Chapter 1

Introduction


Look around you. We have more than 2,000 people
here today -- mayors, community activists, environmentalists,
developers, bankers, entrepreneurs, officials from all levels
of government -- and we're all working together toward a common
vision: clean, safe, healthy, thriving communities across America.

Carol M. Browner
Administrator
U.S. Environmental Protection Agency
Opening comments at Brownfields '98
Los Angeles, California
16 November 1998

1.1 Introduction

"Brownfields" have been defined by the U.S. Environmental Protection Agency (EPA) as "[a]bandoned, idled, or under-used industrial and commercial facilities where expansion or redevelopment is complicated by real or perceived environmental contamination." The U. S. Conference of Mayors has characterized brownfields as "dead zones" and as "pockets of disinvestment, neglect and missed opportunities" that exist within American cities. In part, the scope of the problem can be seen by the sheer number of brownfield sites. The U.S. General Accounting Office, for example, has concluded that there may be between 130,000 and 450,000 contaminated commercial and industrial sites located within the United States. By another estimate, as many as 650,000 brownfield sites may be located throughout the country.

Brownfields exist in a wide variety of urban settings. In a recent study undertaken by the U.S. Conference of Mayors, 126 cities responding to a request for information reported a total of 16,531 brownfields sites and 122 cities reported a total of 47,384 acres of urban land consumed by brownfields. The problem arises irrespective of the size of the city. In the same study, 88 cities having populations of less than 100,000 reported 1,465 brownfields sites consuming 16,000 acres of urban land and 53 cities having populations of less than 50,000 reported 618 brownfields sites consuming 6,305 acres of urban land. To provide the proper perspective, it must be remembered that there are more than 18,000 cities and towns in the United States.

The costs associated with brownfields are significant. In terms of lost tax revenues, for example, the Conference of Mayors also conducted a survey of 33 cities within which brownfields are located. The lost tax revenues were estimated to range between $121 million and $386 million per year in these cities alone. On a national scale, local governments "could be losing billions of dollars each year in local tax receipts resulting from their failure to restore brownfields to economic viability."

It has been argued that the redevelopment of brownfields will have significant positive economic benefits by creating new employment opportunities, improving quality of life and increasing the municipal tax base once redeveloped properties are returned to the tax rolls. This is especially important if ad valorem taxation is the basis for public school funding and the provision of other municipal services. As these benefits accrue, urban neighborhoods should be revitalized.

In addition, it has been suggested that the redevelopment of brownfields could serve as a check or constraint on urban sprawl by reducing developmental pressures on greenfields. This is an issue of growing concern. According to the American Farmland Trust, between 1982 and 1992, 13,823,000 acres of land were converted to urban use. Of this total, 4,266,000 acres were either prime or unique farmland. In fact, at the present time, farmland in the United States is being lost to urbanization at a rate of approximately two acres per minute.

Unfortunately, the cost of restoring brownfields to economic viability may be beyond the capability of many state and local governments. Though remediation costs are always site-specific, total remediation costs for all of the brownfields located within the United States have been estimated to exceed $650 billion. Consequently, it is imperative that private capital be attracted to the redevelopment of brownfields.

In 1997, the U.S. Environmental Protection Agency (EPA) and The George Washington University (GWU) entered into a cooperative agreement to attempt to answer certain questions relating to the redevelopment of brownfields. The first question focused on the extent to which the redevelopment of brownfields reduced developmental pressures on undeveloped suburban or rural areas ("greenfields"). The second question concerned economic benefits that are induced by the redevelopment of brownfields. Statutes and regulations that either inhibit the redevelopment of brownfields or that encourage the development of greenfields were the focus of questions three and four. Question three addressed federal statutes and regulations while question four addressed statutes and regulations at the state and local level.

To answer these questions, a "Work Plan" was developed and submitted to EPA in December of 1997. The research described in the "Work Plan" has been completed and is summarized herein. This research sheds light on answers to two key, higher-level, questions. First, does the redevelopment of brownfields actually serve as a check or constraint on urban sprawl? Second, what are the critical factors (and the relative weights of those factors) that most influenced specific decisions to redevelop brownfields?

The methodology used to answer these questions is discussed in Chapter 3: Research Approach and Methodology. With regard to questions concerning the degree to which brownfields redevelopment may serve as a check or constraint on urban sprawl, one of the primary means of determining the relationship between the redevelopment of brownfields and the reduction of developmental pressures on greenfields was to conduct a series of in-depth interviews with both public and private sector individuals involved in the redevelopment of brownfields in selected metropolitan areas. The results of these interviews formed the principal basis for determining areal differentials ("offsets") between the redevelopment of brownfields and the development of greenfields. These interviews provided site-specific information on successful brownfields redevelopment projects. This information was utilized to calculate the minimum amount of land that the redevelopment project would have required if it had been developed in a greenfields area. The results from these calculations are presented in Chapter 5: Brownfield/Greenfield Tradeoffs. These interviews also provided information on the extent to which individuals making redevelopment decisions considered greenfield development as an alternative to the redevelopment of a brownfield (or vice versa).

With regard to critical factors most influencing specific decisions to redevelop brownfields, the interviews also formed the principal basis for determining critical factors that most influenced redevelopment decisions. These critical factors (as well as the relative weights of the factors) are summarized in Chapter 7: Impediments and Incentives to the Redevelopment of Brownfields.

Conclusions are presented in Chapter 8 with the Bibliography following. Appendix A lists all of the individuals who were interviewed during the course of the study. Detailed information on the metropolitan areas that were included in the study is presented in Appendix B. The phase one interview form and the sample tract illustrations that were used during the interview process are attached as Appendices C and D, respectively. The individuals and organizations contacted during an Internet-based survey are listed in Appendix E. Appendix F contains detailed information on the sites and the calculations that form the basis for the determination of areal differentials.

1.2 Importance of the Study

The U.S. Conference of Mayors has made the redevelopment of brownfields its highest priority. The reasons are both simple and complex.

Simply stated, it is imperative that land be recycled, not abandoned. The hundreds of thousands of acres of land that have been abandoned in metropolitan areas throughout the United States, most of which falls within the definition of brownfields, have had profoundly negative impacts on those areas. In many instances, the key to revitalizing these metropolitan areas is the redevelopment of brownfields. Such redevelopment projects may be the "seed crystal" around which urban revitalization may coalesce.

In addition, there are other (and more complex) reasons for removing barriers to the redevelopment of brownfields and for providing incentives to encourage such development. One reason is environmental justice. Suburban areas have continued to grow, aided in large measure by "white flight" from the cities. This population shift has left many cities with fewer citizens. Of those citizens who remain, an increasing percentage consists of low income or members of minority groups, or both. Within this context can be seen a pattern of private industry abandoning urban lands when the continued use or redevelopment of those lands is no longer convenient or economically justifiable. As a result, abandoned lands disappear from the tax roles and make it progressively more difficult for cities to maintain urban services because of the loss of tax revenues. The resulting decline in the quality of life is imposed on the residents remaining in the cities, not on the individuals or companies who chose to abandon their properties and leave the cities.

A better understanding of the critical factors that influence brownfield redevelopment decisions and of the areal differentials that exist between brownfield redevelopment and greenfield development will have benefits to the local community, to the metropolitan area within which the community is located, to the nation and to the world.

1.2.1 Benefits to the local community.

Facilitating the redevelopment of brownfields will have profound effects on the local community. Redeveloping such properties should return them to the tax roles and allow the local community to benefit from ad valorem taxation. This, in turn, would increase available funding for the full range of public services including such essential functions as education and health care. Redevelopment projects should provide new employment opportunities. Such projects also reduce urban crime and facilitate law enforcement by removing abandoned buildings and restoring private security functions. Perhaps most importantly, brownfield redevelopment projects renew the spirit of a community and revitalize the residents of that community. In many instances, redevelopment projects involve the restoration of historic properties, restoration of which provides "a sense of place" and improves the quality of urban life significantly.

1.2.2 Benefits to the metropolitan area within which
the community is located.

Many of the benefits described above are also regional benefits. A reduction in crime rates, for example, benefits the entire metropolitan area within which the community is located, not just the community in which crime rates have been reduced. Redeveloping brownfields should have the effect over time of reducing the amount of financial assistance that many cities need in order to provide essential public services. As need for financial assistance declines, so would the obligation of governmental entities at all levels to provide such assistance. The economic benefits resulting from the redevelopment of brownfields will be felt throughout the metropolitan area within which the community is located. These benefits are not limited to the community itself. Brownfield redevelopment projects that provide employment opportunities near areas where community residents live have the effect of reducing commuting needs. This produces positive benefits both from an air quality perspective and as a means of reducing vehicular congestion. As discussed herein, redevelopment of brownfields also acts as a check on urban sprawl by reducing development pressures on greenfields.

1.2.3 Benefits to the nation.

In one form or another, much of the financial assistance received by many communities comes from the federal government. The redevelopment of brownfields could reduce the need for such financial assistance. In many ways, the benefits to nation are similar to the benefits to the metropolitan area: Reduction in crime, increase in employment, economic growth with concomitant increases in tax revenues and reduction in demands for assistance. Related to these benefits is assistance in achieving the goals of a number of federal environmental protection statutes, including attainment of the National Ambient Air Quality Standards of the Clean Air Act. The revitalization of specific communities also could assist in achieving national environmental justice goals.

1.2.4 Benefits to the world.

The problem of abandoned urban properties is not unique to the United States. As the world of the present becomes a "post-industrial" world, the problem of abandoned properties (particularly abandoned industrial properties) has become one of global dimension. The ways in which such properties are redeveloped in the United States could provide a model that would be applicable in many areas of the world. This is particularly true with regard to alternative means of financing redevelopment projects. The public-private partnership approach that has been utilized in many communities could be implemented in urban areas throughout the world. The likelihood of this occurring has been enhanced by the increasing presence of multinational corporations.

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Chapter 2

The Problem

2.1 Statement of the Problem.

To improve understanding of the role that brownfields redevelopment may play as a check or constraint on urban sprawl and to facilitate the redevelopment of brownfields by helping to eliminate barriers and provide incentives for such redevelopment.

This problem may be resolved through the investigation and solution of the subproblems identified in the following section.

2.2 Subproblems

In order to accomplish the purposes of this study, the following subproblems must be resolved:

Subproblem 1: To determine the extent to which the redevelopment of brownfield sites
reduces developmental pressures on undeveloped or rural areas ("greenfields.")

Subproblem 2: To identify benefits induced by the redevelopment of brownfield sites and to utilize benefit information to help prioritize brownfield site redevelopment efforts.

Subproblem 3: To identify federal statutes, regulations and policies that either inhibit the
redevelopment of brownfield sites or that encourage the development of greenfield sites and to determine the critical factors that influence decisions to redevelop brownfield sites and the relative weights for those factors.

Subproblem 4: To identify state and local statutes, regulations and policies that either inhibit the redevelopment of brownfield sites or that encourage the development of greenfield sites and to determine the critical factors that influence decisions to redevelop brownfield sites and the relative weights for those factors.


2.3 Component Questions and Research Rationale

In addressing Subproblem 1, the principal research approach involves the determination of the areal differentials that exist between the amount of land that would be required for the development of specific projects utilizing brownfields as compared to the amount of land that would be required if development occurred on greenfields.

Three component questions must be answered to successfully resolve the first subproblem. First, what are the areal differentials? Second, to what extent can these areal differentials be confirmed utilizing secondary or tertiary sources of information? Third, in the context of specific development or redevelopment decisions, to what extent did individual decision makers consider greenfield development as an alternative to the redevelopment of a brownfield (or vice versa)?

In terms of resolving subproblem one and its component questions, it is essential to determine the minimum amount of land that a brownfield redevelopment project would have required if it had been located in a greenfield area. It would be helpful if these differentials could be validated utilizing secondary or tertiary sources of information. Finally, in order to facilitate the redevelopment of brownfields, it is important to understand the extent to which individual decision makers considered the redevelopment of brownfields as an alternative to the development of greenfields (and vice versa).

