1. Brownfield Redevelopment and Reuse Charlie Bartsch Vice President/Brownfield Expert ICF International July 18, 2007 www.icfi.com

2. Redevelopment takes place on sites that have been used before Given the economic history of so many places, redevelopment sites are often former older industrial or commercial facilities with at least some degree of real or perceived contamination – including… –Big former chemical, steel, other industrial sites –Small manufacturing sites – foundries, tool-and-die shops, tanneries –Mining, timber, and food processing in rural areas –Rail yards, utility sites –Commercial facilities such as gas stations, dry cleaners – even old supermarkets, restaurants Redevelopment with an Environmental Twist -- Emergence of “Brownfields”

3. 1 Million Brownfields May Exist… Bend, OR Baraboo, WI New London, CTSomerville, MA

4. 50,000 Successes and Counting…. Baraboo, WI Bend, OR New London, CT Somerville, MA

5. What steps need to be worked through for the brownfield redevelopment process to work? Identifying contamination Unknown contamination Known contamination with unknown cleanup cost and time Addressing contamination Determining end user to decide “how clean is clean” Defining cleanup plan to know when cleanup is complete Process and Funding Barriers to Brownfield Reuse

6. What steps need to be worked through for the brownfield redevelopment process to work? Meeting project economic challenges linked to environmental cleanup For site assessment, remediation, underwriting expenses, institutional controls, environmental insurance Finding redevelopment financing for brownfields Leveling financial playing field between greenfield and brownfield development in the face of real or perceived environmental risks Process and Funding Barriers to Brownfield Reuse (cont.)

7. The issue of "liability" is evolving in practice -- from liability in the traditional legal sense to lender and new owner concerns over: reduced value of collateral because of environmental factors and perceptions borrower inability to pay both cleanup costs and loan obligations simultaneously -- cash flow capability of the project to absorb remediation lender having to assume cleanup costs in the event of foreclosure, in order to dispose of the property lender having to forfeit collateral in the face of cleanup that exceeds asset value “Liability” – In a Financing Context

8. At brownfield sites – state VCPs rule!! Federal Brownfield Redevelopment Act (2002) put final authority with states that have VCPs or comparable voluntary response programs Brownfield sites addressed thru VCPs are protected from EPA enforcement and cost recovery action (except in the case of a few statutorily defined re-openers) All 50 states now have these programs in place VCPs/voluntary response programs are a new effort – half these programs are less than 5 years old Voluntary Cleanup Programs/Voluntary Response Programs (VCPs)

9. Increasingly, VCPs are a Key Economic Development Facilitator  VCP process certainty brings comfort and closure  VCP assurances increase willingness of developers to consider contaminated sites, innovative technologies, and institutional controls -- all of which encourage them to go forward with re- development  VCPs foster state and local redevelopment partnerships VCPs and Redevelopment

10. Step 1 – identifying a brownfield site, its options Step 2 – learn about your state VCP Process, costs, time-frame Step 3 -- identifying interested parties Direct parties – buyers, sellers, PRPs, technical/transaction support Indirect parties – citizens and other stakeholders Environmental regulators Redevelopment process through a “brownfield” lense

11. Step 4 – defining the contamination plan of attack Excluding contaminated portion Capping Innovative technologies possible? Step 5 – preparing a brownfield feasibility analysis Determine costs for environmental consultants and tests, legal fees linked to contamination Prepare cleanup plan Satisfy lender requirements Establish prospective purchaser liability relief Define ongoing environmental monitoring needs Redevelopment process through a “brownfield” lense

12. Step 5 (cont) – preparing a feasibility analysis Identify factors that could limit project feasibility, such as diminished market demand, high cost of cleanup, stigma Consider sources of funding for site assessment and cleanup Step 6 – negotiating and structuring the deal Determine responsibility for cleanup, financial incentives, allocation of private liability incentives such as insurance or indemnifications Secure public liability assurances Redevelopment process through a “brownfield” lense

13. Step 7 -- purchasing or selling the contaminated property Establish site access and environmental information provisions Define time frames for pre-development activities Step 8 -- carry out cleanup By “who” depending on step 7 Goal is to win VCP and market approval, provide comfort to lender, protect health and the environment Redevelopment process through a “brownfield” lense

14. Step 9 -- monitoring ICs, preserving NFA Defining who will do it, who will pay for it, how it will be ensured over time Step 10 -- doing it again! Communities and developers often build on their experience and initial success – level of effort economies of scale Redevelopment process through a “brownfield” lense

15. Public Redevelopment Support Can Take Many Forms, Have Various Goals…  Reduce lender’s risk  loan guarantees; companion loans  Reduce borrower’s costs interest-rate reductions or subsidies; due diligence assistance  Improve the borrower’s financial situation re-payment grace periods; tax abatements; training and technical assistance help  Provide comfort to lenders or investors loan guarantees; performance data  Provide resources directly grants; forgivable/performance loans

