SEPA United States Environmental Protection Agency Using the DWSRF to Support Brownfield Redevelopment Introduction The Small Business Liability Relief and Brownfields Revitalization Act defines brownfields as "property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant." The Government Accountability Office estimates that there are more than 500,000 brownfields in the United States. These sites do not include land listed on the National Priorities List (also known as Superfund or CERCLA sites) or facilities subject to the Solid Waste Disposal Act. States, Tribes, communities, and coalitions may designate a site as a brownfield if it satisfies the definition. Brownfields are found throughout the country; most are abandoned or idle industrial sites in urban and suburban areas. Examples of brownfield sites range from closed gas stations to moth-balled manufacturing plants. Why Revitalize Brownfields? By redeveloping brownfields, communities can stimulate economic development by increasing the local tax base, facili- tating job growth, and raising property values for nearby owners. Revitalizing brownfields also supports "smart growth" prin- ciples. By using existing infrastructure and previously-devel- oped space, brownfield revitalization projects decrease the community's impact on the environment by slowing sprawl and by recycling expensive resources such as land and infrastruc- ture. In addition, brownfield redevelopment can reduce the pressure to develop the remaining urban green spaces in a community. Brownfields often contain unknown contaminants, such as solvents, fuels, and volatile organic compounds, in unknown quantities. This pollution may contaminate ground water and surface water or pose a direct threat to public health by seeping into pipes that deliver finished drinking water. As brownfields are stabilized and rehabilitated, the threat of pollution is eliminated or contained, thus protecting both the human health and the environmental health of the community. Lafayette Village Residential Development: Brownfield Revitalization in Jersey City, NJ Before After ------- Using the DWSRF to Support Brownfield Redevelopment 2 EPA and other federal agencies have joined forces with states and cities to revitalize brownfields. In addition to removing potentially dangerous contami- nants from communities, these redevelopment projects lead to the creation of jobs, commercial centers, and homes. What is the Drinking Water State Revolving Fund? The Drinking Water State Revolving Fund (DWSRF) was established by the 1996 Safe Drinking Water Act (SDWA) Amendments to provide loans to publicly and privately owned public water systems. The loans can be used for infrastructure improvements needed to protect public health and ensure compliance with the SDWA. The DWSRF is a state-run program that works like a bank, providing low- or no-interest loans to communities, public utilities, and private companies for drinking water projects that meet the program's "There are more than 500,000 brownfields in the United States. " Source: GAO criteria. Federal and state contri- butions capital- ize the pro- grams, which exist in all 50 states and Puerto Rico. In addition to providing loans, states may set aside up to 31 percent of their DWSRF grants to finance a variety of activities, such as encouraging im- proved water system management and perfor- mance and helping systems prevent contamination through source water protection measures. Annually, DWSRF programs provide nearly $2 billion in assistance to drinking water projects. Using the loan fund and set-asides, state DWSRF programs can provide financial assistance in a variety of ways to support the rehabilitation of brownfield sites across the country. A redeveloped brownfield in Dallas, Texas, built on the site of former gas stations and an automotive and tire center, that is now an environmentally- friendly police headquarters. Are Brownfield Revitalization Projects Eligible for DWSRF Loans? In response to a public health risk, state DWSRFs are able to loan money to water systems for the infrastructure costs needed to provide a brownfield site with safe drinking water, if certain conditions are met. The flowchart on pages 4-5 illustrates the criteria that states should consider (in order of progression) when determining whether a brownfield-related drinking water project is eli- gible for a DWSRF loan. Since exact project eligibility and available funding vary by state, water systems should contact their state DWSRF representative for more information. Contact information can be found on EPA's DWSRF Web site at http://www.epa.gov/safewater/dwsrf.html. How Can the DWSRF Help Communities Revitalize Brownfields? There are a number of ways DWSRF programs can assist local communities and states in redeveloping brownfields. Exhibit 1 shows specific brownfield activities and whether they can be funded by DWSRF loans, DWSRF set-asides, or other EPA sources. Since the DWSRF program is managed by states, set-aside funding decisions are made at the state