Key component questions in addressing Subproblems 3 and 4 involve the determination of critical factors that influence decisions to redevelop brownfields and the relative weights of those factors. Four component questions must be answered to successfully resolve these subproblems. First, what are the critical factors (and the relative weights of these factors) that most influence decisions regarding the redevelopment of brownfields? Second, do federal or state statutes or regulations impose barriers to the redevelopment of brownfields? Third, of those federal or state statutes or regulations that provide incentives for the redevelopment of brownfields, which have been successful? Fourth, of those federal or state statutes or regulations that provide incentives for the redevelopment of brownfields, which have not been successful?

The specific need is to determine and weigh those factors that most influence private decisions to invest in brownfield redevelopment projects. Information is needed regarding the factors that lead to decisions to redevelop brownfield sites rather than to develop greenfields. In essence, it is necessary to ascertain the key variables that influence both public and private land use decisions regarding the redevelopment of brownfields. It is also necessary to determine the extent to which federal or state statutes and regulations are either encouraging or inhibiting the redevelopment of brownfields.

Chapter 1

Table of Contents

 

Chapter 3

Research Approach and Methodology

3.1 Background Research

In order to address the problem, subproblems and component questions identified in the preceding chapter, the first step was to undertake a comprehensive review of relevant literature. The primary purpose of the literature review was to determine key variables that were presented as either inhibiting or enhancing the redevelopment of brownfields. The results of this literature review are presented in Chapter 4.

In order to understand the relationship between the redevelopment of brownfields and the development of greenfields, it was necessary to determine which of the key variables identified during the literature review were, in fact, critical factors affecting individual decisions. To make this determination, two series of interviews were conducted with public and private sector individuals involved either in the redevelopment of brownfields or the development of greenfields in selected metropolitan areas.

3.2 Selection of the Study Areas

Two groups of study areas were selected. The first group, which was intended to lead to an understanding of both the key variables that influence public and private land use decisions and the relationship between the redevelopment of brownfields and the development of greenfields, included six metropolitan areas meeting the following three criteria: First, the population of the core city within the metropolitan area either was declining or had remained relatively stable. Second, the total population of the metropolitan area was increasing. Third, the study area had to include an EPA Pilot Program city.

In terms of fulfilling the requirements of these criteria, population changes in Pilot Program cities were compared to population changes in adjoining or nearby areas using Bureau of the Census population data. This comparison produced a differential that was a representation of the population changes in the two areas. These differentials were then ranked and the six areas with the greatest differentials were selected for inclusion in the study.

A similar selection procedure was utilized to select the second group of metropolitan areas. These additional areas were included in order to make the results of the study as robust as possible for brownfield redevelopment projects in a variety of metropolitan areas.

As noted above, the Pilot Program cities and the metropolitan areas within which they are located were ranked according to the population differentials previously discussed. Once this ranking had been completed, six study areas were identified as follows: Two study areas were selected from that third of the continuum having the greatest population differentials, two study areas were selected from that third of the continuum having the lowest population differentials and two study areas were selected from the middle third of the continuum. Because the third of the continuum having the greatest population differentials overlaps with the criteria that were utilized for the selection of the first six study areas, a total of ten study areas were selected.

The assumption upon which selection of the study areas was based is that brownfields are more likely to have been redeveloped in cities where the differential is lowest (where population changes in the city and the surrounding area have been relatively equal) than in cities where the differential is greatest (where the surrounding area has continued to grow but the city has not). The selection of these study areas was subject to EPA approval. Concern was expressed that certain areas of the United States were not represented by the study areas that had been selected initially. As a result, utilizing the same selection criteria and population differentials noted above, the selections were adjusted slightly to be more representative. The two groups of study areas are depicted in the following two tables.

TABLE 1:

Study Areas Selected to Assist in the Determination of Key Variables Influencing the Relationship Between Brownfields Redevelopment and Greenfields Development and to Provide Project-Specific Data as Needed to Calculate Brownfields/Greenfields Offsets

City Core Area
1990-94 Population Change
Metropolitan Area
1990-95 PopulationChange
Differential
St. Louis,Missouri(See Appendix B-10)
-7.2%
St. Louis MetropolitanStatistical Area
+2.2%
9.4
Lowell,Massachusetts(See Appendix B-7)
-7.1%
Boston-Worcester-Lawrence-Lowell-Brockton New England County Metropolitan Area
+1.5%
8.6
Burlington,Vermont(See Appendix B-2)
-2.1%
Burlington New England County Metropolitan Area
+6.3%
8.4
Baltimore,Maryland(See Appendix B-1)
-4.5%
Baltimore Primary MetropolitanStatistical Area
+3.7%
8.2
Richmond,Virginia(See Appendix B-8)
-0.8%
Richmond-PetersburgMetropolitan Statistical Area
+7.1%
7.9
Sacramento,California(See Appendix B-9)
+1.2%
Sacramento PrimaryMetropolitan Statistical Area
+8.7%
7.5

 

TABLE 2:

Additional Study Areas Selected to Assist in the Determination
of Key Variables Influencing the Relationship Between
Brownfields Redevelopment and Greenfields Development

City Core Area
1990-94 Population Change
Metropolitan Area
1990-95 PopulationChange
Differential
St. Louis,Missouri(See Appendix B-10)
-7.2%
St. Louis MetropolitanStatistical Area
+2.2%
9.4
Lowell,Massachusetts(See Appendix B-7)
-7.1%
Boston-Worcester-Lawrence-Lowell-Brockton New England County Metropolitan Area
+1.5%
8.6
Houston,Texas(See Appendix B-6)
+4.4%
Houston Primary MetropolitanStatistical Area
+11.7%
7.3
Detroit,Michigan(See Appendix B-5)
-3.5%
Detroit Primary MetropolitanStatistical Area
+1.3%
4.8
Cleveland,Ohio(See Appendix B-4)
-2.5%
Cleveland, Lorain, ElyriaPrimary MetropolitanStatistical Area
+1.0%
3.5
Charlotte,North Carolina(See Appendix B-3)
+10.6%
Charlotte-Gastonia-Rock Hill MetropolitanStatistical Area
+10.9%
0.3

 

3.3 Review of Brownfields Redevelopment Activities

Materials were compiled on brownfields redevelopment activities in each of the study areas. These materials included summaries of brownfields redevelopment activities within each study area, summaries of state initiatives and programs for the state in which the study area is located, case studies of brownfields redevelopment projects and other materials such as articles and reports that related to specific brownfield redevelopment activities. These materials were reviewed in anticipation of interviews in each of the study areas.

3.4 The Interview Process

In addition to the compilation of materials, lists were prepared of appropriate individuals to interview in each of the study areas. Included on the lists were the EPA brownfield coordinators for the specific regions within which the study areas were located, appropriate state and local governmental representatives, representatives of the business and economic development communities and representatives of other stakeholder groups (e.g., environmental justice advocates).

After these lists had been compiled, specific individuals within each of the study areas were contacted and, if possible, an interview was scheduled. The scheduling of these interviews was then confirmed through a telefax sent to each of the individuals to be interviewed. In addition to confirming the time and location of the interview, this telefax explained the background of the research project and indicated in general terms the questions that would be asked during the interview.

3.4.1 Phase One Interviews

The phase one interviews were conducted primarily with public sector individuals involved in the redevelopment of brownfields in the study areas. These interviews had two primary purposes.

The first purpose was to identify specific individuals who had been involved in successful brownfield redevelopment projects. These individuals, who would become the focus of the phase two interviews, were identified only for the six study areas having the greatest population differentials.

The second purpose was to identify key variables that most influenced decisions either to redevelop brownfields or to develop greenfields. As discussed previously, these interviews were conducted with individuals representing all ten of the study areas. The additional areas were included in order to make the results of the phase one interviews as robust as possible regarding brownfield redevelopment projects in a variety of metropolitan areas.

The phase one interviews were conducted either in the study area or in Los Angeles at Brownfields '98. At the beginning of each interview, the person being interviewed was asked to review and sign an "Informed Consent Form: Research Project on Brownfields Redevelopment." This procedure allowed the interviewer to explain the background of the research project and to set the context for the interview. The "Informed Consent Forms" were seen by many of the participants as being quite humorous. This had the unintended effect of "breaking the ice" and, indirectly, facilitated the interview process.

3.4.2 Phase Two Interviews

All of the phase two interviews were conducted in the six study areas during two or three visits to each metropolitan area. These interviews, which began shortly after analysis of the phase one interviews had been completed, were conducted through August 2000.

As noted above, specific brownfield redevelopment decisions were of primary concern during the phase two interviews. These interviews focused on key variables that most influenced individual redevelopment decisions. In order to provide a basis for the brownfield/greenfield offsets discussed in Chapter 5, as much information as possible regarding specific brownfield redevelopment projects was obtained during the phase two interviews.

3.4.3 Interview Protocol

Each of the interviews conducted during the first phase of interviews utilized a standard interview form focusing on issues that were of concern or interest to individuals representing different public sector entities. The issues identified in the interview form were derived from the literature review discussed in Chapter 4. In addition to the identification of issues, prior to development of the interview form, numerous previously utilized survey research tools (and the results of recent research utilizing such tools) were reviewed. Of particular note was the methodology used by the Center for Transportation and the Environment (CTE) at North Carolina State University. Recent CTE research, which focused on environmental compliance costs for highways, utilized a methodology that provided a model that was utilized (with appropriate modifications) in the development of the standard interview form.

Essentially all of the questions asked of the individuals being interviewed were leading questions. A different interview protocol was utilized during the second phase of interviews. Unlike the first phase of interviews, the second phase did not utilize a standard interview form and only open ended questions were asked.

The utilization of two different types of questions was based on the belief that critical factors identified in both the first and second interview phases are in actuality the critical factors affecting the redevelopment of brownfields. As a result of using open ended questions, however, the range and number of issues addressed during the phase two interviews were considerably narrower than during the phase one interviews.

Also unlike the first phase, the second phase of interviews utilized illustrations of sample brownfield and greenfield tracts. This illustration was used to determine whether the individual being interviewed had considered greenfield development as an alternative to the redevelopment of a brownfield (or vice versa). It was anticipated that the use of illustrations of alternative tracts would provide information on the specific factors that influenced the selection of a specific tract. For situations where the redevelopment of a brownfield was considered and rejected, information was needed regarding the critical factors responsible for the decision, changes in the critical factors that could have affected the decision to the extent that brownfield redevelopment would have been the selected alternative and the nature and characteristics of the brownfield sites that would have been redeveloped if desired conditions on the critical factors had been provided. For situations where the redevelopment of a brownfield was the selected alternative, information was needed regarding the nature and characteristics of the brownfield site as well as identification of alternative greenfield sites that would have been selected had the brownfield site not been selected or had conditions leading to selection of the brownfield site not been adequate to support the selection decision.

3.5 Internet-based Survey

When the "Work Plan" discussed in Chapter 1 was being developed, it was thought that the results of the interview process would be subject to confirmation utilizing a national survey research instrument. During the interview process, however, a significant number of the individuals interviewed, when informed of the pending use of such an instrument, argued that a national survey would not be worth the time and expense that it would require. One individual involved in the redevelopment of brownfields, for example, noted that he had received "over thirty" brownfield-related surveys in the previous month and that he had ignored all of them.

The alternative that was developed to confirm the results of the interview process (particularly the areal differentials discussed in Chapter 5) was an Internet-based survey. This survey focused on individuals and organizations involved with urban redevelopment and "smart growth" issues. These organizations were identified utilizing both personal information and commonly available Internet search engines. In most instances, specific individuals within such organizations also were identified. A standard email message was then sent to both the individuals and the organizations. The message was also posted to those Internet newsgroups that focused on land use and related issues. This message (reproduced in part below) posed the following hypothetical:

I am working on a study that seeks to compare the amount of land needed for a project in terms of the location of the project. Here's the hypothetical: A company has the option of locating a production facility either in an urban area that is being redeveloped or in an undeveloped suburban/rural area. Question: What is the differential (if any) in the amount of land that would be required if the same facility could be located in either location?

My preliminary research indicates that the same facility will require more land if located in a suburban/rural setting than if located on an urban setting. The reasons for this include such things as zoning requirements to preserve green space, setback requirements, wetland protection requirements, nonpoint source control requirements, density limitations, etc. Unfortunately, I have not been able to find any type of an analysis of the additional acreage that would be required when suburban or rural areas are developed as opposed to urban areas being redeveloped.

