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

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                                            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.
                                                                          20

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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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