level. Given that each state administers its program differently, the first step in seeking assis- tance is to contact the state DWSRF representative. Contact information can be found on EPA's DWSRF Web site at http://www.epa.gov/ safewater/dwsrf. html. ------- Using the DWSRF to Support Brownfield Redevelopment Exhibit 1: Eligibility of Brownfield Activities for DWSRF Assistance ^^g Eligible Under Eligible Under Eligible Under DWSRF DWSRF Other EPA Infrastructure Fund Set-Asides Programs Planning Activities Assessment of drinking water infrastructure Legal costs Design/engineering plans for drinking water infrastructure /* /« /* /* /* /* / Drinking Water Infrastructure Projects Main replacement or rehabilitation Installation of temporary line to maintain service (if pipe has live service connections) Installation of other distribution system components (e.g., valves, backflow prevention devices, meters, service boxes, flushing hydrants, booster pumps) Reconfiguration and/or replacement of service line Looping to eliminate dead ends and improve pressure Expand other system components (e.g., storage and treatment) / ' ' / / / Other Brownfields Rehabilitation Projects Phase 1, II, and III site assessments Design/engineering plans for entire site Excavation and disposal of underground storage tanks Excavation, removal, and disposal of contaminated soil or sediments Capping of wells or soil Remediation of stormwater runoff Monitoring of ground water or surface water for brownfield contaminants / / ' ' / / ' * Certain activities are eligible for loans vtfiile others are potentially eligible for set-asides. ------- Using the DWSRF to Support Brownfield Redevelopment Question 1 Does the project include expansion of the system? • Assume the project is otherwise eligible for DWSRF funding. • An increase in the service population, amount of water produced, or amount of water delivered is not considered expansion; only an increase in the capacity of the assets is considered expansion. • If assets are replaced with those of egual size, the project should be considered eligible for DWSRF funding. • If new infrastructure is added or assets are replaced with components of higher capacity, consideration of project eligibility continues under Question 2. i Community A proposes replacing 1 mile of deteriorated 8-inch main that runs under a brownfield site with 1 mile of new, reconfigured, 8-inch main to serve the planned residential redevelopment. Community B proposes replacing 1 mile of deteriorated 8-inch main that runs under a former brownfield site with 1.3 miles of 12-inch main to serve the planned residential redevelopment. Question 2 Is the proposed expansion meant to address future population growth? • If the expansion is to meet the needs of the current population, the project is eligible for DWSRF assistance. • If the expansion is solely attributable to a single commercial or industrial operation, the project is not eligible for funding. • If the project includes some capacity for future population growth, consideration of project eligibility continues under Question 3. Eligible Community K proposes replacing 6-inch mains with 8-inch mains to provide water for future residents at its affordable housing units being built on a brownfield site. Total cost increase of expansion is 7% of overall project costs. Community J proposes replc 6-inch mains with 12-inch mains. Additional costs from this expansion are substantial (approximately 50% of overall project costs). Community I is proposing a new water system that will include a brownfield redevelopment for housing. The costs of this expansion are significant. Question 5 Is growth a substantial portion of the project? • If growth is NOT a substantial portion of a project, the project is eligible for funding. • If growth is a substantial portion of a project for a NEW water system, the project is not eligible for DWSRF assistance. • If growth is a substantial part of an EXISTING system's project, the project is eligible for assistance but will be moved lower on the state's funding priority list. ------- Using the DWSRF to Support Brownfield Redevelopment Future Population Growth Community D proposes building new affordable housing units and sizing infrastructure with enough capacity to serve existing residents and to attract new residents in the future. Question 3 Is the primary purpose of the project to supply future population growth? • The interpretation of "primary purpose" can vary by state. • If the project's primary purpose is to supply future population growth, the project is not eligible for DWSRF assistance. • If the project's primary purpose is not to supply future population growth, consideration of project eligibility continues under Question 4. Community C proposes building new affordable housing units and relocating residents from dilapidated units served by the system. N o Future Population Growth Substantial Costs Reasonable Community E proposes building a new high-rise unit on a brownfield site and replacing the existing infrastructure with