EFAB
Robin L. Wiessmsan
Chak
B. Geltraaa
JohaCWise
Executive Dtoeter
Members
Honorable Pete V. Domuici
Honorable Beryl F. Anthony
Honorable Stephen Goldsmith
Honorable Msyasrd Jackson
Mitchell W. Bti^er -
George H. Butcher
Pete Butkus
Willism H. Chew
Eufard L. Cooper
Michael Curky
Peter M. Emirton
Deeohn Ferns
Shoekley D. Gardnef
Anne Pendeif mss Hill
William B. Jamo
Susan P. LeGmi
Robert ©. Lerais
Divid M. Lick
Merlin L. Mssfey
George V. Pedress
Deborah A. Fhoissdii
Qeorge A. Raftelis
HeaAer L. Ruth
Robert P. Schwartz
limJ.Tozzi
Warren W, lyjet
Susan F. Vogl
Frieda K. Wailison
Maiy ESiesi Whitworth
Neil Yosb'n
joMsph L. Young
,. Elizabeth Yeeli
Brownfields Report No. 4
?lp ^.
INDIANAPOLIS MEETING
ON FINANCING
BROWNFIELDS REDEVELOPMENT
This report has not been reviewed for approval by the
U.S. Environmental Protection Agency; and hence, the views
and opinions expressed In the report, do not necessarily
represent those of the Agency or any other agencies In the
Federal Government.
March 1996
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IndianapoK!sMeetin &n
Table of Contents
Executive Summary ..... .... .............. ... ...... .....,.,, i
I. Introduction ............... ........ ............................ 1
II.* Meeting Summary , ....... ..................................... 2
Day l-~ March 27, 1995
A. Brownfield Definitions and Perspectives ............'..,.........'....' 2
B. Federal and Slate Brownfield Initiatives .....,............,..../..... 4*
-- Question and Answer .............................. 8
C. Community and Neighborhood Involvement ........................ 9
-- Question and Answer Session ............................. 11
Day 2-- March 28, 199S
D. Financial Perspectives .........,'.,.......................•,... 12
— Question and Answer Session ...;......................... 14
* E. Business Perspectives ................,......'.........., ...... 15
— Question and Answer Session . . ...... .'....•........'........ 17
$
*
F. Development Perspectives .................................... 17
~ Question and Answer Session ............................. 19
G, Capital Provider Perspectives .................................. 20
ML . Meetfsig Findings ............. v ..,.. ---- ... ____ ............... 23
IV. Appendix ......... ---- ....... ....... ......................... 25
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_ Indianapolis on Finmdm
SUMMARY
abandoned or under-used industrial and commercial with
known or suspected contamination problems, pose a major problem for many cities. To
input on the extent of the problem and possible solutions, the United
Environmental Protection Agency's (EPA) Environmental Finance Advisory Board
(EFAB) held a public mealing in Indianapolis, Indiana on March 27-28,1995. Meeting
included:
• Brownfield Definitions and Perspectives;
• Federal and State Brownfield Initiatives;
» Community and Neighborhood Involvement;
• Financial Perspectives;
* Business Perspectives;
• Development Perspectives; and
• Capital Provider Perspectives.
During and ideas and on
the financial, real regulatory, economic development, community, and
environmental faced in cleanup and redevelopment. They discussed
at the barriers limiting the public and private sectors' ability to finance and implement
successful project!. Speakers and participants that:
• EPA clarify its regulatory role in brownfidd sites;
• the federal government give a liability release to new properly owners,
and-developers who make productive use of these sites;
* risk-based approaches be used - that real risks, rather than perceived risks,.
determine cleanup actions and future uses of properties;
• the federal government and States provide economic incentives to property
owners and developers to make brownfidd projects profitable and to
overcome the competitive advantages of suburban "greenfield"
* EPA and rely more on State voluntary cleanup programs such
as the innovative Ohio and Indiana models;
• become the lead players in brownfields cleanup and redevelopment;
« the role of the private sector in brownfields be expanded in the
investigation and cleanup processes; and
• State and local officials undertake a comprehensive, effort to encourage
economic development in distressed urban areas where brownfields ar©
concentrated.
Enmnnmenml Financial Advisory Board
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Meeting an BrmvnfieUs
Participants recognized that EPA was giving greater attention to Innovative
solutions to the brownfieSds problem. They saw that EPA was building new relationships
with the States and the private sector to bring legal and financial solutions
to these problems. While some were regulators, most
the difficulty the federal government and State regulators in bringing
effective and equitable solutions to these problems.
Meeting and attendees provided much valuable information that will help
in and redevelopment Issues. It was clear from the
and discussions that a variety of on
the brownfields Speakers were nearly unanimous in calling for realistic, cost-
effective, and coordinated solutions. The majority and audienee partieipanti
were optimistic that cities could tackle these problem! successfully — with help from
federal and State regulators.
