Preparing Your Plan for Site Reuse: How Your Community Can Examine Brownfield Revitalization Possibilities

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Preparing Your Plan for Site Reuse

TABLE OF CONTENTS

Preparing Your Plan for Site Reuse	5

Part 1: Analyze Your Brownfield Site	7

Perform a Site Reuse Assessment	7

1.	Resource/Document Research	7

2.	Opportunities and Constraints Analysis	7

a.	Neighborhood Context	7

b.	Access	8

c.	Ownership	8

d.	Infrastructure and Utilities	8

e.	Land Use and Zoning	8

f.	Environmental Status	8

g.	Developable Acreage	8

h.	Necessary Property Improvements	10

3.	Market Assessment	10

4.	Environmental Liability and Assessment	11

5.	Infrastructure Plan	12

6.	Resource Tracking	12

Part 2: Design and Calculate Site Reuse Potential	13

A.	Evaluate Financial Risk	13

B.	Understand Financial Feasibility	13

1.	Conceptual Use Plans	13

2.	Financial Analysis	15

APPENDIX	17

Part 1: Template 1 - Market Assessment Questions	17

Part 1: Template 2 - Resource Roadmap (Sample)	18

Part 2: Template 1 - Sources and Uses Chart	21

Part 2: Template 2 - Pro Forma Analysis	24

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Preparing Your Plan for Site Reuse

PREPARING YOUR PLAN FOR SITE REUSE

Your community can begin to revitalize brownfieid sites1 by identifying and examining site reuse possibilities. While
continual and robust community engagement2 surrounding site assessment, cleanup and reuse is likely to lead your
community to specific site reuse goals, it is very important that your community also carefully examine the financial
feasibility of those goals. Knowing which site reuses are financially feasible will
create community confidence in the reuse project, lead to informed assessment
and cleanup decisions, and help your community take initial steps to position
the brownfieid site for reinvestment.

Parts 1 and 2 of this document can help your community examine brownfields
revitalization possibilities.

The approaches shared in this
document can be used by local
communities, governments and
nonprofits.

Analyze arid Prepare Your Design and Calculate Site

Brownfields Site Reuse Potential

EXAMINING REUSE POSSIBILITIES STARTS WITH UNDERSTANDING SITE PLANNING AND REDEVELOPMENT

Revitalizing a brownfieid site starts with understanding how the community's reuse goals align with local economic,
infrastructure, social and environmental conditions.

Specific planning activities will help your community determine which reuses are feasible for the site. The reuse influenc-
es site assessment and cleanup decisions.

In addition to community engagement, planning activities that focus on brownfields revitalization are eligible under
an EPA Brownfields Assessment or Multipurpose Grant. Below are examples of eligible activities.

Planning activities to initiate brownfields revitalization:

~ Site Reuse Assessment

~ Land Use Assessment

~ Market Study

~ Infrastructure Evaluation

Planning activities to prepare for site reuse:

~ Site Reuse Vision

~ Revitalization Plan

~ Resource Roadmap

~ Evaluation of Market Viability

~ Community Health Assessment

~ Site Disposition Strategy

1A "brownfieid site" means 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 (per CERCLA 101(39)).

2 For community engagement approaches that emphasize equitable development and brownfields reuse, please visit Groundwork USA. Groundwork USA is an EPA
technical assistance provider through 2024.

Preparing Your Plan for Site Reuse

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These planning and preparation activities will help your community identify site reuse goals, project strengths and
weaknesses, areas of risk or uncertainties, and financial feasibility. The results of these activities will help your communi-
ty understand the range of realistic possibilities for safe site reuse and better involve stakeholders in site assessment and
cleanup discussions.

While brownfields reuse projects vary greatly in complexity and scope, the redevelopment process can be generally
simplified into four components:

Predevelopment activi-
ties involve identifying
and assessing potential
reuses, conducting due
diligence, obtaining
access to the property to
conduct environmental
and other assessments of
the property, and identi-
fying potential costs and
sources of funding.

A deal is secured after the
predevelopment activities
generate enough informa-
tion for the private or
public investor to make
their decision whether to
take control of the property
and continue with the
project. Continuing with
the project typically includes
negotiating contracts,
obtaining financing,
establishing cleanup plans,
acquiring the property, and
navigating the local regula-
tory process.

Preparing and develop-
ing the property includes
obtaining construction and
environmental approvals,
coordinating cleanup and
construction activities,
securing tenants, and
completing the redevel-
opment. The developer or
investor also chooses to
sell or lease the property.

