Unlocking Brownfields Redevelopment:
Establishing a Local Revolving Loan Fund Program
Brownfields Solutions Series
A brownfield is a property on which expansion, redevelopment, or reuse may be complicated by the presence, or perceived presence, of contamination.
EPA's Brownfields Program provides grants to fund environmental assessment, cleanup, and job training activities. More specifically, EPA's Revolving
Loan Fund (RLF) grants provide funding for a grant recipient to capitalize a revolving loan fund and to provide subgrants to carry out cleanup activities
at brownfield sites. Through these grants, EPA seeks to strengthen the marketplace and encourage stakeholders to leverage the resources needed to
clean up and redevelop brownfields.
This Brownfields Solutions Series fact sheet is intended to provide an overview to those interested in applying for an RLF grant, and information to new
RLF grantees on how to establish an RLF program. The fact sheet describes how RLF grants can unlock the brownfields redevelopment process and
summarizes six successful elements of RLF programs. Case studies from innovative and successful RLF programs provide real-world examples for
readers who are new to the process. The information contained in this fact sheet is based on stakeholders' experiences in the brownfields RLF process.
More information is available at: www.epa.gov/brownfields.
RLF Grants
Can Unlock the
Brownfields
Redevelopment
Process
A revolving loan fund is a capital fund that is used to provide loans
or subgrants. When loans are repaid, the loan amount is returned into
the fund and re-lent to other borrowers, providing an ongoing source
of capital within a community.
A key challenge to brownfields cleanup
and redevelopment is overcoming
the financial barriers associated with
developing a potentially contaminated
site because private lenders are often
reluctant to provide loans for projects
with potentially contaminated
property. An RLF can help overcome
this challenge by providing low-
interest loans and grants to fill the
gap in financing. This added source
of funding can assist property owners
with flexible and favorable borrowing
and repayment terms.
Elements of
Successful
Revolving Loan
Fund Programs
A successful RLF program is one
that is actively utilized to provide
capital for cleaning up brownfield
properties. It balances loans and
subgrants to maintain a healthy, self-
sustaining fund—one in which loan
repayments cycle back through the
fund to be made available for use
at other properties. RLF grantees
should establish a local RLF program
that is responsive to the needs of the
community, staffed with the right
professionals, and effectively marketed.
RLF grantees can equip themselves to
establish and administer a successful
RLF program by implementing the
following six RLF program elements.
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Elements for Successful RLF Program Implementation
Understand
the Role of Key
Participants
in the RLF
Program
Coordinate
with State/Tribal
Environmental
Programs
/ V
Develop
Technical
Tools
Develop
Processes for
Administering
the RLF
Program
Successful
Operation
of the RLF
Program
Understand
the Role of Key
Participants
in the RLF
Program
Understand the Role
of Key Participants
in the RLF Program
There are four key
roles in an RLF
program—the RLF
grantee, RLF borrowers
and subgrantees, the
RLF manager, and the
qualified environmental professional
(QEP). The adjacent table identifies
their roles and responsibilities.
Partnerships and coordination are
essential to running a successful RLF
program. It is important that all of the
people who hold these key positions
meet before the start of each project
to discuss project requirements and
ensure each position understands their
responsibilities.
Coordinate tvith State/Tribal
Environmental Programs
The majority of
contaminated sites in
the United States are
cleaned up under state
or tribal authority. As
such, it is important for
RLF grantees to coordinate with these
programs.
Identify applicable state/tribal
response programs. EPA encourages
RLF grantees to develop a partnership
with state/tribal environmental agencies
to identify the appropriate state/tribal
program for each RLF cleanup project.
Common state/tribal environmental
programs include:
• Volun tary clean up programs
(VCPs). State VCPs or response
programs provide a mechanism
for property owners or developers
to clean up a contaminated site,
Coordinate
with State/Tribal
Environmental
Programs
Key RLF Program Roles
Participants
RLF Grantee
RLF
Borrowers and
Subgrantees
RLF Manager
Qualified
Environmental
Professional
(QEP)
Role
A community or a coalition of communities that is awarded EPA RLF grant funding to capitalize
an RLF for brownfields cleanup. The RLF grantee administers the RLF program and is legally
responsible for ensuring proper environmental cleanups and complying with all applicable federal,
state, local, and tribal laws and regulations. The RLF grantee approves RLF borrowers and
subgrantees, and selects the individuals that fill the RLF manager and QEP positions.