Finandsl Board II
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fadianaponsMj&ingwFUiancine
L INTRODUCTION
Many American cities are running out of "clean land" to support economic and
community development abandoned or under-utilized industrial and
commercial properties with known or suspected contamination problems, are a major
problem. To gain public input on the dimensions of the and possible
solutions, the Environmental Finance Advisory Board (EFAB) of the United States
Environmental Protection Agency (EPA) held a two-day public rattling on March 27-28,
1995 in Indianapolis, Indiana. Primary of the were to the barriers
limiting the public and private sector's ability to site cleanup and
redevelopment — and to find solutions.
The meeting was held in Indianapolis, Indiana, at the invitation of Mayor Stephen
Goldsmith, an EFAB member, Warren Tyler, a Vice President of State Savings Bank in
Columbus, and an EFAB chaired the This report was developed
to capture the major ideas and discussed at the
During the two-day meeting, shared their ideas and experiences with the
EFAB on the financial, legal, real estate, regulatory, economic development, and
community faced in redeveloping Speaker sessions covered the
following key topics:
Brownfield Definitions and Perspectives;
Federal and BrownfieJd Initiatives;
Community and Neighborhood Involvement;
Financial Perspectives;
Business Perspectives;
Development and
Capital Provider
At the and attendees provided the EFAB with valuable
information that will help in evaluating financing barriers and various strategies related to
cleanup and redevelopment Participants identified possible federal actions
that could increase public and private sector investment in site cleanup and redevelopment.
In addition, many legal liability, regulatory, financial, community, and institutional barriers
that reinvestment in these properties were This report identifies
the major and issues during the meeting.
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II. MEETING SUMMARY
/ - Murdi 27,
A. Brownfldd Definitions aid Perspectives
Mayor ©f
Fat Taylor Woodyard, CH2M Hill
to and State
regulators, cities, neighborhoods, and private sector investors and lenders. In
groups that greater attention should be to solving problems, but
of opinion over what the most
solutions. Current budget pressures on all levels underscore the for
efficient use capital in Similarly, the intense competition
for private capital the need for regulators and other sector
to assure private and investors that they can receive an adequate return ©n
investment in making competitive for future use.
_ is a leading lubject of discussion at many national
conferences and meetings. Many want to know whit guidelines they should follow
in structuring solutions. They want to know if there are any critical success factors t©
increase the chances of successful redevelopment Effective brawnfields will
upon the and sectors' ability to and employ critical success
factors in the and of these properties.
Mty@r Stephen Goldimith,
Impact an Urban Social and Economic
Mayor Goldsmith directly to the issue of how impact on urban
social and economic conditions. He discussed how have reduced
Indianapolis' to compute with surrounding suburbs and areas for residents,
businesses, and jobs. The Mayor pointed t© the City's increased difficulty in competing
with land-rich suburbs offering "greenfield" and stable economic development
incentives.* He saw tht impact of on development patterns in
, as typical of many other American cities' He stressed the need
for greater coordinated action by federal and State environmental regulators t© help city *
officials, residents, and businesses cleanup and redevelop sites. , •
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011
Mayor Goldsmith the following priorities:
• need to a more to defining real and
associated costs and benefits site cleanup;
» regulators need to reduce the threat of future regulatory enforcement
action once a property owner has developed and implemented an agreed
upon cleanup, plan meeting appropriate State and federal and
« ail levels of government must do a better job of reducing real and
potential inequities and threats experienced by neighborhood
residents directly to
8
Fat Taylor Woodyard, CH2M HILL
Build Upon Critical Success Fact&n
Pat Taylor Woodyard from CH2M Hill, on© of the nation's largest environmental
firms, believed that regulators can learn much from the observed shortcomings
of the federal Comprehensive Environmental Compensation, and Liability Act
(CERCLA) and Resource Conservation and Recovery Act (RCRA) programs. She slated
that these lessons can help makers devise better solutions to brownfields site
problems.
Ms. urged federal and State officials to the technical
investigation associated with brownfields. She identified the following critical
from her CERCLA and RCRA project as to
brownfields redevelopment efforts:
• regulators should grant greater flexibility to the compliance process on a
site-by-site basis; .
*
• the focus of investigation efforts should be to real risk, and not
theoretical or perceived risk;
« attention should be to how risk itself is defined;
» more attention should be to how remediation technologies are
selected and implemented;
• the process should be directed to the ultimate issue of clean-up
and not strict investigation;
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IiuBanapotts m Financing
e
the brownfield regulatory process should be simplified and revamped to
encourage both cleanup and reuse of these sites;
• future regulations should be more and less haphazardly
I© avoid conflict federal and regulatory requirements; and
• the litigious climate surrounding and should be
greatly reduced.
M§. Woodyard said chances ©f success greatly if these are followed.
R Federal and State Initiatives
James EPA, Region V
Greta Hawser male, Indiana Department of Environmental
Management
Ohio of Environmental
• Federal and State environmental agencies receive criticism for their
efforts to protect the environment and public health, especially when these actions prove
coitly to the public and private businesses. Environmental regulators are working
to redevelopment concerns raised by businesses, and State and local
officials. They are developing innovative legal and financial solutions to problems
associtted with
As an to the traditional
State environmental officials are implementing innovative to permit property
owners to voluntarily devise and initiate site cleanup plans. At the time of the meeting,
nineteen had launched programs the late 1980s. These
initiatives have developed in response to severe criticism of the traditional regulatory
approach by property owners, and State and local officials themselves.