If the developer or investor
does not sell the property,
they will be responsible
for several tasks involving
property management
long-term. These tasks
may include managing the
financial aspects, commer-
cial operations, tenant
issues, community relations,
and any long-term environ-
mental issues, such as
operation and maintenance
of any cleanup systems and
components associated with
the property.

Early in the redevelopment process, as part of predevelopment activities, an interested public or private investor
will analyze the project's redevelopment potential. This evaluation process will identify any significant data gaps and
uncertainties that introduce unacceptable risks to the project. The public or private investor will then determine whether
the potential financial return or public benefit from the project justifies spending the resources required to resolve these
risks, and further refine the evaluation.

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Preparing Your Plan for Site Reuse

PART 1: ANALYZE YOUR BROWNFIELD SITE

Your community can determine the range of safe reuse opportunities and any associated risks through site analysis and
preparation activities. These activities include researching, gathering, integrating, and sharing existing data.

Discussing the findings with your community will help stakeholders understand the types of site reuses that are both
feasible and safe. It will also empower them to be engaged in making decisions about how to address risks and position
the site for reinvestment.

The terms "site" and "property" are
used interchangeably throughout this
document.

PERFORM A SITE REUSE ASSESSMENT

Performing a reuse assessment for your site will help your community
develop a realistic view of the brownfield in terms of redevelopment
potential.

A site reuse assessment is an analysis of a property's reuse potential.

It ties together key findings from available environmental studies,
community engagement, planning and zoning, local market data,
infrastructure conditions, opportunities, constraints, and other information relevant to the property. The results will
help your community identify where project risks exist and generate options for how to assess, cleanup and otherwise
prepare the site for reuse. A site reuse assessment also can be useful when determining the property's market value.

These six planning activities3 comprise a site reuse assessment:

1.	Resource/Document Research

Research the site's past uses and identify any community reuse plans for the area where your site is located. Check
your municipality's comprehensive plan and other local documents for project area redevelopment goals. Summarize
these documents, highlight goals for the brownfields area, and identify information gaps. This research will provide
insights into the area's economic assets and risks, and the strengths and weaknesses of any redevelopment goals.

2.	Opportunities and Constraints Analysis

Use your research to conduct an opportunities and constraints analysis, which looks at the site's positive and negative
attributes that influence its reuse potential.

Will the reuse goals be limited by site history, zoning, surrounding land use, and ownership? Also consider how local
ordinances may affect site layout.

An opportunities and constraints analysis typically unveils a range of site reuse obstacles, potential uncertainties,
and other risks. This is especially true for brownfields and other blighted properties. However, the opportunities and
constraints analysis will help your community identify and resolve information gaps, better define uncertainties,
and decide necessary steps for redevelopment. For example, you may want to conduct a Phase I or Phase II environ-
mental site assessment (ESA) or additional site investigation if the analysis raises questions about the environmental
condition of the property. You may want to further examine the condition of the site's infrastructure if it appears to
be deteriorating or misaligned with reuse goals.

Eight steps comprise a baseline opportunities and constraints analysis. (Examples are shared from a project complet-
ed in Lorain County, OH).

a. Neighborhood Context

Describe the site or area, including the property lines and the area conditions surrounding the site (e.g., residen-
tial, school, commercial, and industrial areas). Use a map to label and describe the area and note any liabilities or
risks (See Example 1.1).

3 A guide for an entire site reuse assessment can be found in the EPA Revitalization Ready Guide.

Preparing Your Plan for Site Reuse

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b. Access

Site access is key to understanding the redevelopment potential of an area. This step needs to include the site's
overall logistical and transportation access points (See Example 1.2).

c. Ownership

Who owns the site you are trying to redevelop? Is it one or more parcels? Figuring out answers to these two
questions could help avoid obstacles that may be difficult to overcome later in the process.