If a response was forthcoming, follow-up questions were asked regarding the critical factors that influenced decisions regarding either the redevelopment of brownfields or the development of greenfields. When appropriate, questions regarding the relative weights of the critical factors were also asked.

3.6 Summary of Data Sources
In essence, as depicted in Figure 1, the first phase of interviews focused on secondary data sources that served to identify and confirm the primary sources of information. The second phase of interviews focused on primary sources of information regarding the critical factors (and the relative weights of those factors) that influenced specific brownfield redevelopment decisions. The Internet-based survey, which was intended to confirm both the primary and secondary source results, focused on tertiary sources of information.

FIGURE 1

Data Sources for Brownfield/Greenfield Offsets Research Task

Primary Data Sources

 

Individuals and organizations with project-level experience in the redevelopment of brownfields:

Developers
Property owners wishing to expand
Investors

 

Identification of primary sources
Confirmation of primary source results

Secondary Data Sources

Organizations with programmatic-level experience with brownfields redevelopment:

Municipal agencies State agencies
Economic development/redevelopment authorities
Industrial development trade associations

Confirmation of primary and secondary source results

Tertiary Data Sources

Organizations with policy-level experience with brownfields redevelopment:

Federal agencies:

Environmental Protection Agency
Department of Housing and Urban Development

Research institutes:

Urban Land Institute
Institute for Responsible Management

 

Chapter 1

Chapter 2

Table of Contents

 

Chapter 4

Literature Review

Initially, with regard to federal and state statutes and regulations, it must be noted that many of the impediments and incentives identified in the literature are only indirectly related to statutory and regulatory requirements. Many impediments and incentives are posed by private sector financial considerations.

A literature review was undertaken in order to identify federal and state statutes and regulations that either inhibit the redevelopment of brownfields or that encourage the development of greenfields. Based on this review, it appears that impediments and incentives fall into five general categories: Information Issues, Site Acquisition Issues, Financing Issues, Permitting Issues and Site Development Issues. A sixth category (Miscellaneous Issues) includes impediments and incentives that do not fall readily into any of the five general categories.

4.1 Information Issues

Absence of information regarding available properties has been identified as an impediment to the redevelopment of brownfields. In essence, what brownfields are available for redevelopment? Related to this question is the absence of site-specific information. Preliminary environmental assessments are not available for many brownfield sites. The absence of such information, it has been argued, inhibits private sector decisions to redevelop brownfields.

4.2 Site Acquisition Issues

With regard to the acquisition of a brownfield site, the literature indicates that a significant impediment is valuing the property or agreeing on a price for the property. Typically, it appears that the seller seeks a sale price that does not reflect the brownfield status of the property while the buyer seeks exactly the opposite.
The literature also indicates that the potential for seller liability under federal law for conditions that may exist at the brownfields site has created a liability "ambiguity" that discourages the sale of brownfields. Rather than confront such liability directly, it has been argued that many owners of brownfield sites may prefer not to sell their property. Such a preference, of course, would forestall any subsequent redevelopment of the property.

4.3 Financing Issues

The issue of potential lender liability has arisen consistently in the literature. Because of the liability "ambiguity" discussed in the preceding section, it has been asserted that many lending institutions refuse to finance the redevelopment of brownfields. Related to this issue is uncertainty regarding state limits on lender liability.

A second financing issue that has been identified in the literature is the inability of entities involved in brownfields redevelopment to obtain insurance on the redevelopment project. Absent such insurance, it has been argued, the redeveloper of a brownfield site must bear the entire risk of the redevelopment project. The entire scope of this risk, which may be unknown when a redevelopment project is initiated, may have the effect of inhibiting the redevelopment of brownfields.

Tax incentives to encourage the redevelopment of brownfields have been suggested as a needed incentive. One suggestion has been to allow for the full deductibility of environmental remediation costs in the year in which the costs were incurred. In addition, other tax incentives (such as investment tax credits, property tax deferrals and other "tax relief" forms of financial assistance) have been suggested.

4.4 Permitting Issues

An issue that has arisen consistently in the literature is uncertainty regarding permit requirements. In essence, what permits are required and from whom? Related to this appears to be uncertainty regarding the possibility that site remediation requirements might be incorporated into different permits.

Inconsistent federal, state and local permitting requirements have been identified as an impediment to the redevelopment of brownfields. In addition to this inconsistency, the simple fact that there are requirements for multiple federal, state and local permits may also discourage brownfields redevelopment.

Another issue that has been identified in the literature as constituting an impediment to the redevelopment of brownfields is "entrenched attitudes" among regulators. It has been argued that there is need for regulatory flexibility in order to respond to site-specific requirements.

4.5 Site Redevelopment Issues

Two primary issues relating to site redevelopment that have been identified in the literature. The first is a lack of available expertise (e.g., consultants, laboratories, contractors, etc.). The second, inadequate or antiquated infrastructure, may be a more significant impediment because it impacts the redevelopment of specific sites more directly.

4.6 Miscellaneous Issues

There are a number of additional issues that have been identified in the literature which have the effect either of discouraging the redevelopment of brownfields or of encouraging the development of greenfields. A major issue is urban crime. It appears that interest in the redevelopment of a specific brownfield and the crime rate for the area in which the brownfield is located are inversely proportionate.

There have been a number of instances in which the redevelopment of brownfields has been inhibited by public opposition to redevelopment projects. This opposition appears to be based on the simple fact that the interests of entities involved in the redevelopment of brownfield sites and the interests of the communities within which such sites are located do not always coincide.

The lack of a trained workforce in redevelopment areas has been identified as another impediment to brownfields redevelopment as has a limited public demand for redeveloped properties. Additional impediments include inadequate housing for employees as well as unacceptable health care and educational facilities.

Chapter1

Chapter 2

Chapter 3

Table of Contents

 

Chapter 5

Subproblem 1: Brownfield/Greenfield Offsets

As discussed previously, it has been suggested that the redevelopment of brownfields will have the effect of reducing developmental pressures on greenfields. An important consideration in determining such relationships is the fact that similar development projects may require significantly more land if constructed in a greenfields area than if constructed in a brownfields area. Such "areal differentials" are addressed in this section.

The essential question is whether similar development projects require more land if located in a greenfield area than if located in a brownfield area. There are a number of reasons why development of a greenfield could require more land. Land use requirements in effect in many greenfield jurisdictions include such land-consuming provisions as setback requirements, parking requirements, floor area ratios, lot coverage or density limitations and minimum lot sizes.

5.1 An Example of Brownfield/Greenfield Offsets

Consider the following example: A brownfield redevelopment project involving the restoration and continued use of a commercial building located in an urban area. The exterior dimensions of the building are 150' by 200' for a total of 30,000 square feet. The building sits on one city block with sidewalks along three sides and an alley along the back of the building. Because the city allowed the original developer to build to the property lines, the total amount of land occupied by the building is also approximately 30,000 square feet, or 0.68 acres.

5.1.1 Greenfield Area One

In greenfield area one, land use regulations applicable to commercial developments require setbacks of 50' from any main road, 25' from any side road and 10' from any alley. These setback requirements would increase the amount of land required for the project from 30,000 square feet to 52,500 square feet, or 1.2 acres. This would yield a normalized brownfield/greenfield offset ratio of 1:1.76.

5.1.2 Greenfield Area Two

Greenfield area two has the same setback requirements as greenfield area one. The critical difference is that unlike area one, greenfield area two does not permit parking facilities to be constructed in the setback areas. The land use regulations in effect in area two require commercial facilities to have one parking place for every 100 square feet of floor area. A 30,000 square foot facility, therefore, would be required to have 300 parking places, each of which is required to be a minimum of 10' by 18' (or 180 square feet). Fulfilling these regulatory requirements would require an additional 54,000 square feet of land. In addition, commercial facilities are required to have a minimum of one loading zone (measuring 20' by 30' or 600 square feet) for every 10,000 square feet of floor area. The loading zone requirement would add an additional 1,800 square feet to the amount of land required. The result is that the minimum amount of land needed to construct the same project in greenfield area two would increase to 108,300 square feet, or 2.48 acres. This would yield a normalized brownfield/greenfield offset ratio of 1:3.64.

5.1.3 Greenfield Area Three

Greenfield area three does not have setback requirements. Instead, the political leadership of area three has enacted lot coverage limitations. The regulations provide that commercial facilities located in the greenfield area may not cover more than 40% of any given tract of land. The regulations define "lot coverage" to include all buildings and parking facilities. The regulations also impose the same parking requirements as greenfield area two. The amount of land that would be covered by the building and the parking facilities is 85,800 square feet. Imposing a 40% lot coverage limitation would increase the total amount of land needed for the project to 214,500 square feet, or 4.92 acres. This would yield a normalized brownfield/greenfield offset ratio of 1:7.23.

5.1.4 Greenfield Area Four

The approach taken by greenfield area four differs from the approach taken by the other three areas. In order to preserve open space, the political leadership of greenfield area four has enacted regulations mandating minimum lot sizes for different types of development projects. For commercial projects, the minimum lot size is ten acres. This would yield a normalized brownfield/greenfield offset ratio of 1:14.7.

5.1.5 Discussion of the Example

The amount of land required for the brownfield redevelopment project was 0.68 acres. Because of the land use requirements in effect in the four different jurisdictions, had the same project been constructed in one of the four greenfield areas, the minimum amount of land required would have ranged between 1.2 acres and ten acres. The normalized brownfield/greenfield offset ratios would range from 1:1.76 to 1:14.7. In essence, this means that every acre of brownfields redeveloped for commercial purposes would have required a minimum of 1.76 acres in greenfield area one, 3.64 acres in greenfield area two, 7.23 acres in greenfield area three and 14.7 acres in greenfield area four.

5.2 Calculation of Brownfield/Greenfield Offsets

In order to convert the theoretical areal differentials illustrated in the example into actual brownfields/greenfields offsets, specific information about successful brownfield redevelopment projects was required. This information was gathered during the phase two interviews. Specific information included such variables as the nature of the redevelopment project, lot dimensions, total square footage, outside dimensions, number of floors, number of residents, number of employees, etc.

The phase two interviews were conducted in each of the six study cities previously discussed. During these site visits, the land use regulations for a minimum of three proximate greenfield areas were obtained for each of the metropolitan study areas. The greenfield areas identified as proximate to the study cities in these metropolitan areas are noted in the following table.

TABLE 3:

Study Cities, Metropolitan Areas
and Proximate Greenfield Areas

Study City
Metropolitan Area
Proximate Greenfields
St. Louis, Missouri(See Appendix B-10)
St. Louis MetropolitanStatistical Area
Franklin CountySt. Charles County
Lowell, Massachusetts(See Appendix B-7)
Boston-Worcester-Lawrence-Lowell-Brockton New EnglandCounty Metropolitan Area
Town of ChelmsfordTown of DracutTown of Tewksbury
Burlington, Vermont(See Appendix B-2)
Burlington New England County Metropolitan Area
Town of ColchesterTown of MiltonTown of Williston
Baltimore, Maryland(See Appendix B-1)
Baltimore Primary MetropolitanStatistical Area
Baltimore CountyCarroll CountyFrederick County
Richmond, Virginia(See Appendix B-8)
Richmond-PetersburgMetropolitan Statistical Area
Goochland CountyHanover CountyHenrico County
Sacramento, California(See Appendix B-9)
Sacramento PrimaryMetropolitan Statistical Area
Placer CountySacramento CountyYolo County

 

Once these land use regulations and information regarding the characteristics of specific brownfield redevelopment projects had been obtained, it was possible to calculate the minimum amount of land that specific projects would have required if constructed in any of the proximate greenfield areas. Three values (based on the land use regulations in effect in the three proximate greenfield areas) were calculated for each of the successful brownfield redevelopment projects. The calculation of three sets of land use requirements for each redevelopment project enhanced the statistical significance of the data by reducing the effect of anomalous values. As noted previously, the calculated areal requirements were normalized and expressed as a 1:x offset ratio.

It is important to understand that the calculation of areal differentials was intended to approximate the minimum amount of land that a brownfield redevelopment project would have required had it been constructed in a greenfield area. Consequently, when it was necessary to make an assumption in order to calculate areal requirements, the assumption that minimized the amount of land required was the assumption used, as indicated below.

