-------
Economic Benefits and Costs
; I
Net benefits = Change in the value of outputs
- change in the cost of inputs
• Outputs: more open space, cleaner air, reduced
crime
Inputs: resource costs to society (labor, 'external'
costs)
Key criterion of success is efficiency, can the
"winners' fully compensate the 'losers?
-------
Economic Impacts
Key criterion of success is distribution
<$>Who gains, who loses, and by how
much?
^Indicators: jobs creation, changes in
output or revenue, financial impacts to
state and local governments
—'
-------
Returning to the calculation of net
_fl
V
hpnpfjfc
U\^l It-l ILO
Change in the value of outputs
- change in the cost of inputs
3 \
\
\
\
\
(^jobs creation^)
-------
Brownfields Financing Basics:
Making the Numbers Add Up
Presentation by
Charles Bartsch
The Northeast-Midwest Institute
Brownfields 2002 Conference -- Charlotte, NC
-------
NORTHEAST ~7^ ~T 7r> ur
; MIDWEST Goals of Public
INSTITUTE Financing Initiatives
o
What Can Public Financing Programs Do?
*and some examples
Q Reduce lender's risk
s loan guarantees; companion loans; insurance
Q Reduce borrower's costs
s interest-rate reductions or subsidies; due diligence assistance; maintain
records on institutional controls
Q Improve the borrower's financial situation
^ re-payment grace periods; tax abatements; training and technical
assistance
Q Provide comfort to lenders or investors
^ loan guarantees; performance data; insurance/risk transfer mechanisms
Q Provide resources directly
S grants; forgivable/performance loans
-------
NORTHEAST Coping with
MIDWEST Contamination: Common
- INSTITUTE ' t _. — «
Local Financing Tools
Tax increment financing (TIP)
Tax abatements
'«,
;
Locally capitalized revolving loan funds
(RLFs)
General obligation bonds
-------
EE MIDWEST a^ r , ,, „
Out of the Box
NORTHEAST Examples of
JL
«rv,
INSTITUTE
Financing
Traverse City, Michigan - blend of environmental and
economic development funding sparks river front mixed use
redevelopment
Stamford, Connecticut -riverwalk supported by marina/boat
slip fees
Huntsville, Alabama - in-town mall stimulates increased
property values, which will be used to pay for additional
community improvements
Wyandotte, Michigan - golf course and park maintenance
supported through greens fees
Old Town, Maine - small town drives state and federal funding
efforts for commercial and recreational reuse
Waukesha, Wisconsin - cleanup, construction, and home
ownership funding lead to a new community
Connecticut dry cleaners fund - grants for brownfields
prevention g _^
-------
__ NORTHEAST
E MIDWEST New State and Local
INSTITUTE Financing Ideas:
*•'
Whaf s on the Horizon?
Local:
m earmarking water, sewer, and waste water charges for brownfield
cleanup
• earmarking part of existing grant, loan, or loan guarantee
program funds to site assessment and cleanup projects/activities
• developing a municipal "linked deposit" program targeted to
browntiela borrowers;
• channeling loan repayments from existing city programs to
brownfield projects;
• devoting monies raised from fines or fees to a brownfield
financing pool
• using small amounts of public funds to "seed" a private, shared-
risk financing pool devoted to brownfield redevelopment.
-------
^ NORTHEAST —
pfi**p
E MIDWEST New State and Local
= INSTITUTE Financing Ideas:
What's on the Horizon?
State:
• Connecticut's dry cleaning fund - from 1 percent
surtax on cleaning services
.
• Michigan - targeting unclaimed bottle deposit revenue
for cleanup and redevelopment
• Wisconsin and Ohio - using EPA CWSRF monies for
water-related brownfield projects
-------
NORTHEAST-
ER MIDWEST
INSTITUTE
Project Examples
River's Edge - Traverse City, Michigan
A former iron foundry site along the Board man River
turned into a successful, mixed-use urban infill project
Financial incentives included direct and indirect
financing and tax credits, such as: (a) State
Coastal Management funds used to assess the
environmental contamination and future uses of
the property, (b) a state site reclamation grant, (c)
a downtown development authority (DDA) public
infrastructure TIP, and (iv) the single business tax
credit associated with the brownfields
redevelopment authority.
River's Edge redevelopment involved over $50
million in private investment. The site is built on
more than 300,000 sq ft, with a value of .nearly
$100 million. Mixed-uses include a street-level
retail shops, second floor office space and high
rise residential units. Much of the parking is
hidden below the buildings, giving the surface
back to the people to stroll, shop, live, work and
play.
-------
NORTHEAST
MIDWEST
; INSTITUTE
Riverwalk
Stamford, Connecticut
• Brownfieid site used to "open
up" Long Island Sound to the
public
•' Maintenance supported by
marina/boat slip fees from
adjoining brownfield
development
Project Examples
-------
NORTHEAST
: MIDWEST
INSTITUTE
Parkway Place Mall
Huntsville, Alabama
$60 million in-town mall, replacing a
largely abandoned "brownfield mall"
Huntsville and Madison County
contributed $6 million for a parking
garage and street improvements
Special TIF-like taxing district
created around the mall, to take
advantage of anticipated rise in
property values
* $10 million generated will be used to
rebuild an adjacent high school
*other proceeds will be used recover
developer subsidies
_•
Project Examples
.. • ;!
-------
NORTHEAST
MIDWEST
INSTITUTE
Project Examples
Wyandotte, Mi-Chemical Site on Detroit River
This project involved transforming a defunct, 84 acre chemical
manufacturing plant along the Detroit River into a public
recreation area and a nine-hole golf course.
•
Today, the redeveloped property includes a park with a
riverfront walkway and observation decks, picnic areas, jogging
trails, and a rowing club, In addition to the nine-hole public golf
course. User fees have allowed the golf course to be self-
supporting and pay for maintenance of the park. The nine-hole,
par 36 golf course cost approximately $5.2 million in public
funds-supported primarily from Wyandotte's tax increment
finance district and the Issuance of tax increment bonds.
-------
NORTHEAST
MIDWEST
INSTITUTE y. Project Examples
illltl
Old Town, ME « Marsh Island Cany
The successful transformation of the underutilized contaminated
site to a revitalized waterfront park and commercial property was
a partnership between the proactive city government of Old
Town, the Maine Department of Environmental Protection's (ME
DEP) Voluntary Response Action Program (VRAP), and the
U.S. EPA Brownfields Program, with additional support of the
private sector.
The redevelopment was made possible by several additional
grants from federal and state agencies. They include a $400,000
Enhancement Grant from ME DOT for the park and walkways; a
$400,000 Community Development Block Grant for
infrastructure around the commercial buildings, a $24,500 from
the National Trails Recreation Act for trails, walkways, and river
stabilization, and $8,000 from ME Forest Service for tree
planting
15
-------
NORTHEAST
MIDWEST
INSTITUTE
Project Examples
Phoenix Heights - Waukesha, Wisconsin
69 energy-efficient homes
completed, many for moderate
income families
$13.5 million project, including
$3.13 million in public funds, for
* $1.87 million in state funds for cleanup
* $415,000 in CDBG for construction
* $575,000 in state and HOME funds for
buyer assistance
$405,000 in annual property
taxes generated
-------
NORTHEAST
MIDWEST Project Examples
- INSTITUTE
Connecticut Dry Cleaner Remediation Fund
Brownfield prevention
program
Provides up to $50,000
in grants for soil and
groundwater cleanup,
pollution prevention
-------
NORTHEAST!
MIDWEST Web Sjte
INSTITUTE
www.nemw.org/brownfields.htm
Federal Legislative Proposals to Promote Brownfield Cleanup and
Redevelopment - what's happening in Congress
State of the States - profiles of state VCPs, including new information on financing
incentives, economic benefits, eligible contaminants, cleanup standards, and
institutional controls
Guide to Federal Brownfield Programs - detailed information on programs
throughout the federal government that can promote and support brownfield
cleanup and redevelopment
Financing options for brownfield cleanup and redevelopment
Contacts in state and federal brownfield programs
.
Link to EPA brownfield home page
Links to brownfield databases and organizations
-------
yp7 OF D~hl U.S.-German Bilateral Working Group
&EPA
Economic Tools for Sustainable Brownfields Redevelopment
U.S.-German Bilateral Workshop Agenda -
The Charlotte Convention Center, Room AB
November 11 and 12, 2002, Charlotte, North Carolina
Monday, November 11, 2002
12:00 - 12:30 Welcome, Introduction of Participants
12:30-1:15
Annette Gatchett, EPA
Karl Alvarez, EPA
Dr. Fabian Dosch,
Federal Agency of Building
and Housing
1:15-1:40
Introduction Key Notes
U.S. Situation
• Land Management / Site Recycling
- Status and Challenges
Germany
• Land Use, Land Management, Site Recycling
- Overview about the German Situation
U.S. Introductory Presentation
Brief Overview of Brownfield Economics
• Primary Economic Factors Affecting Brownfield Evan Henry,
Redevelopment Bank of America
• Three Types of Risk to the Brownfields Transaction
and Common Financing Requirements to Minimize Risk
-------
1:40-2:00
Economic Tools for Sustainable Brownfields Redevelopment
U.S.-German Bilateral Workshop Agenda
Overview of National Brownfields Financing Tools
(as applied with examples of success and failure)
2:00-2:15
• Tax-based tools
• Market-based tools
• Public/private investment tools
• U.S. urban economic policies empowerment zones
• Community development corporations
Questions and Answers
Charlie Bartsch, Northeast-
Midwest Institute
2:15-2:30
2:30-3:15
Break
German Introductory Presentation
Funding instruments applicable for brownfield
redevelopment-an Overview
• German urban economic development policies
• National finance instruments
- Federal Level
- State Level
• European funding initiatives (e.g. Urban II, European
Structural Funds)
Dr. Uwe Ferber,
Projektgruppe
Stadt+Entwicklung
3:15-3:30
Questions and Answers
-------
3:30-4:30
4:30-4:45
4:45-5:00
5:00-6:00
Economic Tools for Sustainable Brownfields Redevelopment
U.S.-German Bilateral Workshop Agenda
U.S. Panel Presentation
• Public Finance Tools
- Bonds
- Tax Credits
• Private Capital Tools
- Debt
- Equity
- Risk Management/Insurance
Questions and Answers
Break
German Panel Presentation
Specific Discussions:
• Federal and State Urban Development
Programs - Funding Experiences for Brownfield
Redevelopment in the City of Leipzig
• PPP development and finance strategies
• The State Property Fund ("Grundstucksfonds") in
North-Rhine Westphalia and the Role of State
Development Agencies
("Landesentwicklungsgesellschaften - LEG")
Doug MacCourt, Ater
Wynne LLP (Moderator)
Ann Sherman, Ater Wynne LLP
Ken Cornell,
Vice President, AIG
Environmental
Evan Henry, Bank of America
Karsten Gerkens,
Head of Redevelopment
Agency, City of Leipzig
Ralph Ishorst
West German Real Estate
Bank
6:00-6:15
Questions and Answers
-------
Economic Tools for Sustainable Brownfields Redevelopment
U.S.-German Bilateral Workshop Agenda
Tuesday, November 12, 2002
8:30-10:00
10:00-10:30
10:30-11:00
11:00-12:30
12:30-1:00
U.S. Case Studies
Trenton, New Jersey
Portland, Oregon
Questions and Answers
Break
German Case Studies
Duisburg Innenhafen
Model Project from Baden-Wuerttemberg
Questions and Answers
Leah Yasenchak,
City of Trenton
Doug MacCourt,
Ater Wynne LLP
Martin Linne,
City of Duisburg
Michael Konig,
Dr. Eisele Group
1:00-2:00
Lunch Break
-------
2:00-3:00
3:00-3:15
3:15-5:15
Economic Tools for Sustainable Brownfields Redevelopment
U.S.-German Bilateral Workshop Agenda
Joint Panel Discussion - Financing Public
Infrastructure Towards Sustainable Brownfields
Redevelopment
U.S.
• Mechanism and project example of funding
sustainable uses (e.g. new EPA and HUD laws,
U.S. DOT policy to access public financing, and
examples of projects linking land use planning,
air/water quality and public infrastructure)
Germany
• Approaching Sustainability on Brownfields - a
Current Example from German Urban Development
Question and Answer
Roundtable Discussion - Group Design Exercise
Real site (U.S./German)
Only essential, predevelopment facts (former use,
contamination, what a planner needs)
Comparison real end and findings of the groups
Colin Vance, EPA
Lisa Peoples, HUD
Chris Forinash, EPA
Jan Eitel,
GIU - Innovation, Enterprise
Support and Land Management
Ann Vega
(U.S. Facilitator)
Stephan Tomerius
(German Facilitator)
-------
Economic Tools for Sustainable Brownfields Redevelopment
U.S.-German Bilateral Workshop Agenda
5:15-5:30 Conclusion Annette Gatchett, EPA
Suggested format for reporting conclusions in panel
discussion at Brownfields 2002
Brownfields 2002 Conference
Presentation of workshop results on Wednesday, November 13, 2002, Panel Session, 1:00 -2:30 p.m.
-------
The Brownfields Revitalization Act of 2001:
How Communities Can Benefit
by Charles Bartsch
Northeast-Midwest Institute
On January 11, 2002, President Bush signed the Brownfield Revitalization and Environmental Restoration Act into law - nearly eight years after
the first brownfield bill was introduced into Congress. The new law will promote greater interest in brownfield site reuse in a couple of ways (see
summary on the last page). As noted below, it will set the stage for new state-community-private partnerships that can resolve thorny liability
issues that impede site reuse. A key aspect is that the act clarifies the state-federal relationship regarding cleanup finality.
The new law will also help cities, communities, and private sector players overcome one of the most significant hurdles they face when
trying to acquire and redevelop contaminated property - the lack of capital to carry out essential early- stage activities, notably, site assessment,
remediation planning, and the actual cleanup itself.
-------
The Brownfield Revitalization and Environmental Restoration Act authorizes $200 million per year (thru fiscal 2006) for grants to states, local
governments, and tribes, as well as entities such as quasi-public redevelopment agencies and authorities. This money to be used for:
Site assessment grants - typically, up to $200,000 per site, but EPA has discretion to bump this to $350,000 under some
circumstances
Grants for cleanup - both to make direct remediation grants of up to $200,000, to governments or non-profits, or to capitalize
cleanup revolving loan funds (RLFs), up to $1 million per applicant.
The new law will also make it easier for recipients to run their revolving loan funds; they will no longer have to meet national
contingency plan and on-site coordinator requirements that stymie existing loan fund operators.
Even though the direct cleanup grants will require a 20 percent match, this is a significant step forward in EPA's brownfields effort, since this
will be the first time that the agency will be allowed to make direct grants for cleanup. Criteria for funding awards will also allow a wider range
of activities, including "non-economic" uses that will help improve community quality of life. Applications will be judged on factors that
include the extent to which the money will be used to protect human health and the environment; spur redevelopment and create jobs; preserve
open space and parks; represent a "fair" distribution between urban and rural areas; and involve the local community.
The new law opens up the program in two potentially significant ways. First, it permits sites with - and stipulates that 25percent of what
Congress appropriates for the program (up to $50 million) may be used for sites with petroleum contamination. This will help brownfield reuse
proponents better address the realities of the reuse process, where a variety of contaminants are the norm; it will also be useful in small towns
where the predominant type of brownfield is the abandoned gas station. Also, grant recipients will now be able to use a portion of the site
assessment or cleanup grants to pay insurance premiums that provide coverage (such as for cleanup cost over-runs) for these sites. This should
help prospective site reusers secure private financing more readily, because it will provide a way to better quantify and manage risk.
-------
The Brownfield Revitalization Act also significantly increases EPA's support of state response programs. This will be critical, given the enhanced
state role in deciding site cleanup finality, which includes strict limits on federal enforcement and cost recovery. The new authorizes $50 million
per year (thru fiscal 2006) for grants to states and tribes to establish and enhance state voluntary cleanup and other response programs - more than
triple the pre-enactment level. States can use these funds to help them fulfill their new obligations under the act, and give state officials resources
to expand program efforts, such as establishing their own state-wide cleanup RLFs.
The Bush Administration's fiscal year 2003 budget requested a total of $200 million for EPA's brownfield program:
$50 million (full funding) to enhance state voluntary cleanup or other response programs
$150 million for balance of program ($50 million shy of full funding), which includes $120.5 million for grant programs and $29.5 million for
new staffing and other program costs (which makes the 25 percent petroleum project set aside about $30 million)
-------
It will be up to key members of Congress to decide how strongly they will push for full funding of the newly authorized brownfield programs; at
this time, it appears likely that Congress will comply with the President's wishes and provide $200 million for next fiscal year
In addition to funding, the new law will encourage more public-private partnerships with a common goal of site cleanup and reuse,
because it clarifies vexing liability issues that deterred site acquisition and redevelopment. Specifically, the Brownfield Revitalization Act:
Exempts from Superfund liability contiguous property owners - those who did not contribute to the contamination
and who provide cooperation and access for the cleanup;
Clarifies the innocent landowner defense to Superfund liability, making it easier to use via a "checklist" to
determine whether or not it applies; and
Exempts from Superfund liability prospective purchasers - those who did not know about the contamination at the
time of acquisition, who are not responsible for contamination at the site, and who do not impede its cleanup (the
law includes windfall lien provisions for sites where the government pays for cleanup, thus enhancing the fair
market value of the property).
-------
The latter is probably the most important provision in the new law. Liability protection for prospective purchasers, available for persons who
acquire property after January 11, 2002, will remove a significant barrier to private sector participation in brownfield projects, and allow new
owners to quantify their risk much more precisely. This should give local officials a good marketing tool to promote site redevelopment -
especially as it is linked with property assessment resources and technical assistance efforts.
The act also clarifies the state-federal relationship regarding cleanup finality. Sites addressed thru a state's voluntary response program are
protected from EPA enforcement and cost recovery actions under CERCLA, except in the case of only a few statutorily defined "reopeners" -
situations in which EPA can come back with an enforcement action. These situations include: sites where contamination has migrated across state
lines or onto federal property; if releases of threat of releases present an imminent and substantial endangerment; if new information shows that a
cleanup is no longer protective; or if a state requests intervention. At the same time, states will need to maintain a "public record of sites"
addressed through the program, and update it annually. In addition, citizens may request a state to conduct an assessment at a specific site, and a
state must "appropriately" respond.
-------
Small Business Liability Protection and Brownfield Revitalization Act
H.R. 2869 - Summary of Key Brownfield Provisions,
as passed by Congress and
Signed by President Bush on January 11
(incorporates provisions of S.350)
Title II - Brownfield Revitalization and Environmental Restoration
Sub-title A - Funding
$200 million per year (thru '06) for grants to states, local governments, and tribes, as well as entities such as
quasi-public redevelopment agencies and authorities
• Money to be used for (1) site assessment grants - typically, up to $200,000, but EPA has discretion to bump
this to $350,000 under some circumstances); and (2) grants for cleanup - both for direct remediation grants,
up to $200,000, to governments or non-profits (requires 20 percent match), as well as capital for RLFs, up to
$1 million (with less burdensome requirements)
• Funding criteria include the extent to which the money will be used to protect human health and the
environment; spur redevelopment and create jobs; preseve open space and parks; represent a "fair"
distribution beween urban and rural areas; and involve the local community
• Up to $50 million (25% of appropriation if less than $200 million) may be used for sites with petroleum
contamination
• Insurance premiums are now an eligible use of funds
• Authorizes EPA to operate a brownfield program that includes training, research, and technical assistance
activities
-------
Sub-title B - Liability Clarifications: Provides Superfund liability relief to:
Contiguous property owners, who provide cooperation and access for the cleanup
• Prospective purchasers, who are not responsible for contamination at the site, and who do not impede its cleanup
(bill includes windfall lien provisions for sites where the government pays for cleanup, thus enhancing the fair
market value of the property)
• Innocent landowners
Sub-title C - State Response Programs
• Authorizes $50 million per year (thru '06) for grants to states and tribes to establish and enhance state
VCPs/response programs
States must maintain a "public record of sites" addressed through their programs, and update it annually
• Provides for deferral of listing sites on NPL list if a state is taking action
• Establishes finality - sites addressed thru state programs are protected from EPA enforcement and cost recovery actions
under CERCLA - except....
• In the case of re-openers - situations in which EPA can come back with an enforcement action, are preserved in
specifically defined situations, including:
*migration of contamiantion across state lines or onto federal property, if releases or threat of releases present an
imminent and substantial endangerment; new
information shows that a cleanup is no longer protective; or a state requests
intervention
• EPA must consult with the state on re-opener situations
Citizens may request a state to conduct an assessment at a specific site, and a state must "appropriately" respond
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U.S.-German Bilateral Working Group
Economic Tools for Sustainable Brownfields Redevelopment
Workshop Notes
November 11 & 12, 2002
Charlotte, North Carolina
Monday, November 11, 2002
Annette Gatchet, EPA
Ms. Gatchett welcomed everyone to the workshop, outlined the purpose of and agenda for the workshop, and
reviewed logistical issues with the participants.
Karl Alvarez, EPA
Current planning in the U.S. results in large-lot development, which is X-Urban, isolated, car dependent,
unsustainable, and results in a loss of agricultural resources. Cities as "centers" for commerce and culture must
absorb traffic flows which creates planning challenges, is transportation intensive, stresses air and water resources,
increases commutes, promotes housing price differentials, and exacerbates environmental justice issues.
-------
Historic patterns of city design create 'communities' that
incorporate the following features:
Human scale
Pedestrian access
Compact
Greenspace/parks
Diverse neighborhoods
Neighborhood identity
"Workable"
Brownfields redevelopment and Smart Growth promote livable cities, which are:
Multi-modal, multi-use
Human scale
Compact communities
Greenspace/parks
Retains neighborhoods
In these cases, cities become the destination where people want to live, work, and
play.
-------
The new U.S. Brownfields law defines brownfields as "real property, the expansion, redevelopment, or reuse of which may
be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant." The law
provides for grants to be awarded under two processes:
1. Competitive grants for assessments, revolving loan funds (RLF), cleanups, and job training (up to $200 million).
2.Non-competitive grants to states and tribes to build program capacity (up to $50 million).
Benefits of the new law include:
Jobs for inner-city residents
Increase in the number of revitalized unproductive and derelict properties
Increased tax revenues to cities
Increased social and environmental knowledge
Environmental cleanup of contaminated properties to appropriate standards
Conservation of open rural land ("greenfields")
Increased pollution and transportation infrastructure controls
Opportunities for business involved in brownfields restoration projects
-------
Measures of brownfields success (national statistics since 1995):
$4.6 billion leveraged: $283 million in cleanup investments and $4.41 billion in
redevelopment/construction.
3,691 sites assessed with pilot funds: 1,162 sites assessed with leveraged funds and 1,563 sites deemed
not to require cleanup
20,583 jobs created or retained: 7,545 cleanup jobs and 12,983 redevelopment jobs
15 RLF loans made totaling over $4 million; over $66 million in leveraged funds
63% job placement rate for job training pilots; $12.37 average starting hourly wage
In summary, the new brownfields legislation is:
Market-based
Community-driven
Partnership-centered
Environmentally-sound
Economically-sustainable
-------
Dr. Fabian Dosch, BBR Bonn
The current land consumption rate in Germany is 47,000 hectares each year. This rate is 1.5 times larger than the
area of Munich. The concern regarding this land consumption is the impact to the economy, ecology, and social
aspects of Germany.
Currently, estimates of derelict land are broken down in the following manner:
Commerce/Industry - 48%
Military-41%
Remaining land - 10%
Land reuses are currently charted at the following:
Nature - 14%
Housing - 22%
Commerce - 59%
-------
Best practices and the National Strategy dictate that Germany and the European Union (EU) concentrate efforts on
revitalization of cities, reduction of land consumption, and focus on internal redevelopment towards existing
infrastructure.
Indicators used for this effort include tracking the increase in employment opportunities, 100% occupancy rate in
dwellings in inner city locations, and the successful redevelopment of remaining derelict land.
Economic tools to reduce land consumption include:
Land tax reform
Abolition instrument fostering land consumption
Increase urban redevelopment grants
Regrouping housing subsidies from new housing starts to existing housing
Evan Henry, Bank of America
Matrix of brownfields versus greenfield development:
Condition
Cost to cure
Financial impact
Brownfield
Contamination
Cleanup
Property value
Greenfield
Unstable soils
Grading & compaction
Property value
-------
There are increased consequences to uncertainty in the brownfield marketplace including:
Technical
Legal
Timing
Possibility of unknown problems increase uncertainty and the result is to narrow the range of economic
viability.
The role of government in the U.S. is to reduce the unknowns to increase the range of economic viability
through the use of technical assistance, grants and liability relief as well as subsidizing the restoration of
economically less viable sites.