The RLF program makes loans and subgrants to cleanup contaminated property. Borrowers and
subgrantees are responsible for ensuring their environmental cleanup projects comply with eligible
RLF uses, planning and executing the cleanup, and documenting all fund uses as required by the
program. Borrowers and subgrantees are contractually responsible to the RLF grantee.
The RLF manager is designated as the financial manager of the RLF. The RLF is initially capitalized
with the EPA grant, which can then be supplemented with program income (e.g., principal
repayment, interest, and fees) resulting from the lending of funds. The RLF manager administers the
loans and subgrants from the RLF, and manages RLF funds.
The QEP is designated by the RLF grantee to coordinate environmental cleanups funded through
the RLF. Multiple QEPs may be involved with a single RLF program— up to one per site assisted by
the RLF. Each QEP ensures that the cleanup is conducted in accordance with applicable laws and
regulations and is responsible for documenting the cleanup actions at a site.
while affording them liability
and enforcement protection.
These programs provide oversight
assistance and ensure protective
site cleanups while promoting
the cleanup of contaminated
properties that might otherwise be
overlooked.
• Underground storage tank
(UST)programs. UST programs
work to prevent and respond
to contamination caused by
petroleum and other releases from
UST systems, including tanks and
piping.
• Programs for asbestos, PCB, and
lead-based paint issues. Many
states also have separate programs
and/or requirements for addressing
asbestos, PCB, and lead-based
paint contamination, which are
generally not addressed in VCP or
UST programs.
EPA encourages RLF cleanups to
follow state/tribal processes and
procedures so long as the substantive
requirements of the EPA RLF program,
and the terms and conditions of the
cooperative agreement are met. For
additional information on state or
tribal cleanup programs, visit the EPA
Brownfields Web site for links to state
programs: www.epa.gov/brownfields/
state_tribal.htm
Develop relationships with the state/
tribal response programs to facilitate
coordination. EPA encourages RLF
grantees to coordinate and closely
integrate with state/tribal programs as
early as possible. This relationship can
help target sites for cleanup, ensure
the RLF grantee is familiar with
program requirements, and facilitate
a relationship between the borrower/
subgrantee or the QEP and the state/
tribal response program representative.
Understand the requirements of the
state/tribal response programs.
A cleanup that is performed as
part of an RLF program must
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meet all applicable federal and
state environmental standards. It
is important for RLF grantees to
understand these requirements. Once
a project is selected, identification and
evaluation of applicable federal and
state laws should occur throughout
the cleanup selection process to reduce
the potential for schedule delays and
overlooked cleanup requirements.
Consider requiring RLF borrowers
and subgrantees to put sites
through applicable state/tribal
response programs. State/tribal
programs continue to be at the
forefront of brownfields cleanup and
redevelopment. RLF grantees should
work with state/tribal program contacts
to determine whether all RLF borrowers
and subgrantees should be required to
participate in an appropriate state/tribal
response program.
Develop Technical Tools
The technical tools
used to administer an
RLF program are the
financial components
critical to the program's
overall success.
Develop
Technical
Tools
Secure an RLF manager. Each RLF
grantee must designate and secure an
RLF manager to be responsible for
the financial management of the
RLF. The RLF manager can be a
government employee or a qualified
private or nonprofit entity. The
grantee may enlist the services of
other entities with fund management
experience to help the RLF manager
fulfill his responsibilities, which
include development of loan criteria,
outreach, and marketing plans, and
active management of the fund.
Consider the local universe of
cleanup sites and the existing
market. Understanding the
geographic area, the type of
potential borrowers (e.g., developers,
nonprofits, municipalities), and
the type of redevelopment/end-
use can help the RLF program:
1) target marketing efforts to
appropriate properties; 2) facilitate
the identification and selection of
successful RLF projects; and 3) develop
appropriate loan products to meet
borrower needs.