5.2.1 Assumptions Regarding Setback Requirements

Several greenfield jurisdictions had setback requirements that varied in terms of adjacent land uses. For example, if the adjoining land use was commercial, the setback requirement might be twenty-five feet. If the adjoining land use was residential, however, the setback requirement might increase to fifty feet. The applicable setback requirement was always assumed to be the minimum requirement.

5.2.2 Assumptions Regarding Parking Requirements

All of the land use regulations in effect in the greenfield jurisdictions included mandatory parking requirements. As with the example previously discussed, these requirements were based on such variables as total square footage (for commercial), total number of employees (for manufacturing or industrial) or total residential units (for multifamily residential).

The area calculated as needed to meet the parking requirements was assumed to be the total area needed for parking. As a result, the calculated parking area will always be less than the actual amount of land needed for parking because aisles and access ways between the parking places have not been included. To include the amount of land needed for aisles and access ways would not have been the most conservative assumption as the location and characteristics of such aisles and access ways could only be determined in the context of a specific development project. In addition, when calculating parking requirements, 90º parking was assumed in all cases because such a configuration requires less land than angled parking places. Again, this assumption was made because it was the most conservative assumption.

A further assumption was that all parking would be constructed at ground level. The assumption was based on the differential costs of parking structures. Average costs for ground level parking range between $2,500 and $3,000 per space. Construction of a parking structure, which would have reduced the amount of land needed for parking, would also have increased costs significantly. The cost to construct a parking structure ranges between $6,000 and $8,000 per parking space. The cost per space increases to between $12,000 and $15,000 per space for construction of an underground parking structure.

5.2.3 Assumptions Regarding Density Requirements

The land use regulations applicable in several of the greenfield jurisdictions allowed the same development to be constructed in different zoning categories having different density requirements. For example, construction of a single family home development project might be authorized in three different residential zoning categories: R-2 (a maximum density of two residences per acre), R-4 (maximum density of four residences per acre) or R-10 (maximum density of ten residences per acre). If a choice among such zoning categories was presented, the category allowing the highest density development was selected.

5.2.4 Assumptions Regarding Height Requirements

A number of the brownfield redevelopment projects involved either the construction or renovation of relatively tall buildings. Limitations in many of the greenfield areas, however, precluded construction of buildings beyond a certain height. In such situations, absent any other means by which the brownfield/greenfield offset might be calculated, the amount of land needed for the brownfield redevelopment project was determined by reducing the height and increasing the width (or length) of the building. With regard to reducing building height, for example, the minimum amount of land required for a 300' high rise hotel in a greenfield jurisdiction having a 150' height limitation would be calculated as though two 150' towers were constructed.

With regard to increasing the width (or length) of structures, the assumption was made that the shortest appropriate structure would be constructed. For example, consider the need to calculate the minimum land requirements for an eight story brownfield redevelopment project. In a greenfield jurisdiction having a three story height limitation, the redevelopment project could be constructed either as a longer (or wider) two story buildings or as a smaller building containing two and three story sections. Construction of a longer (or wider) two story building was the selected alternative in most instances as this would minimize building costs. Beyond a height of two stories, construction costs per square foot increase substantially. This increase in cost is attributable to a number of factors including increased foundation costs and additional expenditures on safety related issues. Because the price of land in many greenfield jurisdictions is less than the incremental costs of constructing a larger structure, it was assumed (when confronting an applicable height limitation) that a larger, shorter building would be constructed.

5.2.5 Assumptions Regarding Buffer Zones and Landscaping

Most of the land use regulations applicable in greenfield areas include requirements for such things as buffer zones and landscaping. The location and areal extent of such buffer zones and landscaping can only be determined in the context of a specific development project. Consequently, the amount of land needed to fulfill these requirements was not included in the calculations.

5.3 Areal Differentials by Land Use Category

The successful brownfield redevelopment projects were divided into three groups: (1) primarily industrial developments, (2) primarily commercial developments and (3) primarily residential developments. The normalized offset ratios for each of the three categories are presented in the following table.

TABLE 4:

Normalized Brownfield/Greenfield Offset Ratios
for Industrial and Manufacturing Development,
Commercial Development and Residential Development

Measurement
Industrial Development
Commercial Development
Residential Development
Mean:
1:6.24
1:2.40
1:5.57
Median:
1.33
1.74
2.15
Mode:
1.04
0.74
0.94
Range:
1:0.53 to 1:60.52
1:0.48 to 1:12.50
1:0.44 to 1:45.77
Confidence interval (95%):
± 5.38
± 0.59
± 2.54
Standard deviation:
14.79
2.18
10.03
Number of sites:
10
18
20
Number of samples:
29
53
60

 

The data contained in Table 2 indicate that the brownfield/greenfield offset ratio may be significant:

The overall mean for the three subcategories into which the data were divided (industrial development, commercial development and residentisl development) was 4.5. In essence, this means that every brownfield acre redeveloped would have required a minimum of 4.5 acres had the same project been located in a greenfield area.

Of the 142 samples (derived from 48 specific brownfield redevelopment projects) that were analyzed in the study, 108 (76.1%) would have required more land in a greenfield area than was actually used by the brownfield redevelopment project.

The total area of land used by all of the brownfield redevelopment projects was 142.7 acres. Had these same projects been constructed in a greenfield area, a minimum of 645.9 acres would have been required.

If for industrial purposes, the redevelopment of one acre of brownfields would have required 6.2 acres in a greenfield area (95% confidence interval: ± 5.4 acres). The total acreage actually used by the industrial development projects was 49.6 acres. Had these projects been located in a greenfield area, the minimum amount of land required for the projects would have been 309.1 acres.

If for commercial purposes, the redevelopment of one acre of brownfields would have required 2.4 acres in a greenfield area (95% confidence interval: ± 0.6 acres). The total acreage actually used by the commercial development projects was 58.3 acres. Had these projects been located in a greenfield area, the minimum amount of land required for the projects would have been 140 acres.

If for residential purposes, the redevelopment of one acre of brownfields would have required 5.6 acres in a greenfield area (95% confidence interval: ± 2.5 acres). The total acreage actually used by the residential development projects was 34.9 acres. Had these projects been located in a greenfield area, the minimum amount of land required for the projects would have been 194.5 acres.

The distribution of the data support these conclusions:

With regard to industrial redevelopment projects, 19 of 29 samples (65.5%) had a brownfield/greenfield offset ratio of greater than one.

With regard to commercial redevelopment projects, 39 of 53 samples (73.6%) had a brownfield/greenfield offset ratio of greater than one.

With regard to residential redevelopment projects, 50 of 60 (83.3%) had a brownfield/greenfield offset ratio of greater than one.

Land use decisions are inherently site-specific. This is reflected in the data contained in Table 4 in terms of the wide range of values between the smallest and the largest offset ratios. It is also reflected in the relative large standard deviations and the 95% confidence intervals.

Chapter 1

Chapter 2

Chapter 3

Chapter 4

Table of Contents

 

Chapter 6

Subproblem 2: Induced Benefits

6.1 Background

In general, metropolitan areas of the United States have experienced economic decline throughout the second half of the twentieth century. Both shifts in economic activity from urban areas to suburban locations and inter-regional migration from the Northeast and Midwest to the South and West have contributed to this decline. These demographic shifts, along with the overall trend away from heavy industry and other types of manufacturing, have left many older industrial areas idle, underutilized or completely abandoned. Dramatic increases in crime and welfare dependence are apparent in many of these areas.

In an effort to remedy some of the problems associated with economic decline of cities, federal, state and local governments are examining policies affecting urban areas. As a part of these comprehensive efforts, they are examining barriers to and incentives for redevelopment of brownfield sites and developing strategies to address identified impediments. Information on the costs and benefits of redeveloping brownfield sites is needed to set priorities and develop effective strategies that will ensure the success of brownfield redevelopment projects.

The purpose of this component of the present research project was to provide additional insights into the nature of benefits that are induced by the redevelopment of brownfield properties. While a number of researchers have examined economic benefits of brownfields redevelopment, social and environmental benefits induced by brownfield redevelopment have not been as thoroughly examined.

6.2 Summary of Previous Work

Initially, a literature review was performed to obtain information related to the determination of community benefits of brownfields redevelopment efforts. The results of this review indicated that much of the existing literature focuses on general impediments to urban redevelopment opportunities and concerns of communities and developers regarding brownfield site redevelopment, rather than focusing on determinations of benefits to be received from such redevelopments. While many articles address liability considerations or other impediments to brownfields redevelopment, comparatively little has been written about measurement of benefits induced by brownfields redevelopment efforts. The literature that does exist on brownfields redevelopment-induced benefit analysis tends to focus on three basic areas of community benefits: human health risk reduction, property value increases and provision of services and open spaces. The research reported herein, however, found that brownfields redevelopment may provide a much broader spectrum of benefits.

In addition to the literature review mentioned above, the present research also included a series of telephone interviews with experts in the area of economic redevelopment cost/benefit analysis. These experts pointed out many potential benefits of brownfields redevelopment. Brownfield projects are viewed by many as providing major opportunities for revitalizing urban communities. Redevelopment of brownfield sites may reduce health risks, create jobs, provide services, increase local tax revenues and improve the overall livability of urban neighborhoods. Brownfield site redevelopments tend to affect communities in different ways, depending upon the nature of the land use (e.g., industrial, commercial, residential) and the needs of the community. Left undeveloped, however, brownfield areas remain unproductive, generate little or no economic benefits and are environmentally and socially detrimental to the surrounding communities. On the other hand, if impediments to redevelopment can be reduced, then the realization a wide array of social, economic and human health benefits is likely to occur. Such benefits may accrue both to the immediate community and adjacent areas as brownfield sites are remediated and returned to productive use.

As an example, a case study of brownfield site redevelopment in Trenton, New Jersey , indicated that a variety of social, environmental and economic benefits are accruing from the Trenton, New Jersey Brownfields Demonstration Pilot Program. Interviewees emphasized that, in addition to benefits commonly associated with brownfields redevelopment, such as urban sprawl reduction, traffic congestion curtailment and reduction of air quality problems and other forms of environmental degradation, less tangible social benefits also occur. These types of benefits include a higher level of citizen awareness and sensitivity about individual and community conditions, a sense of control and empowerment from being part of the decision making process, reduced crime and restored safety and security, a sense of hope and a sense of pride.

In other case studies reviewed, the benefit of brownfields redevelopment that was most frequently reported was that of job creation. In Louisville, interviewees explained that job creation will benefit the community only if the jobs are provided specifically to residents occupying the neighboring community. This may require job training programs targeted at community residents. The creation of neighborhood-based businesses could shorten commuting times for residents, making it easier for them to hold down jobs and reducing child care burdens.

Reversal of neighborhood deterioration was the second most frequently mentioned neighborhood benefit. Improvements in the area, including reduced crime, surface cleanups, increased property values and increased local tax revenues were mentioned as potential benefits of brownfields redevelopment. These benefits enhance the ability of local governmental entities to provide better schools, roads and libraries. One respondent pointed out that tax revenues may be most beneficial to the community if they are specifically earmarked for such purposes.

Interestingly, only a small fraction of interviewees mentioned improved environmental quality and the associated reductions in health risks or environmental justice as major benefits of brownfields redevelopment. Perhaps these issues were not emphasized because they are such obvious benefits. On the other hand, residents may be more concerned with other, more visible and immediate concerns such as crime, heavy traffic and noise, than with the longer-term health effects of environmental contamination. In addition, some interviewees indicated that the types of sites that are being targeted for brownfield redevelopment in are not highly contaminated and therefore do not pose high health risks that would be significantly reduced if the sites were cleaned up.

6.3 Benefit-Based Priority Setting

Another output of the literature review and interviews conducted as part of the research project summarized herein, in addition to the identification of benefits induced by brownfield redevelopment efforts, was the articulation of a framework for prioritizing brownfield site redevelopment efforts based on benefits projected to be accrued. As shown in Figure 2, the framework is intended to integrate economic, environmental and social factors in a manner that may be helpful to guiding brownfield redevelopment strategies in a way that achieves the multiple objectives of generating investment in urban areas which ultimately provides increased tax revenues and jobs, reducing human health and environmental risk and benefiting low income and minority populations by revitalizing their neighborhoods.