Limitations to the role of government in the U.S.:
Cannot use public funds to enrich the private sector
Cannot use public funds to help polluter restore brownfield
U.S. funds are set up to "find" not "fund" brownfields
Government brownfield programs are aimed at working around the liability issue
Arguably a change in liability scheme would stimulate private redevelopment of brownfields
more than government assistance approach
-------
Private financing includes:
• Debt
• Equity
• Insurance
Insurance is not a financing mechanism but should be considered a risk reduction mechanism.
Debt
Equity
Risks
Direct liability
Repayment
Collateral value
Loss of investment
Direct liability
Rewards
Repaid fixed amounts
Gain is proportional to success of
the project
-------
Charlie Bartsch, Northeast-Midwest Institute
The goals of public financing initiatives include:
• Reducing lender's risk
• Reducing borrower's cost
• Improving borrower's financial situation
• Providing comfort to lenders or investors
• Providing resources directly to users
Common local financing tools include:
• Tax increment financing (TIP)
• Tax abatements
• Locally capitalized RLFs
• General obligation funds
New local financing ideas include:
• Earmarking water, sewer, and wastewater charges for brownfield cleanup
• Earmarking part of existing grant, loan, or loan guarantee program funds to site assessment and cleanup projects
• Developing a municipal "linked deposit" program targeted to brownfield borrowers
• Channeling loan repayments from existing city programs to brownfield projects
• Devoting monies raised from fines or fees to a brownfield financing pool
• Using small amounts of public funds to "seed" a private, shared-risk financing pool devoted to brownfield redevelopment
New local financing ideas include:
• Connecticut's dry cleaning fund - from 1 percent surtax on cleaning services
• Michigan - targeting unclaimed bottle deposit revenue for cleanup and redevelopment
• Wisconsin and Ohio - using EPA CWSRF monies for water-related brownfield projects
The web site for the Northeast-Midwest Institute also provides a variety of resources related to brownfields redevelopment.
-------
Uwe Ferber, Germany, Ferber, Graumann und Partner
German urban and economic development policy principle: "Preservation of equivalent living conditions.
Funding:
Privately driven
Public/Private driven
Public driven
Self developing
Potential development
Reserve sites
Public/Private - Urban renewal and economic regeneration policies with a mix of tax based tools and direct, public co-funding. For example, tax
deductions on historic (heritage) building retention and reuse.
Public - 50% to 75% direct funding for eligible projects:
• Federal economic regeneration fund
• Urban renewal programs
• Employment initiatives
• Contaminated lands program
• Minimizing public funding by maximizing private funding
• Enhance private investment
• Mix of instruments in project practice depending on drivers and type of redevelopment
-------
Problems: Transparency of funding and cash flow, EU competition policy and bank policies. In addition, most brownfields in Germany are
privately owned.
Discussions took place of other avenues for funding brownfield cleanup and reuse that included:
• Future of insurance models
• Benchmarks for performance (indicators)
• England is using a National Lottery to fund brownfield cleanup activities
-------
Ann Sherman, Ater Wynne, Portland, Oregon
Tax Exempt bonds - Income tax exempt from federal/state taxes. Interest rate is much less on these types of bonds.
Tax exempt bonds (offered by State and Local governments):
1. Tax exemption
a. Must be used for Government purpose
b. 501(c) 3 (not-for-profit organization)
c. Private activity
• Exempt facility (airports, docks and wharves, mass commuting facility, facilities for furnishing water, sewage disposal, facility for solid waste
disposal and includes large investment for infrastructure)
ii. Small issuer manufacturing facility bonds
iii. Multifamily housing bonds for affordable housing
2. Types of Issuers include cities, counties, special districts, tribes, state bond act.
3. Security and sources of repayment for bonds need to be identified (property taxes, revenues, limited tax, TIFs, local improvement district [LID],
certification of participation [COP], lease purchase of obligation [using lease revenues to pay back debt])
Taxable Bonds:
1. Taxable tails - little pieces of taxable bonds issued with tax exempt bonds
2. State tax exemption
3. Tax Credits
a. Low income housing tax credits
b. New market tax credits (tax credit for any redevelopment in low income areas)
c. Other Federal and State subsidies
Types of projects bonds are used for include: open space projects, parks, housing, golf courses, assisted living facilities, hospital, convention center,
library and mixed use projects.
Tax credits used in conjunction with tax exempt or taxable bonds may also be a strategy.
Market disclosure issues include:
• Public offerings of municipal debt
• SEC 15c2-12 continuing disclosure requirements
-------
Ken Cornell, AIG Environmental
Brownfield reuse should take into consideration stakeholder concerns and include community support. Concerns regarding liability for newly found
contamination and conditions on site are exacerbated or created during remediation and third party claims.
People should evaluate a risk management program. This approach will help participants:
• Minimize risks
• Assess, quantify, and control costs
• Provide protection from escalating costs
• Assurance against unknown legal liability
• Thorough cleanup will be completed quickly and economically
Evan Henry, Bank of America
Bankers analyze risk. Applicant should try to reduce risk to lender.
-------
&EPA
AIG Environmental
The Market Leader
The Greatest Risk Is Mot Taking One.
Constructing an Effective Brownfields
Redevelopment Program Through the
Use of Environmental Insurance
Kenneth B. Cornell
Executive Vice President
Bilateral Working Group
AIG Environmental®
-------
&EPA
Address Stakeholders' Concerns
Nurture community
support
Set the stage
for thoughtful
redevelopment
Protect everyone
involved
Bilateral Working Group
-------
&EPA
Sources of Potential Liability
Newfound
contaminants
Conditions
exacerbated or
created during
remediation
Third-party claims
Bilateral Working Group
-------
&EPA
Successful Cleanup Becomes Reality
• Help sellers and buyers minimize or transfer
risks
* Assess, quantify and control cost
• Provide protection from
escalating costs
• Assurance against unknown
legal liability
• Thorough clean-up will be
completed quickly and economically
Bilateral Working Group
-------
&EPA
Environmental Insurance Circa 1992
Pay a lot get a Little
Poor Reception
Fuzzy Picture
Few Channels
No Add-On's
Waiting List
Bilateral Working Group
-------
&EPA
Environmental Insurance 2002
Sleek
Cable Ready
Compatible with other
components
Clear & Crisp
Value = Price
Immediate Delivery
Reliable
Bilateral Working Group
-------
&EPA
Known And Unknown
Unknown
Site Boundaries
Cleanup Cost Cap
Pollution Legal
Liability Select
Known
Known But
ot Actionabl
Bilateral Working Group
-------
und Kfliscliuivg
&EPA
Cleanup Cost Cap Program
Self-Insured
Retention
ing Group
Cost
Overrun
Coverage
Buffer Layer
Expected
Cost
Limit of
Liability
8
-------
&und«fTilnlgterliint
und Kfliscliuivg
Case Study #1
Se//er Concerned About Clean-up Cost Overruns
• Brownfield Site
• 40-acre former industrial site close to downtown
• Future Plan
• Modern shopping and business district
• Concern
• Contamination could escalate during cleanup
• Seller funded a fixed amount for cleanup and
transferred liability for cost overruns
• Developer insured against unknown contamination
and third-party lawsuits
Bilateral Working Group
-------
&und«fTilnlgterliint
und Kfliscliuivg
Case Study #2
Fearful Of Unknown Contamination
• Brownfield Site — 50,000 square foot abandoned facility
• Future Plan — Manufacture heavy equipment, employing
over 300 people
• Concern — Negative publicity about leaking underground
storage tank
• Seller — Doesn't want any future liability
• Buyer — Able to satisfy seller concerns and lender
requirements
• Cap cleanup costs and transfer liability of unknown
contamination
• Third-party protection ensures future profitability
Bilateral Working Group
-------
&und«fTilnlgterliint
und Kfliscliuivg
Case Study #3:
Assurances Required That Clean-up Adheres to regulations
• Brownfield Site — A few blocks from a well-known state
university
• Future Plan — Medical center and pharmacy with
adjacent medical offices
• Concern — Property saturated with oil, gasoline, solvents
and metals
• Seller — Negotiate environmental insurance as part of the
deal to attract investors
• Buyer — Cleanup plan adheres to federal and state
regulations
- Costs are capped to ensure completion
Bilateral Working Group
-------
•SrBMung
vvEPA
BBR - Federal Office for Building and Regional Planning
Supports spatial, urban and housing policy under the (new)
Ministry for Infrastructure. Scientific sections:
I - Spatial Planning and Urban Development,
II - Building, Housing, Architecture.
Spatial monitoring system, demonstration projects of sustainable
development, Urban 21 Berlin 2000, European integration
Website: www.bbr.bund.de
Bundesamt
fiir Bauwesen und
Raumordnung
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12, 2002 1
-------
Bumtesmiitlnerium
Land Consumption & Site Recycling
Challenges for Germany - an overview
1. Monitoring land consumption - facts and trends
2. Derelict land and site recycling - scale and volume
3. Challenges for sustainable land management
Dr. Fabian Dosch, BBR, Bonn
November 11th, 2002, Charlotte NC Workshop "Economic
Tools and Finance for Brownfield Redevelopment"
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12, 2002 2
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•LjLJL. Biinde-sfninlsieriuN'
liir BiWiing
&EPA
Green but fragmented! - land use in Germany
Infrastructure
L_^-;-
Source: CORINE, BBR
Souiv e BBR
-------
iii' B'Idling
&E1PA
"Once the size of Munich every year"
1,290,000m2 every day
...about 50%, almost 650,000 m2 are
sealed.
Land consumption per year (47.000
ha) is 1,5 times larger than the area
within the city borders of Munich
(43,000 ha).
15m2/ sec. growth of built-up area
....about 9 m2 of it being building land
....6 m2 of it being housing /3m2 enterprises
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12, 2002 4
-------
Bunde-smini&wriun*
Hi! r Bid ling
&EPA
Result: loss of fertile soil and open space
Daily land use changes (ha)
Increase
Agriculture Water
Forests Urban
1997. 2001
135
in-
consumption:
more in eastern and
northern Germany and old-
industrialized regions than
in booming regions
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12. 2002 5
-------
liif Rildling
iinO hurst hung
x>EPA
Land use 2001: 85% open space, 12% urban fabric
Land use 2001
Forests
30%
Agriculture
53%
Water
2%
Urban
fabric
12%
Buildings and
surroundings
7%
Traffic area
5%
Recreation,
sports and
parks
1%
Settlement areas cover 12,3 %: buildings 7 %, traffic area 5 %
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12, 2002 6
-------
•lur Bid ling
&EPA
Land consumption by housing and recreational areas
Recreation
6,8%
Traffic
39,0%
\
Storage
1,7%
Settlement areas 2001
and
housing
52,5%
Recreation
15,9%
Storage
5.9%
Building and
housing
60,6%
^m Traffic
17,6% Land consumption 1997-2001
Trend: more building & recreational areas, traffic less important
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12, 2002 7
-------
fiir Brkiiing
xvEPA
Urban sprawl: sealing also of flood plains...
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12, 2002 8
-------
xvEPA
Settlements on the wrong spots?- Extreme floodings 2002
Mi
29.Jul.
Wet-terQnl ine.de
So Mi
So
27.Rug,
Damages on the infrastructure: up to 25bn €
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group. "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12. 2002
9
-------
liif Rildling
x>EPA
Land consumption - increase of prosperity?
180
160
140
120
100
%, 1960 =100
Settlement area
Population
Employees
1960 1970 1980 1990 2000
Data for the old Laender. Source: BBR 2001
In the last 50 years, the settlement area
has grown much quicker than the
population and is still growing more
rapidly than the occupation
Living space m2 /inh.
ca. 1950
2001
Land consumption = increase of
individual prosperity ...!?
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12, 2002 10
-------
liif Rild ling
<&EPA
Suburbanization driven by building land prices
SD-i
SO
: - in 111
CBD Suburbia Fringo
West
O&1
Above: land consumption
m2/inhabitant from core
cities to urban fringes
3-D image: prizes for housing land 2000
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12, 2002 11
-------
fiir B3dling
.ii1'. H;i' in ;ii j
&EPA
Employment shifts towards suburbia
1990-98:
Blue: less employees
Red: more employees
Land Consumption & Site Recycling in Germany, F, Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina,, Nov 11-12, 2002 12
-------
•liir
&EPA
Effect 1: Vacancies, esp. in eastern
Greenfield development versus inner-city vacancy
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12, 2002 13
-------
Bundwiin literal m>
fiir tUdiinp
und Fai stlmr»g
&EPA
Effect 2: Decrease in settlement densities
2100
Inhabitants per km2 urban fabric
1900
1700
1993
1997
2001
West
O5t
Additional urban fabric
per inhabitant
Zunahm* Jo-i S-Kl>u'ia*-uiid Veihshre Paths
ID Elnwohrwr iM7 bis 4flfl1 In m"
be unbar 2C
20 bs untcr AC
40! bi unlci aC
BO l>=s vinfer gc
BO UP it
C UK Bum JBBS
Land Consumption & Site Recycling in Germany, F, Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte. North Carolina, Nov 11-12. 2002 14
-------
•lur Bid ling
x>EPA
Land consumption - ...but what are the problems?
Economically C°Stly lnfrastructure Costly vacancy
..traffic generating
Source:Dosch
Ecologically Contaminated sites Loss of soil
Sou rce: fo to posit iv .com
Land dissection
Socially
Source: BPS
Vacancy
bourcn: Fulirich
Source: WFG Unna
Functional separation Ecological footprint
r^ctm.fff • V \ i-uM.-ta-ttj > v.
Source: Dosch
Source: Dosch
Source: H.Boll-Stiftung. komrn.
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group. "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12, 2002 15
-------
lilr Billing
iii id For Bull Hi ng
&EPA
Causes for land consumption=challenges for action?
Suburbanization is driven
• by increasing prosperity and demands for living space,
• unfavorable concepts for settlement structure,
• increasing division of labor,
* land consuming subsidies & cheap building land prizes,
• the shifting of the employment towards suburbia.
challenges for action
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment' Charlotte, North Carolina, Nov 11-12, 2002 16
-------
I for B'lldling
Persistent trends in settlement development 2020
Settlement and transport area 2001 S^tlf&meril and transport area 2020 - Trend
r iflri inmani VH JEM *< ihestimation of trends
3 10 hjta*ii['«i £D «•—•»•- U|< n...., »i i
| ID In tall IT^! 99 MH^ Ul AUMIl HI
B V> '«• &w hwi *0
I «••
Land Consumption & Site Recycling in Germany. F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte. North Carolina, Nov 11-12. 2002 17
-------
&EPA
European dimensions of urban sprawl: alpine area
Austria 1971-1991
Source: UBA Vienna
' MO LAND: Monrt-wing Land U&e>'Cover Change Dynamics
Changes
Land consumption 1971-1991
.'.rf i [nii.i.Uuii J= UiBlittKn |wl|-MM| iuada lluur-
Grenoble 1948-1997
Source: SAI JRC Italy
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment' Charlotte, North Carolina, Nov 11-12, 2002 18
-------
liir
&EPA
Land consumption higher in the US?
Urban sprawl
In the 1990s:
more in the
NE (old-
industrial.)
than in the
SW.
Lanct Consumption & Site Recycling in Germany. F. Dosch, BBR, Bilateral Working Group. "Economic Tools
and Finance for Brownfield Redevelopment' Charlotte. North Carolina, Nov 11-12, 2002 19
-------
&EPA
II Derelict land in Germany: estimations of areas
• Commerce & industry • BBR - ca. 44,000 ha within
built-up areas
• UBA = ca. 127,000 ha
, Military • > 400,000 ha (2000), 80% in
the hinterland & countryside
• Railway land: next 15 years
9 Trafflc closure of 3,000 objects, real
estate 6,5bn €
Other origins: vacant housing areas, old harbor sites, mining areas,
abandoned fairgrounds, etc.
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12, 2002 20
-------
-liir HflstunQ
und l-orsuhuirj
x>EPA
II Derelict land compared to commercial demand
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
Land consumption . .. Total potential
Available sites
by commerce
10,000 ha 26,500 ha 128,000 ha
Availability of commercial land for re-use almost three times higher
than annual demand (breakdown of demand)
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12, 2002 21
-------
BII mle-miii IB wriuw
liir EliUiing
und fared h ui i-j
Derelict land: definitions
USA/ EPA brownfields: abandoned or under-utilized properties
where expansion or redevelopment is complicated by real or
perceived environmental contamination (USCM conference)
UK NLUD: derelict sites and other previously developed land
and buildings that may be available for redevelopment
German "Brachflachen": broader definition includes sites where
no contamination is suspected
A common objective dominates the brownfield issue:
sustainable urban development
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
anc! Finance for Brownfieki Redevelopment' Charlotte. North Carolina, Nov 11-12. 2002 22
-------
sssu
Derelict land: definitions
Definition of recycling with the indicator on brownfield
redevelopment for "Cities of the Future", Germany
,,Re-usable** derelict* commercial and conversion building land in m2 in 1997, 2000, 2003 in total and re-use*** of
derelict areas in 2000 and 2003 investigated in 1997.
- differentiated according to the following types of uses: trade, housing; (optional)
- differentiated according to location criteria (interior zone, white land; hinterland municipalities)
* derelict land: former industrial and military building land > 1 ha (< 1 ha for information only), which in the long term -
for at least 1 year - will not be used neither for industrial nor for residential purposes (=stock) and which should be
subsequently used (for buildings).
** re-usable: development facilities and existing building law. capture necessary if building permission would be
possible.
*** re-use: areas on which a subsequent use has been started (building notice). Only really re-used areas are
ascertained (partial use).
Trade (type of use): including agricultural areas in the interior zone, including derelict land in transport areas, railway
and mail territories if intended to be re-used; without derelict agricultural areas. Derelict residential areas can be
optionally captured and separately identified.
Data quality largely depends on definitions, mapping and
timeliness.
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12, 2002 23
-------
•Mr Bid ling
JIKl Nil bill HI".)
xvEPA
Derelict land in Germany: types & origins
BBR building land survey 2000:
48% formerly commercial land,
41% military areas
Military
Transport
and others
Closure/reduction of military locations
Commerce
and industry
© BBR Bonn 20DO Source: BBR-Survey on Building Lartd 2000
-•'-•-?-' '\
l^\
•»* •&*-. t
JC,
\,«,
• „
-fir. ..
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
arid Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12, 2002 24
-------
•Ifir
ii -. Kn ti: .11 .1
x>EPA
Lack of knowledge - obstacles with site recycling...
• potential waste deposits, unfavorable locations, new uses do
not suit old facilities,
• competing environmental provisions (noise and air pollution
emissions on neighborhoods), clean-up regulations of the Federal
Soil Protection Act (BBodSchG),
• competition with favorably priced greenland in urban fringes
• bad image
. ftninnna
/"
IB-;., V
• lacking knowledge: register for
industrial and commercial building
land only seldom available
,
BW Bffnn 33» Sw«:* BBfrSuiwr o" frutakta- Lwd StKfl
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12, 2002 25
-------
fiir BSd ling
x>EPA
Recycling: share in building land mobilization
Decreasing demand for building land
Demand per inhabitant in nv"
2,0-
1,5-
1,0-
0,5-
0,0-
V
N. 1
>.
\L
W^>^% ^-^_
""-^ ^^^-
~* ™~ ^~ "^
,
Survey 1995 Survey 1997 Survey 2000
Wn
<& B&H Bon«i 2003 Sourw; BBR'Swfwy on Building LarxJ 2000
Size of
community
in 1 000
infiabitanis
-< 10
10 -< 20
20^50
SO -* 100
100 -< 200
200 -^ 500
c=500
West
East
Total
Derelicl land
and military
brownfields
*!»
10.B
30,9
29.2
30.S
61,1
41,6
34,7
26,2
j r* r*
4 6,2
32,7
Rising share of recycling sites in the mobilization
of industrial and commercial building land shown
by time series and in larger cities
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12, 2002 26
•ffl
-------
liir
&EPA
Recycling of derelict land: follow-up uses
BBR Survey 2000
Nature 14%,
Housing 22 %,
Commerce 59 %
CorrririerDe
and i
BBR Bann 3000 Source: BBR-Survey en 6aidiij Land 2000
22,8%
22,7%
6,9%
29,3%
D Retail
• Commerce
D Leisure&green
D Mixed
• Housing
DIFU2001:
> 70%
commerce,
housing and
mixed uses
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12, 2002 27
-------
fiir BiUuny
mid Forsi hnn>g
&EPA
Recycling of derelict land in Germany: best practice
* A quarter of the former industrial
brownfield converted into a mixed
area: Essen Weststadt 1988-1999
* Nordhorn: former Povel
textile factory converted
into a mixed area to
supplement city centre
1986-1997
Land Consumption & Site Recycling in Germany. F. Dosch, BBR. Bilateral Working Group. "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte North Carolina, Nov 11-12, 2002 28
-------
&EPA
Recycling of derelict land Germany: best practice 2
* Tubingen Franzosenviertel
1991-98: a quarter of military
brownfield converted an built up
with SME and housing
• Cologne-Kalk: former chemical
plant re-used for many
purposes:
- Cologne Science Center
- Urban Entertainment Center...
• Bonn Plittersdorf: former
American village to be re-used
by a big retail centre ... under
protests of neighbors...
Land Consumption & Site Recycling in Germany. F. Dosch, BBR. Bilateral Working Group. "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12, 2002 29
-------
•liir
&EPA
Site recycling funded by Interreg II C / III B
The EU Community Initiative INTERREG is designed to strengthen
economic and social cohesion throughout the EU, by fostering a balanced
development of the continent through cross-border, transnational and
interregional cooperation
Project examples IIC/ III B
CADSES: PROSIDE Promoting Sustainable Inner-Urban Development
RECULA- Restructuring Cultural Landscapes
Alpine Space: TUSEC-IP- ^Technique of Urban Soil Evaluation in City
Regions - Implementation in Planning Procedures"
Baltic Sea: ENSURE - Exchange Network for Sustainable Urban
Revitalization Experience; WUD - Waterfront Urban Development;
CONVERNET, MECIPS
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment Charlotte. North Carolina, Nov 11-12. 2002 30
-------
•liir
&EPA
Challenges for sustainable land management
National strategy on sustainability (April 2002)
• professed political target to revitalize the (medieval) inner cities
• reduction of land consumption from 129 ha (2001) to 30 ha (2020)
* internal development before external development with a ratio 3 : 1
• dispersal of settlement growth by decentralized concentration
Coalition agreement of the German parliament (10/2002)...
"We will further develop urban policy to implement the national
sustainability strategy, particularly to reduce land consumption. This
includes the revitalization of city centres and the stabilization of urban
living, the new use of conversion sites and vacant housings as well as the
reconstruction of infrastructure, (pp.58, livable cities)"
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12, 2002 31
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I BundKrninimeriunv ^ T^ DA
...~i c_..,..i..._ 3' ^^^\f*&i$$3 ^^r mmm M M
Legal regulations for the reutilization of land
FEDERAL BUILDING CODE [Baugesetzbuch - BauGB]
Section 1a: Consideration for Environmental Concerns
(1) ..Land shall be used sparingly and with due consideration; the extent to which it is
sealed by development shall be kept to a minimum...
Section 164b (2): financial assistance ... for the reutilization of land, in particular
derelict industrial sites, conversion land
Section 165: Urban development measures ... return derelict land to productive use
Federal Regional Planning Act (Raumordnungsgesetz (ROG))
§ 1 ..land use possibilities shall be kept open in the long term..
§2 (8) ...Natural resources, particularly water and soil, shall be used sparingly and
carefully;
§2 (2)3 The re-use of derelict settlement areas shall be given priority over the use of
open spaces.
Building regulations (Laender) with special regulations
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12, 2002 32
-------
&EPA
Objectives to reduce land consumption
Quantitative objective^
economical use of land
Qualitative objective
careful use of land
•Reduction of growth of settlement in
'new' areas
•Mobilization of building land instead
of new designation
•Exploitation of existing potentials
(land recycling, use of building law)
•Compact buildings
•Extension of already existing
building substance
•Land management
'Consideration of soil qualities
(especially productive function,
biotope function, archiving function
cultural function)
'Selection of location: protection of
high-quality soils
'Avoiding of unrequired sealing
'Redevelopment of areas under
pressure
1 Desealing, if possible
Land Consumption & Site Recycling in Germany. F. Dosch, BBR. Bilateral Working Group. "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12, 2002 33
-------
fiir B3dling
.ii1'. H;i' in ;ii j
&EPA
Planning levels & initiatives for recycling
European level
regional level
city wide strategies
knowledge by land registers
legally binding plan
P-P-P
image campaign
•ESDP; INTERREG III B
•Objective 2
Revitalizing areas facing structural difficulties
Urban II, Konver II
regional land use management
European funds
local level
object level
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment' Charlotte. North Carolina, Nov 11-12. 2002 34
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•lur Bid ling
x>EPA
"Success indicators" for sustainable land use
Cities of the Future: 5 Strategies of economical
land management 1997-2002, 11 indicators, e.g.