Understand and develop a variety
of loan products to meet borrower
needs. RLF grantees should work
with their RLF manager to optimize
the lending potential of the RLF. A
variety of loan products, as described
in the table below, can be employed
to respond to the needs of the local
cleanup market.
Consider and integrate flexible loan
terms to accommodate borrowers
while maintaining the RLF. The RLF
grantee should incorporate flexible
loan terms to encourage the cleanup
of brownfields while ensuring that
the RLF remains viable. The RLF
grantee and manager should ensure
that the RLF funding is used to fill
financing gaps that would otherwise
reduce the project's success, and should
not automatically provide low-cost
financing to every borrower.
• Develop reasonable interest rate
structure. The RLF manager
should make loans available
to borrowers at interest rates
appropriate to the project and local
economy. In some cases, loans may
be issued at the current market
rate, while in others, loans may be
issued at less than the market rate.
• Consider the length of the
repayment term. Grantees are
required to develop a plan for
determining repayment terms
on individual loans. This plan
should provide enough detail
to assure EPA that loans will be
repaid in a timely and efficient
manner. In addition, RLF grantees
should balance the needs of the
borrower—providing a longer
repayment term or allowing a
deferment period—to make the
project happen.
• Evaluate the total cost of the
project. Understanding the project's
total cost and the need for the
borrower to obtain additional
financing can help determine the
appropriate loan size and structure.
Develop cleanup subgrants. Cleanup
subgrants are grants made from the
RLF to states, political subdivisions,
Indian tribes, U.S. territories, eligible
governmental entities, or nonprofit
organizations. These eligible entities
must own the site at the time of the
subgrant award and throughout the
duration of site cleanup. Unlike loans,
cleanup subgrants may not be made
within the same governmental entity
Flexible RLF Loan Products
Loan Type
Standard
Loans
Intra-
govern mental
Loans
Low or Zero
Interest Loans
Loan
Guarantees
Bridge Loans
Discounted
Loans (partially
forgiven loans)
Description
A standard loan provides capital to borrowers at interest rates comparable with the current market.
A standard loan made by an RLF program may be attractive as an additional source of funding to
fill a financing gap in a cleanup project. Standard loans may include a deferment period (where loan
repayment does not begin immediately), providing added flexibility to the borrower.
An intra-governmental loan is a direct loan made by the RLF grantee to a branch within its own
governmental unit. Often, local governments acquire contaminated property through tax foreclosure
or condemnation. An intra-governmental loan can provide the necessary funding for a government to
complete the cleanup of the property.
A low or zero interest loan is a loan provided at below-market interest rates— as low as zero percent
interest— providing capital to a property owner at little to no cost.
A loan guarantee can reduce the risk of private lenders and provide the needed backing to persuade
lenders to provide financing that would not otherwise be provided.
A bridge loan can provide short-term financing to a borrower, typically pending the arrangement of larger
or longer-term financing. Money from the new financing is generally used to "take out" (i.e., to pay back)
the bridge loan, as well as other captialization needs. This is another RLF funding tool that can be used
to fill financing gaps for borrowers.
A discounted loan allows the RLF grantee to "forgive" a portion of the principle (i.e., the borrower would not
need to "pay back" the portion forgiven). Discount loans are allowed under certain conditions. See your grant's
Terms and Conditions or contact EPA for further details.
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that receives the RLF grant (i.e., intra-
governmental subgrants are not allowed
under the RLF program). However,
if the city redevelopment agency is a
separate legal entity, it may be eligible.
• Evaluate potential needs/special
target market for subgrants. Since
subgrants are not repaid to the
RLF, it is important to identify
potential subgrantee projects
carefully. One target market
for subgrantees may be projects
that are unable to draw on other
sources of funding because of
neighborhood or community
economic status.
• Determine the percentage of
funds available for subgrant. The
percentage of the RLF that can be
used for subgrants is specified in
each cooperative agreement's terms
and conditions. Loans are generally
preferred over subgrants because
repayment of the loans will extend
the life and expand the utility of
federal expenditures under this
program.