higher capacity assets in hopes of stimulating residential and commercial growth in the area. Community F proposes building affordable housing units on a brownfield site and replacing a deteriorated main, which is allowing microbial and chemical intrusion, at the site with a larger capacity main in anticipation of the new customers. Population Growth Primary Purpose Not Eligible Public Health Primary Purpose Community H proposes building new affordable housing units on a brownfield site and replacing old, deteriorating mains with mains that are sized to accommodate a 12% increase in customers served over the 50- year expected life of the mains (based on U.S. Census population growth projections). Unreasonable Community G proposes building residential townhouse units on a brownfield site and replacing the existing infrastructure on the site with assets that are 50% larger to serve both the new units and any future residential developments on the site (based on estimates by private developers). Question 4 Is the project appropriately sized to accommodate a reasonable amount of population growth given the useful life of assets included in the project? • Estimate useful life of an asset using engineering and industry standards. • The definition of "reasonable" population growth is left to the states. • Population growth estimates based on recent trends in demographics may make a better case for eligibility. ^ • If project is appropriately sized, taking into account the projected population growth and useful life, it should be considered further under Question 5. • Otherwise, the project is not eligible. ------- Using the DWSRF to Support Brownfield Redevelopment Case Studies of Possible DWSRF-supported Brownfield Redevelopment The project proposals summarized on this page illustrate how two New Jersey water systems hope to use DWSRF loans to finance drinking water infrastructure improvements as part of brownfield redevelopment efforts. Neither New Jer- sey nor EPA have determined whether these pro- posed project are eligible for DWSRF loans. Milltown, NJ: Residential Units, Retail Space, and Offices (Proposed February 2004) Along the banks of Mill Pond and located just outside of downtown Milltown, NJ, is a 22-acre tract of abandoned industrial land (including the remains of a Michelin Tire Factory) and partially used office space. De- velopers in Milltown are working on a project to reuse this brownfield by creating over 300 new residential units and over 80,000 square feet of retail and commercial office space on the property. The developers plan to relocate existing offices to new buildings, renovate at least one of the industrial buildings on the prop- erty in its entirety, build a parking ga- rage to accommodate the new uses, and keep at least 30 percent of the property as green space. This project will strengthen down- town Milltown by reusing waterfront property, increasing investments, and bringing new companies and residences back to the center of town. The redevelopment will be designed to blend with the surrounding existing residential and commercial structures. Milltown is applying for a DWSRF loan to fund the installation of new water connections for the residential development planned on the brownfield. Over 400 new units will need con- nections to the existing water system, which currently serves a population of 70,000. The cost of the needed drinking water infrastruc- ture improvements is estimated to be $2 mil- lion. New Jersey City University: Performing Arts Center, Housing, Retail Space, and More (Proposed September 2004) New Jersey City University (NJCU) has applied to the New Jersey Water Supply Administration for a DWSRF loan to help finance a planned brownfield redevelopment. The site of the proposed project is approximately 3 square blocks on the western side of NJCU's campus. Soil at the site is contaminated, and groundwater has tested positive for pollution at concen- trations above the New Jersey Depart- ment of Environmental Protection's (NJDEP's) Groundwater Quality Cri- teria. The master plan for the site includes building retail space, housing, a per- forming arts center, a professional building, parking, and new academic space for the university. NJCU's DWSRF application requests funds to cover the costs of the follow- ing necessary infrastructure improvements: • Replacing distribution pipes ($49,368) • Excavating old distribution infrastructure ($5,736) • Installing water meters ($110,000) • Designing and planning the system ($24,766) The total DWSRF pricetag is $189,870. NJCU envisions a well-planned, well-managed smart growth development that adds new housing and new jobs while preserving open space, farmland, and environmental resources. ------- Using the DWSRF to Support Brownfield Redevelopment What Other Resources Are Available to Redevelop Brownfields? In addition to the DWSRF program, there are a number of other programs that provide tools and financial assistance for brownfield redevelopment. This support comes from other federal agencies (including