James EPA, Region V
New Approaches fy Federal Regulator
James Bower, Region Vs Brownfield Coordinator, described some of EPA's
major actions to these issues. He that EPA views the
_ problem as a major priority, and with many of the about how to
federal efforts in this area. EPA is about four major
Environmental Financial'Advisory Bmspd
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Indianapolis Meeting an Fimmsssing Bfswnfidds Redevelopment
» legal liability is defined and
• whether the specification cleanup standards can be based upon
the planned future use of the property (the "how clean is clean" issue);
• how to form more intergovernmental partnerships to Increase the colt-
effectiveness of public sector solutions; and
• how to equitably finance cleanup efforts with public and private sector
resources.
Mr. Bower informed the group that U.S. EPA was working on the following policy
improvements at the present time:
° initiation of new lender liability guidance to commercial lenders
comfort in providing capital for
• development of prospective purchaser guidance to allow "reasonable"
agreements allowing these properties to be acquired and redeveloped;
* clarifying the aquifer contamination by not holding property owners
liable for cleanup if they did not contribute to-its pollution;
• reducing municipalities" liability in those cases where they acquire
contaminated for redevelopment purposes.
He indicated that EPA had recently removed 24,000 CERCLA sites from its
register. Sites, he stated, that EPA had indicated it has no further interest in regulating.
Moreover, he noted that the Agency was working with the States to reach agreement on
how it can recognize State voluntary cleanup programs through its new State
Memorandum of Understanding Program.
Mr Bower the Brownfidds Pilot Demonstration Program as an example
of how EPA was to form partnerships with local governments in local
problems. Three initial demonstration projects had been funded by EPA — in
Cleveland, Ohio; Virginia; and Bridgeport, Connecticut Another IS
Including the City were recently selected as pilot
cities. EPA planned t© have 50 such pilot either or by the end
of 1996. Mr. Bower also said that EPA had initiated a new outreach program to
commercial lenders to determine gain their financial participation in future
redevelopment efforts.
Environmental Financial Adrismy Board
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___, Indianapolis Meeting on FinmdnigBrawnjields_Redevel0pmeM
Greta HawvermaSe, Indiana Department of Environmental Management
Indiana's Innovative Voluntary Clean-Up Program
Greta Hawvermale, the Assistant Commissioner of the Indiana Department of
Environmental Management, explained that Indiana created a voluntary cleanup program
two years earlier, which had worked well thus far. She described the program as more
user-friendly than most environmental programs, allowing property owners to use greater
flexibility on a site-specific basis. Indiana officials recognize both the environmental and
economic sides of the brownfields problem, which were discussed earlier by Mayor
Goldsmith. Ms. Hawvermale described a local brownfields initiative started in Northwest
Indiana, where considerable site contamination occurred as a result of early heavy
industrial uses. According to Ms. Hawvermale, the.federa! government should do the
following to help state voluntary cleanup programs become more successful:
• recognize State programs and provide technical assistance to States in
future policy development;
« provide seed money to help fund the technical investigation and cleanup of
properties, especially at the Phase 1 study level;
• work on partnership-building to ensure continued flexibility by federal and
State regulators; and
« share more information in the future to accelerate State and EPA joint
progress along the brownfields redevelopment learning curve.
Jennifer Ohio Department of Environmental Protection
Ohio's Imn&vat&ve Cleanup
Jennifer Kwasniewski, the Manager of Ohio DEP's voluntary cleanup program,
explained that Ohio's program began in 1994 and was making good progress. Ohio, like
other States grappling with this problem, examined issues such as cleanup standards,
strategies and conditions for the release of legal liability, third-party liability issues, and
other issues. Ms. stated that Ohio's program contains nine key elements:
• it sets clear site cleanup numbers as targets; •
• it permits flexibility allowing the "volunteer" to choose to do a property-
specific risk assessment;
« it provides a legal release of liability as cleanup targets are attained;
Environmental Financial Adm$ory Board
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Redevdmnmnt
• it sets performance goals in attaining cleanup;
• it upon the private sector to provide the certification and lab
required;
» it protects the information provided by the volunteer t© the State to avoid
use of the information in litigation;
• it provides a of protection to lenders against liabilities once an
has been reached;
» it provides new tax credits and financing to help stimulate greater private
investment in these and
• the Ohio program uses proportional liability to allow volunteers to
contributions from the original polluter to pay for cleanup.
She explained that Ohio's financing tools currently include:
• tw© tax abatement options whieh the property owner may qualify for in-
for cleanup and redevelopment; and
• a revolving loan fond drawing funds from Ohio EPA, the Ohio Water
Development Authority, and the Ohio Department of Development
Ms. noted that the State expects to other incentives in the future
to promote these sites for economic development. '
She indicated that Ohio officials believe U.S. EPA could help the in the future by:
•• providing liability protection after a State voluntary cleanup has been
completed;
• performance rather than process in State voluntary programs;
• providing more funding to increase State and local capacity to handle
and
« providing added incentives to encourage the private marketplace to
* to these problems in the future.