Reduction of the growth of
built-up settlement area
Re-use of vacant urban land
and unoccupied buildings
Reduction of land sealing
^>
E^>
a> aT^^irSfcSCL. *-
Ittft
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12, 2002 35
-------
liir Billing
Are success indicators successful?
&EPA
Reduction of the growth of built-up areas: is achieved >— —
Ratio internal development / external development > 3 : 1
Increase in employment, stabilization of inhabitants
Mobilization of available building land reserves
Almost 100% of dwellings in inner-city locations
Successful redevelopment of derelict land in some cities
' --r;i'~ \~—*_-^_,.~^TT;
Investigation in 49 German cities to test the possible future
implementation of indicators in Federal Building Act
Land Consumption & Site Recycling in Germany. F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12, 2002 36
-------
Hi! r Bid ling
&EPA
Regional land use management: pooling
Growth
managemen
Building land
potential
Actors
Demand for
land
Regional
compensations
Control of
success
I
Land Consumption & Site Recycling in Germany, F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment' Charlotte. North Carolina. Nov 11-12, 2002 37 ^
-------
tiir Bddung
&EPA
Economic tools to reduce land consumption
• land tax reform (land value & land use tax)
• abolition of instruments fostering land consumption
* increase of urban development grants
• regrouping of house building subsidies from new buildings to
the existing stock (home-ownership subsidies)
SITE RECYCLING:
e.g. start-up grants,
* special funding program by the Laender, the Federal and the
European level
• tax reduction regulations and increased depreciations for
investments in brownfields
* pooling solutions for clean-up risks
Land Consumption & Site Recycling in Germany, F. Dosch, 8BR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12, 2002 38
-------
flir Biidiiny
&EPA
Visions 2050: ...overshooting?
33. TJ -r^A 2000
Land Consumption & Sito RGcycling in Germany. F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfteld Redevelopment" Charlotte, North Carolina, Nov 11-12, 2002 39
-------
Challenges with site recycling... - conclusions
1. Land consumption continues. In contrast to urban sprawl, the
amount of non-competitive brownfields accelerates
2. Well known obstacles could be overcome by local and
moreover regional land use and site recycling management;
indicators on brownfield redevelopment may contribute.
3. Brownfields are competitive against greenfields only by means
of economical instruments. Proposals are well-known.
4. As revitalization of city centers is a professed political target,
new initiatives are foreseeable. Demographic trends raise the
chances for a modernization of already built-up areas.
•a-***
Land Consumption 8 Site Recycling in Germany. F. Dosch, BBR. Bilateral Working Group, "Economic Tools
and Finance for Brownfield Redevelopment" Charlotte, North Carolina, Nov 11-12. 2002 40
-------
und Kfliscliuivg
&EPA
Economic Tools and Finance for
Brownfield Redevelopment Workshop
Redevelopment of a former military base in Germany.
Difficult and expensive: no money left for sustainability?
Model housing Petrisberg in Trier, Germany
November 11th and 12th 2002
Charlotte, North Carolina
Jan Eitel, managing director EGP GmbH
J.Eitel@giu.de
Bilateral Working Group
-------
&EPA
Situation of Trier in the Rhineland-Palatinate, Germany
Trier
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
&EPA
Impressions of Trier - Porta Nigra
Trier
.-i-* . • 1 jt,.'JJ-;i ......
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
&EPA
Impressions of Trier- the cathedral
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
&EPA
Impressions of Trier - Basilika
Trier
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
&EPA
Impressions of Trier - historic city center
Trier
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
&EPA
Impressions of Trier- market center
Trier
KI JB
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
&EPA
City map of Trier- Location of Petrisberg
Trier
WorkJnQ GrOUD
*> , .{,
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
und Kfliscliuivg
SEPA
The Petrisberg Development Company
EGP
Stock holders
City of Trier 35%
GIU 25% (project
development company)
Sparkasse (savings
bank) 20%
Trier city works 10%
Drees & Sommer 10%
(project development
company)
EGP
Entwicklungs-
gesellschaft
Petrisberg
(Petrisberg
Development Company)
Development
- Science park
- Business park
- Housing
- Management
Capital Stock
1 Million
Tasks for derelict area recycling of Petrisberq
- Acquisition of sites for conversion
- Processing soil/removal or securing of contamination
- Development/civil engineering
- Structural engineering (new construction/conversion)
- Restructuring
- Marketing
- Housing lots
- Commercial lots
- Rental office and commercial space
- Site marketing
- Themes and contents
- Image and address building
- Contact to industry and science
- Economic assistance
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
&EPA
Petrisberg - Barracks circa 1900
Petrisberg
Petrisberg circa 1900
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
Petrisberg - current conditions
&EPA
Petrisberg
Due to the reunification of Germany,
French forces were withdrawn and the
military site in Trier was given up in 1996.
Suddenly the area in the area of the
Belvedere Krone (crown) and the
Belvedere storage facility, used militarily
for decades, was available for civilian use.
• The area possesses highly attractive
landscape and exposed location.
m
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
Petrisberg - current conditions
First plans for a science park in Trier
initiated in the early 90s.
Plans were then transferred to the
freed-up conversion sites.
&EPA
Petrisberg
Housing sites next to the science
park
Integrated into the concept of the
state landscape exposition
Realization of an attractive open area
concept with nearby recreation and
leisure-oriented use
' :
i. •. _„ „ „_
--.
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
&EPA
Petrisberg - current conditions
Petrisberg
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
&EPA
Petrisberg - current conditions
Petrisberg
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
&EPA
Framework development plan for Petrisberg in Trier - EGP
Petrisberg
Systemplan Kfz-Ersthlieflung
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
&EPA
Landscape exposition
Petrisberg
LANDESGARTENSCHAU TRIER 2004 -DIE KULTURGARTENSCHAU
wissenscfiaftspafk"
'^rWi.^'V-.d.
**« .?«•**• ,,.„,„
n-toi-JggtP
*-- 1 Muu
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
&EPA
Master plan
Petrisberg
In 2001, in a multiple
commissioning process, four
architectural firms were asked
to work up a high-quality urban
development and architectural
science park. From this
competition, the Saarbrucken
firm Hepp & Zenner Architects
and City Planners was chosen
as the first prize winner.
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
und Kfliscliuivg
Science park (in the so-called Belvedere crown and storage facility area)
SEPA
Petrisberg
User profile
• start-ups
• young enterprises
• established enterprises
• high-quality service enterprises in
general
• research institutions and university
research institutes
Areas for profile raising
Information + communications
technology
• Leisure / Tourism / Spa
• Construction and housing
• Design
• Life Science / Public Health Service
Goal-oriented selection and acquisition of future renters and investors to reach a
synergistic mix of uses and yield a "creative environment".
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
Science park (in the so-called Belvedere crown and storage facility area)
&EPA
Petrisberg
The group of existing buildings set a positive urban development accent for later marketability.
Preservation and renovation of barracks buildings costs less than demolition and new construction.
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
&EPA
Model
Petrisberg
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
&EPA
Model
Petrisberg
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
&EPA
Model
Petrisberg
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
&EPA
Working/Living on the Waterfront
Petrisberg
-
•
•
. • •
,' I .:. tatttl .T
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
Bilateral Working Group
-------
&EPA
Info box
Petrisberg
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
&EPA
Aerial view
The project-Model housing
sports housing retention vineyards model housing water landscape exposition
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
und Kfliscliuivg
SEPA
Project approach
The project- Model housing
Planning workgroup/Design advisory
council
- organizes
- guides
- decides
State representative
Trier city representative
Representative of EGP
Chief planner
State (ExWoSt) City
Bilateral Working Group
ExWoSt
Experimenteller Wohn- und Stadtebau
(Experimental Housing and City Development)
Objectives:
• Increase planning and project quality
• Support faster, more flexible solutions to
planning tasks
• Labor savings for planning administration
• Relief for public budgets
• Realization of public right to "good",
affordable results
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
&EPA
Architectural culture
The project- Model housing
Sustainability
Identity
Regionality
History
Beauty
Functionality
- economic
- ecological
- energy-efficient
- originality
- individuality
- Polar opposite to rootless
world architecture
- dialog
- historical topography
- prestige
- intrinsic value instead of
cost-producing external
value
- Privacy
- Flexibility
economic
ecological
Quality is produced through complexity
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
&EPA
German single-family housing - current situation
The project- Model housing
Jit HI
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Bilateral Working Group
-------
&EPA
New examples
The project- Model housing
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
und Kfliscliuivg
SEPA
Objective
The project- Model housing
city development solution appropriate to the special situation between city and
nature in Petrisberg.
innovative / model building - creation of architectural building culture
avoidance of migration of affluent and opinion-leading segment of the population
from the city to surroundings
the process should be taken beyond the establishment of the model housing and
be transferred as a model to the other housing construction sites in Petrisberg.
unusual public-private-partnership project
minimal public investment- maximum private follow-up investment
•=> no large private investor who sells complete buildings constructed according to
the rules for optimizing profit.
•=> instead, intensive assistance and guidance of individual builders by experts over
the entire building process
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
und Kfliscliuivg
SEPA
General procedure
Process
He who wants to innovate must violate usual procedures...
Design
Advisory
Council
participates
Informational
events
Bilateral Working Group
Architect
Builder
Team-
building
Forum
Design
Advisory
Council
participates
Concept
development
Allocation of
building lots
Design
Advisory
Council
participates
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
und Kfliscliuivg
Procedure for architects
SEPA
Process
EU-wide application procedure
Architects apply with existing portfolio (reference projects)
The design council chooses a pool of architects
Builder + architect form a team
(find each other independently or during informational events)
Builder + architect develop a concept together
Design council check based on a catalog of criteria/checklist
Entry into the land registry only after the approval of the design council
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
und Kfliscliuivg
SEPA
Procedure for architects
Process
Selection by design
council based on
catalog of criteria
EU-wide open
application
procedure
for architects
Design council
checks based on
catalog of criteria
ool of architect
Design council
checks based on
catalog of criteria
Concept revision
Entry in
land registry
Concept
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Bilateral Working Group
-------
und Kfliscliuivg
SEPA
Process - building process for model housing
Process
-City
development
- Design
- Energy
Beginning of i
construction I Finishi"9
State garden
show events on
the subject of
model housing
Transfer of the
experiences gained
to the remaining
building sites
Communication between builders and public
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
-------
Workshop
&EPA
Process
Participants (approximately 40 people)
• Main moderator Prof. T. Sieverts
• Secondary moderator Ms. A. Skoupil
• Representative of the state of Rhineland-
Palatinate
• Representatives of the city of Trier
- head of the building department
- head of the city planning office, and others
• Representative of the state landscape exposition
• Director of the EGP
• Representative of GIU (shareholder)
• Representative of Drees + Sommer (shareholder)
• Representative of the Rhineland-Palatinate
chamber of architects
• Interested architects from the Trier area
• Representative of the chamber of craftsmen
v.a
-•^
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
&EPA
Workshop
Process
Objective
• Creating an unmistakable profile of the
plan area
• City development requirements
• Definition of "model housing"
• Definition of design quality
• Requirements for energy saving and
housing technology.
• Definition of a procedure acceptable to
all participants for selection of criteria
and allocation of building sites.
Bilateral Working Group
Procedure
Expert lectures - introduction of the topics
Objectives
Site visit
Working on the topics in two workgroups -
city development and design.
Plenary intermediate results
Processing of the intermediate results by
the entire group
Definition of the results
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
und Kfliscliuivg
SEPA
The information event, Nov. 23- 24, 2002
Process
• Potential builders will be informed
-> about the state of the planning process
-> about the application and allocation process for building lots
• Ambitious architecture offices present their work
-> make contact with potential builders
• Presentation of the suggested development plan worked out during the workshop
-> convey an idea to potential builders
-> inform interested architects
• Expert lectures covering, for example
-> architectural building culture
-> energy-efficient building
-> ecological building
• Media-effective visit of the finance minister of Rhineland-Pfalz
• Prize awarding for the children's drawing competition - "My Dream house"
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
&EPA
Suggested development plan from the city of Trier
Criteria and draft
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Bilateral Working Group
-------
&EPA
Suggested development plan from the workshop
Criteria and draft
•
f
Bilateral Working Group
m
** -*
,-**-
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
&EPA
Suggested development plan from the workshop
Criteria and draft
m 3
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
&EPA
Building typologies
Criteria and draft
"stacked" maisonette types
Loft living on the waterfront
• narrow (minimum 5 meters), deep building lots
• two-sided development
• high flexibility through different development stages
(first along the water strip - later in the southeast)
• working + living / multi-generation living possible
Multi-story residential building along the Magistrate
• "stacked" maisonette types - living quality of row housing
• underground garage
• smaller, private open areas facing the valley
• property developer model possible
"Living in the Park"/ free living
• in a cluster around a semi-public, town square-like living
path / restricted traffic street zoned for play
• characterized by green area structure, play streets and
footpaths
• living without fences / common free areas
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
Target groups
The discriminating builder:
• Exclusivity
• Design
• Flexibility
• Mixture of uses
• High-quality open areas,
public and private
&EPA
Criteria and draft
Along the waterfront:
• desire for the house that grows with you
• binding, future oriented
• bound to the area
• living + working
• interest in city living
Along the Magistrate
• flexible "global worker"
• temporary residence
• desire for small, private open area
Individualized living in the park
• affluent families
• bound to the area
• desire for living in green areas in limited but existing
community
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
und Kfliscliuivg
SEPA
Architectural and city development design
Criteria and draft
few stipulations:
• Volume
• Edges
• Building lines
• Building limits
• Levels
Good architecture cannot be
defined by
• Building form,
• Roof form,
• Material
• and color selection
Coordination of the draft designs with the design council
• This can create a certain homogeneity while allowing freedom of design.
• Harmonization of neighboring buildings.
• "Bundling" of builders with similar design ideas.
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
&EPA
Energy
Criteria and draft
Energy-efficient building is state-of-the-art in
Germany.
The German energy saving ordinance places high requirements on
the energy consumption of buildings:
The maximum allowable values for primary energy consumption
in residential buildings are between approximately 75 and 152
kilowatt hours/ma depending on the compactness of the building
and the type of water heater.
Needless to say, innovative, model housing will exceed these already strict consumption
regulations.
An energy consultation by an expert is therefore mandatory for all builders.
Community solutions for heating and energy supply should be made possible.
The positioning of the buildings according to city development plans allow energy savings through
passive solar energy use.
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
und Kfliscliuivg
&EPA
Who profits?
Summary
WIN The builder
few restrictions placed by the development plan and expert advice during the
creation process result in high-quality architecture, in high-quality surroundings ->
Increase in living quality and value
WIN The architect
few building restrictions create the possibility for image-building projects that attract
especially great attention during the state landscape exposition -> Advertisement
The state landscape exposition
a further highlight for the landscape exposition will be created with the integral approach
- living in / at the park. -> Advertisement / larger audience is being attracted
The city of Trier
The high-income, opinion leader segment of the city acquires an attractive alternative for
living in the surroundings. The city is enriched by an additional object of prestige ->
socially sustainable /Advertisement
The EGP - Petrisberg development company
Petrisberg will be developed into a high-quality address for the housing market sector as
well -> Advertisement / Increase in value
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
und Kfliscliuivg
&EPA
Who profits?
Summary
WIN Last but not least, the public wins through the mostly privately financed
sustainability and architectural building culture in a park-like surrounding.
Thus, we have a
win - win - win - win - win - win - situation
Thank you for your attention!
contact: j.eitel@giu.de
Bilateral Working Group
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002, Charlotte, North Carolina
Jan Eitel, EGP GmbH
-------
Economic Tools and Finance for Brownfield Redevelopment Workshop
November 11th and 12th 2002
Charlotte, North Carolina
Jan Eitel, Managing Director of EGP GmbH
Redevelopment of a former military base in Germany.
Difficult and expensive: no money left for sustainability?
In 2004, the Rhineland-Pfalz State Garden Show will take place at the Petrisberg in Trier. At the same time, the
Petrisberg Research Park will be developed by a new foundation (EGP Entwicklungsgesellschaft Petrisberg GmbH -
["Petrisberg Foundation for Development Ltd."]).
This innovative and qualitative conversion of the area also should provide the impulse for development of four
residential areas. These residential areas will satisfy the demand for exclusive, large-area and individual single-family
home building sites. The goal, however, also is to integrate model, sustainable housing concepts. Such worthy
attempts usually fail because of a lack of private homeowners willing to finance them, economic pressures, and a
lack of understanding of the aspects of sustainability.
In Trier, a model has been developed that promises to stimulate private involvement and private independent
financing. The GIU and the EGP, in cooperation with the City of Trier and the State of Rhineland-Pfalz, have
developed a "model housing" method that involves various investors, planners and users. The Petrisberg Derelict
Area Project should be presented as exemplary, and along with the "model housing" cluster, a goal-oriented process
for enticing investment in sustainable projects will be demonstrated.
-------
Brownfields Financing:
Federal Tools to Support Project Reuse
by
Charles Bartsch
Northeast-Midwest Institute
-------
Brownfields Financing:
Federal Tools to Support Project Reuse
Why are federal financing tools needed to support financing efforts for
brownfield projects? A key lesson from the success stories in place is that public-
sector financial assistance is often needed to make brownfield projects economically
viable. Many brownfield projects do not work without some kind of involvement by
the. public sector. Site remediation and preparation costs make many sites
economically uncompetitive, at least initially. Many of them have trouble putting a
complete financing package together - especially the capital needed for 3 specific
activities: (1) carrying out an early stage site assessment; (2) defining a site
remediation plan (necessary if the owner wants to take the site through a VCP in
order to get some finality on liability concerns, or to be able to use institutional
controls; and (3) performing the actual cleanup itself.
The site reuser's challenge is dealing with these financing gaps and situations
that make brownfield sites economically uncompetitive - at least initially - and pull
together the technical and financial resources that can help them reverse financial
course, have a chance to take hold so they can realize the full competitive advantage
of their location and situation. This clearly can be done, if the more than 10,000
successful site reuses around the country prove anything.
For decades, federal development and finance mechanisms have been used to
stimulate economic activity in certain geographic areas or industries, or under certain
types of situations, when private capital markets chose not to participate. Brownfield
projects at contaminated sites represent a logical extension of the mission of many of
-------
Brownfields Financing:
Federal Tools to Support Project Reuse
the programs that federal agencies currently operate. The chart at the end offers a
laundry list of federal programs that could prove most useful to brownfield projects.
Several of these merit detailed consideration.
Several of HUD's programs offer communities considerable potential
resources and the most flexibility. Community Development Block Grants are
provided to cities of all size. How those funds are spent is a local decision, within
broad HUD guidelines. HUD's Section 108 loan guarantee program is linked to the
block grant program. Section 108 was authorized to help cities finance site
clearance, property acquisition, infrastructure, rehabilitation, or related activities too
large for single-year block grant funding. This can include removal of toxic
contaminants as part of these site preparation activities.
Entitlement cities and counties may leverage up to 5 times their annual grant
for large, capital intensive projects — typically, economic development projects
needing considerable up-front cash for site preparation — the typical brownfield.
Cities have up to 20 years to repay these HUD-backed loans. Most cities use the
income generated from the sale or development of the site to pay off the debt. Both
programs have great potential to support brownfield-type projects.
Block grant funds can also be lent to private companies for economic
development projects under some circumstances. Coping with contamination has
been defined as an eligible activity, and specifically put into law in 1997 as part of
appropriations language. Since then more than 50 cities have used CDBG
resources directly for brownfield purposes. Cities ranging in size from Chicago to
Somerville, Massachusetts A have used CDBG to clean up targeted city sites. Other
cities have used CBDG to capitalize local RLFs for brownfield purposes.
Youngstown, Ohio is using CDBG to pay for first year loan costs incurred by a new
manufacturing plant attracted to a brownfield site. Dallas used $155,000 in CDBG to
-------
Brownfields Financing:
Federal Tools to Support Project Reuse
directly pay for cleanup at its McCommas Bluff site. And Wisconsin has been
reserving $2.5 million of state CDBG allocation for its small cities to provide them with
resources to pay for site assessments - meeting a key need.
More and more cities are targeting Section 108 to brownfield projects. For
example, Detroit has used it to pay for infrastructure improvements. Chicago has
used it to cover the costs of cleaning and assembling small parcels into 25- and 50-
acre tracts for new industrial development. Denver is using 108 for short-term
construction loans on downtown projects, with the developers repaying the notes
upon sale of the properties. Mid-sized cities such as Yonkers, New York have used
108 proceeds to create a brownfield revolving loan fund.
When considering use of HUD resources, though, communities need to do a
reality check. First, funding allocations within cities are local decisions, out of the
reach of HUD as long as they meet basic eligibility criteria. In many areas, groups
such as community development and service organizations have been recipients of
block grant support for many years, and they are concerned about the impact of any
new activity on their own bottom-line. This may make it difficult for new activities,
such as brownfield initiatives, to work their way into the local priority setting process.
Moreover, block grant resources have simply not kept pace with demand, even in this
time of surplus. The overall level of funding has been pretty constant over the past
five or so years - even as the number of entitlement cities eligible to share in that pot
grows, often by 5 percent a year.
In terms of Section 108 — the program's requirement that cities pledge their
future entitlement grants as collateral — even if the chance of default is highly remote
— causes political problems at the local level. Rightly or wrongly, state and local
officials' concern about the political fallout of a failed project - as remote as that
prospect may be - discourages use of the program. This is unfortunate, since the
-------
Brownfields Financing:
Federal Tools to Support Project Reuse
108 program gets about $1 billiion in new authority from Congress each year- and it
never gets applications for near that amount. In fact, Section 108's track record
suggests that a well-conceptualized project based on solid market analysis has every
likelihood of paying back the guarantee with no cost to the city or state. Thus,
convincing mayors and city councils that it can work becomes the brownfield
challenge.
Also with regards to Section 108 — small cities with less than 50,000 are not
eligible on their own to apply. They must apply through their state or an urban
county. To date, Glen Cove, New York is the only small city to gain access to this
program. At this time, the states of Washington, California, and Connecticut are
expjoring greater use of Section 108 for small town brownfield projects, perhaps by
setting up financing pools.
Low-income housing tax credits are a federal tool with good local potential
to support brownfield projects. There is growing interest in reusing brownfield
properties for residential purposes, an interest which will be further fueled as state
voluntary cleanup programs become more established, and the impacts of recent
lender liability and cleanup expensing incentive provisions are absorbed by the
market.
Low-income housing tax credits can play an important role in attracting capital
for housing on brownfield sites. One of the first success stories is found in Trenton,
New Jersey, where the Circle F project was developed on a contaminated
manufacturing site that dated to 1886. Trenton officials selected a long-time local
non-profit developer undertake the housing project. The developer fronted the
$500,000 for site cleanup and preparation, and applied for and received an allocation
of $8 million in federal low-income housing tax credits through the state of
-------
Brownfields Financing:
Federal Tools to Support Project Reuse
New Jersey. These credits attracted a private lender, who helped finance the project,
and assumed the role of a limited partner in the project in order to get the benefit of
the tax credits. In the case of Circle F, the credits were linked to brownfield
considerations without undermining the bank's profitability.
One of the newest federal financing tools is HDD's Brownfield Economic
Development Initiative, or BEDI; Congress provided $25 million for BEDI in fiscal
2000. These funds were awarded competitively, and in August HUD announced this
year's 22 winners, which include: Buffalo, which will use $240,000 in BEDI funds and
a $3 million Section 108 for site preparation and remediation at the Union Ship Canal
commercial and office project; and Phillipsburg, New Jersey, which will use a
$500,000 BEDI and $2.5 million Section 108 to acquire and redevelop 100 acres of
the 385 acre former Ingersoll Rand site into a modern industrial park, doing soil
remediation as part of site preparation work that will include road, rail, and utility
upgrading.
BEDI has important potential to support brownfield projects. These grants are
intended to improve the viability of projects financed with HUD's Section 108 loan
guarantee program. BEDI can be used for any activity also eligible under CDBG.
But BEDI grants must be used in conjunction with new Section 108 loan guarantees,
with at least a dollar-per-dollar ratio — they will not be granted independently. This is
proving to be a stumbling block for cities that have reached their limit on Section 108
— either in real dollar terms, or because of local political and community pressures.
And again — small cities are, in practice, largely shut out of the BEDI process.
The Economic Development Administration provides grants to communities
to support public works activities. EDA has emerged as one of EPA's strongest
inter-agency partners. During the past 3 years, EDA has made brownfield
redevelopment one of its program funding priorities, spending nearly 20 percent of its
-------
Brownfields Financing:
Federal Tools to Support Project Reuse
project resources on brownfield-related activities. EDA's public works program
supports industrial development activities. EDA's economic adjustment and defense
economic adjustment programs can capitalize locally run revolving loan funds to
enhance business development activities in distressed areas.
