Industrial property owners who have contaminated properties they would like to take off their books, developers who are interested in acquiring and redeveloping those properties, and cities whose economies would gain from the restoration of contaminated industrial properties all might benefit from reading the article recently published by international environmental consulting firm Arcadis:   “Arcadis Urban Land Restoration Index—Ranking the Development Potential of Environmentally Impaired Land Across 27 U.S. Cities.”   Link to the article at:
https://www.arcadis.com/media/2/A/4/%7B2A4B47FE-3EE1-4B6F-B7D5-E097E6CB61A0%7DAG1004%20Restoration%20Index%20_Full%20Version_FINAL_ONLINE.pdf .
The 31 page article (NB: beware the small print!) provides a perhaps unnecessarily wordy, but nonetheless valuable overview of the economic potential for developing urban brownfield properties and presents a useful tool for owners and developers of those properties and the cities in which they are located.

In a nutshell, the article presents an Urban Land Restoration Index (ULRI) that rates the brownfield redevelopment potential of 27 American cities, based on differences in remediation cost, city dynamics, and property type (i.e., industrial, commercial, and residential).

I have taken the liberty of presenting a condensed and lightly edited version of the article below.  After reading this version or the entire article, if you have questions about the remediation and/or redevelopment a brownfield property, don’t hesitate to contact me here at Trill-EnviroLaw.

The Arcadis Urban Land Restoraton Index

The Urban Land Restoration Index (ULRI) combines insight on city dynamism and the relative
environmental clean up (remediation) costs in 27 cities across the U.S. to identify locations with the greatest opportunities for divestment, restoration, and development of impaired industrial property.

The two key elements behind the ULRI assessment are City Dynamism and the Cost of Cleanup, which when combined yield a unique parameter referred to as the restoration ‘sweet spot’. Industrial property owners and investors are well-advised to target property sale (divestment) and development in areas currently identified as having high potential – especially if remediation costs are relatively low on either a ‘one-off’ single site scenario or a portfolio basis. Typical remediation costs vary across a sample of U.S. cities by a factor of 2.5, meaning the cost of cleanup for an equivalent parcel of land with equal levels of contamination and targeted end use for development more than doubles between selected cities

Land, accessibility and resources are advantages the cities possess. Many urban environments are hosts to strategically located, underutilized properties. Much of this property is held in the legacy portfolios of industrial firms, primarily multi-national companies. Although many of these sites face environmental challenges, they nonetheless offer significant financial opportunity based on timely divestment, remediation, restoration and smart redevelopment.

In effect, the continuing renaissance of mid-sized cities may be creating unexpected pockets of
untapped value in the real estate portfolios of industrial land owners. By focusing on cities with the greatest potential and fewest barriers to restoration, it is possible to create outstanding sustainable and investment opportunities, while simultaneously creating a platform for industrial land owners to effectively divest environmentally impaired properties.

ULRI may be used as a tool to empower industrial land owners, developers, investors, and city
leaders to make informed, smart decisions by identifying cities with the greatest potential to create value:

• For the industrial property owner, the ULRI serves as a barometer, comparing relative remediation costs across 27 cities, and gauges the potential and attractiveness of cities for real estate investment, enabling owners to spot opportunities in their portfolio and helping to maximize the value of their properties.
• For the developer, the ULRI supports the allocation of resources within individual markets or across an investment portfolio, and provides a broad indication of the potential cost and return on redeveloping environmentally stressed properties, allowing for a weighted assessment of the attraction of properties and prioritization of opportunities for further viability analysis.
• For City leaders and planners, the ULRI provides a better understanding of the competitive position of a city and highlights the key factors critical for effective transformation of under-utilized industrial sites. ULRI developed a measure of city dynamism that combines several factors; a city’s attractiveness, growth potential, real estate performance, resilience and business environment.

The urban areas ranked in the top five for brownfields redevelopment of industrial properties are New York, Denver, Charlotte, Chicago, and Los Angeles.  The top five for commercial redevelopment comprise New York, Nashville, Charlotte, Pittsburgh, and Denver.  For residential redevelopment the top five list is Denver, New York, Nashville, Charlotte, and Atlanta.  Occupying the bottom of the overall index are Baltimore (#25), Phoenix (#26), and Detroit (#27).