FIGURE 2:

Brownfield Redevelopment Induced Benefit Framework

Social Factors

Those associated with benefiting low income & minority population

Priorities for Targeting Successful Brownfield Redevelopment

Environmental Factors

Those related to human health & environmental benefits


Economic Factors

Those affecting the generation of business, tax revenues & jobs

 

 

This simple framework may be helpful in precluding a failure to see "the forests for the trees" when sifting through large numbers of urban properties to identify those which have the greatest redevelopment potential and the greatest economic, environmental and social benefits. As such, the framework may be a useful tool in setting priorities for redevelopment projects, targeting economic development incentives and programs and developing strategies for brownfield site redevelopment. An important purpose for determining benefits induced by brownfields redevelopment is to use such information to set priorities among the large numbers of brownfield redevelopment opportunities that exist in most large urban jurisdictions. Information on induced benefits can be applied usefully to EPA's six-step process for identifying and evaluating brownfield sites that can be successfully redeveloped, as illustrated in Table 5, below.

TABLE 5:

Benefit-Based Approach to Brownfields Redevelopment Priority Setting

I. Target Geographic Areas
A. Mixed use areas with highly exposed, low income, minority populations.
B. Commercial/Industrial areas with large land tracts & significant job creation potential.
C. Waterfront/downtown areas that are attractive to businesses
II. Identify Brownfield Sites in Each Area
A. Use local knowledge & land use surveys
B. Contact local economic development offices
C. Coordinate with city urban planning activities
D. Use federal & state environmental databases
E. Use GIS to incorporate a variety of data sources
III. Characterize Brownfield Sites Based on Marketability
A. Low Marketability; public funding necessary. [Public sector takes the lead]
B. Marketable for specialized developers; could make use of alternative funding sources. [Public-private partnerships]
C. Highly Marketable; traditional sources of funding. [Private sector takes the lead]
IV. Screen Sites for High Potential Community Benefits [Discussed in following sections]
V. Evaluate Potential Impacts of Redevelopment Alternatives [Discussed in following sections]
VI. Develop Strategy for Brownfield Redevelopment Activities
A. Partnerships with multi-stakeholder groups to establish priorities for public funding efforts & an action plan.
B. Partnerships with multi-stakeholder groups to establish priorities for development projects.
C. Coordinate with development & environmental agencies to market sites, streamline development process & manage community involvement.

 

The benefit-based approach to priority setting was developed using information obtained from literature reviews and interviews with a variety of people involved in brownfields redevelopment activities. As illustrated in Table 6, the screening and impact evaluation processes envisioned in Steps IV and V, as well as site and neighborhood characteristics and attributes of the redevelopment plan itself, are factors to be considered in evaluating potential benefits.

TABLE 6:

Factors to Consider in Evaluating Potential
Benefits of Redevelopment Alternatives

Type of Benefit
Discussion
Environmental Benefits
1. Reduced health risks
Evaluation of existing risks, based on contamination and exposures and reductions in those risks resulting from remediation and redevelopment.
2.Environmental Justice
Socio-demographic evaluation of the beneficiaries of redevelopment.
3. Prevention/Reduction of air pollution
Due to curbing urban sprawl; most significant as commercial and industrial redevelopment occurs, providing jobs for city residents.
4. Creation of green spaces
Applies to parks, open spaces and community gardens development.
Economic Benefits
1. Job creation and potential for higher incomes
Jobs created by the redevelopment may not benefit the local community if residents do not have the necessary education or training to fill these jobs.
2. Improve labor market efficiency
Increasing urban fill may provide more job opportunities to city residents, thereby reducing job search costs, labor market search costs and relocation costs.
3. Increased tax revenues
Due to returning property to productive use and increasing property values.
4. Spill-over economic effects
Redevelopment has the potential to improve neighborhood quality and overall business conditions in the area.
5. Reduced congestion, accidents and highway costs
Due to reduction in urban sprawl and commuting.
6. Prevent housing abandonment
Increasing the desirability to live in the city may result from urban fill. Commensurate benefits include avoiding expenses of new construction, preventing crime that often occurs in and around abandoned buildings and improving the aesthetics in the area.
Social Benefits
1. Increase in easily accessible services
Applies to commercial development; many inner city neighborhoods do not have easy access to grocery stores or other necessities.
2. Affordable Housing
For residential development only.
3. Restored sense of control and neighborhood empowerment; renewed sense of hope and pride
These types of benefits are most likely to result when there is a high degree of community involvement in brownfield site cleanup and redevelopment planning.
4. Improved city services
Increase in tax revenues generated by redevelopment may enable the city to provide better public services (e.g., schools, transportation, recreation).
5. Aesthetics
Improved appearance and overall neighborhood quality may result from all types of redevelopment projects, especially parks, open spaces and community gardens.

 

While this list is more detailed than the screening criteria applied in previous steps, it would be applied only to a subset of higher priority sites. Comparing potential impacts of alternative site redevelopment projects will allow cities to identify those sites likely to provide the greatest economic, environmental and social benefits. Evaluating potential brownfield sites on the basis of the ability to provide community benefits provides a sound basis for establishing priorities and tailoring assistance so that brownfield site redevelopment efforts can proceed.

Chapter 1

Chapter 2

Chapter 3

Chapter 4

Chapter 5

Table of Contents

 

Chapter 7

Subproblems 3 and 4: Impediments and
Incentives to the Redevelopment of Brownfields

The results of the phase one and phase two interviews were analyzed to isolate key variables having the greatest influence on both public and private sector decisions to redevelop brownfields. As noted earlier, the underlying assumption was that specific factors identified during both phases of the interview process were, in fact, key variables most influencing brownfield redevelopment decisions.

Initially, it must be noted that land use decisions are inherently site-specific. As a result, factors affecting decisions regarding the development or redevelopment of any specific site may (or may not) arise with regard to the development or redevelopment of any other site.

It must also be remembered that issues relating to the redevelopment of brownfields are a subset of a larger set of issues relating to economic development. According to one of the interviewees, brownfields are "a part of a piece of a puzzle." With regard to urban redevelopment, another interviewee noted that brownfields are "the tail wagging the dog." In essence, there was general agreement that the real issue was urban economic development and that the redevelopment of brownfields was but one component of that development.

7.1 Issues of Special Concern

Despite the site-specific nature of brownfields redevelopment decisions, there were five issues that arose in all or nearly all of the study areas. These are issues that have a disproportionate impact on the redevelopment of brownfields or the development of greenfields. Because they are of overriding importance, these issues of special concern are addressed individually.

7.1.1 A "Market Mismatch"

With regard to the relationship between the brownfields and greenfields, there was general consensus that the redevelopment of brownfields and the development of greenfields were not on a level playing field. There exists, according to one interviewee, a "market mismatch" that makes it significantly less expensive to develop greenfields. For developers, this "market mismatch" produces both higher and quicker profits from the development of greenfields than from the redevelopment of brownfields. As noted by one of the interviewees, "every brownfield disincentive is a greenfield incentive." The inverse is true as well.

There are almost as many examples of economic incentives and disincentives that affect decisions to redevelop brownfields as there were interviewees during this phase of the study process. Everyone, it seemed, had an example of the economic imbalance between brownfields redevelopment and greenfields development:

In Detroit it was the property tax rate. Within Detroit, the property tax rate is 70 mills per hundred dollars of valuation. In nearby suburban and rural areas (greenfield areas), the tax rate varies between 30 and 40 mills. To compound the problem, Detroit is confronted with the need to spend approximately $1.6 billion on facilities to handle combined sewer overflows in order to meet the requirements of the Clean Water Act. In order to raise the funds necessary to comply with Clean Water Act requirements, it is likely that Detroit's property tax rate will have to be increased.

In St. Louis it was a one percent earning tax that is imposed on income earned within the City of St. Louis. A similar tax is not imposed by other local governments within the St. Louis Study Area. One interviewee noted that the one percent earnings tax was felt most by those individuals who had the highest incomes. With regard to the relocation of a corporation, this interviewee noted that the individuals who were making relocation decisions were also the individuals who would pay the most if they were forced to pay an earning tax. Was it any wonder, queried the interviewee, that corporations chose to locate elsewhere?

In Richmond it was telephone surcharges that are imposed by the city but not by suburban and rural jurisdictions within the Richmond Study Area. It is difficult to imagine a land use decision turning on something as relatively minor as telephone surcharges. As one interviewee noted, however, land use decisions are based on the cumulative effect of a multitude of relatively minor variables. This person concluded that something as minor as a telephone surcharge could be the straw that broke the proverbial camel's back.

7.1.2 Crime

Perhaps the greatest single impediment to the redevelopment of brownfields is crime. In one form or another, this issue emerged in all of the study areas. Several of the interviewees noted that crime rates were major factors when investment decisions are made. For example, it was argued that the homicide rate in Richmond had the effect of discouraging investments in brownfields redevelopment. In fact, through a combination of public and private initiatives, Richmond was able to reduce the homicide rate by 40% between 1997 and 1998. Nonetheless, as noted by one of the interviewees, the homicide rate has created such a stigma that many potential investors not only will not consider developments within the city but also do not wish even to be associated with the city.

The influence of crime is not limited to serious crimes. Vandalism, for example, was considered to be a major issue in one of the study areas. The need for intensive site security to prevent theft was a factor in a relocation decision in another of the study areas. As noted by one of the interviewees, crime rates "make brownfield sites look unattractive."

Even the perception that a study area is a high crime area is sufficient to discourage investments in the redevelopment of brownfields. In one study area, fights in an ethnically diverse high school created the impression that the community was prone to violence. This impression affected at least one brownfield redevelopment proposal adversely. In more than one of the study areas, abandoned buildings were cited as creating the perception that neighborhoods were unsafe. One of the interviewees noted that funding for the removal of abandoned buildings was needed both to prepare the site for redevelopment and to reduce both the actual crime rate and the perceived threat of crime.

Several of the interviewees argued that crime was not confined to brownfield areas, noting that greenfield areas were not free from crime. Others contended that crime was just one of several factors that had to be considered. Nonetheless, though the extent of the problem varied among study areas, there seemed to be general agreement that the perceived threat of crime was causing developers to favor the development of greenfields over the redevelopment of brownfields.

7.1.3 Intergovernmental Competition

A major issue that arose in every study area was intergovernmental competition. This issue is perhaps second only to crime in presenting a major impediment to the redevelopment of brownfields.

Much of the discussion relating to the redevelopment of brownfields or the development of greenfields seems to be based on the assumption that development is being forced on greenfield areas. This assumption is incorrect. Many greenfield areas are pursuing development with great vigor.

In the pursuit of development, local governments in greenfield areas are offering a wide variety of financial inducements to encourage the development of greenfields. As noted by the interviewees, these inducements may include:

Property tax deferrals
Business or corporate earnings tax rebates
Sales tax deferrals or rebates
Reduced or eliminated fees for governmental services
Reduced or eliminated fees for required permits and permit studies
Simplified permit procedures
Waiver of permit requirements
Construction of infrastructure (including highway and rail access)

The result of this competition for development is that the skewed playing field discussed above becomes even more highly tilted toward the development of greenfields instead of the redevelopment of brownfields. One of the interviewees characterized the situation as "corporate welfare" that subsidized private sector decisions to relocate from an existing location to a newly developed greenfield.

In essence, given the degree of intergovernmental competition that was observed by all of the interviewees, any decision to encourage the redevelopment of brownfields will have to include financial inducements for developers. The list of potential inducements noted above is illustrative, not exhaustive. Even provision of these inducements may not be sufficient to motivate the redevelopment of brownfields. With regard to developers considering a proposed retail area in St. Louis, for example, one of the interviewees noted that "we can't bribe them enough to get them to move into the city."

7.1.4 Assembly of Parcels of Land and Clearing of Title

The importance of this issue has not been addressed adequately in the literature. In nearly every study area, the issue of assembly of land parcels and clearing of title emerged as a major impediment to brownfields redevelopment. Many of the core cities in the study areas have thousands of small parcels of land that fall within the definition of brownfields. In large measure, these are abandoned sites that are scattered throughout the city. For example, St. Louis has acquired more than 11,000 small parcels through tax foreclosure alone.