In 1999, EPA's 61brownfield related projects included: $923,000 in public
works funding to renovate an old factory into a multi-tenant facility, in Uniontown,
Pennsylvania; $7.3 million in public works funding for a port expansion in New Iberia,
Louisiana; and$1.3 million in defense adjustment funding for utility system
improvements at the former Memphis depot site.
Some communities have made creative use of Department of Transportation
funds for brownfield purposes, although it was only 2 years ago that the agency
acknowledged that its programs could even play a brownfields role. As a growing
number of case studies show, transportation projects can be connected with
brownfield projects in 3 ways: (1) situations in which the brownfield site itself may be
a transportation facilities itself, in need of upgrading - this most commonly includes
roads and rail yards; (2) sites where infrastructure improvements are needed to make
them more marketable - typically by expanding access for vehicles, freight, or
passengers; and (3) when part of the transportation solution is also part of the
environmental solution, where roads, parking lots, and other transportation structures
can be used as caps to limit exposure.
Most federal loan assistance is delivered by the Small Business
Administration, either directly or through local economic development agencies or
community-based corporations. And while SBA retains much of the broad decision
making authority, specific projects are locally determined and driven. SBA can prove
especially helpful to new or small firms that usually lack access to affordable capital
from conventional sources - the types of companies that likely to be attracted to
cheap space in less-than-tony places in distressed areas.
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Brownfields Financing:
Federal Tools to Support Project Reuse
But as with the HUD programs, it is necessary to temper these descriptions
with a reality check. First, EDA resources can work well in brownfield situations, but
in practice it can be very difficult to get EDA to provide revolving loan fund resources
to communities that have ever received them before - even if "before" was 10 or 15
years ago, and for vastly different purposes. A key reason is that national need for
and interest in EDA programs far outstrips available resources.
At DOT, the culture and mindset of the Metropolitan Planning Organizations
that direct much of the program spending has proven to be a barrier in many places.
Many MPO officials simply do not want to consider brownfield-related activities. In
addition, the MPO process - with its long time frames and often lengthy reviews -
does not fit well with the quicker time-frames of many brownfield reuse opportunities.
A reality check is also needed for SBA. To date, SBA programs have not
directly addressed brownfield scenarios; in fact, some bank officials and local
economic developers have complained that SBA tends to be more conservative with
respect to contamination and liability concerns than private lenders themselves. SBA
generally only looks at clean deals.
Finally, two other programs merit a quick mention. First, if a brownfield project
can somehow be linked to water or water quality, it may be able to tap into programs
of the Army Corps of Engineers or use a state clean water revolving fund to help pay
for remediation. The former can help with site planning and remediation, although
some communities may be constrained by the Corps' matching requirements. In the
latter, EPA allows states to use their RLF for brownfield mitigation to correct or
prevent water quality problems - including those stemming from petroleum
contamination.
-------
Brownfields Financing:
Federal Tools to Support Project Reuse
Clearly, a number of federal program resources are available to communities
wanting to promote brownfield reuse. But it is important to stress that private
financing must play a bigger role if more extensive brownfield reuse is to be achieved.
The public sector can provide critical seed money, plug some crucial capital holes,
and help balance the economic scale between greenfields and brownfields. But the
public sector can not do it all alone. Private investment must be sought and
leveraged.
CHART 1:
Federal Financial Assistance Programs Applicable to Brownfield
Redevelopment Activities
Loans
EDA's Title IX (capital for local revolving loan funds)
HUD funds for locally determined CDBG loans and "floats"
EPA capitalized brownfield revolving loan funds
SBA's microloans
SBA's Section 504 development company debentures
EPA capitalized clean water revolving loan funds (priorities set/ programs run by each
state)
Loan guarantees
HDD's Section 108 loan guarantees
SBA's Section 7(a) and Low-Doc programs
-------
Brownfields Financing:
Federal Tools to Support Project Reuse
Grants
HDD's Brownfield Economic Development Initiative (BEDI)
HDD's Community Development Block Grants (for projects locally determined)
EPA assessment pilot grants
EDA Title I (public works) and Title IX (economic adjustment)
DOT (various system construction and rehabilitation programs)
DOT's transportation and community system preservation (TCSP) grant
Army Corps of Engineers (cost-shared services)
Equity capital
SBA's Small Business Investment Companies
Tax incentives and tax-exempt financing
Targeted expensing of cleanup costs (through 12/31/01)
Historic rehabilitation tax credits
Low-income housing tax credits
Industrial development bonds
Tax-advantaged zones
HDD/DSDA Empowerment Zones (various incentives)
HDD/DSDA Enterprise Communities (various incentives)
-------
&EPA
Funding instruments applicable for
brownfield redevelopment - an Overview
Dr.-lng. Uwe Ferber,
PROJEKTGRUPPE STADT+ENTWICKLUNG •
FERBER, GRAUMANN UNO PARTNER *.<
Leipzig
Bilateral Working Group
-------
&und«fTilnlgterliint
und Kfliscliuivg
Why?
German urban and economic development
policy principle:
preservation of equivalent living conditions"
(German Constitution, Art. 72 Par. 2 No 3)
Bilateral Working Group
-------
und Kfliscliuivg
How?
&EPA
Market led too|s^^|
lax-based tools ;;;;;;;;;;;;|j
Public-funding tools
Private-driven projects
PPP nrru^/M-o
~rr -projects
Public-d riven-projects
• *•
uropean
Federal level
State level
ocal level
Bilateral Working Group
-------
und Kfliscliuivg
Typology for funding
SEPA
Land Value
(after reclamation)
'self- developing sites'
'potential development sites'
private- driven / B:
projects / public- private
partnership
'reserve sites'
C:
public-driven
projects
Reclamation Costs
Bilateral Working Group
-------
&EPA
Private-driven projects:
_k Balancing brownfield projects by the change of use
' and generation of planning gains, (new offers of
inshurence models)
lousing estate in Dortmun
Bilateral Working Group
opping mall in Oberhausen
-------
&und«fTilnlgterliint
und Kfliscliuivg
Bilateral discussion Input
Kienzle Site Dr. Eisele
Bilateral Working Group
-------
&EPA
Public-private-partnership:
Integrated in general urban reneval and economic
regeneration policies with a mix of tax based tools and
direct public co-funding
e.g. Tax deductions for the renovation of industrial heritage buildings and
for investments in Urban Reneval Zones
(Europe: Enterprise zones e.g. in GB, F)
Discothek in a former briket works
Bilateral Working Group
Future individual housing area in Leipzig
-------
&EPA
Bilateral discussion Input
Case studies: Saarbrucken, Duisburg, Leipzig
Saarterrassen Saarbrucken
Harbour Duisburg
Bilateral Working Group
-------
&EPA
Public driven projects
European Union:
• EU-Programms (ERDF, KONVER, URBAN), 50 - 75% direct
funding for eligible projects e.g. Brownfield program in Saxony
Conversion: Olympic village in Berlin
Starter building in Leipzig
Bilateral Working Group
-------
&EPA
Public driven projects - Federal and state level:
• Federal economic regeneration fund (GA)
• Urban reneval programms
• Employment initiatives
• ,,Grundstucksfonds Nordrhein-Westfalen"
• Contaminated land programms
ler fordert das Land u,c
umnutzung des ehemaligen
ndustneeelandes Hoesch/
larnischfeeer in Dortmund.
>acn den Ranen der Stadt
entstehen
nier neue
Gerwerbe-
flachen.
Bilateral Working Group
-------
und Kfliscliuivg
Bilateral discussion input
SEPA
.Grundstucksfonds NRW"
30.000.000 -,
25.000.000 -
20.000.000 -
15.000.000 -
10.000.000 -
5.000.000 -
o 4^
ANKA UFE
VERKA UFE
BESTAND
Bilateral Working Group
-------
&und«fTilnlgterliint
und Kfliscliuivg
Summary
Several funding instruments are available
General Goal: Minimising public by maximising private funding
Enhancing private investment: e.g. Urban reneval schemes: 1:5,
Mix of instruments in project practice depending on drivers and
types of redevelopment
Problems: Transparency of funding and cash-flow, EU-
Competition policy, Bank policies (see HVB-Group)
Bilateral Working Group
-------
&und«fTilnlgterliint
und Kfliscliuivg
German-American Workshop discussion
Transparency in approach to funding
,,Trust building" in funding institutions
Future of insurence models
Benchmarks for performance
Bilateral Working Group
-------
Abstract
Dr.-lng. Uwe Ferber, Funding instruments for brownfield redevelopment
The use of funding instruments in Germany depends on different types, backgrounds and drivers for the individual
brownfield redevelopment project. The main influence is by project costs and benefits.
Private projects, public-private partnerships and public projects at the European, federal, and state level - are presented in
relation to marked-led tools, tax-based tools and direct public funding. The use of these instruments is illustrated by the
case studies. Based on the experiences in Germany, general problems are identified and proposals are made for the
discussion in the Bilateral Working Group.
-------
-lur (
mid Fjirschuiig
Karsten Gerkens
City of Leipzig, Germany
Federal and State Urban
Development Programmes
Funding Experiences for Brownfield
Redevelopment in the City of Leipzig
-------
Bundf-yninisterium
liir HiM
&EPA
The Peaceful Revolution
Bilateral Working
Karsten Gerkens (Germany): Federal and State Urban Development Programmes -Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11, 2002
-------
FutoswiiHiflteriiiin
R id i inn
&EPA
Building Types in Leipzig
"Gruenderzeit"
I,, ; „ |,
ings
Multi-storey prefabs
(1-slBirev or^fstis
Bilateral Working Group
Karsten Gerkens (Germany): Federal and State Urban Development Programmes -Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11,2002
-------
B ur,il*5.Ti in interim*
liir-flrUunij
und Fflrachuug
Revitalisation of the City
3EPA
1990
2000
Unrefurbished
Refurbished
B il-»t<-n--> I \Mr\rlr\nri
Karsten Gerkens (Germany): Federal and State Urban Development Programmes - Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11,2002
-------
I lull]
&EPA
State Aid for Urban Renewal 1990-2000
(in DM million)
Redevelopment areas
Subsidies:
Housing construction
2,739
Urban development
| 564
Tax:
3,378
"isrsl \A'
Karsten Gerkens (Germany): Federal and State Urban Development Programmes -Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11 2002
-------
tin a hirachung
&EPA
Park on a Former Railway Station
A disused railway station
is converted into a park
Bilateral Working Group
Karsten Gerkens (Germany): Federal and State Urban Development Programmes - Funding Experiences for
Brownfield Redevelopment in the Citv of Le/pz/a November 11, 2002
-------
«r g
Park on a Former Railway Station
&EPA
Bilateral Working Group
Karsten Gerkens (Germany): Federal and State Urban Development Programmes - Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11, 2002
-------
(Sundew in istanu IT
ffirBfldlinn
iiiid Kn M.-I j«.,
f/EPA
Lost Industrial Jobs
Industrial Jobs
Bilateral Working Group
Karsten Gerkens (Germany): Federal and State Urban Development Programmes -Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11, 2002
-------
&EPA
Decline of east German Industry
I--1
^ Arbeit aut
Baustellen
R KOMMUNE,
Arbeitspfatz-
sich&rung dun
LWB - AuftrSn
Poiitiker
zsrstoren
MitteJstancf
in Leipzig
•eraI Working Gf^
Karsten Gerkons (Germany): Federal and State Urban Development Programmes - Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11. 2002
-------
iiir fl.i-
Plagwitz in 1992
>>EPA
Ri fsti^n I Worlc inn f^roi it*i
Karsten Gerkens (Germany): Federal and State Urban Development Programmes -Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11, 2002
-------
Bunili?=nimst?niiir
•fir fl-'riling
mid Fwschung
wEPA
Plagwitz in 2000
Bilateral Working Group
Karsten Gerkens (Germany): Federal and State Urban Development Programmes -Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11, 2002
-------
*l?h
I! .: Kll Sfl Jl ,1
,„,
From Crane Factory to Manual Trades Center
>>EPA
Bilateral Working Group
Karsten Gerkens (Germany): Federal and Sfafe L/rJban Development Programmes - Funding Experiences for
Brownfield Redevelooment in the Citv of Leiozia November 11. 2002
-------
B ur,il*5.Ti in interim*
und Fflrachuug
Nuclei for New Work
3EPA
Start-up Business Center
Bilateral Working
Karsten Gerkens (Germany): Federal and State Urban Development Programmes - Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11, 2002
-------
BuniJ«mirlateriiiin
liir B iWiirit]
iind Rmschuiig
EXPO 2000
r/EPA
Mm Basin
Bilateral Working Group
Karsten Gerkens (Germany): Federal and State Urban Development Programmes - Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11. 2002
-------
mid Barsuhung
EXPO Park (prior to redevelopment)
6EPA
Bitateral Working Group
Karsten Gerkens (Germany): Federal and State Urban Development Programmes - Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11, 2002
-------
Bundf-yninisterium
liir HiM
EXPO Park Planning (now implemented)
&EPA
Bilateral Working
Karsten Gorkons (Germany): Federal and State Urban Development Programmes - Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11, 2002
-------
bu>-i 10-511 iHlSterill HI
liir B-'Wung
ana Farschting
From a sewer to an waterway
&EPA
New and refurbished
bridges, new footpaths
and cycle tracks
I
RIEataroJ \A/orkinn f^roiio
Karsten Gerkens (Germany): Federal and State Urban Development Programmes -Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11, 2002
-------
Bundf-yninisterium
liir HiM
Reasons for Moving Away
r/EPA
25,000
50,000
25,000
Migration to
western Germany
Migration to
the surroundings
Population
decline
Bilateral Working Gr-
Karsten Garkens (Germany): Federal and State Urban Development Programmes - Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11, 2002
-------
Bun de sm m lateriu in
-liirB i;lunij
II Ml !:.i:i .11 .1
&EPA
Urban Development Plan
Aim categories:
n Consolidated district
• Preservation district
II Priority restructuring district
T I Restructuring district
- Area of investigation
— Borough
City of Leipzig
Urban development plan working party
Revised: December 2000
Karsten Gerkens (Germany): Fedora! and State Urban Development Programmes - Funding Experiences for
Brownfield Redevelopment in the City of Leipzig Novembei 11, 2002
-------
BuniJ«mirlateriiiin
liir B iWiirit]
iind Rmschuiig
Visions for East Leipzig
r/EPA
CD
I \
'if ** ^jf •/'>-*+ ~ I/** "* """^* * »*B^^
.- A?^' » jTrlr-iAVa** H
^ ^V>^ ? -iF^Sair/ *
v^%.,^0^ ,
Bilateral Working Group
Karsten Gerkens (Germany): Federal and State Urban Development Programmes - Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11.2002
-------
in interim*
Unified Activities
&EPA
I City of Leipzig
Councel schemes in
East Leipzig
The
Borough
.-•Key funding areas
Schemes in areas:
• Business and employment
• Transport
O Youth, social services, healthcare
» The arts, schools
9 Green and open spaces /urban
regeneration
1 "Social City" programme
district
I "mi.
Bilateral Working Group
Karsten Gerkens (Germany); Federal and State Urban Development Programmes -Funding Experiences for
Brownfieid Redevelopment in the City of Leipzig November 11, 2002
-------
BurHteminlateriun
&EPA
The New Funding Areas
.
V.
-
.
_' . •
*? L"
"J
.
• :
'
•
f = =.--
ftnami
«iti r,flriirr»t-:irfi:ni
•OUt)
Utti* In- IJ'Mn R«gE vrallM
Bilateral Working Group
Karsten Gerkans (Germany): Federal and State Urban Development Programmes - Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11, 2002
-------
BundMminlBtenunv
fifrMdung
and Parscl uing
Better Quality in Public Space
&EPA
1
II
II
r
TpFFj*?1^ B""TY*
1111
id • I u 11. v ur d
d« Hithb-inctiilL Urapsrir all SntmllActv*
w.ra* mil «if»niii£n*n M.EMIII
This site was made available
by the owner to the local re-
sidents as a green space un-
der a scheme financed by
public money.
.dl L.lniiq
"(T MIJ U 1 HI* M H
••iri-ftjng
Bilateral Working Group
Karsten Gerkens (Germany): Federal and State Urban Development Programmes - Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11, 2002
-------
bu>-i 10-511 iHlSterill HI
liir B-'Wung
ana Farschting
Fresh Opportunities through Demolition
&EPA
Bilateral Working Group
Karsten Gerkens (Germany): Federal and State Urban Development Programmes - Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11,2002
-------
B unites^ in {gteriuiiv
filrfl'tiling
uitd Farsehuitg
&EPA
Planting Vacant Sites with Greenery
•iii
1111,14;
UMMl ' —
"f / ' T*
Bilateral Working Group
Karsten Garkens (Germany): Federal and State Urban Development Programmes -Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11, 2002
-------
&EPA
Goals for URBAN
Business and jobs
.
Sustainable urban development
Identification
Equal opportunities
Karsten Gerkens (Germany): Federal and State Urban Development Programmes - Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11. 2002
-------
r*?B^
&EPA
Advisory Committee for Integrated Borough Development
Network of
URBAN II cities
Project developers
representatives
European
Union
German government
JBMVBW. BMWi, BMFSFJ'i
^ Free State of Saxon/
Regional Administration
Office Leipzig
EFREnetwrk
Social City network
I
Advisory Committee for Integrated
Borough Development
Adni in istration
Mayor of Leipzig
City council
Councillors
Stakeholders' representa-
tives:
public, business,
social work bodies,
associations, academia
-
East Leipzig Forum
Borough management
Local institutions' board
in east Leipzig
Project developers
Representatives
' BMVBW = Ministry of Transport. Construction and Housing: BMWi = Ministry of Trade. Industry and Technology: BMFSFJ = Ministry of the Family, Senior Citizens. Women and Youth
Bilateral Working Group
Karsten Gerkens (Germany): Federal and State Urban Development Programmes - Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11. 2002
-------
r*?B^
New Industry in Leipzig : BMW
&EPA
Bilateral Workino Group
Karsten Gerkens (Germany): Federal and State Urban Development Programmes - Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11. 2002
-------
Bundf-yninisterium
liir HiM
r/EPA
New Industry in Leipzig : PORSCHE
Bilateral Working Group
Karsten Gerkens (Germany): Federal and State Urban Development Programmes - Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11, 2002
-------
in interim*
City Marketing
&EPA
Bilateral Working Group
Karsten Garkens (Germany): Federal and State Urban Development Programmes - Funding Experiences for
Brownfieid Redevelopment in the City of Leipzig November 11, 2002
-------
B ur,il*5.Ti in interim*
liir-flrUunij
und Fflrachuug
&EPA
Migration has been stopped
30000
25000
20000
15000
fOOOO
5000
7993 ?994 ?995 f996 7997 7998 f999 2000 2001
Arriving
Moving
Bilateral Working Group
Karsten Gerkens (Germany): Federal and State Urban Development Programmes - Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11,2002
-------
liir Rifling
!• • Rarsehung
&EPA
Our Advantages
I KOHTESKLFV, ' -
Assessment of the urban surroundings
I
HbS
Study of an agency ordered
by the French car producer
"RENAULT"
A fcU. K'JI-ITESKLRVES
Assessment of the quality of life for families
:«3ral Working Group
Karsten Gerkens (Germany): Federal and State Urban Development Programmes - Funding Experiences for
Brownfield Redevelopment in the City of Leipzig M t^vemljer 11. 2002
-------
•iiir |l iW liny
£EPA
New Infrastructure : Airport
Der Neue Flughafen Leipzig
Bilateral Working Group
Karsten Gerkens (Germany): Federal and State Urban Development Programmes -Funding Experiences for
Brownfietd Redevelopment in the City of Leipzig November 11, 2002
-------
bu>-i 10-511 iHlSterill HI
liir B-'Wung
ana Farschting
Individual Family Housing in the City
&EPA
ilstpnl Workinn Groiio
Karsten Gerkens (Germany): Federal and State Urban Development Programmes -Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11,2002
-------
Bundfrsmniliteriiiin
•Mr Billing
Individual Family Housing in the City
&EPA
.
Sites for Town Houses:
35 Sites
52WKK) m*
2300 Houses
_. /***_.-,.._*
Bilateral Working
Karsten Gerkens (Germany): Federal and State Urban Development Programmes - Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11, 2002
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Bilateral Working Group
Karsten Gerkens (Germany): Federal and State Urban Development Programmes - Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11, 2002
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Bilateral Working Group
Karsten Gerkens (Germany): Federal and State Urban Development Programmes -Funding Experiences for
Brownfield Redevelopment in the City of Leipzig November 11.2002
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Bilateral Working Group
Karsten Gerkens (Germany): Federal and State Urban Development Programmes - Funding Experiences for
Brownfield Redevelooment in the Citv of Leiozia November 11.2002
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Dipl. Ing. Karsten Gerkens
Head of the
Office for Urban Regeneration and Residential Development
of Leipzig City Council
Federal and State Urban Development Programmes
Funding Experiences for Brownfield Redevelopment
in the City of Leipzig
Brownfield Redevelopment in Leipzig
I Previous development
1.1 The situation in eastern Germany
1.2 The housing market
1.3 The development of old industrial areas
II New demands
11.1 The shrinking city
II.2 Urban redevelopment
III Cooperation
111.1 Development
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"Economic Tools and Finance for Brownfield Redevelopment" Workshop
November 11 and 12, 2002
Charlotte, North Carolina, USA
I Previous development
1.1 The situation in eastern Germany
The development of brownfield sites in eastern Germany is an issue of particular significance. In the late 1980s, the housing stock
was in a lamentable state. Of the 258,000 dwellings in the city, around 25,000 were actually in danger of collapse, while all in all
196,000 homes had to be refurbished. The maintenance of the housing stock had been badly neglected for decades starting with
World War I, during World War II and in particular during the 40 years of the DDR (East Germany/German Democratic Republic). In
East German times, entire areas of housing dating back to the late 19th century were demolished and partly replaced with buildings
made from prefabricated slabs: "new homes for the new people". The city began to dissolve.
The situation was equally bleak in manufacturing industry. For decades it was largely restricted to 19th-century factories using
obsolete machinery, and the products were not competitive on the world market. Moreover, industry frequently ignored environmental
concerns such as pollution of the air and the soil, as well as layers of chemical foam on rivers and lakes.
The political situation was doubtless the main factor leading to the changes which took place in eastern Germany. Yet the hopeless
conditions in people's living environment also spurred on protest. It was no coincidence that the dramatic changes in eastern
Germany began with the Peaceful Revolution in Leipzig.
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1.2 The housing market
Preserving the late-19th-century building stock was the first, most pressing aim following German reunification. Nowadays following a
decade of refurbishment, the initial situation has been reversed. Whereas 74 per cent of the housing stock in 1990 needed
refurbishment and 26 per cent was in order, nowadays 74 per cent has been refurbished leaving 26 per cent still in need of
modernisation.
This development has been aided by massive state support. Over €300 million was invested in redevelopment districts. Tax relief and
high rents prompted high investment in rented accommodation. Housing construction support was available throughout the city.
However, it was almost impossible to steer the use of subsidies into certain areas and this approach proved to be the equivalent of
blanket support for reconstruction.
By contrast, funding under urban development support was much easier to control. Leipzig City Council decided on the districts to
benefit and also the aims involved.
Urban development support is basically a revolving fund. It assumes that investing public money in roads, footpaths and squares as
well as helping owners to repair and modernise their buildings will make the district concerned more attractive and push up the land
value. Following the completion of redevelopment, the increase in land value caused by redevelopment is supposed to be paid back
to the state. At least, that's the theory: so far in Germany there are only very few districts where the state has 'settled up' with the
owners.
Until 1994, the focus was on maintaining the status quo. Subsequently, attention was increasingly switched to changing local ground
values. The development of brownfield sites was a key problem. But rather than developing inner-city brownfield sites with a view to
new construction projects, instead it was felt to be more important to convert brownfield sites into green areas. The creation of these
new green spaces was relatively inexpensive and initiated numerous modernisation projects nearby which didn't need public financial
support. For example, the transformation of the brownfield site Eilenburg Station into Eilenburg Park completely changed the local
ground values and opened up new opportunities for the surrounding buildings.
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1.3 The development of old industrial areas
German reunification and the switch to hard currency suddenly made products from eastern Germany unaffordable to customers in
Eastern Europe. Yet their quality was often insufficient for them to be sold in Western Europe. Moreover, the cessation of eastern
Germany's isolation meant that companies there were suddenly hit by the crisis which had long afflicted the West European coal,
steel and heavy machinery industries.
As a result, 60,000 industrial jobs in Leipzig rapidly disappeared. Furthermore, the previous East German economic structure
comprising enormous 'combines' was abolished. The impact of these changes was especially felt in west Leipzig, where huge areas
suddenly became brownfield sites more or less overnight.
The counterstrategy focused on small and medium-size enterprise and the establishment of new businesses. In the first few projects,
some old factory buildings formerly used by the combines were transformed into business centres. This created better conditions for
the manual trades and service sector. Nevertheless, huge areas were left with no real function.