Privately-owned property or properties with multiple parcels and multiple owners can be an immediate barrier
to redevelopment. You must verify the site layout as weil as the percentage of public and/or private parcel
ownership (See Example 1.3).

d. Infrastructure and Utilities

What infrastructure services surround the site? Identify the current layout of power, communications, and water
infrastructure to help develop an infrastructure plan that aligns with site reuse goals.

e. Land Use and Zoning

Look at the land use and zonng information for the site and the surrounding areas. This information will help
your community understand which site reuses can and cannot occur. Find out if the current zoning reflects the
community's desired reuse goals for the area. If not, your community may need to discuss changing zoning
requirements to accommodate redevelopment (See Example 1.4).

f. Environmental Status

Detail the environmental condition of the property, including the results of previous investigations, what investi-
gations still need to be done, and where institutional or engineering controls are in place. Bringing environmental
clarity to the site reuse process is critical to alleviate uncertainties for your local community.

g. Developable Acreage

Describe the physical characteristics of the site. Identify how much of the site can be developed, and the
condition and usability of any buildings on the site. Depending on reuse goals, you may need to know how much
of the site is available for construction of structures and how much will be designated as greenspace, parking, or
other site needs (See Example 1.5).

Example 1.1

The site has a history of recreational and commercial use. Surround-
ing the site to the northwest and west is the city power plant and to
the northeast, the city water plant. Adjacent to the power plant on
the west side on 14.7 acres are Miller Road Park, a public park, and
a lake boat launch, which is heavily utilized by residents and lake
boaters. Directly east of the site is a former industrial site and the
city water plant. Areas to the south of the site and further east of
the former industrial area are primarily residential.

The power plant may be an aesthetic concern for the marketabili-
ty of the proposed site. There also may be historic environmental
issues; however, no known investigations have been done to date.

Preparing Your Plan for Site Reuse

Example 1.2

Air Access: Cleveland-Hopkins International Airport (CLE)
fe * ../J is located approximately 15 miles to the east of the site via

(¦ Route 6/1-90/1-480 East. Additionally, the Lorain County

I | Regional Airport is 20 miles from the lakefront site. It is classified

M sSr : as a reliever for Hopkins and has a 5,000-foot runway.

Highway Access: Access to the site is via State Route 6 and Highway 83 (via Moore and Walker Roads). Local access
to the site is served by Lake Road (Route 6), Electric Boulevard to the east, Moore Road to the south, and Redwood
Boulevard to the east, which connects to Highway 83. Major roadways include 1-90, which is located approximately
six miles south of the site; 1-75, which is located approximately 95 miles west of the site via 1-80/1-90 West; and 1-71
and 1-77, which are located approximately 20 miles and 30 miles, respectively, east of the site via 1-80/1-480 East.

Water Access: The city has exceptional water access to the
lake for recreational purposes. There are numerous marinas
and opportunities for recreational boating. The city boat
launch is located within Miller Road Park, less than a mile to
the west of the site.

Example 1.3

)

Example 1.4

Most of this site is privately owned, with 18 different private
owners. The city controls approximately 6.4 percent of the
project site, with the remaining 93.6 percent privately owned.
That 6.4 percent of the site represents 7 out of 57 parcels. Site
assembly and redevelopment will require the cooperation and
participation of many private owners.

Land use in the area surrounding the site is a mix of
industrial, commercial, and rnulti- and single-fami-
ly housing. The site is currently zoned B-3, "Special
Commerce," although land use on the site is currently a
mix of commercial and residential.

Preparing Your Plan for Site Reuse

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Most of the site is under private ownership, with little
vacancy. Physical structures are present on a large
majority of the parcels. Further investigation is needed
to see which structures are vacant and their condition to
help determine redevelopment potential.

Example 1,5

h. Necessary Property Improvements

Describe what needs to be done to prepare the site for reuse and identify costs associated with site prepara-
tion. These improvements may include site clearance, infrastructure repairs, realignment or upgrades, and
potential demolition of existing structures. Identifying these needs and major impediments upfront will help you
understand what you can and cannot achieve financially.

3. Market Assessment

Conducting a market assessment is an important early step towards understanding the economic viability of potential
site reuse options. The results of the market assessment will support
your community's financial analysis and help clarify financial risks.

Focus on these three essential areas as your community develops the
market assessment:

Does your community have a vision for
how to reuse the property? Is the vision
based in market realities?

As part of the visioning and planning
process, your community should
understand the types of reuses that can
be supported by current local economic
and labor market conditions while
remaining flexible and responsive to
market shifts.

1. Basic socioeconomic data (population; unemployment; median
household income; poverty; education; median home value;
median rent)

2. Industry sector and cluster data

3. Market data for industrial, office/commercial, retail/restaurant/
hotel, and residential space

a. Overall conditions of the market area

b. Building demand/vacancy (optimal size/square footage;
specifications)

c. Lease rates and rents

d. Building costs per square foot

Reach out to local and regional industry experts to learn about market conditions from an on-the-ground perspec-
tive. Use the sample questions in Appendix, Part 1: Template 1 to generate the basic information your community
needs to develop a financial analysis for site reuse. Adjust questions to fit your specific region, site requirements, and
community goals.