As noted by one interviewee, a typical developer wants a minimum of five to ten acres of land to be available before a project will be considered. Assembly of parcels of such a size in greenfield areas presents no difficulties. Conversely, assembly of parcels of such a size in brownfield areas is very difficult. An average city block, for example, is only two to three acres. With thousands of small parcels scattered throughout a city, assembly of land into five to ten acre tracts presents an enormous problem.

One solution to the problem has been the use of eminent domain authority to assemble the scattered parcels and other parcels (usually privately owned) into developable tracts. In many areas, the use of eminent domain authority has encountered serious political opposition. Even the use of such authority presupposes that the specific city can afford to pay for the property taken by eminent domain. This is not a safe presumption in most of the study areas.

An even more politically sensitive issue has been the proposed use of eminent domain authority to acquire private land as needed to allow the expansion of existing industries within the study areas. The purpose of using public authority to acquire land for a private entity has been to discourage the entity from relocating by facilitating expansion at the entity's existing location.

In general, there was agreement that eminent domain authority could (and should) be used to "quiet title" to parcels of land that have been assembled into redevelopment tracts. Absent clear title, the interviewees noted that funding for remediation of the site might not be forthcoming nor would interest in site redevelopment. One of the interviewees stated specifically that site redevelopment was being discouraged by clouds on the titles to land that could have been redeveloped. Use of eminent domain authority is one means by which these clouds might be eliminated.

7.1.5 Leadership Issues

This was not considered an issue of special concern at the conclusion of the phase one interviews. It was only after numerous phase two interviewees expressed the opinion that local leadership was the key to a successful redevelopment project that the importance of this issue emerged. One very successful brownfield redevelopment project, for example, was able to proceed because the local fire department worked closely with the developer to determine how best to provide fire protection and because the local government assisted the developer in finding necessary remediation expertise.

Any number of the interviewees stressed the fact that successful brownfields redevelopment efforts required a strong commitment from the city within which the brownfields were located. As noted by one interviewee, the city was successful in redeveloping brownfields because it was blessed with aggressive leadership and a business retention strategy. This strategy focused on assisting existing businesses to remain within the city. As noted by the interviewee, existing business owners are more likely to redevelop brownfields than are "outside" developers whose only goal is a quick profit.

Aggressive community leadership needs to include all elements of the community. One of the interviewees noted the relationship between a strong labor union presence and both the creation and restoration of brownfields. In the study area represented by the interviewee, at least one industry had chosen to relocate elsewhere rather than accept the demands of a local labor union. Not only did this have the effect of discouraging brownfields redevelopment by reducing municipal tax revenues, it also had the effect of creating a new brownfield when the former manufacturing facility was abandoned. As noted by the interviewee, any future representation of the community needs to include union representation so that potential developers are not dissuaded by the union presence.

A number of related planning issues emerged. Two of the interviewees suggested that the cities needed to create an "industrial park atmosphere" in order to compete with suburban developments. Others noted that the redevelopment of brownfields was creating a "hopscotch" pattern of development because "the easy sites are done first." The result was that individual redevelopment decisions were driving land use plans rather than individual decisions being made within the context of existing land use plans.

7.2 Information Issues

7.2.1 Available Information: General

The literature review suggested that brownfields redevelopment was being inhibited because information regarding redevelopment opportunities was not available to potential developers. This did not turn out to be a valid concern. Any number of information sources are available to potential developers, many of whom have now developed (or are developing) the expertise to utilize such information.

One suggestion was to maintain a database of brownfields that were available for redevelopment. This suggestion was rejected in a number of study areas because of the stigma associated with the term "brownfields". The frequency with which interviewees spoke of a "brownfields stigma" was somewhat surprising. As noted by one interviewee: "We don't maintain a list of brownfields; we maintain a list of economic development opportunities."

7.2.2 Available Information: Site-specific

The literature review also suggested that an absence of information regarding specific parcels of land had the effect of inhibiting redevelopment. This emerged as an issue in a number of study areas. Detroit and St. Louis, for example, have acquired thousands of acres of land through abandonment and tax foreclosure. Very little (if any) information is available about activities that occurred on specific sites. Phase One environmental assessments have not been done. One interviewee noted that it was difficult to attract a developer to a site if it was not possible to tell the developer what had occurred there. Another noted that it was easier to stimulate interest in small sites if preliminary environmental assessments were available.

Though less significant, absence of site-specific information was also an issue for privately owned brownfields. One interviewee noted that property owners are very hesitant to release information regarding their property because they fear EPA. This fear, according to the same interviewee, is the primary reason why the Revolving Loan Fund that EPA established for the remediation of brownfields has not been used extensively.

One suggestion was to use Geographic Information Systems (GIS) to integrate all available information regarding specific sites irrespective of whether the sites were publicly or privately owned. The proposed GIS would be based on an inventory of all sites falling within the definition of brownfields. Information about the sites included in the inventory would be included in the GIS. In one study area, much of this information was already available but had never been organized at a single location or in a single system. As a result, it was virtually impossible to make site-specific information available to a potential developer. If funding becomes available to develop the GIS completely, then issues of information availability should be resolved.

7.3 Site Acquisition Issues

7.3.1 Sites to Acquire

A number of site acquisition issues emerged. An initial issue was whether there were sites to acquire. Several interviewees noted that there were private landowners within their jurisdictions whose lands were classified as brownfields and who consistently had refused to sell their property. There seemed to be a consensus that property owners were refusing to sell brownfield properties because of fears of potential liability for contamination:

In one study area, a number of railroads were faulted for "sitting on" their property rather than remediating it or selling it for redevelopment.

In another study area, a small number of corporations that owned tracts of land that were key to redevelopment initiatives were faulted for refusing to sell or redevelop their land.

In a third study area, the city itself was refusing to sell city owned land because of fears of potential liability should it be discovered that the site was contaminated.

In a fourth study area, this problem focused on the acquisition of federal property. Not only did the decision of whether or not to sell the property change frequently, but the price "goes up and down every day." As a result, the property has not been acquired by the city and an anticipated brownfield redevelopment project has not be initiated.

7.3.2 Value of Property

The literature notes that the sale of brownfields may be difficult because the parties to the transaction cannot agree on a purchase price. This problem has been seen in the study areas. It appears that property owners consistently over value their properties. Property owners do not want to deduct cleanup costs from the sale price. In addition, structures on the property tend to aggravate the situation. From the property owner's perspective, such structures should add to the price of the property. From a developer's perspective, however, the need to remove a useless structure prior to redevelopment of a site should have the effect of reducing the price of the property. Finally, selling prices tend to increase dramatically once interest in the property has been expressed. The result, as noted by several of the interviewees, was that property owners had such unrealistic expectations of the value of their properties that they refused to accept realistic offers that reflected market prices.

Consequently, not only does the price of land increase, but the possibility of financing a redevelopment project decreases proportionately. As noted by one of the interviewees, land prices are a key variable in determining the availability of private capital.

7.3.3 Purchaser Liability

The literature suggests that potential purchasers of brownfields are dissuaded by ambiguities relating to potential liability for site contamination. This does not appear to be a "real world" issue. Many of the interviewees noted that developers understand this issue and do what is necessary to protect themselves from potential liability. It was noted that several successful brownfields redevelopment projects saw both the purchaser and the seller of the property work together to resolve liability issues. Concern was expressed, however, as to the legal effect of EPA "no action" letters. Did such letters constitute a shield against future liability for contamination at specific sites? With regard to at least one study area, this uncertainty had the effect of discouraging brownfield redevelopment activities. Legislation enacted recently in Michigan was offered as an example of one means by which this uncertainty could be resolved. This legislation, which reflected a "hold harmless" approach, precluded purchaser liability for preexisting contamination. Unfortunately, the Michigan legislation is not consistent with federal law, specifically the liability provisions CERCLA. Uncertainty remains as to which approach is controlling in Michigan. Though EPA has assured the state that it will not initiate an enforcement action regarding properties that are covered by the Michigan legislation, this assurance was in the form of a policy decision that could change as EPA leadership changes. The uncertainty associated with this may be an impediment to the redevelopment of brownfields in Michigan.

7.4 Financing Issues

7.4.1 Tax Incentives

The Taxpayer Relief Act of 1997 (TRA) included a tax incentive that was designed to encourage the remediation of contaminated properties. Under the TRA, remediation costs are fully deductible in the year in which they are incurred if the property meets specified land use, location and contamination requirements. There was general agreement among the interviewees that the TRA tax incentives were not being utilized.

One interviewee attributed this to developer misunderstanding of the tax incentives. Other interviewees disagreed, with several noting that the tax incentives were insignificant. As stated by one of the phase two interviewees, twenty to thirty thousand dollars in tax credits "is not worth screwing around with."

Another interviewee noted that developers are much more interested in "turning the property as quickly as possible" rather than in "expensing cleanup costs". Still other interviewees noted that the TRA tax incentives were not being used because of cumbersome procedural requirements such as requiring local legislation (usually a local ordinance) that allowed the tax credits. One of the phase two interviewees noted that the tax credits did not justify the amount of work (and related costs) that were needed to obtain them. In terms of procedural requirements, this interviewee suggested that a "sliding scale" of requirements be developed with procedural requirements to be determined by the size of specific redevelopment projects.

Other types of tax incentives were suggested. Several of the interviewees argued for increased Tax Increment Financing authority. Such authority is needed not only to clean up a site but to prepare it for redevelopment (e.g., to remove existing structures, to rehabilitate infrastructure, etc.) Other interviewees argued in favor of an "Enterprise Zone" approach to tax credits for brownfields redevelopment. Two of the interviewees from Massachusetts noted a state program under which local communities were empowered to provide tax incentives based on a percentage of value added by a redevelopment project. The definition of "value added" includes the costs of remediation.

Tax incentives similar to those afforded historic preservation projects were advocated as were business tax credits for investments in the redevelopment of brownfields. One interviewee argued that such tax incentives needed to be transferable if they were to be effective. This appears to be a reasonable approach to stimulating investment in brownfields redevelopment.

7.4.2 Financial Assistance

One of the phase two interviewees noted the critical importance of access to capital. As an alternative to tax incentives, this interviewee suggested that a program be developed to "backstop" the developer. A program similar to the federally-insured student loan program was suggested. The goal would be to provide the developer with a surety (or the equivalent) in order to make private capital available to the developer. Comparing tax credits with access to capital, this developer noted that "tax credits are icing on the cake as opposed to the flour that makes the cake." The possibility of a loan guarantee program was raised by another interviewee who suggested that such a program would be an inexpensive means by which lending institutions might be encouraged to finance brownfields redevelopment.

Whether lending institutions would do so, however, is a separate question. One interviewee noted that the present economy is so strong that "banks don't want to mess with brownfields." Another noted that the robust economy was driving the development of greenfields which are perceived as being "easier" to develop.

A variety of other tax incentives and other forms of financial assistance were identified. For example, legislation enacted in Maryland provides for the incremental increase of property taxes if property values are increased as a result of redevelopment activities. Several of the interviewees, noting that CERCLA provides funding for site assessment but not for cleanup, argued for "site preparation" or cleanup grants. It was felt that such grants were needed to allow cities to make brownfields as attractive to developers as greenfields. The comments of one interviewee are probative: "Tax incentives are good, clean ground is better."

7.4.3 Lender Liability

An issue related to purchaser liability is the potential liability of financial institutions. The literature suggests that such institutions are hesitant to finance brownfield redevelopment projects because of concern that they may become liable for remediation costs if they are forced to foreclose on the property that is being redeveloped. This no longer appears to be a serious problem. A number of the interviewees noted that financial institutions are now sufficiently experienced to know how to handle issues relating to lender liability. Others noted that recent changes in federal law have had the effect of significantly limiting potential lender liability.

One interviewee argued that the issue of "lender liability" was a "red herring" issue. Lending institutions do not want to finance brownfields redevelopment, this interviewee argued, not because of potential liability but because the property to be redeveloped had little collateral value. As a result, capital was not made available for redevelopment initiatives.