Individual sites were amalgamated through urban development schemes, which also financed demolition and improvement. Funding
from organisations such as the European Union led to the erection of new facilities such as the Business Innovation Centre, other
business centres and a youth technology centre. Like redevelopment, urban development schemes assume that the project costs
can be refinanced by the transformation of a brownfield site into a development zone. To enable this, the land prices are frozen at the
beginning of the scheme.
The transformation of the old industrial districts into an area of thriving start-up businesses is still in progress. Considerable support
was provided by Expo 2000, which brought the conversion of these areas to broad public attention. One key measure was the
conversion of a brownfield site, the old loading station, to create suitable surroundings for the new development. The enhancement of
an old canal also helped to improve the district, which has since become a popular housing area thanks to the usage of lofts.
This pattern of development is to be elsewhere in west Leipzig, which still contains a large proportion of old industrial brownfield sites.
Many of them featuring huge opportunities such as Lindenau Port are eminently suitable for mixed use. The key is to make the
distinctive quality of each site usable - in this case its water location. Development projects at Lindenau Port are currently being
carried out in international cooperation with Birmingham City Council and British Waterways.
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II New demands
11.1 The shrinking city
Like all towns and cities in eastern Germany, Leipzig was affected by serious migration. The reasons were initially the social gap
between eastern and western Germany and the lack of jobs in the east. Migration continued in the mid-1990s with considerable
numbers of people moving to homes of their own in the nearby countryside. This was especially attractive because home ownership
in inner cities in East Germany was virtually unknown. As a result, Leipzig lost 100,000 inhabitants, nearly a quarter of the
population.
This population decline reduced demand for housing construction and also cut lower turnover for retail and business. As result, the
situation for housing which had not yet been modernised became critical. Oversupply depressed rents, making profitable
refurbishment almost impossible. Furthermore, oversupply gave tenants enormous choice, meaning that areas of dense housing or
loud traffic were avoided. This led to the urban structure in dense central districts crumbling; the city was 'rotting at the core'.
This situation was carefully analysed through the housing construction and urban regeneration development plan. Market forces
mean that only limited counteraction can be taken. Nevertheless, as investment declines, the public sector must take action to
formulate at least the framework conditions.
This is now being done by the housing construction and urban regeneration development plan. The plan states which urban districts
are to be regarded as consolidated, lays down where restructuring needs to be carried out, and also lists the areas where
restructuring has been deemed hopeless. For the first time, something is appearing in German planning which is already well-known
in the USA- a type of redlining. The difference is that the areas concerned are being designated not by banks but rather by the city
council. We assume that the falling land prices in the districts concerned will create the conditions necessary for restructuring.
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11.2 Urban redevelopment
The seemingly negative framework conditions actually represent an enormous opportunity for the city. Numerous vacant and
brownfield sites as well as the demolition of dilapidated housing stock have created a chance to tackle structural problems and to use
the current situation as a basis for the construction of the city of the future characterised by more greenery, less density and more
individuality.
Below the level of the urban development plan, the long-term development possibilities of disadvantaged districts in east and west
Leipzig are formulated by conceptual borough plans. In the next step, these conceptual plans are underpinned by concrete planned
measures which outline the medium-term action framework, specify priority projects, and are given financial backing. These plans of
measures are being extensively used in east Leipzig - for example to transform a traditional shopping street into the edge of a park.
At present, the redevelopment activities are not yet sustained by the free market. Following highly speculative deals during the days
of high tax depreciation, the market has since had to return to normal investment behaviour. Local ground values are regaining their
old levels.
In some cases, however, these local ground values must first of all be created. The public sector is involved in this process. In order
to cope with urban redevelopment, the entire system of public subsidies has been reorganised by Leipzig City Council. In the first
stage of urban regeneration, we designated relatively large redevelopment zones in the belt of late-19th-century housing surrounding
the city centre. Wherever the problems could be largely solved within the zones themselves, we have succeeded. This is the case in
9 out of 13 redevelopment zones, where population growth has been achieved. However, in those zones subject to serious structural
problems affecting various areas simultaneously, the public funding measures previously available geared mainly to building work
were not sufficient.
In order to prepare for the new system of subsidies, under the housing construction and urban regeneration development plan the
entire district of Leipzig was analysed and requirements identified using uniform criteria. The findings indicated that efforts needed to
be concentrated on east Leipzig, west Leipzig, the boroughs of Leutzsch and Schonefeld, and the WK 7 and WK8 districts in Leipzig-
Grunau.
These findings were taken into account when drawing up the new system of subsidies. In particular, large sections of east and west
Leipzig have been awarded ERDF and URBAN funding. The redevelopment zones within the areas are being altered and positioned
wherever the tool of Special Urban Development Law is needed in order to achieve the transformation of the urban structure. Hence
these urban areas contain different overlapping support districts. We believe this will enable us to meet the complex demands
existing in these urban areas.
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The new programme entitled Urban Redevelopment East plays a key role in this scenario, which developed from discussion with the
housing sector. We assume that the necessary reduction in density and in particular the creation of new housing opportunities hinge
on the implementation of model projects. Completed examples are needed to stimulate the market.
In order to meet these demands, it must be possible for model projects to receive support throughout the area covered by the urban
development plan. We also want to initiate subsidy competitions to enable the implementation of committed examples.
Simultaneously, newly developed instruments are being used which help us to remove dilapidated housing stock, brownfield sites
and other wasteland. Agreements have been signed with building owners which grant permission for their buildings to be demolished.
The owners retain the right to build on these areas; we organise the planting of greenery or other usage and shoulder the
maintenance work, thus helping to create jobs for the unemployed.
We also run a district service which, staffed by local unemployed, lays out and tends newly created public areas. The activities of
these district services are partly determined by the local residents. Unemployed people are involved in these demolition, greenery
and construction projects under the guidance of professional firms. As well as cutting costs, this close involvement with the primary
labour market has led to subsequent employment in 18 per cent of cases.
The most important step in organising urban redevelopment is changing the views and the previous approach to the development of
the city. A major role is played by the European Union's subsidy philosophy. The programmes are based on combining resources and
funding from different subsidy programmes, and take an integrated view of district development. It is becoming increasingly apparent
that restructuring disadvantaged districts greatly depends on coordinating different policies. Construction policy, the arts policy, labour
market policy and economic development policy all need to be coordinated so that they can jointly take effect.
Another change possible is the closer involvement of stakeholders. Associations and professional chambers are increasingly feeling
jointly responsible for the development of districts and are contributing material and personnel resources. Work on the various
aspects of urban redevelopment are discussed by 'civilian' forces in these areas through the Advisory Committee for Integrated
Programmes.
Another area in which the public is becoming increasingly interested is home ownership. This is supported and encouraged by
Leipzig City Council. Special assistance is granted for the purchase of owner-occupied housing by groups of people. The aim here is
to revitalise as many vacant old buildings as possible. The key word is 'homesteading' - an approach which enabled the first steps of
revitalisation to get off the ground in places such as New York City. The new owners are given support by architects and consultants
as they draw up their plans and during construction work.
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IMCooperation
III. 1 Development
Leipzig is a city full of opportunity. It is the only city in eastern Germany where following the phase of migration a stable trend of
immigration has been recorded. Enormous efforts have been expended to fundamentally improve the public infrastructure. The
intercontinental airport, the widening of local motorways, and major projects such as the city-centre tunnel designed to greatly
improve rail links are all location factors which are greatly appreciated by industry. For example, Porsche and BMW have both
chosen to invest in Leipzig. The city is being made increasingly attractive by lower land prices, low rents and a diverse range of high
quality housing and business premises. The Renault study showed that Leipzig can complete with other German cities and is in many
respects near the top of the table. The city's diversity and the local opportunities for children are for instance rated more highly than
in many cities in western Germany. The city marketing slogan "The freedom of Leipzig" is not an empty saying but a genuine
opportunity.
Leipzig has applied to host the 2012 Olympics. Assuming Leipzig is chosen by the German Olympic Committee, the city has a good
chance of actually staging the games. Arguments in favour of Leipzig include the fact that there is plenty of land still available which
would enable the games to be organised within a compact area. Here, too, enormous opportunities are afforded by brownfield sites.
For example, old port facilities could be transformed into a magnificent backdrop for the Olympic village, simultaneously closing a
development gap between the old and new city. Moreover, this instance of urban repair would create fundamentally new qualities.
Yet not everything needs to be on an Olympic scale. As an urban redeveloper we're seeking partners for smaller projects such as the
construction of detached and terraced houses on inner-city brownfield sites. Suitable areas are being made available by the city
council. The first tranche comprises 35 sites with room for 2,340 dwellings. The state supports private ownership in this area; Leipzig
City Council reduces land prices, provides assistance in finding users, and also improves the surroundings.
We are seeking pioneers wiling to seize the opportunities provided by this new market and to set new trends. These areas harbour
the possibility of developing a new type of housing estate which exploits and reinforces the qualities of the European city but with less
density, and which represents an alternative to land-eating suburbanisation. Brownfield sites are the key.
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Moreover, brownfield sites also enable the development of new commercial premises. Old industrial areas, previously in the suburbs
but following urban expansion now almost in the city centre, are an opportunity to develop intelligent production, research and mixed
usage in an urban setting.
This direction of development is not the mainstream. We are trying to draw attention to these opportunities with PR activities. For
example, campaigns in which Leipzig artists have decorated vacant sites have received awards from Eurocities, the organisation of
European cities.
During EXPO (2000), the millennium field was something of a sensation. This cornfield on an inner-city site with a size of 23,900
square metres (257,000 square feet) in an urban setting underlined the unique opportunities of this situation. We are now developing
a future energy park on this site, which will be home to related businesses.
As you can see, brownfield sites are the key!
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&und«fTilnlgterliint
und Kfliscliuivg
I know a great Brownfield. Can you give me
a loan?
Evan Henry
Bank of America
Environmental Services Department
Bilateral Working Group
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und Kfliscliuivg
&EPA
Brownfields as a Site Preparation Cost
Brownfield
Example
Greenfield
Example
Condition
Contamination
Unstable Soils
Cost to Cure
Clean Up
Grading and
Compaction
Financial Impact
Property Value
Property Value
Bilateral Working Group
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&und«fTilnlgterliint
und Kfliscliuivg
What makes Brownfields different?
• Liability for cleanup
- US environmental laws impose the risk of not
being able to stop the "site preparation" related to
cleaning up once the developer has taken
ownership
• Increased consequences of uncertainty
- Technical uncertainty (How big is the problem and
can it be fixed?)
- Legal uncertainty (How much do I have to do even
if the project does not go forward?)
- Timing uncertainty (Will this take forever?)
Bilateral Working Group
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&und«fTilnlgterliint
und Kfliscliuivg
Consequence of Uncertainty
Known and quantified problems can define
where the overall project is in the range of
economic viability ("tan" to "brown" to "black")
Possibility of unknown problems increase
uncertainty - result is to narrow the range of
economic viability
Bilateral Working Group
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BufidHfnlnlgterlun* '"'^ Y^wa f\, ^•P^J
und Kfliscliuivg
What is the role of government in the US
system of private development?
• Reduce the unknowns to widen the range of
economic viability
- Technical Assistance
- Assessment Grants
- Liability Relief
• Subsidize the restoration of the economically
less viable sites
Bilateral Working Group
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DMdMtrilHBthirt
Limitations to the role of Government in the US
system
• Cannot use public funds to enrich the private sector
• Cannot use public funds to help a polluter restore a
Brownfield
• US laws are set up to "find", not "fund" Brownfields
• Government brownfield programs are aimed at
working around the liability situation. Arguably, a
change in the liability scheme would stimulate private
redevelopment of brownfields more than government
assistance approach
Bilateral Working Group
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&und«fTilnlgterliint
und Kfliscliuivg
What about Private Financing?
• Three categories
-DEBT
- EQUITY
- INSURANCE
• Insurance is not financing - it is a risk
management mechanism that can reduce the
uncertainty of financing with either debt or
equity
Bilateral Working Group
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und Kfliscliuivg
Debt versus Equity
&EPA
Debt
Equity
Risks
> Repayment
> Collateral Value
> Direct Liability
> Loss of
Investment
> Direct Liability
Rewards
> Repaid fixed
amount (no
share in
"upside")
>Gain is
proportional to
success of
project (share
in "upside")
Bilateral Working Group
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&und«fTilnlgterliint
und Kfliscliuivg
Summary Point of View
US emphasis on private sector brownfield
redevelopment
Fixing actual contamination conditions are
complicated by the US legal liability system
Government actions aim at tempering the
impacts of the US liability system (reduction
in uncertainty)
Lending is a not a key player in early stage
financing of brownfields redevelopment
Bilateral Working Group
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Abstract
I know a great Brownfield. Can you give me a loan?
Evan Henry
Bank of America
Environmental Services Department
The environmental conditions that make a Brownfield can be thought of as an added site preparation cost. However, in contrast
to fixed costing of engineering aspects, the legal uncertainty related to environmental liability, especially as imposed by the US
system, increases the overall uncertainty for financiers of Brownfields redevelopment. The role of government is discussed
relative to the reduction of uncertainty to stimulate private investment in Brownfields, the cornerstone of Brownfields
redevelopment approach in the US. Private financing may be enhanced by understanding the relationship of debt and equity as
well as how insurance can be a factor. Government stimulation of investment may be more effective with a focus on equity
investment.
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bmb+f
&EPA
The U.S. - German
Bilateral Working Group
Economic Tools for Sustainable Brownfield
Redevelopment
The State Property Fund
("Grundstucksfonds") in North-Rhine
Westphalia and the Role of State
Development Agencies
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
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bmb+f
The State Property Fund in North-Rhine Westpalia
• Deindustrilisation
- With the closure of many coal-mines in the
70's the deindustrilisation began.
-The deindustrilisation began specific in the
Ruhr-Area.
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
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bmb+f V£/ &EPA
The State Property Fund in North-Rhine Westpalia
• Deindustrilisation
- The former owners had first no interest to
develop the sites.
- For the cities these sites were very
important for their own development,
because they had a good and central
position.
Bilateral Working Group Ralph lshorst
Monday, November 11, 2002
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bmb+f V£/ &EPA
The State Property Fund in North-Rhine Westpalia
• Problem
- But they didn't want to buy these sites because
• of the price
• they didn't had the man-power to handle these
sites
• They thought it's a job to be handled by the
government in Dusseldorf
Bilateral Working Group Ra|ph |shorst
Monday, November 11, 2002
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bmb+f \^y &EPA
The State Property Fund in North-Rhine Westpalia
Solution
- So the ,,State Property Fund Ruhr" was
established on the first Ruhr-Area-
Conference in 1979
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
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«bmb+f \£J &EPA
The State Property Fund in North-Rhine Westpalia
• Function of the fund
- The fund started in 1980 to buy the first
sites and spent about 11.5 Mio. $.
-The fund is managed since the beginning by
the LEG NRW (State Development Agency
of Moth-Rhine Westphalia).
Bilateral Working Group Ralph lshorst
Monday, November 11, 2002
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bmb+f
The State Property Fund in North-Rhine Westpalia
Area of the fund
NlEDERLANDE
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
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bmb+f V£/ &EPA
The State Property Fund in North-Rhine Westpalia
• Function of the fund
- Between 1980 and 1987 the LEG had to do
the following things for the fund:
• Building up a cost-benefit analysis for the
development of the site
• Building up a time table for the development
Bilateral Working Group Ra|ph |shorst
Monday, November 11, 2002
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bmb+f
The State Property Fund in North-Rhine Westpalia
• Function of the fund
-After the decision on buying the site by the
State Department for Towndevelopment the
LEG had to discuss the final price with the
former owner and had to buy the site.
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
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bmb+f \^y &EPA
The State Property Fund in North-Rhine Westpalia
Function of the fund
-After buying the site the LEG then had to
organize the demolition of the buildings an
the cleaning of the sites.
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
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bmb+f Vy &EPA
The State Property Fund in North-Rhine Westpalia
• Function of the fund
- In the responsibility of the cities was the planning of
the development plan. Also they have been put
under an obligation to buy the infrastructue surface
for 5 $ per squaremeter and for 4 $ per
squaremeter for public green surface. For parts like
slagheap they have to pay 1 $ per squaremeter.
They also had to do the marketing for the sites.
Bilateral Working Group Ra|ph |shorst
Monday, November 11, 2002
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bmb+f
The State Property Fund in North-Rhine Westpalia
Budget of the State Property Fund 1980-1987
Budget of the State Property Fund
7n nn
i \j,\j\j
RO on
«/}• Kf) Of]
(/)
^ 40 00
.2 on oo
^ ou,uu
c on nn
._ £.\J,\J\J
m nn
I U,UU
p
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80
i
81
I
^=
82
—
—
—
I I I I I
83 84 85 86
Year
r
87
:
• Revenue
D Budget
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
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bmb+f \£J &EPA
The State Property Fund in North-Rhine Westpalia
• Function of the fund
- In 1987 the guidelines for the meanwhile 2
Funds, the second one is for the rest of
North-Rhine Westphalia, changed. LEG was
allowed to
• Planning and realization of infrastructure
• Create the Development and a Marketing plan
Bilateral Working Group Ralph lshorst
Monday, November 11, 2002
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bmb+f \^y &EPA
The State Property Fund in North-Rhine Westpalia
Function of the fund
- From this time the funds started to sell sites
for about 20 Mio. $ each year.
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
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bmb+f
The State Property Fund in North-Rhine Westpalia
Development of the Funds in squaremeters
Development of the funds
to
30,0
Bilateral Working Group
Acquisition
•Sale
• Stock
Year
Ralph Ishorst
Monday, November 11, 2002
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bmb+f
The State Property Fund in North-Rhine Westpalia
New use of Fund sites
New use of the fund sites
4%
42%
Bilateral Working Group
54%
D Industry and Business
pares
• Infrastructure, green and
leisure use
D Housing
Ralph Ishorst
Monday, November 11, 2002
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bmb+f V£/ &EPA
The State Property Fund in North-Rhine Westpalia
• Function of the fund
- Because of missing money in the budget of
the State of North-Rhine Westphalia in the
90's the financing of the funds changed. So
they received also money from our major
government in Berlin and from the
European Union from Brussels.
Bilateral Working Group Ralph lshorst
Monday, November 11, 2002
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bmb+f
The State Property Fund in North-Rhine Westpalia
Budget of the State Property Fund 1980-1987
160,00
140,00
<* 120,00
^ 100,00
d 80,00
i 60,00
~ 40,00
20,00
Budget of the State Property Fund
Year
• Other Programs
D EU-Programs
• ZIM
D Town Renewal Program
D Steel-Program
D Revenue
n Budget
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
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bmb+f
The State Property Fund in North-Rhine Westpalia
Examples
- Former Coal-Mine
Herten Disteln
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
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bmb+f
The State Property Fund in North-Rhine Westpalia
Examples
- Former Coal-Mine
Herten Disteln
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
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bmb+f
The State Property Fund in North-Rhine Westpalia
Examples
- Former Coal-Mine
Herten Disteln
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
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bmb+f
The State Property Fund in North-Rhine Westpalia
Examples
- Former Coal-Mine
Herten Disteln
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
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bmb+f
The State Property Fund in North-Rhine Westpalia
Examples
- Former Coal-Mine
Herten Scherlebeck
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
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bmb+f
The State Property Fund in North-Rhine Westpalia
Examples
- Former Coal-Mine
Herten Scherlebeck
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
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bmb+f
The State Property Fund in North-Rhine Westpalia
Examples
- Former Coal-Mine
Herten Scherlebeck
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
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bmb+f
The State Property Fund in North-Rhine Westpalia
Examples
- Former Coal-Mine
Herten Scherlebeck
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
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bmb+f
The State Property Fund in North-Rhine Westpalia
Examples
- Former Coal-Mine
Zeche Waltrop
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
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bmb+f
The State Property Fund in North-Rhine Westpalia
Examples
- Former Coal-Mine
Zeche Waltrop
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
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bmb+f
The State Property Fund in North-Rhine Westpalia
Examples
- Former Coal-Mine
Zeche Waltrop
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
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bmb+f
The State Property Fund in North-Rhine Westpalia
Examples
- Former Coal-Mine
Zeche Waltrop
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
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bmb+f
The State Property Fund in North-Rhine Westpalia
Examples
- Former Chemical
processing plant
in Herne
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
-------
bmb+f
The State Property Fund in North-Rhine Westpalia
Examples
- Former Chemical
processing plant
in Herne
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
-------
bmb+f
The State Property Fund in North-Rhine Westpalia
Examples
- Former Chemical
processing plant
in Herne
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
-------
bmb+f
The State Property Fund in North-Rhine Westpalia
Examples
- Former Chemical
processing plant
in Herne
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
-------
bmb+f V£/ &EPA
The State Property Fund in North-Rhine Westpalia
• Summery
- The funds play an important role in the
economical change in Northrine-Westphalia
-They also play an important role in the
ecological development of brownflields
Bilateral Working Group Ralph lshorst
Monday, November 11, 2002
-------
bmb+f \^y &EPA
The State Property Fund in North-Rhine Westpalia
• Summery
- The time for the development is too long.
- The financial situation changes from year to
year.
- They have many sites with no economical
use.
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
-------
Abstract:
The State Property Fund Northrine-Westphalia
As a result of deindustrailization, the State of Northrine Westphalia opened this fund in 1979.
You will receive an overview of the history of the fund. Guideline changes and their effects on the fund are explained. After a view on some
projects, I will show the actual problems with the fund. This will end in a final discussion on the pros and cons for the fund.
PPP Development and Finance Strategies
Compared with the state property fund, the Westdeutsche Landesbank (WestLB) started PPPdevelopments in the early 1980's in Northrine
Westphalia. In 1984, WestLB founded a company in Hilden (near Dusseldorf) to develop old industrial sites in Hilden. Until now, this company
has developed about 380.000 square meters and currently is developing about 250.000 square meters. I will show how the financing of these
projects work and which differences we can offer in a public-private partnership. A short explanation of the calculation of risk-management will be
given. Finally, I will show a new project that we will realize in 2003.
Contact Information:
Ralph Ishorst
WestGkA Managementgesellschaft fur kommunale Anlagen mbH
Volklinger Str. 4
40219 Dusseldorf
Phone: 0049 211 90101550
Fax: 0049 211 90101599
Mobile: 0049 170 8505839
Email: r.ishorst@westgka.de
-------
bmb+f Vy &EPA
The U.S. - German
Bilateral Working Group
Economic Tools for Sustainable Brownfield
Redevelopment
Bilateral Working Group
PPP development and finance
strategies
Ralph Ishorst
Monday, November 11, 2002
-------
* bmb+f ^y xe,EPA
PPP Development and finance strategies
• Public-Private Partnership
- Since the late 80's developments in the form of a
Public-Private Partnership started. Reasons for this
are:
• The cities don't have enough money to finance the
projects
• They also don't have the people to work on these projects.
Bilateral Working Group _. , , T ,
Ralph Isnorst
Monday, November 11, 2002
-------
bmb+f Vy &EPA
PPP Development and finance strategies
• Public-Private Partnership
- So this kind of work is good for 2 or more
partners:
• Public: The project will be done, and they can
earn part of the profit
• Private: They can manage the project
professionally and get money out of their work
and also out of the profit
Bilateral Working Group _. , , T ,
Ralph Isnorst
Monday, November 11, 2002
-------
bmb+f \£J &EPA
PPP Development and finance strategies
• Public-Private Partnership
- For the cities it is important to develop sites
for their own future development. The sites
they can develop are:
• former agricultural sites
• former industrial sites and
• former military sites
Bilateral Working Group _. , , T ,
Ralph Isnorst
Monday, November 11, 2002
-------
bmb+f \£J &EPA
PPP Development and finance strategies
• Public-Private Partnership
- They must buy the sites before the
development starts, because then they are
inexpensive. But for the cities comes now
the problem, because they don't have the
money for the site and the development.
Bilateral Working Group _. , , T ,
Ralph Isnorst
Monday, November 11, 2002
-------
bmb+f \^y &EPA
PPP Development and finance strategies
• Public-Private Partnership
- In this case private companies like us can
help the cities with their development
problems.
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
-------
bmb+f ^y xe,EPA
PPP Development and finance strategies
• Public-Private Partnership
- It starts with a cost-benefit analysis for the project.
In this analysis we calculate the complete costs and
the revenue of the project. Costs for planning and
infrastructural building are easy to calculate. But
costs for pulling down buildings and cleaning the
sites have a higher risk in the calculation.
Bilateral Working Group _. , , T ,
Ralph Isnorst
Monday, November 11, 2002
-------
bmb+f \£J &EPA
PPP Development and finance strategies
• Public-Private Partnership
- So we work here together with Partners like
AIG Engineering Group Ltd.- Germany.
They explore the site and give us calculated
costs, which they guarantee (Cleanup Cost
Cap). So the risk for the partnership will be
calculable.