Environmental Board
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Question and Answer Session , • •
Important were during the first question and answer session. This
discuision 'followed the first two ©n brownfield definitions and
perspectives and federal and State brownfield initiatives.
1. cam t& and property
kelp in this area?
Ohio and Indiana officials stated that their programs were working well, but would work
even better if U.S. EPA provided liability, protection. Ultimately, the federal government
will need to greater assurance against future to the State programs
successful. One indicated that some States consider it beneficial to have some
level of federal regulatory by
2. and Stats actions by
and the U.S. cleanup?
The by the two and U.S. EPA was'that this is unlikely t© b@ a
major problem these judicial bodies would probably rely on regulators* decisions.
3. Does have the ability to authority to the States on
Stain clean-up? . •
While the federal govtmmtnt has die to State programs, it does not have
full authority to this responsibility to State
4. enough Mention to
would more attention help resolve sits technology
More attention should be to this but property owners and may b©
reluctant t© experiment -with new technology, ©specially if costs are to© great and
regulations don't permit these alternatives.
5. if a actual
If remediation (deanupXefforts were more matched to future property us®, then
more actual cleanup of sites would occur. Encapsulation occurs it Is a less
coitly method the problem in most cases.
Board '8
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IfldianapoKs Meeting &n Financing Brmvnfields Redevelopment
6. How are State voluntary programs financed; and will they be self-funded In the
future?
'- i
Fees are coEeeted in both Ohio and Indiana, which" appeared to be a common approach in
many other States. Self-funding in the long-term hinges on the extent these programs are
used and whether the programs can rely on private sector firms for much of the
certification and testing work required. In the short term, States have indicated they need
some financial help to run these programs. This is an area where the federal government
could be helpful to ensure that State programs have adequate capacity.
7, Is there a need to different types of brownfield sites and establish
appropriate processes to deal with different types?
Several and others preient saw some merit to this approach, especially in those
cases where large "mega-brownfield sites" were concerned.
C, Community and Neighborhood Involvement
Speakers; Kay Nelson, City of East Chicago
Jeff G®Sef City ©f Indianapolis
William Indiana Environmental Institute
Community residents must participate in public decision-making about the cleanup
and future use of brownfield sites. This participation is essential sine© these decisions
affect citizens, and because their support is needed to ensure the success of future
redevelopment efforts. The EFAB heard a number of useful ideas about how to approach
community involvement in dealing with brownfields.
Kay Nelson, City of East Chicago
City Involves Community in Project
Kay Nelson, a brownfields project coordinator for the City of East Chicago,
described how the City involved affected stakeholder groups in their project. She talked
about the Northwest Indiana Brownfield Redevelopment Project which focused on several
sites contaminated by earlier industrial uses. Ms. Nelson indicated that committees played
a key role in issue identification and resolution in the City's community participation -
efforts. This allowed the group to focus on issues of concern and address them. She
staled that the City has strong concerns that environmental justice be protected through
community involvement. Th© impact of the brownfields on minorities and disadvantaged
groups were an utmost concern in this regard.
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on
Jeff Gole, City Councilman
dtp Zteilf MI&& mnd
Jeff Golc, an Indianapolis City Councilman, talked about how his district has
learned to cope with two Superfund site and various brownfield over the
Mr. Golc stated that brownfields pose the following interrelated problems:
« health and safety—which must be protected;
« property value decline-which must be reversed to reduce poverty; and
° must be to ensure
market demand for the site and sufficient economic benefit
returned to the community.
Mr. Golc itrongly believed that all three must be addressed if are to be
and »
William Beranek, Indiana Environmental Institute _
JtTgw to Effective Community Involvement
William Beranek that five things were needed to bring about effective
community involvement — which helps solve the problems associated with brownfidd
•• establish agreement on whit is a non-threatening property, since people
react emotionally to these
« are to a site and what
standards will be achieved;
«
• reduce the "poEtieal bandwagon effect" —' where people use the
issue for political reasons other than the immediate
environmental, and social by
a to the what the riik is to them, and tell them about
the unknowns; and •
» listen more to the public regarding its concerns.
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fa&anmoKsMeeting m Financing Brotmfietds
Question and Answer Session
The second question and discussion session produced useful ideas on how to
increase success in dealing with brownfield as staled below.
1. Haw eon achieve b&th **pmcess" and **@®tcom@M 'from
Both are important according to the greater attention Is focused on
process, or using community involvement to move the decision-mating process forward.
At times, final outcomes and are not adequately during the community
involvement process. Greater attention should be given to using community involvement
to achieve desired end results that are satisfactory to residents tnd other stakeholders.
Also, community residents should participate in decisions about the future use of these
once has occurred.
2 How resolve a "deal" in
site cleanup doss this
Citizens will cooperate when they are involved from the beginning of the process, as
opposed to being brought in at the last minute and told by government and private
developers what is going to be done. Citizens are less likely to oppose a "deal", if they
have been involved throughout the process.
3. are the best to offer input to community
aboM environmental issues? Can these a r&le as a if the
private does not in?