7.4.4 Availability of Insurance

The literature suggests that the inability of developers to obtain insurance for brownfield redevelopment activities may have the effect of inhibiting such activities. This does not appear to be a valid concern. Several interviewees noted that insurance was available from a number of different sources. However, one interviewee did note that inexperienced developers may not know of the full range of insurance coverage that is available.

7.5 Permitting Issues

7.5.1 Existing Permit Requirements

The literature suggests that uncertainty regarding permit requirements is an impediment to the redevelopment of brownfields. Fortunately, this does not appear to be the case. As noted by one of the interviewees, the more sophisticated the developer, the less permit requirements present a problem. In fact, specific programs of assistance had been implemented in each of the study areas to assist developers in fulfilling the variety of federal and state statutory and regulatory requirements that may be applicable to brownfields redevelopment:

Detroit has developed a "Toolbox" to equip a potential developer with the tools needed for fulfill the statutory and regulatory requirements.

Houston has adopted a "partnership" approach under which the developer and representatives of those agencies having jurisdiction over different aspects of the development are brought together early in the process ("getting people to the table") to address permitting requirements.

California has implemented a "one-stop shop" approach under which one state agency is designated a lead agency and is authorized to facilitate all permitting requirements.

The one area in which uncertainty regarding permit requirements did become apparent related to local land use control, specifically zoning requirements and building permits. The requirements of local zoning ordinances and related building codes were described as impediments to brownfields redevelopment in several of the study areas.

A related issue was described by one of the interviewees as the "regulatory burden" that must be borne by a developer. According to this interviewee, the total number of federal, state and local permits and approvals that are required for a redevelopment project has the effect of discouraging the redevelopment of brownfields and encouraging the development of greenfields. Another noted that the total number and cost of permits required for a brownfields redevelopment project had the effect of increasing transaction costs which had the perverse effect of discouraging the redevelopment of brownfields. A suggested remedy for this problem was to consolidate different state and local permit requirements. At the local level, however, there may be significant opposition to such consolidation because it could be viewed as a surrendering of local control.

One of the phase two interviewees noted that the issue was not the burden imposed by different permitting requirements but instead was the delay and uncertainty inherent in the permitting process. The issuance or denial of permits, this interviewee noted, needed to be processed expeditiously and delivered on time. The interviewee also noted that private developers cannot bear the risk of regulatory agency delays and that this works against potential public-private partnerships. As this interviewee concluded, "uncertainty defeats the program."

7.5.2 New Permit Requirements

An issue that may affect the redevelopment of brownfields is the increasing stringency of permit requirements under the Clean Air Act (CAA). Many brownfields are located in nonattainment areas. The more severe the air quality problems of the nonattainment area, the more stringent the permitting requirements. Recently, EPA announced more stringent control on the emission of both ozone precursors and particulate matter. One of the interviewees argued that these requirements would increase the regulatory burden borne by brownfield redevelopers. Similar requirements may not be applicable to the development of greenfields located within the same study area but not within the CAA nonattainment area.

7.5.3 Remediation Requirements

The literature suggests both the possibility that remediation requirements might be incorporated into different permits and that this possibility has the effect of discouraging the redevelopment of brownfields. Fortunately, this was not considered to be an issue in any of the ten study areas. As one of the interviewees noted, should this issue arise, it could always be resolved through negotiations with the permitting agency.

7.5.4 Inconsistent Requirements

Inconsistent federal, state and local permitting requirements were identified in the literature as an impediment to the redevelopment of brownfields. Though this issue was identified in several of the study areas, it usually reflected the requirements of specific sites, not a systemic inconsistency. At one site, for example, federal and state standards for the cleanup of waste PCBs were not consistent. At another site, there was confusion regarding the requirements of a permit required under § 404 of the Clean Water Act.

One context in which inconsistent requirements was likely to arise was in the area of risk assessment. Two of the interviewees noted that public health agencies and environmental quality agencies utilized different risk assessment standards.

With regard to risk assessment standards, another of the interviewees raised the "how clean is clean" question in the context of an acceptable range of risks. This interviewee argued that better risk assessment models are needed that are easier to use, scientifically credible and acceptable to EPA for use in health assessments. The interviewee noted that a better definition of acceptable risk was needed, specifically arguing that a "risk range" of 10-4 to 10-6 was both too broad and too uncertain. An alternative, advocated by this interviewee, was to determine land uses in terms of acceptable levels of risk. For example, if economically feasible remediation was able to reduce the risk level only to 10-4, then the land could be used only for purposes that did not involve human contact. The Food Quality Protection Act was offered as a model of such a standard.

With regard to inconsistent federal and state standards, several of the interviewees argued that cleanup standards should be set based on the use to which the property was to be put. This issue, which has generated significant political opposition, has arisen most recently in the context of the CERCLA reauthorization process.

7.5.5 Regulatory Flexibility

The literature identified "entrenched attitudes" among regulators as increasing the regulatory burden that must be borne by developers and, as a result, discouraging the redevelopment of brownfields. With very few exceptions, this issue did not arise in the study areas.

One exception noted by several of the interviewees was the fulfillment of statutory requirements. In essence, a regulator could not deviate from statutory requirements in the interest of regulatory flexibility. To do so was to invite litigation that could delay (and possibly preclude) a redevelopment project.

Another exception relates to EPA. Two of the interviewees had harsh words for EPA. They were offended by the "parental" attitude that EPA employees displayed toward local communities. Conversely, several of the interviewees had particular praise for EPA. The difference appears to be the EPA region within which the study areas is located.

One of the most telling comments focused on the apathy toward brownfield redevelopment projects that was expressed by a state agency. The interviewee's words are of note: This agency "never brought hope to the table." The idea of bringing hope to the table, of being both goal oriented and willing to work to overcome obstacles, is perhaps the most critical component of regulatory flexibility. In addition to EPA, several state agencies were praised for their ability and willingness to "get the job done."

7.6 Site Redevelopment Issues

7.6.1 Availability of Expertise

The literature suggests that a lack of available expertise (e.g., consultants, laboratories, contractors, etc.) has had the effect of impeding the redevelopment of brownfields. Once again, this was an issue that did not arise in any of the study areas. As noted by several of the interviewees, the availability of expertise is a function of the willingness of developers to pay for such services. With the exception of costs associated with site remediation, the cost of expertise should not be significantly greater for the redevelopment of brownfields than for the development of greenfields. The costs associated with site remediation, however, may be significant.

7.6.2 Inadequate or Antiquated Infrastructure

This issue arose in virtually every study area but it was always a site-specific issue. In some cities, specifically Detroit and Richmond, the availability of existing infrastructure was perceived as a benefit that should encourage brownfields redevelopment. In other cities, the inadequacy of the existing infrastructure was viewed as a major barrier to the redevelopment of brownfields. With regard to commercial and industrial redevelopment, for example, lack of highway and rail access was identified as a major infrastructure inadequacy.

Several of the interviewees noted that infrastructure may become inadequate as land use changes. Water and systems that were designed for a residential population, for example, may be inadequate to accommodate commercial and industrial requirements. One of the interviewees noted that this is a general urban development issue, not a specific brownfields issue. Another interviewee noted that infrastructure upgrades may be necessary in order to attract private capital.

7.6.3 Limited Demand

The literature suggests that the demand for redeveloped properties may be limited and that this limited demand has the effect of discouraging the redevelopment of brownfields. While this may be true on a site-specific basis, the general consensus among the interviewees was that there was significant demand for redeveloped properties. Land use restrictions in Vermont, for example, virtually mandate the reuse of land. Similar demands were seen in California and Michigan. Based on the comments of the interviewees, it does not appear that a lack of demand is inhibiting the redevelopment of brownfields.

7.6.4 Workforce Issues

An interesting refrain emerged during the interview process. At one point during the interviews, virtually everyone interviewed noted that their community was having difficulty finding and keeping skilled workers. The need for a trained workforce is not an issue that is limited to the redevelopment of brownfields. It is a part of a larger economic development problem. Given a mobile workforce and a booming economy, retaining trained personnel has become a major corporate issue.

One aspect of this issue is worthy of note. A California entity involved in the redevelopment of brownfields has entered into a partnership agreement with a local trade school. The purpose of the agreement is to utilize brownfield redevelopment projects as a means of training laborers. This training is one component of an established "welfare to work" program.

Several of the interviewees noted the general perception that skilled labor is located in the suburbs and that industries will choose to locate in the suburbs to have greater access to this skilled labor pool. Two other interviewees challenged these assumptions, arguing that the suburban labor pool was no more skilled or unskilled that the urban labor pool. One of the interviewees, however, noted a recent relocation decision by a "high tech" company. This company, the interviewee noted, chose not to relocate to a brownfields redevelopment area because it felt that it could not attract employees for "high tech" jobs if it relocated to such an area.

As noted, the truth of the perceptions that the skilled labor pool is located in the suburbs and that these employees cannot be attracted to a brownfields redevelopment area is open to question. The reality, at least with regard to one relocation decision, is that these perceptions appear to be guiding relocation decisions.

7.7 Miscellaneous Issues

7.7.1 Housing Issues

One question that arose in the literature was whether inadequate employee housing in brownfield redevelopment areas had the effect of discouraging redevelopment projects. Though most of the interviewees dismissed this concern, it did arise in two of the study areas. As noted above, one of the interviewees described a situation where a "high tech" firm chose not to locate in a brownfields redevelopment area because it did not feel that it could attract employees to the area. The adequacy of housing was one of the issues that the firm considered in making its relocation decision. In another study area, the inadequacy of middle income housing is recognized as a limiting factor on brownfields redevelopment.

7.7.2 Education Issues

As with housing, the adequacy of educational facilities for the children of employees was an issue noted in the literature and dismissed by most of the interviewees primarily because of their perception that employees are not obligated to live in a brownfields redevelopment area. Given the mobility of most employees, it is possible for them to work in a brownfields redevelopment area and live in an area with adequate educational opportunities for their children. The one study area where inadequate educational facilities was seen as impeding the redevelopment of brownfields was St. Louis. One of the interviewees stated the problem succinctly: "People don't want to live in the city because the schools are so bad."

7.7.3 Health Care Issues

Review of the literature also suggested that inadequate health care facilities would have the effect of discouraging brownfields redevelopment. This issue was dismissed by all of the interviewees for two reasons. First, health care facilities within the study area were considered to be adequate. Second, the mobility of the workforce allowed access to health care facilities throughout the study area, not just in the brownfields redevelopment area.

7.7.4 Public Opposition

Somewhat surprisingly, the interviewees offered a number of examples of public opposition to brownfields redevelopment projects that lead to termination of the projects. Several reasons for public opposition to brownfields redevelopment projects were cited:

Change in character of the neighborhood was likely to generate opposition to redevelopment projects. This was especially prevalent if there was a public perception that the proposed redevelopment project was have an adverse effect on property values.

Related to this has been community opposition to the types of redevelopment projects that have been proposed. One of the interviewees noted that a proposed industrial facility had been opposed because the community in which it was to be located wanted a shopping mall instead.

The "politics of race" and environmental justice issues also have resulted in opposition to brownfields redevelopment projects. In one instance, a proposed redevelopment project would have resulted in the construction of high density, low income housing. Given population trends in the study area, the new residents of the housing were likely to have an ethnic background different from existing residents of the area. As a result, the proposed redevelopment project generated significant community opposition.

One of the interviewees noted opposition to a proposed redevelopment project because of the "historic" nature of the building that was going to be razed to allow the project to proceed.

Increased traffic levels, especially traffic involving trucks and heavy equipment moving through residential neighborhoods during the construction phase of the redevelopment project, have resulted in community opposition to redevelopment projects. One of the interviewees described traffic as the "hot button" issue for brownfields redevelopment.

It should be noted that brownfields redevelopment projects usually have substantial community support. This is especially true if the community has been involved in planning for the redevelopment project. As noted by one of the interviewees, the greater the community involvement, the less likely that a specific project will be opposed by the community. This may be of critical importance given the observation of another of the interviewees that virtually any community opposition will have the effect of driving away developers and precluding brownfields redevelopment. In at least one of the study areas, however, community politics were characterized by a great deal of "infighting", the result of which was opposition by one group to virtually anything proposed by another group. In such a situation, it is highly unlikely that brownfields redevelopment projects will be initiated.