April 21 is the New York City “Poem In Your Pocket Day,” the annual citywide celebration of National Poetry Month. Lee Ilan, Chief of Planning in the NYC Mayor’s Office of Environmental Remediation every year encourages folks who work on brownfields remediation and redevelopment to send her an appropriately themed entry. Here’s mine, entitled,

“The Brownfield Developer’s Lament” (or “Why Didn’t I Conduct a Phase I ESA?”)

In some dirty stinking soil
Racked with muck and dirty oil
My spade I thrust and hoped my toil
Would bring me profit, wealth, and spoil.

Alas I hadn’t checked the file
On prior uses, fines, or trial:
Such diligence to guard ‘gainst guile
To make an innnocent purchaser smile.

Now on the hook for more I’ll be
Cause no Phase I sought to see.
A sad site buyer in reality
Saddled with much liability.

“Legal Planet,” the environmental law and policy blog published by the law schools at UC Berkeley (my alma mater) and UCLA (legal-planet.org) on March 28, 2016, reports on a surprisingly positive environmental record from several cities in Texas, particularly with regard to sustainable energy use. See the article by Berkeley Law Professor Dan Farber, entitled “Deep in the Heart of Texas
Some green patches in one of the reddest of the Red States.” http://legal-planet.org/2016/03/28/deep-in-the-heart-of-texas/

The State of Connecticut has once again reaffirmed its role as a leader in the remediation and redevelopment of brownfield properties, by the actions of its U.S. Senator Chris Murphy and Representative Elizabeth Esty in having introduced  legislation that would restore incentives for developers seeking to reuse brownfield properties.   

The legislation (S. 2734, the Creating Livable Environments And New Usable Property Act,  https//www.govtrack.us/congress/bills/114s3734/text/is) deals with two incentive programs.

First, it would revive a tax deduction that expired in 2011 for commercial developers who invest in brownfield projects.  It would allow them to deduct the entirety of costs they incur for environmental cleanup of the property in the same year that the expenditure is incurred rather than being required to “capitalize” the expense and spread its recovery  over a five-year period.

Second, it would reauthorize brownfield tax credits for qualified nonprofit developers, allowing them to avoid paying unrelated business income taxes on earnings from the sale or exchange of certain properties in need of environmental cleanup. That tax credit expired in 2009.

The brownfield tax deduction that expired in 2011 was little used, inasmuch as most brownfield redevelopment projects do not create income in the same year that the expense is incurred and the law did not allow for the developer to carry over the expenses until the project showed income.  The proposed legislation similarly does not appear to provide for such a carry over, but nonetheless signals Congressional encouragement for brownfields development. The tax credit for not for profits should help dispel concerns that the income produced from their brownfield projects could result in tax consequences they would hope to avoid.

See article in the March 23, 2016 New Haven Register:  http://www.nhregister.com/business/20160323/murphy-esty-seek-to-revive-tax-credit-legislation-for-brownfield-cleanup,

.

See this article from the Huffington Post on the adverse environmental and health effects of using palm oil:  http://www.huffingtonpost.com.au/2016/03/23/palm-oil_n_9536668.html

See Reuters March 22, 2016 story on the USSC’s unanimous ruling overturning a Ninth Circuit Court of Appeals judgment that upheld US Park Service prohibition of hovercraft use in a non-federally owned “conservation area” in Alaska.http://www.reuters.com/article/us-usa-court-moose-idUSKCN0WO205

See the article below from the February 22, 2016 Meriden Record-Journal about how the City of Meriden has leveraged grants from the state and federal governments to redevelop its old industrial downtown.  Please contact me if you would like to learn more about brownfield redevelopment opportunities in Connecticut or if you have any questions about the remediation and redevelopment of environmentally challenged properties throughout the U.S.

Brownfield cleanup grants helping reshape downtown Meriden

Published: February 22, 2016 | 

By Molly Callahan Record-Journal staff

MERIDEN — Between cleanup grants, Transit-Oriented District planning and implementation grants, and Choice Neighborhood grants, the city has received more than $24 million in state and federal money for downtown Meriden in recent years.

