December 2001

The Surest Way to Receive Brownfield Funding

By Mark Chilcott

The procurement of brownfield funding is a dynamic, complex and sometimes frustrating process. It is not suited for all brownfield projects; however, proper utilization of local and state brownfield programs often enables developers and investors to achieve returns on investment that are equal to or greater than those achieved with Greenfield developments. By first getting a handle on the feasibility of a project, developers can not only save themselves time and money but avoid the potential for frustration.

This is the first in a series of newsletter articles that will present experienced-based thoughts and recommendations on when and how to utilize brownfield funding. The focus of this article pertains to assessing brownfield funding feasibility.

Before development

After development

ASSESSING FEASIBILITY IS CRITICAL COMPONENT

Feasibility analysis includes assessing whether or not you have a demonstrable need for brownfield funding, determining if you have a viable economic contribution to the community and state, assessing if you can get governmental support and cooperation, determining if procurement can occur on a timely basis and finally, assessing if you have the proper leadership team (internal and/or external) to successfully procure funding.

NEED. The best way to access and demonstrate need is to proforma the project. If there are economic gaps due to brownfield impediments then, we can quantify how the program(s) will bridge the gap. It is not unreasonable to assert that the gap is at the bottom line (i.e. the ROI is not great enough to motivate the developer to take on the risk of the brownfield redevelopment). Once we have qualified the need and quantified the gap, the next action is to determine what program(s) are necessary to fill the gap. Each program has its own unique decision-making process, timelines and dynamics; thus, we need to look at the cost/benefits of pursuing a single program or blend of programs.

The local and state brownfield decision makers (a generalized term to represent local and state decision makers/stakeholders involved in the funding process) will require you to demonstrate need. A simple threshold question often asked by these decision makers is, would the developer pursue the project without brownfield funding incentives? If the answer is no, then likely we can build a case to support requests for funding. If the answer is yes, the project will occur without brownfield funding assistance, then our request could be viewed as attempting to gain an unfair windfall advantage and we will have an uphill road to procure funding.

VIABLE ECONOMIC DEVELOPMENT. It is important that we can affirmatively answer the following questions: Is there a community need for this project (i.e. does it fill a market void and/or return a non-productive property to the tax roles)? Will it create incremental tax revenues, new jobs and other economic spin-offs for the community and state? Does the developer have the experience, financial resources and commitment to complete the project? Are the timeframes realistic to operate under?

GOVERNMENT SUPPORT AND COMMITMENT (local/state). An initial meeting(s) with the decision makers is important to assess their willingness to support and commit to the project and brownfield procurement process. We will need to satisfy the following: Do they view the project as a viable economic development and are they satisfied there is a need to procure brownfield funding? Will they support your project and proposed funding request? Can they be responsive in a timely manner to your project timelines? Do they have a track record with these types of projects and if not, are they willing to commit to the process?

TIMING. Based on the type of funding you desire to procure, the typical procurement time ranges between 60 to 180 days. All programs require preapproval before you can incur eligible expenses (there is some minor exceptions to this with Brownfield Redevelopment Authority). How does this fit with your overall deal timing? Do you have enough lead-time to procure financing? It is important to note that if you are pursuing school tax capture, you will be adding additional time and investment and may not necessarily achieve favorable outcomes. Also, if you are pursuing a Brownfield Single Business Tax Credit in excess of $1 million dollars then, you enter into a MEGA approval process, which adds more time and expense to the process.

LEADERSHIP. Do you have a brownfield consultant and attorney that can lead you through the process in a timely and cost effective manner? Can they demonstrate a track record of success in this area?

Once you have completed the feasibility step and/or feel comfortable in proceeding forward with the procurement process, the next step is to structure the process for success. The next newsletter will feature an article presenting thoughts and recommendations on this matter.

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By Richard Kral

Surveying a Brownfield site may involve locating and establishing elevations for monitor wells or completing condominium documents.

After development

The safety of the survey crew needs to be kept in mind during the survey of a brownfield site. A Health & Safety plan is filed indicating safety precautions to be followed. This may require wearing protective clothing when on site and cleaning the equipment when the survey is completed.

When property is being sold, an ALTA (American Land Title) Survey may be required. An ALTA survey is done when the title insurance company is asked to insure title to the land without exceptions as to what might be discovered by doing a survey and inspection that is not in the public records.

A strip mall, for example, may be the end product of a brownfield development. Construction staking of curbs and gutter, parking areas, road and building layout would be required for the completion of the mall.

Surveying a brownfield site is no different from any other survey project.

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Transaction Information
Baseline Environmental Assessments

By Lee Blodgett, R.E.P.A.

I briefly discussed the Baseline Environmental Assessment, commonly known by the acronym BEA, in the June 2000 issue of Earth Tones posted on our website. This tool has been the cornerstone for Brownfield Redevelopment in the state. Since its introduction in June of 1995 there have been over 4600 BEAs submitted to the Department of Environmental Quality. Each BEA represents a property on which there exists environmental contamination. Prior to the existence of the BEA, the vast majority of known impacted properties were left idle because purchasers were unwilling to risk the financial liability that the environmental laws placed on them for simply owning such a property. The BEA is a means to provide a reasonable level of liability protection to a new owner of an environmentally impacted property provided it reasonably defines the existing conditions at an impacted property so that in the event of another release, there is adequate means of distinguishing the new release from existing contamination.

For more detail on BEAs, the DEQ Environmental Response Division has instructions to help prepare BEAs at their website http://www.deq.state.mi.us/erd, or contact EC&S.

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Land Development News
Site Design for Brownfield Project

By Garth Greenan, P.E.

Site design for development projects must meet a variety of competing demands. The demands include designing an aesthetic, cost effective, efficient project that meets regulatory requirements. Brownfield projects add an additional layer of complexity. In addition to addressing the final environmental concerns for the ultimate users, care must be taken during design to protect the worker that is building the project. These additional concerns should be addressed during the design process. The Civil Engineer, working with the Environmental Scientist and the Developer as a team, must create a set of plans that gives the contractor details on how to handle the hazards created by the contaminants. Control of stormwater and earthwork phasing are used to minimize human contact, and reduces the potential for contamination of clean materials. The coordination of the environmental and development work is an essential component of a successful brownfield project.

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