7.7.5 Governmental Corruption

This issue arose in more than one of the study areas. In order to obtain needed permits, approvals or financial assistance, there was an expectation that developers would "contribute" to the campaigns of different elected officials. As noted by one of the interviewees, these "contributions" were expected to be in cash and were passed "under the table."

In essence, it appears that the transaction costs for a brownfield redevelopment project in certain of the study areas must include appropriate bribes for elected officials and their progeny. Irrespective of either propriety or legality, such financial inducements increase the transaction costs associated with brownfields redevelopment. As discussed above, given a choice between brownfields redevelopment and greenfields development, if redevelopment of the brownfields site is more expensive, it is unlikely that it will be the chosen alternative. This is especially a concern in study areas where greenfield governmental entities are providing substantial financial inducements to encourage developers to pursue greenfield development. An anomalous situation appears to have developed in which developers expect to be paid to facilitate the development of greenfields and elected officials expected to be paid to facilitate the redevelopment of brownfields. Given the willingness of local governments to provide financial inducements to developers, it is not surprising that brownfields are not being redeveloped.

7.7.6 Federal Agency Policies

Any number of federal agency policies were cited by the interviewees as having an adverse effect on the redevelopment of brownfields. Fortunately, virtually all of these effects arose on a site-specific basis. Department of Transportation policies that favored the construction of new roadways over the maintenance or expansion of existing roadways were identified as policies that favored the development of greenfields over the redevelopment of brownfield. In two of the study areas, U.S. Army Corps of Engineers (Corps) flood control policies affected brownfields redevelopment adversely. In one instance it was the refusal of the Corps to provide flood protection. The other instance focused on the Corps cost sharing policies for the construction of flood control structures.

7.7.7 Relocation Preferences

Finally, the issue of relocation preferences needs to be addressed. As noted previously, there is a general perception that skilled workers prefer to live in suburban or rural (greenfield) areas. A number of the interviewees noted that the same is true for senior corporate officers. One indicated that corporate relocation decisions are driven by "where the CEO wants to live." Others noted that the "nicer" environment of the suburbs may have been the basis for decisions to relocate to those areas rather than to redevelop brownfield areas.

Another of the interviews indicated that corporations are likely to relocate to areas where there are other corporations. This interviewee offered three reasons for this pattern of behavior: First, the experience of other corporations allows the relocating corporation to "learn the neighborhood" quickly. Second, there is a perception that industrial park areas are safer. Third, there are fewer political conflicts that have to be resolved prior to the relocation decision. The result is that it is much more likely that corporations making relocation decisions will chose to develop a greenfield than to redevelop a brownfield.

Chapter 1

Chapter 2

Chapter 3

Chapter 4

Chapter 5

Chapter 6

Table of Contents

 

Chapter 8

Summary and Conclusions


EPA's Brownfields Economic Redevelopment Initiative represents an innovative approach to environmental protection while bringing the focus of that protection directly to communities. It has spurred environmental cleanup, reduced neighborhood blight, generated tax revenues, and created jobs and in so doing it has helped to stabilize and enrich communities.

Timothy Fields, Jr.
Assistant Administrator
Office of Solid Waste and Emergency Response
U.S. Environmental Protection Agency
Testimony before the Committee on
Environment and Public Works
U.S. Senate
4 March 1997


The primary issue addressed in this present research project was the relationship between brownfields and greenfields. Two critical questions were addressed. First, to what extent will developmental pressures on previously undeveloped properties be reduced by the redevelopment of brownfields? Second, what are the critical factors that most influence public and private land use decisions either to redevelop brownfields or to develop greenfields? Answers to these questions can be summarized as follows.

8.1 Areal Differentials

Based on a total of 142 samples derived from 48 brownfield redevelopment projects, it is reasonable to conclude that such redevelopment projects consistently would have required more land if constructed in a greenfield area and, in many instances, would have required significantly more land. An industrial redevelopment project utilizing one acre of brownfields would have required an average of 6.2 acres if it had been developed in a greenfield area. A residential redevelopment project utilizing one acre of brownfields would have required an average of 5.6 acres if it had been developed in a greenfield area. A commercial redevelopment project utilizing one acre of brownfields would have required 2.4 acres of if it had been developed in a greenfield area. Redevelopment of brownfields should reduce developmental pressures on greenfields proportionate to these average offsets.

8.2 Internet-based Survey

The primary purposes of the Internet-based survey were to confirm both the areal differentials (discussed in section 7.2, supra) and the identification and weighing of critical factors (discussed in section 7.4, infra). Unfortunately, as discussed herein, the survey did not produce meaningful results.

Respondents to the survey expressed a great deal of interest in the present research project. In fact, most of the respondents either asked to be added to the project mailing list or requested copies of the final report. Despite this level of interest and enthusiasm, however, none of the respondents was able to offer confirmation as to either the areal differentials or the identification and weighting of the critical factors.

8.3 Considerations Regarding Alternative Tracts

One issue emerged during the interview process that appears to be a major factor in determining the brownfield/greenfield relationship. All of the individuals interviewed during phase two of the interview process were involved in specific brownfield redevelopment projects. Of those individuals, only two considered the alternative of locating their business activities in a greenfield area. In one instance, a planned relocation to a greenfield area was abandoned for financial reasons. In the other instance, the commercial square footage that could be obtained through the redevelopment of a brownfield structure could not be obtained at the same cost through the construction of a new structure in a greenfield area.

Apart from these two examples, plus the aforementioned commercial developers who would locate their operations wherever they could obtain market share, those individuals who were involved in the redevelopment of brownfields were not also involved in the development of greenfields. Additional interviews have suggested that the converse is also true, that individuals involved in the development of greenfields are not also involved in the redevelopment of brownfields. A major factor influencing the brownfield/greenfield relationship, therefore, appears to be the conflicting "corporate cultures" of brownfield redevelopers and greenfield developers. There is relatively little communication between the two groups. Each continues to do what it has done with little consideration of alternatives. For example, in the context of a discussion regarding the redevelopment of urban brownfields as an alternative to the development of suburban greenfields, one greenfield developer commented: "I don't even know who to call in the city."

8.4 Critical Factors Affecting Redevelopment Decisions

The issues that were identified by the interviewees as either inhibiting the redevelopment of brownfields or encouraging the development of greenfields present substantial (though not insurmountable) barriers. This is particularly true regarding the five issues of special concern: The need for strong local leadership, the "market mismatch" (and the resulting economic incentives to develop greenfields), crime (both actual and perceived), the competition between local governments to attract development and the assembly of parcels of land into developable tracts.

These are the critical factors affecting brownfield redevelopment decisions. The comparative importance of these factors varied both among the individuals interviewed and between the study areas. This variability appears to have been caused by site-specific conditions. As a result, it was not possible to determine with any confidence the relative weights of the critical factors.

Taken individually, all of the issues identified by the interviewees as either inhibiting the redevelopment of brownfields or as encouraging the development of greenfields are capable of resolution. Unfortunately, these issues may not be taken individually. Because of their close interrelationship, the issues must be addressed collectively. The need to confront the interrelationships that have emerged over time, in essence to address the "ecology" of the issues, makes any realistic resolution highly problematic.

With regard to intergovernmental competition, for example, the most fundamental issue confronting the redevelopment of brownfields may be the structure and function of government in the United States. The federal government is a government of limited powers that cannot compel the states to do anything. The most that the federal government can do is to offer financial incentives to encourage state compliance with federal policies. A similar pattern can be seen in many states, especially "home rule" states in which there is substantial protection for local autonomy. In these states, the authority of the state over state political subdivisions is limited. As was observed in many of the study areas, if a political subdivision located in a greenfield area chooses to encourage development, there is relatively little that either the state or the federal government can do about it. Such local decisions are the outcome of a political process in which greed and stupidity appear to be the controlling factors. If the conversion of greenfields reflects any single human shortcoming it is an apparent willingness to seek short-term gains irrespective of long-term costs.

There are as many examples of these interrelationships as there are observers. For instance, there are many more economic incentives to develop greenfields than there are to redevelop brownfields. As noted by several of the interviewees, the developers of greenfields never pay the full cost of development. With regard to the redevelopment of brownfields, however, the developer is expected to pay not only the full cost of development but also to assist in the resolution of social problems resulting from years of urban neglect.

8.5 Statutory and Regulatory Barriers

A number of statutory and regulatory barriers were identified during the interview process. Somewhat surprisingly, the "real world" barriers were not generally the barriers that had been identified during the literature review.

The best example is CERCLA liability. The literature suggested that this liability was a major barrier to the redevelopment of brownfields. As noted above, however, there was general agreement among those interviewed that the liability provisions of CERCLA did not pose a barrier to brownfields redevelopment.

With regard to CERCLA liability, however, the legal status of EPA "no action" letters did arise as a potential barrier. The extent to which such letters relieve both developers and financial institutions of liability is uncertain. With regard to specific sites, such uncertainty may have the effect of inhibiting redevelopment of a brownfield.

The greatest single barrier noted throughout the interview process, which relates to the "market mismatch" noted in section 8.4, is access to capital. Both public and private funding is needed to correct this mismatch. Site assessments need to be conducted and needed remediation activities need to proceed. Tracts of land need to be assembled into parcels of sufficient size to facilitate development and title questions regarding these parcels need to be resolved. These are conditions precedent to the redevelopment of brownfields that can require substantial financial resources.

Numerous suggestions were offered as ways of providing access to capital. Expansion of both Tax Increment Financing authority and Enterprise Zone tax credits could provide such access. One of the interviewees noted that transferable tax credits could have the effect of attracting even more capital to the redevelopment activities generating the tax credits.

Other barriers to the redevelopment of brownfields that were identified during the interview process focused on the policies of both the U.S. Department of Transportation (DOT) and the U.S. Army Corps of Engineers (COE). DOT policies were criticized for favoring the construction of new roadways over the reconstruction or rehabilitation of existing roadways. COE flood control policies were criticized for two reasons. The first related to the provision of flood control to different areas of a metropolitan area. The area in question had been inundated by a prior flood. When the COE declined to construct new flood control facilities, rehabilitation of the area became an impossibility. The second area of criticism related to the COE cost sharing policies. At issue was whether a metropolitan area that was struggling to find sufficient resources to redevelop a brownfield site should also have to pay the requisite cost share in order to protect the site from flooding.

8.6 Statutory and Regulatory Incentives

Just as many of the perceived barriers to the redevelopment of brownfields did not turn out to be barriers, one of the primary incentives to brownfields redevelopment did not turn out to be an incentive. Specifically, the tax incentives provided in the Taxpayer Relief Act of 1997 have not been utilized. Very few of the individuals who were interviewed during the interview process utilized these tax credits.

With regard to taxes, however, there is one incentive that could be offered under federal law that could have the effect of controlling the governmental competition issue discussed above. This would be to amend the Internal Revenue Code to require developers to declare as income any and all inducements they received to develop in a greenfields area. These inducements would have to be declared in their entirety for the year in which they were received. There is nothing to prevent a state political subdivision from deferring property taxes for twenty years in order to attract development to that political subdivision. Likewise, there is nothing to prevent the Congress from requiring twenty years of state tax credits to be considered as income to the developers for the year in which the credits were received.

Additional tax incentives were identified during the interview process. Tax incentives available for the preservation and restoration of historic properties were suggested as a model for a similar program applicable to brownfields. The federal student loan program was also offered as a model of a means by which the federal government could "backstop" developers by acting, in essence, as a surety. Having such guarantees could make additional capital available.

In terms of incentives for the development of greenfields, the lending policies of the Small Business Administration (SBA) have to be considered. Though these policies were not identified during the interview process, they have been the subject of recent litigation alleging that the SBA has not considered the full environmental impact of its policies. The allegations are based, in part, on the extent to which urban sprawl had been facilitated by SBA loans.

In the final analysis, there is neither a single barrier to be removed nor a single incentive to be provided that will have the effect of reversing decades of urban decline. The demands are too great, the task too ominous. Removing barriers and providing incentives, however, are critical first steps in the process of urban renewal and revitalization.

Chapter 1

Chapter 2

Chapter 3

Chapter 4

Chapter 5

Chapter 6

Chapter 7

Table of Contents

 

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