Development .Corporations (CDCi) can play this developer and have
in some cities have a number of CDC organizations, which are active in
community economic development. CDCs should be seen as the "developers of last
that is if the sector not to the situation. These local groups
need to bridge businesses and residents in the neighborhood to be effective.
4. -How can we deal more with at the two most
in 1) the Bite Is and 2)
when demolition mnd excavation occurs?
This is a common and speakers agreed these are two very risky points in the 'life"
of the brownfield. controls for dust, and other occurrences should be addressed
by programs, as they are in Ohio.
II
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2 - JfarcA 2«, 7PP5
D. Financial Perspectives
Larry WiSs@ns Indiana Univer sity
Jim Bond Bank
Philippa Guthrie, Ice, Miller, Domiclte & Ryan
The meillng's seeond day was devoted to financial, and development
perspectives of brownfields redevelopment. EFAB heard a number of ideas on how to
overcome barriers I© private sector Investment in site cleanup and redevelopment.
Larry Wilson, Indiana University " ,
EFAB Consideration
Larry Wilson, from Indiana for Urban and Environments!
Affairs, offered eight ideas for EFAB consideration:
»
• and to improve understanding of the number
and location states and across the country;
9 States and EPA need to adopt overall strategies to deal with brownfields,
rather than continue to rely on strict approaches;
• should work harder at industrial
for polluting these sites more involved in financing cleanup;
» site cleanup efforts should be guided by clear priorities that weigh health
and environmental risks and redevelopment potential;
« major problem poiing serious health threats should be addressed
regardless of redevelopment potential;
• second/ third-order priority sites with less pollution should be prioritized
largely on future demand and economic development potential;
• local planning and zoning tools should be considered in structuring
- solutions to brownfieSd problems; and •
• the public sector to continue to new financial to
spark cleanup and reuse
Emm'&nmmta! Financial AJ^h&sj Board 12
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InduuuaMlttMeetuig&n FinancingBrmmfldds Redwd@mnent
Mr. Wilson also specifically recommended thai the federal government assess the
feasibility of a national brownfields insurance pool, modeled" after the national flood
program, which could provide title insurance lo property owners
and other
Jim Bond Bank
Municipal Liability Concern®
Jim an official from the Bond Bank, offered suggestions on
how to municipal liability concerns associated with local initiatives.
He informed the EFAB that cities serious liability problems, like any other party, once
they are in the "chain of title" for these properties. Mr. Synder echoed Larry Wilson's
recommendation that a national brownfields program be evaluated. He
and local governments to mike use ©f tax increment financing — a tool used
by many governmental entities to finance infrastructure improvements related to site
development and I© help pay for brownfields cleanup. '
Mr. Synder pointed out that many possess from a
location standpoint. He noted that limited transportation access and other
weaknesses are frequent problems reducing the attractiveness of these for
future reuse by business and industry.
Plilllppa Guthrie, Ice, Miller, D®radi© & Ryan
Philippa Guthrie, an attorney, shared some major concerns raised by her firm's
corporate clients about reusing sites for business expansion. She stated that'
the biggest concern underlying the issue is uncertainty. "A major cause of this
uncertainty is that State and federal regulators are unable to "guarantee" that enforcement
action will not be taken even if the complies with current cleanup standards.
«
She observed that accurate cost estimates are also difficult lo make, which adds
uncertainty to business Site investigation costs can be substantial —
depending upon the cleanup method these costs can be very major. Ms. Guthrie
that State and federal consider the following actions:
e adopt new strategies to spread the cost of cleanup across the public and
responsible private
9 broader covenants-not-to-tue that would protect future property
owners and lenders; and
EmmmngmaSal Finmndml Adm&ry Bmrfl 13
-------
on
9 the number ©f Stale voluntary cleanup programs; and expand the
purview of existing programs to offer more solutions to site
and reuse.
Questl&m and Answer Seid&n
The from the Financial
questions and comments, which are summarized below,
1, Wte process should and State t@ remove
from regulated Rats?
As a starting point, the process followed by EPA to de-list the 24,000 CERCLA sites
should be examined for on how to this In It is
unclear how many of these sites were placed on the CERCLA list in the first place.
2. Can tax (TIFs) be
It is unclear whether or not are eligible costs under current law. Indiana has
TIFs for land acquisition, but not actual cleanup expenses. Many people believe TDK's'
could help communities finance of site costs.
3. Has she national been. In. any
is
flood insmmmce program)
In principle, the idea appears to make sense, but a detailed evaluation of the proposal has
not occurred yet. a program should be adopted by the States to avoid many
of the earlier associated with the national flood insurance program.
4, How are with m a of the
What"do you suggest to deal with tke
in this
The process it very important. Brownfield are hard to appmlse because it
is difficult to determine lair market value. Many of these have little or no commercial
value as long as the contamination problem exists. But once corrected, these gain
value, favorable Often, will
limply ask the lenders what they would pay for g piece of property. Perhaps part of the
you the associated with
sites — which is a problem beyond the actual contamination on the site.