• Develop a strategy and criteria for
issuing subgrants. RLF grantees
must consider the following criteria
for issuing subgrants: the creation
or preservation of greenspace;
meeting the needs of low-income
communities; facilitating the use
of existing infrastructure; and
protecting the long-term use of
RLF funds.
Develop Processes for
Administering the
RLF Program
Develop
Processes for
Administering
the RLF
Program
An RLF program
should be designed to
optimize its lending
potential—so that
loans and subgrants are
disbursed to maximum
benefit. Establishing effective
administrative procedures to process
loans, repayments, and subgrants will
also reduce the wait time for borrowers
and subgrantees to receive their funds.
Develop an implementation plan.
The RLF manager is required to
develop an implementation plan that
will ensure that basic RLF goals are
met, such as:
• Maximizing the amount of money
loaned out for cleanup purposes,
and ensuring that RLF funds do
not remain idle
• Using established lending
practices (i.e., loan processing,
documentation and approval,
servicing, administrative
procedures, and collection and
recovery actions) and underwriting
principles (i.e., establishing
interest rates, repayment terms,
fee structures, and collateral
requirements)
• Ensuring and obtaining proof of
adequate financial security from
borrowers
• Identifying additional sources of
capital for the RLF, such as federal
agencies other than EPA, states,
tribes, political subdivisions, and
public-sector entities
• Meeting the 20 percent cost-share
requirement that is part of EPA
Brownfields RLF cooperative
agreements
• Identifying the types of loans and
grants available through the RLF
program
Develop a process for selecting
borrowers. Several eligible borrowers
may be competing for RLF funds;
therefore, it is important that the RLF
manager establish criteria to determine
the types of borrowers that should be
selected. In addition, the RLF manager
should establish criteria for determining
borrower eligibility and include a step
to identify the applicable state/tribal
program for each cleanup.
Develop a process for selecting
subgrantees. The subgrantee selection
process will involve many of the same
criteria and precautions used to select
borrowers. The RLF grantee and RLF
manager should establish a rating
system to help differentiate competing
applicants, based on elements such
as project type, subgrantee financial
standing, identification of applicable
state/tribal programs, and likelihood ot
project success.
Flexible Loan Terms - Ohio Department of Development
The Ohio Department of Development (ODOD) has been successfully distributing and managing its RLF
funds since it was awarded its first of several EPA grants in April 2001. ODOD has successfully administered
six RLF loans totaling more than $5 million and one subgrant, in Columbus, Akron, Chesterland, Sandusky,
Broadview Heights, and Cleveland. Much of this success can be attributed to experienced staff and the
understanding and integration of flexible loan terms and subgrants.
In November 2005, ODOD adeptly combined a five-year, zero interest loan for $525,000 with a $200,000
subgrant to the Columbus and Franklin County Metropolitan Park District (Metro Parks) to assist with cleanup
costs associated with the 18-acre Northern Tier section of the Whittier Peninsula property. In February 2007,
ODOD provided a discounted loan of $2 million to the Summit County Port Authority for the Akron Airdock
project. With a low interest rate of 0.5%, a time scale of 10 years and 10% of principle forgiven, this loan covered only a portion of the site's $13 million
cleanup. The loan will be used to help clean up PCB contamination associated with the Airdock facility, which was built in 1928 to build lighter-than-air
ships for the U.S. Navy. For more information on ODODs RLF program go to www.odod.state.oh.us/ud/BCRLF.htm.
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Innovative Marketing Approaches - Hillsborough County, Florida
Hillsborough County, Florida, was awarded its first RLF grant in 2000. It has encouraged active participation in
its brownfields program through several unique marketing approaches targeting the county's 18,000-acre Urban
Development Area.
In 2005, the Hillsborough County RLF program provided a $225,000 loan and a $170,000 subgrant to the
Hillsborough Community College (HCC) in Tampa, Florida. The HCC learned about and successfully applied for
this funding through its participation in a local brownfields communication network. This strong, informal network
has flourished based on widespread community support for and investment in brownfields redevelopment.
Hillsborough County Board of County Commissioners (BOCC) also created a brownfield development team
composed of real estate, economic development, planning, and environmental local government staff. The team participated in marketing and education
activities to expand awareness of available Rinding and stimulate real estate investment.