Bilateral Working Group _. , , T ,
Ralph Isnorst
Monday, November 11, 2002
-------
bmb+f
PPP Development and finance strategies
Public-Private Partnership
- We can also insure the risk of unknown
contaminations. This insurance is important
for the future marketing of the site.
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
-------
bmb+f \£J &EPA
PPP Development and finance strategies
• Public-Private Partnership
- When the partners agree to the cost-benefit
analysis the partnership can be founded in
two ways:
• Foundation of a PPP-company or
• Working together with a PPP-contract
Bilateral Working Group _. , , T ,
Ralph Isnorst
Monday, November 11, 2002
-------
bmb+f \£J &EPA
PPP Development and finance strategies
• Public-Private Partnership
- Risk sharing in Partnerships
• City Modell: The city takes the complete risk. All
partners get only money for their work.
• Investment Modell: Every partner shares the risk
belonging to his investment capital.
Bilateral Working Group _. , , T ,
Ralph Isnorst
Monday, November 11, 2002
-------
* bmb+f ^y xe,EPA
PPP Development and finance strategies
• Public-Private Partnership
- Jobs done buy the Private Partner
• Buying the site inclusive financing of the
complete costs (in thes projects we normally get
communal credits, which is the most reasonable
way to get money).
• Arranging the planning and the revitalization of
the site.
Bilateral Working Group _. , , T ,
Ralph Isnorst
Monday, November 11, 2002
-------
bmb+f \^y &EPA
PPP Development and finance strategies
• Public-Private Partnership
- Jobs done buy the Private Partner
• Planning and building of infrastructure
• Marketing of the site
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
-------
bmb+f \£J &EPA
PPP Development and finance strategies
• Public-Private Partnership
- Examples
• GKA Hilden
• Because the State-Property Fund worked in the
first years only in the central Ruhr-Area the town
of Hilden had to find a solution for the future
development in Hilden by themselves.
Bilateral Working Group _. , , T ,
Ralph Isnorst
Monday, November 11, 2002
-------
bmb+f ^y xexEPA
PPP Development and finance strategies
• Public-Private Partnership
- Examples
• So together with us they founded a small company called
,,GkA Hilden". The risk in this company is completly on the
site of the city, but now after 20 years of work we can say
that there is no big risk in the company. The company
makes every year a small profit. For the next years a profit
of about 1.000.000 $ is planned.
Bilateral Working Group _. , , T ,
Ralph Isnorst
Monday, November 11, 2002
-------
bmb+f ^y xe,EPA
PPP Development and finance strategies
• Public-Private Partnership
- Example
• Sites developed by the GkA Hilden:
• Mannesmann 265.000 m2
• Forstweg 46.430 m2
• Schlieper & Laag 32.540 m2
• Muhlenbachweg 41.447m2
• Marie Curie Str. 3.900 m2
• Giesenheide 250.000 m2
Bilateral Working Group _. , , T ,
Ralph Isnorst
Monday, November 11, 2002
-------
bmb+f \£J &EPA
PPP Development and finance strategies
• Public-Private Partnership
- Example
• For the development of these sites we received
partly public funding, but we have to pay it back
now, because we made every year a small profit
with these sites.
Bilateral Working Group _. , , T ,
Ralph Isnorst
Monday, November 11, 2002
-------
bmb+f \^y &EPA
PPP Development and finance strategies
• Public-Private Partnership
- Example
• Kerpen
• For the development of this site we have a
contract and haven't founded a company.
Bilateral Working Group
Ralph Ishorst
Monday, November 11, 2002
-------
bmb+f
PPP Development and finance strategies
Public-Private
Partnership
- Example
• Kerpen
Bilateral Working Group
WWH 00/14 WOHNPARK WALDWEG / KBRPEN - HORREM
Ralph Ishorst
Monday, November 11, 2002
-------
bmb+f
PPP Development and finance strategies
Public-Private
Partnership
- Example
• Kerpen
Bilateral Working Group
LAGEPLANTIEFGARAGEM 1:750
SCHNITTA-AM1:500
WWH 00/14 WOHNPARK WALDWEG / KERPEN - HORREM
Ralph Ishorst
Monday, November 11, 2002
ARCOPLAN
-------
bmb+f
PPP Development and finance strategies
Public-Private
Partnership
- Example
• Kerpen
Bilateral Working Group
WWH 00 14 WOHNPARK WALDWEG KERPEN - HORREM
Ralph Ishorst
Monday, November 11, 2002
-------
* bmb+f ^y xe,EPA
PPP Development and finance strategies
• Public-Private Partnership
- Summary
• For the future PPP-projects will be very important for both
the public and for the private partner when they
• have an exact contract with a good description of the
targets of the project
• have an exact sharing of competence and work
• and a high involvement of all partners.
Bilateral Working Group _. , , T ,
Ralph Isnorst
Monday, November 11, 2002
-------
Ken Cornell - Abstract
This presentation identifies the environmental liability issues associated with brownfield redevelopment and how they can be
overcome. The existence of these liabilities can delay or prevent certain transactions from taking place, even within the
framework of the new common sense brownfield regulations promulgated by the federal government and many state
governments. The presentation describes how environmental insurance can be used as a tool to overcome environmental
liability problems in transactions. Examples of how insurance was utilized in transactions are also provided.
-------
German Case Studies
The OKAL Site in Titisee Neustadt
Bilateral Working Group
-------
wEPA
Beinebs- und
*gL'ngsgesell
Dr. Eise-le mbH
UnternehmensgruppeDr Eisele
Bilataral Working Group
-------
mid Fwschung
r/EPA
The OKAL-Site: Aerial photograph
Bilateral Working Group
-------
fur B
&EPA
The OKAL Site - Contaminations
90 years of wood-
processing.
Groundwater and
soil massively
contaminated with
mercury and
arsenic.
Fish in the river
Gutach found with
traces of mercury.
Bilatoral Working Group
-------
^N-Immobilien
rerigelmann
&EPA
Untern
A
nensgruppe Dr. Eis
Bilateral Wort Edeka & Aldi
govemir mnt
of Environment
authorities
-------
***!
tit &fld ling
mid Raiscnmig
Tengelmann
TN-Immo
Entrepreneurial Risk
Local Authorities
Bilateral Working Group
-------
bu>-i 10-511 iHlSterill HI
liir B-'Wung
ana Farschting
&EPA
Privately funded initial investigations: 500,000
• Entrepreneurial Risk includes funding of:
- waste evaluation
- creation of remediation plan
- preliminary investigations for development
scheme
- legal fees for urban development contracts
- cost estimation and planning of dismantling
- cost estimation and planning of surface modeling
Bilateral Working Group
-------
BunternmiBtBriiiiR
fik§Hlinj
iina Farschung
&EPA
Governmental funded Investigations: 400,000
• Investigations of health risks and danger to
Public Order, primarily to determine the
extent of:
-soil contamination
- groundwater contamination
-Pollution offish in the Gutach river
Bilateral Working Group
-------
WE"
Development measures
Dismantling of the industrial buildings
Modeling of the terrain to obtain a planed subgrade
Public development measures (traffic circle,
sidewalks)
Construction of new private and public sewers.
Cleanup according to the remediation plan.
15% of entire investment went towards remediation
Bilateral Working Group
-------
mid F«i scrimp
v>EPA
Cleanup measures
Cleanup measures required for the entire site.
Long term ground water remediation
Long term monitoring programs
Hot spots excavated for offsite remediation.
Former industrial waste dump secured.
Approx. 60,000 tons of material removed.
Bilateral Working Group
-------
.II"J (-JISL'hJI".!
Future use of the site
Edeka and Aldi revive previous plans for
supermarket and department store.
Remaining property zoned for industrial use.
Remediation goals limited to industrial use.
Bilateral Working Group
-------
Bunfc-srniniBtBriiiiR
lilr (Til ling
ufld Fnrschung
&EPA
Bilateral Working Group
-------
frfrfUliing
xv EPA
Bilateral Working Group
-------
mid Fwschung
r/EPA
Bilateral Working Group
-------
fur B
&EPA
Bilateral Working Group
-------
I' MI '-.I'! II -,
&EPA
Main Characteristics of the OKAL Site
Unspecified
contamination was the
greatest hindrance to
redevelopment
public health was
seriously endangered
All the governmental
agencies were highly
motivated to find a
solution.
Initial governmental
funding of investigations
was considerable but
concerned solely with
public health hazards
Uncomplicated
conditions of ownership.
Previous attempts to
resolve the problem had
failed
Bilateral Working Group
-------
II r Jlbl-l .11 .;
&EPA
Critical Steps
How can long term financial
security be guaranteed ?
Is governmental funding
of initial investigations
needed':
Long term risks
Location development
Cleanup measures
Initial investigations
Long history of failed attempts
Bilateral Working Group
-------
Deutsch Amerikanischer Workshop, Economic and Finance Tools for Brownfield Redevelopment.
12-13 November 2002
Michael Konig, Unternehmensgruppe Dr. Eisele (Dr. Eisele Group)
Abstract: The OKAL Site in Titisee-Neustadt, Black Forest as an example for Brownfield Redevelopment in middle-
sized Communities.
The Dr. Eisele Group consists of three engineering companies and one company for planning and project development (PPE). The PPE company
acts as an investor in brownfield Redevelopment projects. The structure of the group reflects the liability risks inherent in Brownfield projects.
Redevelopment works effectively only if one person is responsible for the project. In this sense, Dr. Eisele Group serves appears as a coordinator
of all necessary investigations and steps and develops all necessary contacts with the involved authorities. The group organizes projects with tight
schedules and a pattern of option contracts to reduce the required equity capital.
The OKAL Site, in the outskirts of the city, includes about 14 hectares, with the northern bordering on the small river Gutach. Two wood
processing companies were resident on the property for about 90 years. As a consequence, the area is contaminated with heavy metals, in
particular, mercury and arsenic. Contamination includes soil and groundwater.
In this example, the Dr. Eisele Group acted as an investor to solve the problems. Two critical steps involved in the redevelopment process are
financial and liability risks. At the beginning of the projects, as a first step, all investigations are funded by the Dr. Eisele Group. At the end of the
project, liability for remaining risk is a critical point. Governmental funding in Baden-Wurttemberg should be improved to close these funding
gaps so that more projects of this type would be possible. The first step of Brownfield development project investigation is to check the
feasibility of co-financing by government funds.
-------
uwlFurscliiiruj
Economic Tools and Finance for Brownfield Redevelopment
Workshop
November 11 and 12, 2002 - Charlotte, North Carolina
German Case Studies
Duisburg - "The Inner Harbor Project"
Martin Linne
City of Duisburg
Bilateral Working Group
-------
BunitesrnmlBt&riiiiiv
•liir flaunt]
II h .11 it! ii .i
wEPA
The city of Duisburg
Central position in West-Europe
Bilateral Working Group
-------
frfrfUliing
&EPA
Duisburg on the Rhine
the Logistic and service center of european standard
with approximately 512.000 inhabitants (No. 12 in Germany) has
* Europes largest inland port with sea port opportunities, free
port, a terminal for multi-modal traffic ...
• 25 junctions linking to 6 national motorways
• more than 100 Highspeed Train stops daily
• and only a few miles to The International Rhine-Ruhr-Airport-
Diisseldorf-the position two airport in Germany
* is an important part of MetroRapid (magnetic Highspeed Train)
planning through the Rhine-Ruhr-Area
Bilateral Working Group
-------
vvEPA
Outstanding traffic facilities in Germany, Europe ...
Bilateral Working Group
-------
Biinilfrsn in interim*
ill- D 4-| liny
mid Porschmvg
&EPA
.. and naturally - in Duisburg
... as a basis for the
economical
development of the
city.
Bilateral Working Group
-------
*
SEPA
Duisburg on the Rhine ...
...is now as ever the most modern steel location in
Europe (e.g. Thys$en~Krupp-Stahl-AG)
... develops in cooperation with the industry and the
university to a future orientated material location
... catches up substantially within the service sector , after
decades of the dominance of the large-scale industry. In
the sector of call center services there has been created
approximatly 4000 new jobs in the last two years.
.... today tries to get more benefit out of the outstanding
geographic position in one of the most important
conurbations in Europe
Bilateral Working Group
-------
d 1(1 iBtsou IT
Duisburq Inner Harbor
>>EPA
today already a success story
Bilateral Working Group
-------
Bundiwmm interai I*
tiir R:1diinp
und >• ii si-. !«.:
>>EPA
Aerial view and location plan
Size: -900.000 sqft over a length of about 1 miles
Bilateral Working Group
-------
fiirlUdliny
History
6EPA
Until 1960 the 'Granary of the Ruhr region'
Until 1970 flourishing grain and timber trading
Inner Harbor around 1900
Bilateral Working Group
Timber and grain trading - Inner Harbor around
1910
-------
mid Rorscnuiifl
Development strategy
* An increase in functionality and attractiveness by
means of public investment on the basis of the
1991 master plan of Sir Norman Foster - the result
of an international planning competition
* Implementation of concept and marketing by the
establishment of a project company IDE -
in co-operation with the IBA (International
Building Exhibition) and the City of
Duisburg in 1993
Bilateral Working Group
-------
xvEPA
The Result of an international planning competition
Msirina
Kontorliaus
Centra] Police
Services
auditor ,lett>
Umber llarlmr
Iliyluvay Interchange
A 40-A 59
atiun
Kiippersiniihle
VIluenil-ille nan-house
Brftlyo
Bilateral Working Group
-------
Bumk-5/miniHreniifii
liir Bridling
Central, attractive location provides
additional incentive for new development
Schwanentor/Swans Gate - gateway to the Inner Harbor
Bilateral Working Group
-------
r/EPA
Development stimulus and enhancement
by public investment
Historical dh luill
• Built at the end of the 12th century
• Demolition of the city gates
1 sis-1x33
• Reconstruction l%o
• Public funding 1986:
€ 1 million
Museum of Culture and Civic History
Built at the end of the 19th century
• Use as a mill until 1040
• Conversion to a museum in 1989 - 1991
• Funding: € 4 million
ciarden ot Remembrance
1 Public funding: appro.v: (. 2 million
1 jlk'i Jemolili'in ••>]' unused warehouses
1 laid out by Daiii Karavan in 1996-1999
1 Inclusion of warehouses released for
demolition
Bilateral Working Group
-------
mid Fwschung
r/EPA
anil apartments
3 grachten with public
subsidies of approx..:
€75 mi Minn
Bilateral Working Group
Marina, 1st construction phase:
• Constructed: 2000-2002
• Public funding - approx.: ( <> million
Bridge ('crossing structure')
•Built [»<>5-N<>6
• New link
between Schifferslr. and
Phi losoplienweg embankment
struct u re
• Additionally dams up the eastern
harbor basin for ecological
water management
Public funding:
approx. € 5.5 million
-------
I Bunit-srniiiinterim*
-liirE.yunij
.11 •.• I- IISL-: .11 .1
&EPA
2 examples of the exemplary combination
of private investment and public funding
cine warehouse
• Built in 1936 as a 10- stow silo grain warehouse
of the company of Rhenania Allgemeine AG
• A 'modern building with the old outer shell
was obtained in 1999 after investments by
'Kolbl Projektentwicklungen' (project development
company) (C 15 mtlllon) with support from
urban development promotion funds (C 3 million)
Bilateral Working Group
Kiippersmuhle Museum
• Constructed in IMOS - 1912
• Complete curettage and conversion 1997- 1999
• Investors: Hans Grothe and Gebag-Gemeinniitzige
stadtische Baugesellschaft (Municipal construction
company)
• Investment volume: C 18 million (62% promotion
funding for the museum)
-------
Bunrtc-yniniBieniiiF.
fiir0*ldung
urtd Farschung
Private Investment
as a consequence of meaningful urban development
promotion
Bilateral Working Group
-------
I
Private Investment: Faktorei 21
&EPA
Bilateral Working Group
98-99: Conversion by the LEG (Regional development
coipo ration)
2002: 4500 m- of office space have been loo % let in the bmklmsj
which is under a preservation order as a historical building.
-------
Hib-g .Idling
alltours travel center 2001
>>EPA
2001 - 2002: Construction of the alltours headquarters in
the Inner Harbor with a staff of about 350
Investment volume: 20 million euros
Bilateral Working Group
-------
Bii'!!«=.•" in istsriii IT
Hiir idling
und K ji si;i .11 ..
Kolbl project developments 2001
r/EPA
Office building with about 150 work places and a
private investment of approx. t 12 million
Bilateral Working Group
-------
Bun de sm m lateriu in
-liirB i;lunij
II Ml !:.i:i .11 .1
&EPA
Private housing construction
in attractive surroundings
Bilateral Working Group
more than 400 units.
-------
fiir
i! '• ii M-' .si .1
xvEPA
Current construction projects
Central Police Services for
North Rhine-Westphalia.
* Construction time: 1999 - 2002
• Approx. 500 work places
• Investment volume:
approx.: € 50 million
Bilateral Working Group
-------
Buntesnunimehiiiii
lit | ild ing
jiid Borsch uitg
Current construction projects
Welirhan warehouse: 1896 Constructed by the Cohen family
1936 After the Cohen family had tied from the Nazis the
warehouse is taken over by the company of Rhemische
Miihlemverke Wehrlwhn
1969 Closure
2003 Completion of the office complex with gastronomy (Business
Bilateral Working Group Office as well as the Children's Museum 'Atlantis'
-------
Implementation incentives for private investment
prepared public environment
partly tax relief (10% of the investment over 10 years) by
o special depreciation in accordance with preservation of historical monuments
o in particular depreciation in accordance with the Urban Development Promotion Act
partly relatively favorable real property terms - what is known as business
promotion discount (max. 30 % of the current market value as a local act)
optimized moderation and co-operation between the investor, IDE -- Inner
Harbor Development Agency and the city
special location marketing
Bilateral Working Group
-------
£U
!,i-
and
Investment pattern so far
400,00
300,00
Mio€ 200,00
100,00
0,00
in Mio€
1985 1989 1993 1997 2001
Jahr / Year
• Private
Investitionen
D Offentliche
Investitionen
/ privat
investment
/ public
investment
Bilateral Working Group
-------
Project financing by
Public investment - in particular for
infrastructure and cultural institutions -
financed by various programs of the European
Union (EU), the state (Land) of North Rhine-
Westphalia (NRW) as well as the City of
Duisburg
Private investment in specific above-ground
construction projects as well as a marina
Bilateral Working Group
-------
#11
I .iii.jKitsi'i n .1
I
Planned construction projects for 2003
Viterra - H2 Office
Modern buiicling for offices and services
Construction time: 2002 - 2004
Investment volume: € 50 million
Bilateral Working Group
-------
Bundesmmistehiim
•lii'-Jliiiliinri
mid Rorscn 11114)
&EPA
Kolbl - 'five boats'
Marina - Office, leisure and retail trade by the Timber Harbor
Kolbl u. Knise Projektentwicklungcn
Planned investment: C 45 million
Bilateral Working Group
-------
rxEPA
Further impressions
Bilateral Working Group
The Werhan Mill
-------
iff
•IHr Bi
&EPA
Bilateral Working Group
Old city center park by night
-------
iino Farachung
&EPA
Bilateral Working Group
Jewish Community Center
-------
•Kir B*1 liny
HUE) Forscl'iung
c/EPA
Bilateral Working Group
The Marina
-------
I
I
I and Borschuny
v/EPA
Bilateral Working Group
-------
Bilateral Working Group
-------
Bimd«ministeniiir
But allthough we are close to the end
of the Inner Harbor Project, we are
not at the end of our urban development....:
Martin Linne
City of Duisburg
Bilateral Working Group
-------
mid FarscNng
~ I
Stadtebauliches Rahmenkonzept
RheinPark
We want to do a new
redevelopment project,
directly located at the
river Rhine
Bilateral Working Group
Martin Linne
City of Duisburg
-------
Bundfrsm in Interim*
Wir S;W ling
u I-.Hsr;'.ii j
&EPA
... with mixed uses,
widely open green
spaces as a part of the
federal gardening
exhibition 2011, ...
Bilateral Working Group
Martin Unite
Cityof Duisburg
-------
Bun turn in iaterm m
•Hir LHung
P/EPA
Perspektiven
... so I hope that I
will be able to tell
you something new
about another
success story in 3 or
4 years.
Bilateral Working Group
Ma it in Unite
City of Duisburg
-------
mid Rarschiiny
&EPA
Thank you very much for your attention
Martin Linne
City of Duisburg
Bilateral Working Group
-------
BMBF - EPA Meeting
Charlotte - North Carolina - 2002
Workshop Report
Duisburg Inner Harbor
The City of Duisburg:
The City of Duisburg currently has 510,000 inhabitants - a declining population trend has been occurring for more than 15 years. Duisburg lies
at the edge of the conurbation on the Rhine and Ruhr - consisting of 17 cities - with more than 5 million inhabitants.
The economic peak for the city was during the period between 1950 and 1965. Since the mid-1960s, the importance of coal mining has declined
throughout the entire region. Ten years later, the same decline began to occur in the steel industry.
In Duisburg, today, only one pit and two large steelworks are still in operation. However, the steelworks (Thyssen-Krupp) have a high
productivity, and, because of the excellent transport infrastructure (port - rail freight - highway network) and the intense concentration process
of recent decades, a strengthened market position.
Since 1980, the City of Duisburg has been undergoing profound structural change. During this period, on balance, more than 120,000 jobs were
lost, while only about 50,000 new jobs were created.
The redevelopment of Duisburg is being supported by the excellent transport infrastructure within the largest European inland harbor, the
international airport in Diisseldorf (only 20 minutes away from the city center), and national and international high-speed rail links, as well as
the location linked to six highways.
After many reactivation measures on relatively small Brownfields since the mid 1970s, towards the end of the 1980s the first major
revitalization projects of derelict industrial and business areas were tackled. Today, all of the large urban development projects - whether in
the inner city area or the other areas of the city of Duisburg - are located on former production/transport areas of the steel industry, the national
rail company, and/or manufacturing industries.
-------
The Example for a City Center Extension
Duisburg Inner Harbor Service Park
Pre-history:
The Duisburg Inner Harbor, until into the 1970s the most important regional place of transshipment for wood and grain, is only a few hundred
meters away from the city center . For the site, about 25 years ago there were already classic (commercially oriented) considerations for reuse,
sparked by a steep decline in transshipment activity. However, for financial reasons, these could not initially be implemented until 1989.
(Annotation: there have not been large areas of polluted soil, but there have been a lot of "useless" buildings and dock facilities, which should
become very important for the future character of the site.
-------
New goals:
The start of a comprehensive revitalization was made in 1989 - after more than 10 years of inactivity - within the scope of the International
Building Exhibition, Emscher Park. The urban space situation, the Inner Harbor was now to be used for a high-quality extension of the city
center.
At the beginning of 1991, an international planning procedure was implemented in which the team centering on Sir Norman Foster, London, came
to the fore. On the basis of his master plan, the Inner Harbor was developed during the last decade, with the involvement of further renowned
architects and artists, to form a versatile and attractive city quarter.
The main task was here - because of the previous use - not the correct and proper remediation of contaminated soil, but to make appropriate use
of the dock equipment which in itself was Valueless' for the new uses, as well as to use at least parts of the old buildings - grain mills, silo units,
warehouses - and plants - quay facilities, water areas, cranes - for the new uses and to thus enable an identification of the population with 'their'
city quarter.
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The Conception:
In his master plan, Sir Norman Foster developed a successful mixture of old and new allowed the Inner Harbor to become a top address in the
region today. An 'integrated conception was produced, with use being made of reusable but also 'useless' buildings and dock facilities only having
a design-related effect. The future master plan of Sir Foster has been the foundation for project realization during the last 10 years. It has been
adapted and respectively modernized in the details of several steps but not changed in its character.
For the implementation of the overall project, in 1992, the 'Duisburg Inner Harbor Development Company' (Innenhafen Duisburg
Entwicklungsgesellschaft) was founded, which was financed half each by the city of Duisburg and the State of North Rhine-Westphalia.
From 1993 forward, most of the preserved warehouses by the waterside were converted to create more than 2,000 (in 2001) new, jobs in the
service sector. At the same time, several museums were established:
D • The Museum for Cultural and Urban History
D • The Museum of Modern Art of the Swiss Architects Herzog & de Meuron, who also converted the London Tate Gallery
D • A Children's Museum that currently is being organized in an old mill building
At newly laid out, ecologically oriented water areas ("grachten"), more than 400 new housing units were built. The whole of this is supplemented
by special housing provided for elderly people, kindergarten in old office buildings, various restaurant possibilities, a Jewish community center
designed by the famous Israeli architect Zvi Hecker, as well as an "Altstadtpark" (old city center park) designed by the Paris-based artist Dani
Karavan.
In particular the design of this old city center park initially sparked a lot of discussion, because Mr. Karavan integrated lots of remains of earlier
use (staircases, foundations, and heaps of rubble, for example) into the design, creates an enormous city-center park rich in contrast and
excitement. Further design highlights are a moving, rising pedestrian bridge and the yacht marina, which opened this year in the old harbor basin.