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Indianapolis Meeting on Financui% Browm
E. Business Perspectives
Konrad Bamnak, Gtraghty and Miller
Mark Anderson, The Greenfields Group
Limit Toil, Fuller & Henry
Businesses multiple factors when they locate production and office
operations in an area. It is crucial that federal and State understand how
brownfield sites are viewed from a business location perspective — which is usually very
negatively at the onset. The mere presence of these sites is often a factor used to screen
out areas from Moreover, and public officials
should examine how firms make business location and investment decisions- and how
firms come to grips with cost and liability In this local and
groups can b@ valuable resource since they work with firms
on a regular bills.
and Miller
The Business Issue
Mr. Konrad offered a perspective of how businesses approach- the
business location and what they consider. According to Mr.
environmentalists tend to be too "fastidious" in their approach to -- that is they
are concerned about 100% clean-up. Businesses view this tendency as an obstacle
to finding reasonable and practical solutions to environmental problems. Mr.
the group to this when He also urged
EFAB and regulators to look for — better approaches to defining the "off-site" extent of
contamination — and better approaches to defining standards on clean is clean".
When defining cleanup costs, Mr. challenged regulators to think of
solutions that cover "capital" costs and "operation and maintenance" costs. He urged the
group to more that be as IS0 & M" costs in dealing with
brownfield problems. For example, site capping solutions fall into this "O & M" category.
Mark Andersop, The Greenfields Group
with
Mark Anderson encouraged the group to examine more State and local solutions
to brownfidd problems. He cited eight problems with-enforcement-based approaches:
» their insistence on joint and several contributes to legal battles over
liability;
Environmental • IS
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• cleanup standards are often burdensome and unwarranted based upon
planned future reuse of the property;
• most enforcement programs are too inflexible, slowing cleanup and reuse;
• many States lack fiinds and staff for enforcement programs — this causes
them t© deal with problems too categorically;
« most do not get cleaned because the redevelopment potential of the
property is never considered;
* a lack of intergovernmental cooperation progress in cleanup and
» too much is to adversaria! approaches- pitting
against government and vice versa; and
* lenders continue to back away from deals involving because
for past
&
Mr. Anderson praised the Ohio Voluntary Cleanup Program became it
effectively with the eight drawbacks above. He noted that 19 states have voluntary clean-
up programs in now, and more are in the future.
Louis TosL Fuller & Henry
Futun Use of Bmwmfietsh
Louis Tost, an attorney, offered guidance on how to address issues related to the
future use He that the Is Important. He
urged more precise definitions to avoid the perception that all sites are
alike if they are called "brownfields." He noted that there are major differences in these
properties, and therefore there should be differences in how concerned environmental
regulators are about these Mr. Tosi talked about hi§ in helping business
clients address these problems. Like earlier he complimented the Ohio
Voluntary Cleanup for its reasonableness and effectiveness.
Mr Tosi urged greater leadership from the States in addressing the
problem, rather than relying too much on the federal government for answers. He
suggested the U.S. Department of Commerce be allowed to help EPA in implementing
future federal brownfield programs. He this would insure that would be
involved in solving these problems, and that the private marketplace would
deal with the problem to the maximum extent possible.
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Financing Brmmfletds Redevelopment
and Answer Session
the session — the issue of EPA5s
juriidletion over non-Suptrfund brownfield was of great interest. The following
question concerned this interest.
1 over are not placed on
the CERCLA list? take the Imd in
The extent of EPA's jurisdiction on these matters remains uncertain. EPA is signaling that
it will have less interest in brownields in the future, if the sites do not have severe
contamination problems. Businesses are afraid of undertaking site assessments and
volunteering the information to federal and regulators. want protection
from action if and when they brownfeld problems.
F. Development Perspectives
^ Lou Ziekief, Tucker Real Estate
Ine.
Louis Morry, Morry Company
While are for environmental and public health'
most city and State officials are equally concerned about the development
potential of these sites. Many believe that State and local economic development
can contribute to the reuse ©f these sites ~ " more so than environmental efforts
that -concentrate on regulatory compliance issues. A panel of experts shared perspectives
on how to increase activity, after site contamination problem! have been
Lou Zickler, Tucker Real Estate
How Realtors,
Lou a realtor from described how realtors view
In general, many realtors would prefer not to deal with properties if clean is
available to meet their clients* needs. But, commercial realtors are concerned about
- many have contributed to local redevelopment initiatives.
While the incentive system in commercial estate causes realtors to market "ready" sites
first, Mr. ZieSder indicated that willingness to tackle these sites is growing - at least ones
with manageable environmental
Fimnewl Advisory 17
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Mr. ZicHer noted that for purposes, these properties must be dealt
with one-by-one, or on a special case basis. Further, he stated that EPA and the Jostle©
Department should issue eovinants-not-to-sui. Thtse covenants would run with the
property and would allow the transfer of property to new users — as opposed to just the
current property owner. He also recommended that the federal government hold fiduciaries
and lending institutions harmless for liability- after sites have been remedied.
Vicki Keramida, Keramida Environmental, Inc.