In 2005, the BOCC intensified marketing efforts by expanding the size of the brownfield target areas with the intent to qualify properties in this area for its
EPA RLF, and to market the properties for redevelopment. The expanded target area map is currently posted on the county's brownfields Web site. Based on
the success of the program, EPA awarded the county $400,000 in RLF supplemental Rinding in July 2007 to address the need for future brownfields cleanup
efforts. For more information on Hillsborough County's Brownfields Program, go to: www.hillsboroughcounty.org/pgm/communityplanning/brownfields/.
Develop document templates for
loan and subgrant approvals. Having
pre-designed templates already in
place will expedite the administrative
side of approvals for both borrowers
and subgrantees. These documents
should include terms that may
vary from individual project and
borrower/subgrantee, such as interest
rates, repayment terms, and other
considerations.
Develop a process for identifying a
site-specific QEP. Each RLF program
may have multiple QEPs associated
with it—up to one for each site assisted
by RLF funds—and should have a
process in place to identify a QEP for
each cleanup project. For example,
some RLF grantees work with one or
more environmental consulting firms
to identify site-specific QEPs.
Market the RLF Program
To develop a strategy
for marketing an RLF Market
program, consider the RLF
the who, what, when, Program
where, and how of
identifying borrowers,
subgrantees, and sites within a given
community. Who in the community
needs RLF loans or subgrants? What
kind of loan will best meet the
community need? When the deal
is made, what follow-up assistance
is needed to ensure RLF loan and
subgrant requirements are met?
Where are the properties that the
community is trying to develop?
How can an RLF loan help borrowers
and subgrantees? The answers to these
questions will form the outline of the
marketing plan.
Develop local partnerships.
Every community has a different
combination of site types, developers,
local organizations, and institutional
arrangements. Focusing RLF outreach
toward selected local organizations
can build a network that helps spread
the word about an RLF program's
availability. Potential targeted
organizations could include: public,
local, and state officials or agencies;
local and/or state agencies involved in
brownfields cleanup, redevelopment,
or economic development; citizen
and community groups; academic
institutions; nonprofit organizations,
including local chambers of commerce;
private-sector companies involved in
environmental assessment and cleanup;
real estate companies; banks; and
environmental insurance providers.
Identify target sites. When identifying
potential sites for cleanup and
redevelopment, site characteristics such
as location, size, level of contamination,
complexity, proximity to infrastructure,
and surrounding development should
all be considered. These characteristics
will further influence the type of
marketing required. For example,
a small site cleanup may involve a
local business that needs access to
capital, while a larger site cleanup
may involve a national developer that
needs assistance with navigating local
regulatory permitting requirements.
Identify potential borrowers and
subgrantees. For marketing purposes,
it is important to understand which
entities will be most interested in
receiving an RLF loan or subgrant
and/or will be the best candidates for
the RLF program. Potential borrowers
include expanding businesses, local
developers, national developers,
nonprofit organizations, and public
and quasi-public entities. Potential
subgrantees can be nonprofit
organizations; Indian tribes, or eligible
government entities.
Develop an outreach strategy to reach
appropriate stakeholders. Strategies
for reaching any or all of the potential
partners listed should be customized
based on the stakeholder, community
conditions, and the types of sites
looking to be addressed. The most
appealing products available through an
RLF program should be highlighted,
and their appeal will vary depending on
local needs and demand, as well as the
availability of existing state resources.
Market the RLF program to
borrowers and subgrantees. RLF
program outreach can include print-
based promotion—such as brochures,
newsletters, advertisements and web
pages—or people-based approaches—
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RLF and Affordable Housing: Emeryville, California
Emeryville, California, is a small city tucked between Oakland and Berkeley. Previously dubbed the "dirtiest town on the
Pacific Coast," Emeryville has since become a model for land reuse. Recognizing that housing is essential for sustaining
and rebuilding communities, Emeryville has embraced affordable housing as part of a larger economic development
strategy. Since 1995, the city has aggressively reclaimed approximately 385 acres of brownfields. A decade after it started,
the city has built or is building 845 housing units, a third of which are affordable for low- and moderate-income
households. Much of this success is attributed to the Emeryville Redevelopment Agency's encouragement of affordable
infill housing development on brownfield sites funded by a combination of local, state, and federal resources. As a key
component of this strategy, Emeryville has been successfully integrating EPA RLF funds into affordable housing projects.