16. Loans  EDA’s Title IX (capital for local revolving loan funds)  HUD funds for locally determined CDBG loans and “floats”  EPA capitalized brownfield revolving loan funds  SBA’s microloans  SBA’s Section 504 development company debentures  EPA capitalized clean water revolving loan funds (priorities set/ programs run by each state)  HUD’s Section 108 loan guarantees  SBA’s Section 7(a) and Low-Doc programs Grants  HUD’s Brownfield Economic Development Initiative (BEDI)  HUD’s Community Development Block Grants (for projects locally determined)  EPA assessment grants  EDA Title I (public works) and Title IX (economic adjustment) Grants (continued)  DOT (various system construction and rehabilitation programs)  DOT’s transportation and community system preservation (TCSP) pilot grants  Army Corps of Engineers (cost-shared services) Equity capital  SBA’s Small Business Investment Companies Tax incentives and tax-exempt financing  Targeted expensing of cleanup costs (through 12/31/07)  Historic rehabilitation tax credits  Low-income housing tax credits  Industrial development bonds Tax-advantaged zones  HUD/USDA Empowerment Zones (various incentives)  HUD/USDA Enterprise Communities (various incentives) Federal Financial Assistance Programs for Redevelopment

17. State Brownfield Innovations Tax credits, abatements, other incentives linked to site reuse (22 states) Targeted financial assistance (19 states) Direct grants/financial assistance (13 states) Process initiatives to enhance/support brownfield revitalization (14 states)

18. Common Local Financing Tools Putting a Brownfields “Spin” on the Tried- and-True… Tax increment financing/TIF-type financing Tax abatements Tax forgiveness Special service areas or taxing districts Revolving loan funds (RLFs) General obligation bonds Property transfers

19.  Project Freedom – Lawrence, NJ  Charleston Place -- Seaford, DE  Berkey and Gay Building – Grand Rapids, MI  Mills of Carthage – Cincinnati, OH  Victor Building – Camden, NJ  Visiting Nurses Assisted Living – Somerville, MA  American Can – New Orleans, LA Housing projects on vacant properties and brownfield sites – diverse situations, places, types, and financing …

20. Project Freedom – Lawrence, NJ Project Freedom at Lawrence is a 54-unit apartment complex and community center designed and constructed especially for adults with disabilities. This 13-acre site was a vacant lot owned by the New Jersey Department of Transportation (DOT) for 50 years. Lawrence Township acquired the property from DOT; Project Freedom negotiated a 75-year lease with a deed restriction for affordable housing. Unexpected contamination, ash and demolition debris from historic fill, was addressed with an engineering control – the building’s concrete slab serves as a cap New Jersey DEP has issued a No Further Action (NFA) letter Project Freedom opened in November 2003; by January 2004 it was fully occupied

21. Abandoned sewing factory, built in 1920s Developed by non-profit Better Homes of Seaford $600,000 USDA rural development loan, plus DE Housing Authority and private bank participation Ribbon cutting 1/9/06; fully occupied by March Charleston Place – Seaford, DE

22. Berkey and Gay Building -- Grand Rapids, MI AfterAfter Former downtown furniture manufacturer, abandoned in 1960s $35 million cleanup/conversion to mixed use –242 apartments –100,000 sq ft commercial (restaurant, retail, prof. offices) –450 space parking ramp Rehabilitation tax credits key to attracting individual equity contributions 90 permanent jobs created

23. Mills of Carthage – Cincinnati, OH Abandoned industrial property transferred to new owner at below market value As part of deal, owner agreed to take site through Ohio VCP, clean it up, and reuse it First new housing in Carthage neighborhood in 40 years

24. Victor Building – Camden, NJ Abandoned former RCA Victor Building on Camden’s waterfront, with pervasive PCBs Site intended for residential re-use; challenge was keeping $7 million cleanup manageable NJDEP provided t.a. to developer, working with him on remedial and monitoring applications, ICs, entombment of residual PCBs – strategies that allowed cleanup and redevelopment to go forward concurrently, all with considerable cost savings Result – $60 million private investment in 341 units, 1 st market rate housing built in Camden in 40 years, landmark “Nipper Tower” saved

25. Visiting Nurses Assisted Living -- Somerville, MA Former mattress factory, vacant 2 years. Contaminants included barium, lead and petroleum The project's redeveloper, the non-profit Visiting Nurses Association, remediated the site and demolished the existing structures VNA constructed an assisted- living facility and health center, containing 97 units for low-to-moderate income seniors. Leverage -- $100,000 in CDBG was used as a cost- containment reserve.

26. American Can Company – New Orleans, LA Developer transformed this National Register landmark, abandoned warehouse on 6.6 acres Converted to 268 new apartments (20% affordable) with retail and parking space Total project cost -- $42 million Financing included -- $5 million HUD Section 108 loan, $1 million BEDI loan, $1 million city economic development loan; $29 million LIHTC allocation Rehab tax credits critical component Kimberly-Clark Corporation, through its subsidiary Housing Horizons, provided tax-credit equity for approximately $7.8 million in historic tax credits.

27. For further information……….. For additional examples and information…. cbartsch@icfi.com (202) 862-1134 www.icfi.com