Vidd Keramida her views on actions that would encourage brawnfieSd
Ms. that hat led to few site cleanups
the program has had too much of an focus and has not been concerned
enough about remediation and reuse. Future initiatives should avoid these
earlier mistakes. Ms. made several points how firms war© a party to
potential liability suits. She explained that environmental consulting firms hid to cany
substantial liability for protection potential claims. Risk assessment
should be used to determine risks, which is the case in most State voluntary cleanup
These techniques should be used to determine what is appropriate for a site,
in light of clearly identified risks. She urged federal and State regulators to use
approaches to gaining cleanup and redevelopment commitments.
Louis Merry* Noriy C@mpaay
Development Priorities
Louis from Rochester, New York, about development and
how they affect solutions. He described some of his firm's In
dealii\g with these properties. He advised the EFAB t© that not all are
He also out that are four to the conversion
process:
8 the user and/or original generator of the pollution;
• government;
• the subsequent property holder or and
» the businesses which might occupy the site in the future;
Mr suggested that all four parties .should adopt an approach which embodies the
three Rs - reasonable, rational, and responsible..
. IS
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IMS
He emphasized that the greatest initial concern of development firms is with
identifying the generator of the pollution on the site, and examining obligations for paying
for He further stated that it is important to examine how prepared State and local
governments are to help the developer convert the site to productive reuse. Additional
developer concents involve determining local market demand for the property, availability
©f financing, and the ability to accomplish the deal profitably. Mr. Norry was optimistic
that more redevelopment of these could occur if these basic are addressed.
Considerable discussion emerged following the Development session presentations.
Key questions included:
/. How difficult 1$ it t& get aem-ns@Mf$sfinancmgfmprojeet®?
It depends to a high degree on the involvement of the pollution generator and their
to contribute.' A generator with solid financial strength is in a better position
to help pay for cleanup. Not all financial institutions can handle non-recourse financing.
Government incentives help to make projects profitable and worth doing.
*
2, Why does the ad &n 1 mt deals it at? this
be troubling to EFAB and environmental
In 40 out of SO instances, the properly fails the test for real estate
The building, land, or location not meet project
J. In the cases where Issues are a in the deal, km U.&
EPA been a 'help @r hindrance t®ymr efforts?
As a developer, Mr. Nony stated Ms company prefers not t© deal with the regulator until'
the company is certain it wants t© the deal. Norry Company not regulator
involvement unless it is essential Their Company's have been generally
favorable in dealing with both the Indiana Department of Environment Management and
EPA, Region V.
4. having about the bankers and
in
Yes, this information would help. Information designed to define and reduce risk is most
necessary. Information must be provided by credible sources, which are trusted by
different stakeholder groups. In many cases, realtors may be less informed about
regulations and issues than
Environmental Financial Advisory Board - 19
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Afeetin^onflnanmijf
G. Capital Provider Perspectives
Speakers David M©@neyf National City Bank
Richard Sheldon, Environmental Compliance Services
Kirk Her»th. Nationwide Insurance
Commercial banks play a key role in financing business and real estate Investments
In cities. Strategies to gain their participation in brownfields redevelopment financing
are needed. Bankers must become more comfortable with financing these deals. This will
clarification at the and federal and the of
for these
David National City Bank •
and Risk
David Mooney, from National City Bank in about information
and risk concerns from a capital provider's.perspective. He stressed that information" is
needed to help bankers evaluate risk. This information must be reliable and consistent with
regulatory, and Industry Once Information has been Verified, it can be
used in a decision-making model to reduce risks. Information can also be to' facilitate
"risk management". Risk management approaches include:
. » dilute of risk by Involving
%
• insure risk by use of escrows, guarantees, and other mechanisms;
_» risk through .the loan amount, or the
site use; and
• avoid the risk by non-involvement in the deal.
a "
Richard $he!dton$ Environmental Compliance "
Environmental Insurance Perspective
Richard Sheldon on capital provider liability concerns from an
insurance All involved in brownfields want
from liability — the buyer, the seller, the financier, and the municipality. The buyer and
• financier went protection against cost over-runs associated with the cleanup. The buyer,
developer, and financier want protection from unforeseen problems encountered in the
process.. And, want to the public from poEution.
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a»
The costs of environmental insurance to all of these parties differs, depending upon
the property under consideration trad what the wants 'to do with it On average,
Mr. Sheldon that $I million in insurance costs about $ 10,000. These
may be higher if a high hazard property is being insured.
Mr. Sheldon identified three basic types of environmental insurance:
• errors tmd - that protects pollution caused by
a contractor during the course of operation;
• remediation stop toss insurance - that caps the eost of remediation above
initial cleanup cost estimate!; and
• warranty insurance — that can b@ with a property
sale or transfer to cover costs such as unknown cleanup expenses,
party bodily damage, property and other
Mr. Sheldon believed the key in using each type insurance is and innovation.
Nationwide
Kirk offered advice on cost containment in cleaning and redeveloping
Mr. said will be reluctant
providers for cleanup. He stated that liability changes are needed to allow
insurance companies to participate more in these redevelopment deals. He was
particularly concerned with the fact that is defined differently in all fifty states, and
EPA has its own definitions. He indicated that insurance companies are reluctant to either
write insurance or provide capital under this ambiguous regulatory environment
The pockets" and rising transaction costs were also major insurer
concerns in dealing with properties. Mr. explained that insurance is for
unexpected, but fairly predictable events. Insurers look at contaminated sites as caused
by genera! business practices, and not as accidental occurrences. He observed that
these have become more and less risky.