other EPA programs), state and local governments, non-governmental agencies, and private sources. In 1995, EPA joined with multiple federal agencies to promote and fund brownfield revitalization more widely. In 2002, the partnership of over 20 agen- cies (see Exhibit 2) reiterated its support for brownfield revitalization in its Federal Partnership Action Agenda. Some of the largest federal brownfield programs are sponsored by EPA and the Department of Housing and Urban Development. These programs have already dispensed over $236 million in grants and loans for brownfield projects. A few of the largest programs are listed in Exhibit 3. Exhibit 2: Other Federal Sources U.S. Department of k" National Institute of U.S. Department of Labor Environmental Health Sciences Transportation U.S. Small Business Administration U.S. Department of Agriculture U.S. Department of Energy U.S. Department of Defense Bureau of Land Management U.S. Army Corps of Engineers National Oceanic and Atmospheric Administration U.S. Department of the Interior, Office of Surface Mining Agency for Toxic Substances and Disease Registry U.S. Economic Development Administration Federal Deposit Insurance Corporation National Park Service Federal Housing Finance Board U.S. Geological Survey Appalachian Regional Commission U.S. Department of Justice U.S. General Services Administration Adi a Exhibit 3: Other Major Federal Programs Federal Aaencv Name of Proa ram U.S. Environmental Protection Agency Clean Water State Revolving Fund Assessment Grants Brownfields Cleanup Revolving Loan Fund Brownfields Job Training Grants Cleanup Grants Descriotion of Proa ram Low-interest loans repayable over 20 years to communities, municipalities, individuals, businesses, and citizen groups to finance brownfield projects that address water quality problems Up to $200,000 to assess, plan, and conduct public outreach in preparing for revitalization of brownfield sites ($350,000 with waiver) Loans up to $1,000,000 repayable over five years to carry out cleanup and redevelopment activities at one site Up to $200,000 over two years to support environmental job training in brownfield communities Up to $200,000 per site plus a twenty percent cost share to fund cleanup activities otal Funds warded (2004) Over $136 million distributed U.S. Department of Housing and Urban Development Brownfields Economic Development Initiative May be used to pay project costs, or as a loan loss/debt reserve, in conjunction with Section 108 loans $25 million appropriated Community Development Block Grant Program Provides annual grants to "entitlement communities" whose projects aim to benefit low income people, prevent or eliminate slums, and/or meet community development needs $4.4 billion appropriated ------- Using the DWSRF to Support Brownfield Redevelopment Federal agencies are not the only groups that provide funding and support for brownfield projects. State and local governments, private investors, and non-profit groups also support the revitalization of brownfields. State and Local Governments State and local governments often provide funds to match or augment the grants and loans from federal sources. Some of these funds are provided through public works or transportation depart- ments. Other funds are generated by the sale of bonds. In addition, communities across the coun- try are investing their staff, equipment, and materi- als into addressing their brownfields. Private Investors Federal funds may be used to begin brownfield assessments. However, depending on the findings of the site assessment, communities may be able to find developers who are willing to buy the land and redevelop it. These investors might pay for some or all of the site cleanup and necessary infrastructure improvements. Affordable senior housing in Port Jervis, NY, built after the remediation of a former chemical manufacturing site. Other Sources Numerous non-profit organizations work in con- junction with EPA and federal programs to identify and revitalize brownfields throughout the country. These organizations include Groundwork USA, Habitat for Humanity International, and the Brownfields Non-Profits Network. There are also many organizations that work closely with EPA to conduct research on brownfield-related topics, provide training, and give technical assistance to EPA, other federal agencies, and state and local governments. These organizations include the Northeast Midwest Institute, Purdue University, the U.S. Green Building Council, and the Environ- mental Law Institute. For More Information For additional information the Drinking Water State Revolving Fund Program and how it may be used to fund brownfields revitalization projects in your state, visit these Web sites: DWSRF: http://www.epa.gov/safewater/dwsrf.html EPA Brownfield Web Site: http://www.epa.gov/swerosps/bf/index.html EPA Office of Ground Water and Drinking Water: http://www.epa.gov/safewater CWSRF: http://www.epa.gov/owm/cwfinance/cwsrf/index.htm Office of Water (4606) EPA816-F-06-044 www.epa.gov August 2006 ------- |