleanup.
Based on the commercial build-out, it is projected that the Kendall Yards project will generate over $32 million in sales and use revenue during construction alone. Property taxes on the proposed 2,600 residential units will conservatively generate about $12 million a year for the local community.
By putting idled urban property back to work, municipalities can significantly reduce their operation and maintenance costs by centering development closer to the existing infrastructure.
Idled property and buildings can be a haven for crime and social problems. Security costs associated with police, fire and ambulance calls to these idled properties can be reduced when the property is put back into productive use.
Secrets for success
Faced with real or perceived contamination, uncertain cleanup costs, and mandatory oversight from state and federal regulators, some developers avoid brownfield sites. These issues are manageable, and, in many cases can actually benefit a project.
Cost uncertainty is a fact of life for many environmental cleanup projects. Conducting a thorough site assessment of environmental conditions prior to cleanup can minimize the scale of uncertainty. Project budgets should include a contingency, commonly 25 percent to 50 percent, for unanticipated costs. Finally, cleanup plans should include options for less-costly alternatives such as on-site contaminant containment, deed restrictions or long-term monitoring.
Environmental regulators are often unfairly characterized as unfriendly to developers. On brownfield projects, the opposite can be true. At Washington sites funded by the federal brownfields program, the regulator, developer and funding agency work as partners, with the regulator involved in all phases of the cleanup, including planning, assessment and remediation. Because of the partnership, regulators are prepared to make swift decisions when unexpected conditions arise, reducing project de0lays.
Also, through the partnership, cleanup goals are better understood and regulatory surprises are less likely. This approach facilitates a smoother process and finality at the end of the cleanup.
During the Kendall Yards cleanup, unexpected contamination was encountered. To reduce the costs of the additional contamination and to maintain the project schedule, the developer requested a modification to the Ecology-approved cleanup work plan. Due to its familiarity with the project, Ecology was able to approve the modification in one day.
Similarly, upon completion of the cleanup, Ecology already understood the scope of the cleanup that had been completed and began drafting a closure letter within days, rather than months, as is typical.
The public-private catch
Congress has allocated nearly $200 million per year since 2002 to the EPA for its brownfields program. Each October, public entities, tribes and nonprofits apply for grants for environmental assessment and cleanup.
The more successful grants have a private partner already identified. In Washington, the brownfields loan fund is operated through the Department of Community Trade and Economic Development and Department of Ecology.
Federally funded brownfield projects have some special requirements, including: 1) Davis-Bacon prevailing wage rules for construction work; 2) mandatory public involvement; and 3) assessment and protection of cultural resources.
Davis-Bacon rules add costs to some development projects. Carefully allocating public funds to non-construction phases of the project, such as pre-cleanup investigation and planning, can mitigate the effects of Davis-Bacon rules.
Mandatory public involvement requires sharing project cleanup plans with the public and allowing for and addressing public comments. Experience has shown that the perceived negative market impact on the redevelopment is negligible. By cleaning up contaminated land, developers can actually generate significant public good will, which can be transformed into good publicity.
Use of federal or state funds requires a pre-cleanup assessment of cultural resources at brownfield sites. If cultural resources are present, the developer must take steps to protect them.
A formal cultural resources assessment is not mandatory for many development projects; however, everyone is obligated by federal law to protect cultural resources when encountered. The mandatory pre-construction cultural resources assessment can help to avoid expensive project delays when unexpected resources are encountered.
The Kendall Yards project demonstrates that federal brownfield funding is a tool that not only helps pay for brownfield assessment and cleanup costs, but also results in expedited and publicly supported cleanup and redevelopment projects. Experience has shown that a contaminated stigma does not remain at cleaned up brownfields, and the cleanup can result in enormous rewards to both the developer and the affected community.
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