Any visit downtown yields the sights of a city in transition, with construction in almost any direction one looks. The former Hub site is nearing completion as a flood storage basin and park; a new train station on State Street is taking shape; a Meriden Housing Authority and Westmount Development Group joint venture at 24 Colony St. is springing up; 11 Crown St., 116 Cook Ave., and the former Factory H site are all nearing cleanup and demolition; and residents of the Mills Memorial Apartment complex are leaving and the buildings are about to be torn down.

All this, while year after year, residents urge elected officials to attract more businesses and more private development to lighten the tax burden on homeowners.

According to information provided by city Economic Development Director Juliet Burdelski, within the past decade Meriden has received $24,401,000 in state and federal grants.

The city received at least $12.9 million toward the Hub park alone from the state Department of Economic and Community Development, the state Department of Energy and Environmental Protection, and the U.S. Environmental Protection Agency.

Another big area of investment has also been in brownfields cleanup.

The EPA defines a brownfield as “any land in the United States that is abandoned, idled, or underused because redevelopment and/or expansion is complicated by environmental contamination that is either real or perceived.” Unlike Superfund sites, which pose a real health or environmental risk, brownfield sites “represent an economic or social threat, since they prevent development and therefore stifle local economies.”

Between state and federal sources, Meriden has received more than $5.7 million in brownfield grants.

“Meriden industrialized very early so it’s largely built out,” said City Manager Lawrence J. Kendzior. “As such, there are very few large undeveloped parcels of land.”

Through the early 1800s, handfuls of factories harnessed the power of Harbor Brook, which nearly bisects the city. Meriden got the nickname “Silver City” for the breadth of its silver manufacturing capabilities, and its contribution to the war effort during World War II lent the designation “the Nation’s Ideal War Community.”

“Residents have urged us to look at some of the older sites, many of which we have because of the industrial heritage,” Kendzior said. “For the past 15 years, we’ve been concentrating on that, and doing it in a professional, planned manner has been very successful.”

Tim Sullivan, deputy commissioner of the DECD, said Meriden “is one of the more active cities in our state’s brownfields program.

“There’s a lot of interest from developers in downtown Meriden because it’s doing the TOD,” he said, referring to the Transit-Oriented District. “We’re really excited and thrilled to be partnering with the city and its team. They’re doing real-world planning … and we’re supportive of what Meriden is planning.”

The DECD has furnished more than $4 million of the total $5.7 million the city has received in brownfield funding.

Meriden is certainly not the only municipality in the state actively seeking funding to clean up brownfields. Sullivan noted Gov. Dannel P. Malloy’s focus on making brownfield cleanup and assessment money available. “The state’s been provided with unprecedented resources to remediate brownfields,” Sullivan said.

Opponents of the program locally are quick to point out that whether or not the money is coming from Meriden or from the state or the federal governments, it is still taxpayer dollars going toward these projects.

“Certainly it is all tax money,” Kendzior said, “but No. 1, it’s an investment … and No. 2, these are what I call ‘categorical grants’ — the choice isn’t between spending the money here and not spending it at all; the choice is between the money being spent here or it being spent somewhere else.”

Further, Sullivan said that for every dollar invested by the state, they find $4.99 invested by non-state sources — either federal, municipal, or private sources.

In Meriden, Kendzior said that for city-owned sites downtown there’s a roughly 200-1 ratio of non-city to city funds. That is, for an investment of $200 million downtown, the city used roughly $1.5 million of its own money.

The city has either designated or is in the process of designating private developers for a number of city-owned parcels, including 116 Cook Ave. and the former Factory H site; the Hub site; and 11 Crown St. The city has also approved plans for private development on the flots bordered by State and Mills streets. In most cases, developments include a mix of housing and commercial space.

Critics of cleanup measures also decry the burden on the city to clean up sites rather than putting the onus on the new property owners.

For brownfield sites specifically, the money used to clean them up is vital to garnering private development, Kendzior and Sullivan say.

“You’re not going to get private investment in something where there’s not a reasonable opportunity to make it profitable,” Kendzior said. “The cost to remediate these sites would make some of them effectively undevelopable.”

Sullivan added that across the state it’s been proven that brownfield sites will not be developed unless there is some effort to clean them up.