In 1999, Emeryville received its first RLF grant. Since then it has received several supplemental funding awards. In July 2003, the city provided $1,175,000
in EPA RLF funds to GreenCity LLC for the cleanup of the GreenCity Lofts property, a former paint factory located in both the Cities of Emeryville and
Oakland. The GreenCity Lofts project team completed cleanup of the 0.9-acre property in December 2004 and 62 condominiums were constructed in 2005.
Of the 62 units, 31 are located in Emeryville with six set aside as affordable housing. In partnership with EPA and through its RLF program, Emeryville
continues to develop its affordable housing portfolio on brownfield sites. It has been cited as one of the top 15 producers of affordable housing in the Bay
Area. For more information on the City of Emeryville's redevelopment efforts, go to: www.ci.emeryville.ca.us/econdev/housing_rehab.html.
such as public meetings and invited
stakeholder seminars, conferences, and
direct telephone calls. Once interest is
generated, one-on-one meetings allow
potential borrowers and subgrantees to
ask questions specific to their projects.
Whenever possible, consider including
an RLF loan or subgrant within a
redevelopment financing package.
As site cleanup financing is often a
challenge, structuring a brownfields
cleanup RLF loan within part of a
larger financing package can make the
deal more attractive.
Sticcessful Operation of the
RLF Program
Once an
implementation plan
is in place, the RLF
program can begin
operating. Successful
operation can be linked
with building staff skills, "successfully
revolving" the RLF, and meeting EPA
administrative requirements.
Building staff skills to provide
technical assistance to borrowers
and subgrantees. RLF program staff
should be trained in loan fund and
grant management, environmental
cleanup program elements, marketing
skills, and RLF program basics.
Successful
Operation
of the RLF
Program
Ideally, RLF program staff should
have exceptional communication skills
and an in-depth understanding of the
program, so that they can work with
potential (and selected) borrowers and
subgrantees, providing technical and
administrative assistance when needed.
Maintaining capitalization/making
the fund revolve. An RLF program
should consider the timing, size, and
distribution of loans and subgrants
when issuing funding to borrowers and
subgrantees. Based on the individual
loan terms and subgrant amounts, an
RLF program may provide multiple
loans with varying repayment
schedules at a single time, or issue
loans on an ongoing basis. Both
approaches could ensure the RLF is
replenished with income, allowing the
RLF grantee to then issue additional
loans from this income. The RLF
manager should develop a plan for
timing these loan closeouts to ensure
the fund revolves over time.
Supplemental funding for RLF grants
is available to grantees that have
depleted their funds and have viable
cleanup projects ready to go. Further
information regarding supplemental
funding is available from EPA's
brownfields Web site:
www.epa.gov/brownfields.
Negotiating a closeout agreement
with EPA, RLF programs have five
years from the cooperative agreement
start date to obligate awarded funds
to borrowers and subgrantees for site
cleanup activities and a maximum
of five years to complete all required
activities and request final payment
of funds from EPA. At the end of
the cooperative agreement, EPA may
choose to modify the agreement to
allow the RLF program to use any
remaining funds for other eligible
grant activities, such as a final
subgrant.
An RLF program should begin
"closing out" its cooperative
agreement with EPA after: 1) all
administrative and environmental
cleanup actions required under the
cooperative agreement have been
completed, and 2) all unused funds
have been returned to EPA. EPA will
close out or de-obligate any unused
funds, and is responsible for closing
out the cooperative agreement once
all the required actions of the award
have been completed. At the end of
the cooperative agreement, EPA may
choose to modify the agreement to
allow the RLF program to use any
remaining funds for other eligible
activities, such as a final subgrant.
Brownfields Solutions Series
Unlocking Brownfields Redevelopment:
Establishing a Local RLF Program
Solid Waste
and Emergency
Response (5105T)
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EPA-560-F-08-280
August 2008
www.epa.gov/brownfields/
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