With the Inner Harbor Service Park, the goal of an attractive extension of the city center at a high level has already been surpassed, about 2 to
3 years before project conclusion. Reintegration of water into the city and the mixture of modern jobs, cultural facilities, attractive housing, and
opportunities for leisure activities have been outstandingly successful.
-------
Finance:
Over all, there has been a public financed "pre"- investment for the new technical infrastructure, the "old city center park", and a museum of
nearly Euro 60°million.
In the early years and until 1996, only a small portion of financing was from private investment.
But in 1997 private investment increased for new buildings and modernization of old grain mills etc. Today, after approximately 80% of
realization, a private investment of about Euro 250°million has been realized. At the end of the realization there will be a private investment of
Euro°350 to 400 million.
The public investment has usually been financed through different programs by the City of Duisburg, the State of North-Rhine Westphalia and
the European Community. The portion of city financial contribution has been between 10 and 30 percent of public support.
The real progress in this project has been the integrated, supplement financing of some projects with different programs during the period of the
International Building Exhibition.
-------
The result:
As a qualitative result, a new address, an attractive location as city-center expansion, (well known at the supra-regional level and greatly
sought after), has emerged, which has had a positive influence on downtown Duisburg in its entirety.
From a quantitative point of view, it is the case that following initially relatively high use of public funds which was necessary to ensure quality
standards-with public capital expenditure of about Euro 60 million - an investment ratio of 1:4/1:5, and in the end of nearly 1:7, has been
reached. This means that through every portion of preliminary public capital expenditure, about seven portions of subsequent private capital
expenditure were triggered. In a regional comparison this is an outstanding figure.
In summary, as a result of the Inner Harbor project, such companies currently are considering a location in Duisburg by the Inner Harbor or in the
nearby city center, who, only a short time ago, would never have seriously considered the City of Duisburg as a business location. Therefore this
project is not only in itself to be rated a success, but it has contributed considerably to new, better positioning of the City of Duisburg in regional
competition.
-------
The author / contact:
Martin Linne
Stadt Duisburg - Stadtentwicklungsdezernat
Leiter des Amtes fur Stadtentwicklung & Projektmanagement
(City of Duisburg -Department of Urban Development
Director of Urban development & Projectmanagement)
Friedrich Albert Lange Platz 7
D 47049 Duisburg
Phone:+49 (0)203 283 3366
Fax:+49 (0)203 283 3666
Mail:m
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Financing Brownfield Reuse Projects:
Emerging Local Tools - and Why They Are Needed
by
Charles Bartsch
Northeast-Midwest Institute
-------
Financing Brownfield Reuse Projects:
Emerging Local Tools - and Why They Are Needed
The legacy of the nation's past is evident in communities all across the country.
Often abandoned, usually contaminated industrial sites dot the cityscape. They pose
significant challenges for local elected officials and economic development agencies.
Redeveloping these "brownfield" sites can be a costly proposition. The complicated
process and legal hurdles of acquiring, cleaning, and reusing these sites can be
expensive in terms of site preparation expenses and fees, and costly in terms of time
delays. Site evaluation processes, testing, possible legal liabilities, and other factors
serve to deter private participation in activities to bring old industrial sites back to
productive use. In many situations, the private development and financial sectors are
not able or willing to act on their own to ensure that the full economic potential of site
reuse will be achieved.
Critical funding gaps are, in fact, the primary deterrent to site and facility reuse.
The financing situation is especially gloomy for start-up firms or small companies with
little collateral outside the business. Clearly, local governments can find creative
ways to help enterprises overcome the obstacles that environmental contamination
brings to the ecpnomics of the site reuse process; such actions range from regulatory
clarification for liability stemming from loan workouts to direct financial assistance
programs. For decades, local governments have used or sponsored public finance
mechanisms to stimulate economic activity in certain geographic areas or industries.
Now, publicly-driven economic development initiatives are reaching into new sectors
and incorporating new concerns, such as environmental improvement. Brownfield
reuse strategies and techniques are rapidly evolving.
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Financing Brownfield Reuse Projects:
Emerging Local Tools - and Why They Are Needed
Redeveloping Contaminated Sites - Barriers in Brief
Lack of process certainty and finality. The Superfund law and its attendant
regulations guide public officials and private parties as they cope with contamination
at any site. The problem is widespread and significant; even though only about 1,200
sites have been classified as "Superfund sites," more than 500,000 sites nationwide
show evidence of at least some contamination that could trigger Superfund rules and
deter their owners from selling the site, securing financing for cleanup, or proceeding
with reuse. Prospective site reusers need a clear, recognized, and expedited
process to determine how clean is clean for any given situation. Today, some 47
states have launched "voluntary cleanup programs" to provide a mechanism to
address these issues.
Uncertain liabilities. Liability is a critical concern. Superfund imposes liability
on those who generated or arranged for the disppsal of hazardous waste, and on
landowners and operators of contaminated facilities. Current owners and operators
are identified first - even if they did not cause the contamination. Moreover, liability
is retroactive to past actions that cause present problems. The prospect of liability
drives prospective site reusers away, and keeps cpmpanies from being able to
borrow enough to clean up properties and modernize operations. Faced with the
spectre of liability, some companies have simply mothballed obsolete, unused
facilities. As a result, npt only does no new economic activity occur, but no
environmental cleanup is undertaken, either. As a first step to address some of these
concerns, Congress in September 1996 adopted language to clarify lenders' liability
responsibilities at contaminated sites, where their only involvement was making the
loan itself.
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Financing Brownfield Reuse Projects:
Emerging Local Tools - and Why They Are Needed
Cost of environmental cleanup. The legal and procedural steps necessary
to test, clean, acquire, and reuse contaminated sites is expensive and time
consuming. The costs of preparing financing packages have tripled since 1980
because of environmental requirements. In practice, whether sites are cleaned and
reused or not boils down to one of dollars and cents; even if an old industrial facility
has only small amounts of contamination, site assessment and cleanup add
considerably to the cost of a redevelopment project, making its economics much
harder to justify.
Lack of redevelopment finance. In mpst areas, adequate private financing to
carry out both cleanup and redevelopment activities is simply not available. Even with
lender liability addressed, financiers are still concerned about the impacts of
contamination on collateral value and the ability of borrowers to repay their notes.
These risks have made lenders wary, and this fear makes them reluctant to provide
the resources needed to carry out site reuse projects.
Therefore, lenders have changed the way in which they deal with projects that
even remotely involve hazardous wastes in response to these risks - real or
perceived. This, in turn, affects the reuse potential of specific sites as well as the
broader economic development climate in many areas. In practice, financial
institutions grappling with concerns over environmental liability and contaminated
project sites are:
Sharply curtailing their level of lending, especially to manufacturing companies;
Cutting off financing for certain types of businesses, such as those that routinely
handle toxic substances - service companies such as dry cleaners and auto body
shops, as well as manufacturers such as high technology metal fabricators,
semiconductors, and tool and die shops;
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Financing Brownfield Reuse Projects:
Emerging Local Tools - and Why They Are Needed
Significantly increasing transaction costs by requiring thorough
environrnentaassessments (which can cost $50,000 or more, depending on the size
of the site and the nature of prior activity on it), and demanding that cleanup be done
as a condition of loan approval; and
Restricting their interaction with and advice to a borrower, to reduce their exposure to
liability.
Promoting Reuse: Goals of Public-Sector Incentives
In many cities, few needs are more pressing than that of restoring abandoned
buildings and brownfield sites to useful life. Their continued deterioration will only
worsen existing environmental problems and further weaken the local economic
base. Therefore, in spite of the difficulties of brownfield projects, communities have
little choice but to promote their reuse; the benefits of returning these sites and
structures to productive reuse outweigh the option of inactivity. City agencies and
local development organizations, as well as private interests, are beginning to
successfully confront the obstacles, however daunting.
The public sector can do much to help level the economic playing field between
greenfield and brownfield sites. Creatively crafted and carefully targeted incentives
and assistance can help advance cleanup and reuse activities. Such strategies must
recognize, however, that brownfield projects differ considerably in terms of barriers to
investment and opportunities to redevelopment. Therefore, no one "best" public-
sector approach will fit all needs. Clearly, a variety of incentives can make the most
effective use of public-sector assistance, as welj as improve the climate that invites
private investment in brownfields. These incentives, used separately or in
combination, should be able to meet several goals, including:
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Financing Brownfield Reuse Projects:
Emerging Local Tools - and Why They Are Needed
Reducing the lender's risk, making capital more available by providing incentives or
legal clarification for lending institutions to help companies or projects at sites
deemed riskier because of their prior uses;
Reducing the borrower's cost of financing, for example, by making capital more
affordable by subsidizing the interest charged on brownfield loans, or by establishing
policies that reduce loan underwriting and documentation costs; and
Easing the developer's or site user's financial situation by providing incentives, such
as tax credits, that can help improve the project's cash flow.
State and local gpvernments, in many respects, are the innovators. Typically,
brownfield success stories are found in places that have adopted their own site
characterization and reuse tools and creatively built on the foundation provided by
federal programs and policies.
Yet as important as these initial successes are, the potential exists for even
greater activity. Many jurisdictions are starting to explore ways to help prospective
re-users overcome the difficulties that contamination can bring to the redevelopment
process, setting up finance programs to ease the cost or terms of borrowing,
augmenting private funds, or filling funding gaps that the private sector will not bridge.
Moreover, public-sector support does not have to be limited to helping specific
companies; other related activities can be financed that help improve the broader
brownfield investment climate. For example, localities can assume some of the
responsibilities for site preparation and clean up, recovering some of their costs
during subsequent site sale or development. And, jurisdictions can support such
activities by earmarking tax revenues, loan repayments from other programs, and
other sources of funds to pay for necessary project activities, such as site testing or
soil removal.
-------
Financing Brownfield Reuse Projects:
Emerging Local Tools - and Why They Are Needed
Local Brownfield Initiatives: Emerging Financing Tools
New missions for old workhorses. Practically speaking, the benefits of
bringing new business activity to established city locations has been outweighed by
the risks accompanying the acquisition of brownfield sites. Environmental
assessment and even small-scale cleanups remain significant costs that channel
investment away from previously used facilities to greenfield sites. In many
instances, local governments have begun to explore a variety of financial incentives
to offset some of these risks. Many of these efforts will involve placing a new
brownfields "spin" on long-time, tried-and-true financial assistance tools.
Tax Increment Financing. The TIP mechanism, available in nearly 40 states,
has traditionally been used for numerous types of economic revitalization efforts,
usually in economically distressed or abandoned areas - the typical brownfield
location. The TIP process uses the anticipated growth in property taxes generated by
a development project to finance public sector investment in it. TIFs are built on the
concept that new value will be created -- an essential premise of most brownfield
initiatives - and that the future value can be used to finance part of the activities
needed now to create that new value. The key to TIP is the local commitment of
incremental tax resources for the payment of redevelopment costs.
TIP bonds are issued for the specific purpose of redevelopment - acquiring
and preparing the site, upgrading utilities, streets, or parking facilities, and carrying
out other necessary site improvements. This makes them an ideal financing tool for
brownfield projects; in fact, many cities with brownfield success stories helped bring
them about with TIP financing. TIP programs are easily used with other types of
funding, such as grants or loans.
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Financing Brownfield Reuse Projects:
Emerging Local Tools - and Why They Are Needed
However, many jursidictions have been hesitant to use TIP mechanisms for
brownfield projects; if projected development fails to materialize or unanticipated
complications arise, it can be difficult to retire the bonds. Some local economic
development practitioners also cite the complexity of many TIP initiatives as a
practical disadvantage; they can require a lot of time to put into place, and high levels
of technical expertise and negotiating savvy to move a project from concept to
implementation, especially one made more difficult by environmental concerns.
Tax Abatements. Tax abatements are commonly used to stimulate
investments in building improvements or new construction in areas where property
taxes or other conditions discourage private investment. States must usually grant
local governments the authority to offer tax abatement programs, and most allow only
certain areas to participate, such as economically distressed communities or
deteriorating neighborhoods -- typical brownfield locations.
Tax abatement programs must be carefully designed to target intended
beneficiaries without offering unnecessary subsidies, a feat often difficult to
accomplish. Because of this, tax abatement programs have numerous critics. Yet
the key advantage of tax abatements is that they give local governments a workable,
flexible incentive that helps influence private investment decisions. This can be
important in efforts to promote brownfield reuse.
Community Development Block Grant "Float". Generally, CDBG recipients
are unable to use their entire block grant allocations in the year received; long-term,
larger projects (such as infrastructure construction) approved for funding take more
than a year to plan and carry out. According to HUD rules, funds not needed to meet
current project costs remain in the federal treasury until the city actually needs them;
it is not unusual for CDBG funds awarded one year to be drawn down a couple of
years later as big capital projects move towards completion.
-------
Financing Brownfield Reuse Projects:
Emerging Local Tools - and Why They Are Needed
When a city can show that previously awarded CDBG funds will not be needed
in the near term, it may tap its block grant account on an interim basis - using what
HUD calls a CDBG "float" - to finance short-term, low interest construction financing
for projects which create jobs. Any developer, not-for-profit agency, or private
company which can obtain an irrevocable letter of credit from a lender is eligible to
apply for such financing. (The letter of credit satisfies HDD's concern that the funding
will be available for its originally planned purpose.)
Proceeds may be used to pay all costs for the purchase of land and buildings,
site and structural rehabilitation - including environmental remediation -- or new
construction. Float funds can also finance purchase of machinery and equipment.
Maximum loan size is determined by the amount of funds in a jurisdiction's CDBG
account available to cover the float. Float loans can not be extended for more than
two years; the interest rate is limited to 40 percent of the prevailing prime rate. A few
municipalities, notably Chicago, have financed brownfield cleanup activities via the
CDBG float mechanism.
General Obligation Bonds. Virtually all communities can issue G.O. bonds
for (in the terms of one city attorney) "any proper public purpose which pertains to its
local government and affairs." Economic development practitioners can make a
strong case that a bond pool to support brownfield cleanup and reuse projects could
create jobs and enhance the local tax base, which are appropriate public purposes.
Cities traditionally issue G.O. bonds for acquiring land, preparing sites, and making
infrastructure improvements ~ key elements in a brownfield redevelopment strategy.
Moreover, the city's ability to repay this bond debt would be enhanced by the growth
in property tax revenues as more brownfields are brought back to productive uses.
-------
Financing Brownfield Reuse Projects:
Emerging Local Tools - and Why They Are Needed
Refocussing existing local development programs. Every local
government already uses a variety of financial assistance programs and incentives to
promote economic and business development; like federal and state programs, local
offerings can be more explicitly packaged and prompted for potential developers and
lenders to use to clean and rehabilitate brownfield sites. A growing number of cities
are examining ways to do this; alternatives being considered in some places include:
Earmarking water, sewer, and waste water charges for brownfield cleanup activities;
Earmarking some portion of grant, loan, or loan guarantee program funds to
applicants proposing site characterization or cleanup projects;
Developing a municipal "linked deposit" program targeted to brownfield borrowers;
Channeling some portion of loan repayments from existing city programs to
brownfield projects;
Devoting monies raised from fines or fees to a brownfield financing pool; or
Using small amounts of public funds to "seed" a private, shared-risk financing pool
devoted to brownfield redevelopment.
In addition, cities can explore other low- or no-cost techniques to stimulate the
flow of capital to promising brownfield redevelopment undertakings. For example,
Chicago and Cleveland are considering ways to more easily convey tax-delinquent
properties to new owners with viable reuse plans. Other cities are contemplating
modifications in their zoning requirements in specific cases to provide developers with
the opportunity to earn a greater return on their investment and offset more site
preparation costs.
-------
Financing Brownfield Reuse Projects:
Emerging Local Tools - and Why They Are Needed
New types of local brownfield finance initiatives. Many brownfield sites
have the potential to become economically viable, hosting new business activity and
jobs. However, many of these sites require some level of public investment to
achieve this viability. Federal and state resources will not be sufficient to address all
the prospective site cleanup and reuse possibilities identified by jurisdictions across
the country; the large number of applicants for the handful of EPA brownfield pilot
sites designated to date is testimony to that. Existing local programs can meet some
of this need, but clearly can not meet all financing gaps in many areas. Therefore,
communities must consider establishing new brownfield incentive programs of their
own. These could help with site characterization and cleanup costs, or development
costs, or both types of activities.
Competing public needs and objectives, as well as limits to public resources,
are facts of life in every community; recognizing this, local officials could consider two
approaches to promoting brownfield finance. First, they should identify and set-aside
public sources that can be mostly self-sustaining, stable over time, and relatively
isolated from changing political tides. Given the inherent limits of public funding,
some type of cost recovery is essential to the sustainability of local public financing of
brownfield projects. Against this backdrop, local programs can - as they evolve and
become more established - enhance their own flexibility by offering forgiveable
loans, recoverable grants, lengthy repayment terms, recovery upon property transfer,
and similar conditions.
Second, public resources should be marshalled in the context of an explicit,
strategic brownfields approach. Generally, local officials should give sites with
greater development potential priority as they reach decisions on financial assistance.
In many cities and towns, this may mean supporting several smaller sites in a
declining area rather than the one big abandoned plant that has come to signify
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Financing Brownfield Reuse Projects:
Emerging Local Tools - and Why They Are Needed
"brqwnfields" to the community. Momentum for brownfield cleanup and reuse - and
justification for public sector involvement in it - can be created and maintained with
visible successes, even at small sites. Moreover, smaller brownfield projects are
more manageable and often more significant in terms of real benefits than a single
large, more contaminated site.
The Challenge to Local Governments: Confronting Environmental and
Economic Issues Affecting Site Redevelopment
Underused or abandoned industrial facilities are a national concern —with
jocal immediacy in many instances. Confronting the environmental and economic
issues affecting site reuse requires a deliberate, multi-dimensional approach that
often does not neatly fit with the rules and procedures of federal, state, or local
economic development or environmental programs. Financing has emerged as a key
barrier to brownfield reuse. Site assessment and cleanup requires financial
resources that many firms lack and find difficult to secure. And without financing,
private reuse projects cannot go forward, even if their proponents want them to. This
further undermines efforts to revitalize the distressed areas that are home to so many
abandoned, contaminated sites.
Yet in spite of the barriers, brownfield reuse opportunities are real. Scores of
diverse projects have been documented, ranging from an old Soo Line railyard in
Minneapolis that is being redeveloped as a light industry park, to a metal valve
fabricating plant in Bridgeport, Connecticut converted into a minor leage baseball
park — and which attracted more than 300,000 people during its inaugural year to
what had been an abandoned industrial wasteland adjoining downtown. These
projects have been carried out in a way that makes economic sense, and that builds
-------
Financing Brownfield Reuse Projects:
Emerging Local Tools - and Why They Are Needed
on the competitive advantage that specific sites boast. Such success stories suggest
that liabilities can be worked out, that financing can be secured, and that cleanup can
be accomplished -- in short, that brownfield redevelopment can be achieved.
The challenge that local governments face now is to provide the tools that
make the economics of redevelopment projects work. At the same time, it is
important to emphasize that incentives can make a site economically viable, but that
the public sector alone can not carry the brownfield reuse load. Redevelopment on a
wider scale can only be achieved if public policies and programs foster a climate that
invites private investment in these projects.
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B undent! in isrehunv
Wr Qidling
II Kll Ml ,11 .,
&EPA
US GERMAN BILATERAL WORKING GROUP
ECONOMIC TOOLS FOR SUSTAINABLE
BROWNFIELDS REDEVELOPMENT
PORTLAND, OREGON MODEL SITES
Douglas C. MacCourt, Esq
Ater Wynne LLP
Bilateral Working Group
-------
*
Bun item 111 iBteriiim
<,>rw^g
mid F-arsehuivg
PORTLAND, OREGON MODEL SITES
• Two Case Studies
- North Marine Drive
-Yards at Union Station
• Focus on Economics/Project Finance
• Illustrate Successful Application of
Brownfield Finance Tools to Achieve
Sustainable Development
• Compare to German Economic Models
and Finance Tools
Bilateral Working Group
-------
I sna
I mid farsc
mid farschiiiig
Brownfields & Smart Growth
The Willamette River:
- Oregon's oldest, largest industrial, shipping,
transportation and commercial center
- Brownfields concentrated along Portland's
urban waterfront
- Industrial properties served by major rail,
highway, air and deep-water port facilities
Bilateral Working Group
-------
i«ld Kliiii-i .ir .i
Planning/Land Use Strategy
&EPA
Regional land use
framework: inside the
Urban Growth Boundary
Focus on growth: jobs,
infrastructure, access to
labor and markets
Private sector investment
Portland Brownfield
Initiative
Livable Community
Showcase Project
Bilateral Working Group
-------
Hit 9.«ling
ilinj MISII H .,
&EPA
Union Station Yards - Circa 1912
• PJ-
Bilate
-------
Site History
&EPA
Wetlands and small
lake prior to 1890
Filled in with more
than 3,000,000 cubic
yards of Willamette
River dredge spoils
Active passenger rail
station and railyard
for more than 110
years
Bilateral Working Group
-------
TJT
tin dF
-------
Bunil«miiilBteriiii>
frBNuM
and Fnrscliung
r/EPA
Union Station Yards - Circa 1988
-------
vvEPA
Discovery of Environmental Impairment
* During geotechnical exploration, last
geotechnical boring encountered petroleum in
soil
• Discovery of oil led to further assessment, which
resulted in discovery of pervasive contamination
• Discovery of contamination and PDC's inability to
provide indemnification from third-party liability
led to withdrawal of GC and lender
Bilateral Working Group
-------
Bunil«miiilBteriiii>
frBNuM
and Fnrscliung
Exploration Plan
r/EPA
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-------
illi'J Misn H .,
&EPA
Regulatory Framework
Site received priority oversight from State of
Oregon Voluntary Cleanup Program
Remedy stipulated by DEQ within three months of
discovery of contamination
Prospective purchaser agreements were
negotiated with DEQ to ease developer and lender
concerns regarding environmental liability
Bilateral Working Group
-------
imineriiiift
lung
illid !• ji si:i ill j
4>EPA
Environmental Impairment
Oil in Soil
• Area Affected -
5,000 square
feet of site
• Corrective
Action -
Approximately
3,000 cubic
yards of oil-
containing soil
removed
Bilateral Working Group
-------
I mid ForschitHjj
xvEPA
Remediation of Petroleum Contamination
Bila
-------
&EPA
Environmental Impairment
Lead, Arsenic and
Fuel Hydrocarbons
in Soil
* Area Affected -
Entire 6.1 acre site
* Corrective Action -
Surface capping
and institutional
controls
Bilateral Working Group
-------
Bunde-sminluteriLKTV
liir Billing
mid Borsch ling
r/EPA
sx
Surface Capping
Bilat
-------
liir RiMiing
and Borsch iing
&EPA
Construction Issues
Change in building
code allowing 5-
story wood-frame
construction
Safety program
negotiated for
workers.
Minimized soil
transported to
landfill.
Bilateral Working Group
-------
i«ld Kliiii-i .ir .i
&EPA
Phase A Housing
• Project groundbreaking March 1997, Project
completed in March 1998
• Consists of 158 units of housing. Half of units
reserved for persons earning <50% of median
income, and half reserved for persons earning
<60% of median income
* Phase A Housing currently near 100%
occupancy
Bilateral Working Group
-------
und Farschimg
c/EPA
Phase A Housing
-------
Buntesnunlateriiiiii
ui-
&EPA
Phase B Housing
• Project groundbreaking September 1998.