“There’s a strong case in Meriden and across the state of these market failures — the marketplace isn’t going to take over these sites, the cost of remediation simply aren’t going to lend to profitability,” he said. “The transformative power that cleaning up these sites can have on cities and downtown neighborhoods is great. It’s a great opportunity to breathe new life into old sites.”

mcallahan@record-journal.com 203-317-2279 Twitter: @MollCal

Please see the excellent analysis of the VW emission fraud in the Sept. 29, 2015 issue of Legal Planet by Tim Malloy: http://legal-planet.org/. Is this a situation where someone should be doing some jail time?

See my article on negotiation of agreements and settling disputes involving environmental issues at http://www.americanbar.org/content/dam/aba/publications/nr_newsletters/etab/201508_etab.authcheckdam.pdf. This is the ABA Section of Environment, Energy, and Resources Committee on Environmental Transactions and Brownfields Newsletter for August 2015. Here’ the article’s “Conclusion”:

“As with the negotiation of any other dispute
or contested subject, negotiations that involve
environmental issues frequently have monetary
aspects that provide for a Surplus that leaves
room for the parties to establish their respective
“walk away” positions. When those environmental
negotiations also involve difficult to quantify or
nonquantifiable issues, however, the Surplus may
not provide negotiating room that would otherwise
exist. Although “optimum” rather than “maximum”
results may always lead to reasonable outcomes,
such optimum outcomes take on increasing
importance in the presence of difficult-to-quantify
or nonquantifiable issues, regardless of the
existence or amount of a Surplus.

“In these circumstances, negotiators should:
• identify their non-negotiable walk away points
and design their negotiation strategies to
focus on and achieve the Rational Optimum
Outcome;
• use a methodology such as the decision tree
analysis discussed above to establish an
opening Anchor Point position that exceeds
the Rational Optimum Outcome sufficiently
to provide room for negotiating fallbacks that
will avoid concessions beyond the Rational
Optimum Outcome; and
• devise strategies that consider the alternatives
available if negotiations fail (and the likely
achievement of those alternatives).

“The prudent negotiator will use objective and
quantifiable criteria as standards, but the value
of experience (both personal and from research
sources) and the exercise of good judgment cannot
be overstated.”

To see how I came to this conclusion and for an explanation of the capitalized terms above, please link to the article. In any event, I will welcome questions and comments.

See note below on EPA’s new Vapor Intrusion Technical Guide circulated by Center for Public Enviornmental Oversight Executive Director Lenny Siegel:

On June 11, 2015, the U.S. Environmental Protection Agency finally released its Vapor Intrusion Technical Guide, known officially as the OSWER Technical Guide for Assessing and Mitigating the Vapor Intrusion Pathway from Subsurface Vapor Sources to Indoor Air. The 3.2 MB PDF document is available on line from U.S. EPA, along with the simultaneously released 3.0 MB PDF Technical Guide for Addressing Petroleum Vapor Intrusion At Leaking Underground Storage Tank Sites and several related technical documents and tools, at http://www.epa.gov/oswer/vaporintrusion/guidance.html#EO12866OSWERVI.

The Technical Guide reinforces best practices at EPA and other vapor intrusion projects, and it is expected to influence responses led by EPA and state regulators and well as private parties, such as developers conducting independent responses. It is not a statute or regulation. That is, it does not impose any new requirements. Rather, it explains how to protect building occupants from potential vapor intrusion at sites being addressed under Superfund (CERCLA, the Comprehensive Environmental Response, Compensation, and Liability Act), RCRA (Resource Conservation and Recovery Act) Corrective Action, and their state counterparts. I expect states with their own guidance documents to incorporate EPA’s Guide by reference.

The Guide is thorough, comprehensible, and flexible. At 267 pages, it is not a quick read. But I suggest that all vapor intrusion stakeholders peruse the document, learning enough about it to use it as a reference throughout any vapor intrusion response project. The linked notes are not comprehensive. Instead I have tried to highlight significant recommendations, as well as pointing out surprises and other sections that answer long-asked questions. This document is not a complete review of the Technical Guide. People who want the whole picture should read the whole document.

To download the 17-page, 1 MB PDF, go to http://www.cpeo.org/pubs/FinalatLast.pdf.

—

Lenny Siegel
Executive Director, Center for Public Environmental Oversight
a project of the Pacific Studies Center
278-A Hope Street
Mountain View, CA 94041
Voice: 650-961-8918 or 650-969-1545
Fax: 650-961-8918
LSiegel@cpeo.org
http://www.cpeo.org