According to Mr. insurance companies may be expected to pay three types
of costs associated with
• Indemnification that cleanup costs fall within the terms of
insurance,
Board ' 21
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« costs-associated with defending insurance from liability.
• dispute from litigation.
s f
Insurance companies believe cleanup and redevelopment costs can be contained through
more information about site conditions. Many proptrty owners, though, are
reluctant to provide this information for fear it may be used by regulators.
Mr. that the insurance industry pays about 10% of total private
sector costs associated with Federal National Priority List (NFL) sites. And, insurers pay
four times more than that for of the Insurer's liability mix -
including site payments, transaction costs, and taxes.
He stressed that insurance companies are most concerned about solvency. Unlike
banks, insurance do not have FDIC coverage. Mr. Herath urged States to
address the five in'their efforts:
• eliminate strict Joint and several liability;
•> put an end to subsequent owner by setting lender and fiduciary
limits;
• set standards upon site use;
• base remedy selection upon site-specific "real8' risk assessments; and
* the federal government must concede on its ability to over-ride states on
liability Is federal must become a reality.
Board 22
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on
III. MEETING FINDINGS
Brownfield sites a major to:
private property owners;
real estate developers;
Slate and federal regulators;
cities;
private financial institutions;
economic development and
other groups.
The at this meeting shed light on many of the Issues that arise in cleaning-
up and redeveloping these properties. It was dear from their presentations, and the
ensuing discussions, that several different perspective! exist on these
The meeting provided a forum to discuss and share new ideas, and innovative
solutions to problems from several perspectives. It was evident that few
people were for "silver bullets", or simplified answers. Instedd, were
nearly unanimous In their call for realistic, and coordinated solutions to
browofields cleanup and redevelopment. The majority of the speakers and audience
were that cities will be able to tackle the problems associated with
brownfieldi successfully - with help from federal and State regulators.
Participants felt that sites were potentially a valued resource from
environmental and economic standpoints. An adequate supply of clean land was deemed
essential for to rebuild , neighborhood! • and local industries. Without the
redevelopment of brownfields, new development will continue its outward move away
from cities. The long-term effects of this out-migration trend are devastating t© city tax
bases, residential neighborhood -stability, 'and business It ii also very
to address the impact of these contaminated on minorities and other
Inner city resideits,, who .cannot move away from these problems.
underscored that U.S. EPA should clarify its regulatory role in brownfield
Many urged the federal-government to provide a complete release of liability to new
properly owners, municipalities, and developers who would like to make productive use
©f these properties. Risk-based approaches to regulation were given a strong vote of
support by who argue that real risks, rather than perceived risks, should
determine appropriate site cleanup actions and desirable future uses of these properties.
Board 23
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Indianap0U$Jlfe
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Meeting as
IV. APPENDIX
A. Environmental Finance Board Members
Honorable Stephen Goldsmith
Mayor
City Indiana
Warren W. Tyler (Meeting Chair and Moderator) '
Vice President
State Bank, Ohio
Mary Ellen WWtworth
Director, Environmental Policy
City ©f Houiton, Texas
Jim I Toza
Multinational Business Services, Inc.
Washington, D.C.
George V.
Vic© President Public Finance Group
Texas Commerce Bank
San Antonio, Texas
Neil Yoskin
Partner
Pice©, Mack, and Herbert
Trenton, New
B. Environmental Finance Advisory Board (EFAB) Staff
Timothy MeProtity
U.S. EPA, D.C.
Gen© Pontillo
U.S. EPA, Washington, D.C.
Environmental Financial Advisory Board 25
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0«
C. Meeting Speakers
Honorable Stephen GoSdsmhh
Mayor
City of Indianapolis
Ms. Pat Taylor Woodyard
CmMHIl!
Environmental Consultants
James D. Bower
U.S. EPA, V
Chicago, Illinois
Greta Hawvenraie
Indiana Department of Environmental
Management
Indianapolis, Indiana
Kwisniiwski
Ohio DEP
Columbus,, Ohio
Robert Hallenbeck
Environmental Compliance
Kiy Nelson
Brownfields Coordinator
City of East Chicago, Indiana
William Beranek, Ph.D.
Indiana Environmental Institute
Indiana
Larry Wilson
Indiana University
Indiana
James
Bond Bank
Indianapolis, Indiana
PMIippa Guthri©
Ice, Milter, Donadio &, Ryan
Indiana
and Miller
Indiana
Mark Anderson
The Greenfields Group
Arlington, Va.
Louis Tosi
Fuller and'Henry
Toledo, Ohio
Louis
Tueter Real Estate
Indiana
Vicky Keramida
Environmental Inc.
Indianapolis, Indiana
Louis Norry
Nony Company
Rochester, NY
David
National City Bank
Indianapolis, Indiana
Shtldon
Environmental Compliance Services
Indiana
Kirk Herath
Nationwide Insurance
Columbus, Ohio
.
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