Project completed in January 2000
• Consists of 321 units of housing. Forty percent
of units reserved for persons earning <60% of
median income, and the balance of units are
market rate
* Phase B Housing currently near 100%
occupancy
Bilateral Working Group
-------
Bunil«miiilBteriiii>
frBNuM
and Fnrscliung
r/EPA
Phase B Housing
Bila
-------
imsteHiiiF
ung
I M1 .• I" II Bl'l III .1
Relative Project Costs
The Yards At Union Station
3%n
n Housing
n Public Plaza
• Env. Assess
• Infrastructure
n Ped. Bridge
n Env. Clean-Up
88%
-------
#
Cost-Sharing Arrangements
• PDC able to negotiate and execute cost recovery
agreement with prior owner. Indemnification for
third-party liability also obtained
• Out-of-pocket cost to PDC for environmental
assessment and remediation was $300,000 of
$2,650,000
• No environmental costs were borne by
developer or general contractor
Bilateral Working Group
-------
I mid ForschitHjj
Financing
&EPA
Utilizing TIP, PDC
provided a $10 M
low-interest loan
The project received
10-year tax
abatement for all
site improvements
PDC funded the
public plaza and
pedestrian bridge
Bilateral Working Group
-------
Buntesti in laterium
Hiir?--*1ung
urd Farsehun^
Financing Plan
&EPA
Estimated costs $36.5 M
Sources of funds
- Bonds: $22M
- City subordinated loan: $5.4 M
- Borrower capital: $1M
- Tax Credit Equity loan: $4.4 M
- Deferred development fee: $2M
- Net operating income: $822,000
Bilateral Working Group
-------
and Farschuny
Primary Uses of Funds
* Construction/rehabilitation: $26.2 M
* Architecture & engineering: $1.5 M
* Costs of issuing bonds: $ 1.275M
• Other financing costs: $870,000
* Reserves: $250,000
* Construction contingency: $1M
• Government fees: $750,000
* Developer fee: $2M
* Interest reserve: $2.4M
Bilateral Working Group
-------
MET—
and Farschung
Principal Public Benefits
* Low Income Housing - project provides nearly
300 units of low-income housing
• Access to Jobs - the project is located within 3
blocks of the City's bus mall, and within 6
blocks of downtown
• Regional Planning Goals - provides 10% of
planned housing units within the River District
Urban Renewal Area
Bilateral Working Group
-------
*l
imsteniiif
Pedestrian Access to ransportation and
Downtown
-------
Principal Public Benefits
• Low Income Housing - project provides nearly
300 units of low-income housing
* Access to Jobs - the project is located within 3
blocks of the City's bus mall, and within 6
blocks of downtown (the business hub of the
City)
* Regional Planning Goals - provides 10% of
planned housing units within the River District
Urban Renewal Area
Bilateral Working Group
-------
and Farschuiiy
&EPA
River District Today
Bilateral
i » , . .f* ,
-------
Principal Project Team
* Bond Financing:
- Ann Sherman, Esq., Ater Wynne LLP
- als@aterwynne.com
- (503)226-1191
• Technical Consulting:
- AMEC, Inc.
- Contact: Leonard C. Farr, Jr.
- 503-639-3400
- email: leonard.farr@amec.com
Bilateral Working Group
-------
I MET*
I ,.nd Ftaenng
Additional Project Team Members
• GSL Properties, Inc.
2164 SW Park Place
Portland, Oregon 97205
503-224-2554
• Housing Authority of Portland
135 SW Ash Street
Portland, Oregon 97204
503-802-8512
• Walsh Construction Co.
3015 SW First Avenue
Portland, Oregon 97201
503-222-4375
Bilateral Working Group
-------
Bundiv5Timlaterium
4>EPA
North Marine Drive- Oregon
Project Summary
* Category: C
• Size: 3000 Acres
• Former Use: Chemical Plant, Industrial Junkyard
• Intended Use: Industrial, Transportation, Open
Space, Habitat
• Driver: Private
* Funding: Mix of federal, state, and local
government funding
• Status: Federal, State and Local Transportation
Bilateral Working Group
-------
Bilateral Working Group
-------
BilatGral Working Group
-------
fiir Biding
it I- :u :-.r :!i .1
North Marine Drive- Oregon
S.EPA
Bilateral Working Group
-------
•fib-§ ikl ling
Lin'jlMii settling
North Marine Drive- Ore
&EPA
Bilateral Working Group
-------
iina Fa
North Marine Drive- Oregon
Environmental Concerns and Technologies
• Pre-Development Conditions:
- 9 of 17 parcels needed for expansion were
contaminated; three seriously polluted
- Chemical Plant: organic pesticides in soil and
groundwater; land banned chemicals
- Oil blending plant: petroleum
- Junkyard: PCB's
• Cleanup costs from primary project funding agent (federal
transportation agency) were "Non-Participating"
• Project required sophisticated risk assessment based on
pore water migration model analyzing impact of load on fate
and transport of contamination in groundwater
Bilateral Working Group
-------
nil a F-nrachiwg
&EPA
North Marine Drive- Oregon
Social Issues and Solutions
• NEPA Environmental Impact Statement (EIS) Process
identified publicly supported alignment through
brownfields
* State's largest freshwater wetland and heron rookery, home
to bald eagles, rare turtles and endangered salmon
• Build on NEPA EIS and support from residents and
landowners
* Adjacent property owners involved in process from
beginning, including sharing environmental information
Bilateral Working Group
-------
Bunite-srniiiiHteriiim
fiir S;Wlinrj
and Farscnung
&EPA
North Marine Drive- Oregon
Economic Barriers and Solutions
• Access to 2800-acre Rivergate Industrial Sanctuary
impeded by two-lane road
• Brownfields along truck route discouraged investment
• Project stimulated private investment through
transportation access
• Innovative road design, construction & long term controls
to limit risks from contaminants
• Project changed US DOT policy on cost participation for
contaminated projects
Bilateral Working Group
-------
Bumtesriinlsteriiiiit
•liir Rild unrj
&EPA
North Marine Drive- Oregon
Critical Success Factors
• Coordination among local, state and federal agencies
• Close cooperation with private landowners
• Risk-based cleanup key to changing federal funding policy
• Long-term planning preserves industrial sanctuary, primary
driver of brownfield development project
Bilateral Working Group
-------
xvEPA
^*«^
Costs
• $25 Million for roadway
- $14.6 Million FHWA
- $5.4 Million Oregon Dept. of Transportation
- $2.6 Million Port of Portland
- $2.6 Million City of Portland
• Environmental Costs:
- Potential: $10-12 Million
- Actual: $300,000
Bilateral Working Group
-------
Uses of Funds
Railroad bridge: $ 5 M
- $1.5 M for Railroad Union
- Union actually saved costs
Rail crossing: $1.5M
Bank stabilization: $1 M
Right-of-way purchase: $2 M
Road construction: $12 M
Environmental: Approximately $350,000
Bilateral Working Group
-------
midRorscnuiifl
Impact of Project on Land Values
• Three years after the project, $316 M in private
investment
• Land appreciation:
- 1990: $75,000/acre
- 1993: $86,500/acre
- 1994: $92,500/acre
- 1995: $125,000/acre
- 1996: $141,570/acre
Bilateral Working Group
-------
BunflesrnniiBCeriuin
Pilling
SEPA
Land Appreciation Following Project
• 1997: $206,910
• 1998: $185,130
• Due to land scarcity in Rivergate, Port adopts
policy of only leasing remaining land
- 2000: no sales
- 2001: $206,910
- 2002: $206,910
Bilateral Working Group
-------
lira Rarschung
Project Impact to Land Sales & Leases
• Rivergate sales
- 1963-1993: 508 acres, 17 acres/year
- 1993-1996: 172 acres, 43 acres/year
• Sales and Leases
- 1963-1993: 766 acres, 25 acres/year
- 1993-1996: 237 acres, 60 acres/year
- 1997-2002: 195.3 acres, 43.4 acres/year
EPA
Bilateral Working Group
-------
Abstract for Portland Case Study Presentation
by Douglas C. MacCourt
Portland, Oregon Case Studies:
Two successful case studies from Portland, Oregon will be presented, including North Marine Drive and the Yards at Union Station. These
case studies represent similar remedial action strategies in significantly different settings for industrial and residential uses. North Marine
Drive is one of Portland's first brownfield success stories and a case study which helped influence US Dept. of Transportation policy for
participating in brownfield expenses on federal transportation projects. North Marine Drive illustrates creative financial partnerships among
federal, state, regional and local governments to promote private-sector industrial development within and along Portland's Rivergate
industrial sanctuary. The project also demonstrates the benefits of good planning and strategic public involvement from environmental
regulatory agencies, landowners and the affected public. Habitat preservation and protection of sensitive adjacent freshwater fisheries was
accomplished through public involvement and careful siting conducted largely through the Environmental Impact Statement (EIS) process.
Finally, innovative investigation and remediation techniques were combined to minimize remedial action costs and ultimately keep the
project within budget and on schedule.
The Yards at Union Station, a 2000 Phoenix award winning project, illustrates how Portland is meeting its low-income housing needs on
contaminated rail yards in the vibrant Pearl and River Districts. When contamination was discovered on site, it caused contractors and
lenders to abandon the project. With the determination of the Portland Development Commission (PDC), assisted by public finance tools
developed with the assistance of Ater Wynne LLP's Public Finance Group, PDC rescued the project and built a public-private coalition which
obtained regulatory approval in record time and found willing contractors, financial partners and public support. Today the project is almost
completely occupied and new additions are underway. The purpose of selecting these two case studies is to highlight successful public
finance and transportation funding mechanisms for brownfield redevelopment that can be replicated across the country.
-------
&und«fTilnlgterliint
und Kfliscliuivg
U.S. - GERMAN BILATERAL
WORKING GROUP
ECONOMIC TOOLS FOR
SUSTAINABLE BROWNFIELD
REDEVELOPMENT
Bilateral Working Group
-------
&und«fTilnlgterliint
und Kfliscliuivg
"PUBLIC FINANCING OF BROWNFIELD
REDEVELOPMENT PROJECTS"
Presented by
Ann L. Sherman, Esq.
Partner, Ater Wynne LLP
Bilateral Working Group
-------
&und«fTilnlgterliint
und Kfliscliuivg
I. INTRODUCTION
A. What is a bond?
B. Why is this type of obligation used?
Bilateral Working Group
-------
&und«fTilnlgterliint
und Kfliscliuivg
II. OVERVIEW OF PUBLIC FINANCE TOOLS
A. Tax Exempt Bonds
1. Tax Exemption
a. Governmental Purpose
b. 501(c)(3)
c. Private Activity
i. Exempt facilities (airports, docks and
wharves, mass commuting facilities,
facilities for furnishing water, sewage
disposal facilities, solid waste disposal
Bilateral Working Group
-------
&und«fTilnlgterliint
und Kfliscliuivg
II. OVERVIEW OF PUBLIC FINANCE TOOLS
A. Tax Exempt Bonds, Continued
facilities, facilities for local furnishing of
electric energy or gas, local district heating
or cooling facilities, qualified hazardous
waste disposal facilities, high speed
intercity rail facilities, environmental
enhancements of hydroelectric generating
facilities), hazardous waste disposal
facilities, high speed intercity rail facilities,
environmental enhancements of
hydroelectric generating facilities)
Bilateral Working Group
-------
&und«fTilnlgterliint
und Kfliscliuivg
II. OVERVIEW OF PUBLIC FINANCE TOOLS
A. Tax Exempt Bonds, Continued
ii. Small Issuer Manufacturing Facilities
iii. Multifamily Housing Bonds
iv. Volume Cap
2. Types of Issuers (Cities, Counties, Special Districts,
Conduit Issuers, State Bond Banks, Tribes)
Bilateral Working Group
-------
&und«fTilnlgterliint
und Kfliscliuivg
II. OVERVIEW OF PUBLIC FINANCE TOOLS
A. Tax Exempt Bonds, Continued
3. Security and Sources of Repayment for Bonds
(Property Taxes, Revenues, Limited Tax, TIP, LID's,
COPs, Credit Enhancement, Rural Development,
Fannie Mae)
Bilateral Working Group
-------
&und«fTilnlgterliint
und Kfliscliuivg
II. OVERVIEW OF PUBLIC FINANCE TOOLS
B. Taxable Bonds
1. Taxable Tails
2. State Tax Exemption
3. Tax Credits
a. Low Income Housing Tax Credits
b. New Markets Tax Credits
c. Other Federal and State Subsidies
Bilateral Working Group
-------
&und«fTilnlgterliint
und Kfliscliuivg
II. OVERVIEW OF PUBLIC FINANCE TOOLS
C. Types of Projects (open spaces, parks, housing
owned by governmental units, (501(c)(3) or
private entities, golf courses, assisted living,
hospitals, convention centers, libraries, mixed
use)
D. Tax Credits in conjunction with Tax Exempt or
Taxable Bonds
Bilateral Working Group
-------
&und«fTilnlgterliint
und Kfliscliuivg
MARKI DISCLOSURI ISSUEES
A. Public offerings of municipal debt
B. SEC 15c2-12 continuing disclosure requirements
and Rule 10(b)5 antifraud rules
Bilateral Working Group
-------
&und«fTilnlgterliint
und Kfliscliuivg
IV. SPECIFIC BOND FINANCED EXAMPLES
A. City of Portland, Yards at Union Station
(Affordable Housing Project on train station
brownfield)
B. Solid Waste Disposal Revenue Bond
C. Oregon Garden Project Revenue Bonds
D. City of Newport Wastewater Project
Bilateral Working Group
-------
Presentation Abstract
Public Financing of Brownfield Redevelopment Projects
by Ann L. Sherman, Esq.
Partner, Ater Wynne LLP
This presentation will cover the basic tools for the public financing of brownfields redevelopment. Particular emphasis will be placed on the use
of tax exempt bonds, tax increment financing, local improvement districts and tax credits. Examples of affordable housing projects, golf course
development and other public-private partnerships which have utilized the taxable and tax exempt securities market to finance brownfield
redevelopment will be discussed.
-------
--------
is for (jduoino thG OUCCGSS or
^^ ^^
Brownfield's Redevelopment ]l|lpf
Economic benefits and costs
Economic impacts
^Sustainability
-------
Net benefits = Change in the value of outputs
- change in the cost of inputs ]PI^PI^PZ|
• Outputs: more open space, cleaner air, reduced [ )
crime
• Inputs: resource costs to society (labor, 'external'
Key criterion of success is efficiency, can the
'winners' fully compensate the 'losers?
-------
Economic Impacts
Key criterion of success is distribution
I
<$>Who gains, who loses, and by how
^Indicators: jobs creation, changes in
•/ * *j
revenue, financial impacts to
-------
Returning to the calculation of net
^^F
benefits
Cn9nQ6 in th6 V9lu6 of outputs
••x
jobs creation
-------
Presented at the U.S.-German Bilateral Working Group's workshop "Economic Tools for Sustainable Brownfield
Redevelopment", November 11 and 12, 2002 in Charlotte, North Carolina
Abstract
Criteria for Gauging the Success of Brownfield's Redevelopment
Assessments of the success of brownfield redevelopment often fall into the trap of conflating measures of economic impacts and social benefits. Analyses of benefits
and economic impacts answer two different questions. A benefits analysis addresses the issue of efficiency, assessing, in effect, whether the winners from a project
could compensate the losers ands still be at least as well off. An economic impact analysis addresses the issue of distribution, asking the question of who wins, who
loses, and by how much. Disentangling efficiency and distributional considerations is important to gaining a comprehensive and accurate assessment of the success of
a project and its sustainability. For example, the number of jobs created, oft cited as an indicator of social benefits from a project, would actually show up as a cost in
a comprehensive benefit-cost analysis, given that every job created has some opportunity cost.
Colin Vance
U.S. Environmental Protection Agency
National Center for Environmental Economics
1200 Pennsylvania Ave., NW (MC 1809T)
Washington, D.C. 20460
phone: 202.566.2301
fax: 202.566.2339
email: vance.colin@epa.gov
-------
Contact Information
NAME
Atlenbockum, Michael
Alvarez, Karl
Anderson, Louise
Argus, Roger
Bartsch, Charles
Barczewski, Baldur
Black, Paul
Carroll, Ann
Cornell, Ken
Costopoulos, Christine
DAndrea, Larry
Donella, Dorris
Dosch, Dr. Fabian
AFFILIATION
Altenbockum &Partner,
Geologen
US Environmental
Protection Agency
International Economic
Development Council
Tetra Tech EM Inc.
Northeast-Midwest Institute
VEGAS, University of
Stuttgart
Neptune & Co.
U.S. Environmental
Protection Agency
AIG International
New York State Department
of Environmental
Conservation
US Environmental
Protection Agency
Tetra Tech EM Inc.
Federal Agency of Building
and Housing
TELEPHONE
011-49-241-912650
202-566-2749
202-942-9459
619-525-7188
202-544-5200
011-49-711-685-7018
720-746-1803
202-566-2748
212-458-6206 (cell 917-767-
3731)
518-402-9754
212-637-4314
703-390-0647
011-49-1888-4012-307
FAX
011-49-241-
9126519
202-566-2757
202-223-4745
619-525-7186
202-544-0043
011-49-711-685-
4631
720-746-1605
202-566-2757
212-458-6523
518-402-9722
212-637-4360
619-525-7186
011-49-1888-4012-
266
EMAIL
altenbockum@altenbockum
,de
alvarez .karl@epa.gov
landerson@iedconline.org
roger.argus@ttemi.com
cbartsch@nemw.org
barczewski(S),iws.uni-
stuttgart.de
pblack@neptuneandco.com
carroll.ann@epa.gov
ken.cornell@aig.com
cjcostop@gw.dec.state.nv.us
dandrea.larry@epamail.epa.
gov
doris.donella@ttemi.com
fabian.dosch@bbr.bund.de
-------
Contact Information
NAME
Edelwirth, Michael
Eitel, Jan
Ferber, Dr. Uwe
Fidler, Tom
Forinash, Chris
Gatchett, Annettte
Gatica-Hebert,
Staci
Gerkens, Karsten
Gilland, Kenneth
Graumann, Doreen
Greenfield, Barbara
Hansen, Verle
AFFILIATION
GSF Forschumgszentrum fur
Umwelt und Gesundheit
GIU - Innovation, Enterprise
Support, and Land Management
Projektgruppe Stadt und
Entwicklung, Germany
Pennsylvania Department of
Environmental Protection
U.S Environmental Protection
Agency
US Environmental Protection
Agency
U.S. Environmental Protection
Agency
City of Leipzig
Center for Geosciences
Projektgruppe Stadt und
Entwicklung, Germany
U.S. Environmental Protection
Agency
U.S. Environmental Protection
Agency
TELEPHONE
49-89-651-08863
011-49-681-9762-141
01 1-49-341-48070-24 (-
26)
717-783-9472/7816
202-566-2842
513-569-7697
202-564-2321
011-49-341-1235410
919-485-2601
011-49-341-480-7026
214-665-3111
513-569-7362
FAX
08-965-108854
011-49-681-9762-
120
011-49-341-480-
6968
717-787-1904
202-566-2868
513-569-7620
202-565-2917
011-49-341-
1235412
919-541-8830
011-49-341-480-
6988
214-665-6460
513-569-7620
EMAIL
edelwirth@gsf.de
j.eitel@giu.de
proiektstadt@t-online.de
tfidler@dep.state.pa.us
forinash.christopher@epa.gov
gatchett.annette@epa.gov
gatica-hebert.staci@epa.gov
kgerkens@leip2ig.de
krg@rti.org
doreen graumann@projektsta
dt.de
greenfield.barbara@epa.gov
hansen.verle@epa.gov
-------
Contact Information
NAME
Henry, Evan
Huwe, Alphonse
Ishorst, Ralph
Konig, Michael
Linne, Martin
MacCourt, Douglas C.
Olexsey, Bob
Opper, Richard
Peoples, Lisa
Riley, GaryJ.
Schock, Sue
Schrenk, Volker
Sherman, Ann
AFFILIATION
Bank of America
LESG Leipzig
West German Real Estate
Bank
Dr. Eisele Group
City of Duisburg
Ater Wynne, LLP
U.S. Environmental
Protection Agency
Foley & Lardner
U.S. Housing and Urban
Development
California Environmental
Protection Agency
U.S. Environmental
Protection Agency
VEGAS, University of
Stuttgart
Ater Wynne, LLP
TELEPHONE
714-734-2070
(0341) 9927760
011-49-211-90101-550
011-49-7661-9319-0
011-49-203-283-3366
503-226-1191
513-569-7861
619-685-6445
202-708-0614
510-622-2462
513-569-7551
011-49-711-685-7017
503-226-1191
FAX
714-734-2086
(0341) 9927741
011-49-211-
90101-559
011-49-7661-
9319-77
011-49-203-283-
3666
503-226-0079
513-569-7620
(619) 234-3510
202-401-2231
510-622-2460
513-487-2513
011-49-711-685-
4631
503-226-0079
EMAIL
evan.c.henry@bankofamerica.co
m
lesg.gf@,t-online.de
r.ishorst(g),westgka.de
michael.konigfoHut.de
m.linne@,stadt-duisburg.de
dcm@,aterwynne.com
Olexsey.bob@epa.gov
ropper@,foleylaw.com
lisa peoples@,hud.gov
gir(g),rb2 . swrcb. ca.gov
schock.sue@,epa.gov
s chrenkfgHws .uni-s tuttgart. de
als@,aterwynne.com
-------
Contact Information
NAME
Smith, Terri
Steffens, Kai
Stockton, Tom
Tomerius, Stephan
Vance, Colin (replacement —
Rich lovanna)
Vega, Ann
Yasenchak, Leah
AFFILIATION
New Jersey
Department of
Environmental Health
PROBIOTEC GmbH
Neptune & Co.
German Institute for
Urban Development
U.S. Environmental
Protection Agency
U.S. Environmental
Protection Agency
City of Trenton
TELEPHONE
609-984-3122
011-49-2421-6909-
46
505-662-0707 ex. 17
0049-030-39001-
299
202-566-2280
513-569-7635
609-989-4238
FAX
609-777-1914
011-49-2421-6909-
87
720-746-1605
0049-030-39001-
241
202-566-2339
513-569-7620
609-989-4243
EMAIL
tsmith3@dep.state.nj. us
steffens@probiotec.de
stockton@neptuneandco.com
tomerius@difu.de
Iovanna.rich@epa.gov
vega.ann@epa.gov
yasenchak.leah@epa.gov
-------
Presentation Abstract
US/German Bilateral Working Group Workshop
November 12, 2002
US Case Study: Trenton, NJ
Leah Yasenchak
This presentation will cover Trenton's aggressive approach to brownfields redevelopment, from planning and investigation to acquisition,
remediation and redevelopment. It will also include a brief discussion on Trenton's partners and funding sources. The presentation will then
highlight two particular projects, the Magic Marker site and the Assunpink Creek Greenway; both of which have been selected by the US/German
Bilateral Group as projects for case study research.
-------
jt
TRENTON'S APPROACH TO BROWNFIELDS
REDEVELOPMENT
— ^^NWL""^
Leah Yasenchak, EPA/City of Trenton
ITRC US/German Bilateral Working Group
Hi
November 12, 2002
-------
Trenton's Industri
I A * *
Magic Marker Site prior t
-------
'' 'f>
m
Finn
l,'\ Phases of Brownfield Redevelopment
' / 1 ; • * s • . .i »> ' / . . .*' • • - / . , - • • ' j • LL
Planning
Investigation
Acquisition
Remediation
Redevelopment
:
':
- i :"•
-------
PLANNING
•'.
> Master Land Use Plan
•Neighborhood by neighborhood evaluation of
needs of community
Comprehensive Economic Development Strategy
Open Space Plan
'Individual Site Plans
Community Involvement
•/.I
.
' V
,
A '
-------
INVESTIGATION
f
i
•All properties go through the Voluntary Cleanup
Program p**m
•HDSRF funds many of the investigations of City-owned
properties 1
•A targeted reuse or high potential for redevelopment is i
place prior to initiating an investigation
-------
™
ACQUISITION
Tax Foreclosure
Purchase
Condemnation
•
.ssunpink Creek Greenway
-------
REMEDIAr [ON
•'.
/ A
•
Escrow acquisition price
EPA/DEP Removal actions
•USTfields
•NJRA Brownfields
Remediation Initiative
•Negotiations with PRP
•Property Trusts
• BCRLF
The Old Trenton Water Works
•/.I
.
' V
,
A '
-------
.
REDEVELOPMEN
Crane Site - HOW the US Route 1 Commerce Center
-------
PAR NERS1 »S
COMMUNITY
BEST COMMITTEE
FEDERAL GOVERNMENT
STATE GOVERNMENT
COUNTY GOVERNMENT
REDEVELOPER
INTERNAL PARTNERSHIPS WITHIN THE CITY
,
T
•
-------
'ft
u
'If
ase Studv: The Magic Marker Site
•
1 i
• Seven acre former battery manufacturer; lead contamination
present
• Strong community presence
• Adjacent to a site targeted for a new school
• Site of early phytoremediation field test (results inconclusive)
• City owns property; worked with responsible party to do initial
investigation; RP now in bankruptcy (not because of this site!)
• Site targeted for housing and open space
• Site of new New Jersey Area Wide Brownfield Initiative
•/.I
.
' V
w
' ' \
-------
-------
-------
-------
-------
V
\
-—n
•
pr^
, Community Garth
childrens play
Mjulupucpusc Park/
Schtiol Play Atea
3
4. Ft mi
and ,
/
' BcUc
/, :: 1 «"
i -s—
•.i—
..i
Bellevuc Court Hi
Owners hi D Proiccr
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Case Study: The Assunpink Creek Green way
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• 60+ acres of heavy industrial use
• Property consists of multiple brownfield sites contaminated
with heavy metals, PAHs, PCBs etc.
• Located along a creek in the floodway
• Reuse vision is a park and greenway along the creek
• City owns a portion of the property; working with a
multiple partners to fund the architectural, environmental,
and engineering work required
• Employing innovative field technologies, dynamic
workplan, and triad approach to the extent feasible.
' 77 777W 77 7/^ ~77]
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Greenway Conceptual Plan
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TRENTON'S APPROACH TO BROWNFIELDS
REDEVELOPMENT
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