Preparing Your Plan for Site Reuse

4. Environmental Liability and Assessment

Environmental due diligence is an essential step to moving forward with any reuse project. "Environmental liability"4
is a term used to describe the various obligations and responsibilities that may result from:

~ Federal, state, or local environmental statutes;

~ The regulations and ordinances based on those statutes; and

~ Common law liabilities from negligent behavior or activities. Common law liability also can encompass contractual
disputes arising through indemnification agreements, service contracts relating to the cleanup and management of
a particular property, or other legal agreements.

Your community will need to assess potential environmental liability
for the property under federal (e.g., Comprehensive Environmen-
tal Response, Compensation, and Liability Act [CERCLA], Resource
Conservation and Recovery Act [RCRA] Subtitles C, D and I) and state
cleanup statutes. This is a fact-specific process that requires a thorough
understanding of the applicable laws, site conditions, and operating
circumstances.

Your community also will need to reasonably estimate cleanup costs.
These cost estimates will form the basis of a possible subsidy or
deduction to the as-clean value of the property.

The type and extent of contamination
may limit property reuse options, as
well as the property value. Contami-
nation may limit reuse to industrial/
commercial, recreational/open space, or
no reuse at all.

At some properties, the cost to achieve
cleanup standards suitable for residen-
tial, educational, or hospitality reuse is
financially impractical.

At a minimum, it is important to conduct a Phase I Environmen-
tal Site Assessment (ESA)5 of the property to understand potential

environmental conditions of the property and any associated environmental liability. Complying with the federal
"all appropriate inquiries" (AAI) regulation also will assist in establishing a defense to liability for any contamination
found at the site. Ensure that the AAI or Phase I ESA is conducted or overseen by an environmental professional. Your
community also may need a Phase II ESA to help you better understand any recognized environmental condition(s)
(RECs) found in the Phase I ESA.

PHASE I ESA

~ Includes a review of government and historical records, a visual site inspection, and interviews with those
knowledgeable about the site to identify whether the site has any RECs.

~ Should be performed by an environmental professional in accordance with federal AAI requirements and ASTM
standard E1527-13.

~ May require additional investigation (Phase II ESA) and possibly cleanup if releases of hazardous substances are
identified.

~ Includes sampling of site soils, groundwater, surface water, and/or vapor, and analysis of samples to evaluate
RECs identified during the Phase I ESA.

~ Should be conducted by an environmental consultant.

~ May require the assistance of legal counsel and environmental consultant to move into additional investigation
and cleanup if the municipality owns the site or will be taking ownership of the site.

~ Often conducted as part of the site redevelopment.

~ Must be conducted in accordance with state and/or federal regulations.

4 See https://www.epa.Rov/enforcemerit/addressins-liabilitv-coricerns-support-cleanup-arid-reuse-contaminated-lands for more information. A
general introduction to environmental liability also can be found in the EPA Revitalization-Ready Guide.

5 Additional information regarding Phase I and Phase II ESAs can be found in the EPA Assessing Brownfield Sites fact sheet.

Preparing Your Plan for Site Reuse

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5. Infrastructure Plan

Your community will need to develop an infrastructure plan for the site to ensure the reuse is accessible, produc-
tive and safe. Consider the conditions and capacity of roads, electrical, gas and water lines, and broadband. Identify
infrastructure improvements needed to bring the site up to standards and within code and include other site prepara-
tion activities that your community is willing to implement to support the reuse.

An infrastructure plan usually has several steps, including site clearing, surveying, design, and investigation (including
geotechnical site investigation). This planning process can be challenging, and often is an area where communities
require technical expertise.

Discuss with your community how the plan can be implemented - including what can be covered locally versus what
requires outside investment - and any other cost factors.

6. Resource Tracking

Develop a plan for how your community will track the resources going into the project before reuse costs accrue.

Many communities use a "resource roadmap" (see Appendix, Part 1: Template 2) to break down a large reuse project
into several smaller components that require discrete sources of funding.

As you break down the larger project into several smaller components, you will notice that the specific projects likely
include site clearance and ground cleanup, sidewalk or utility improvements, stormwater management, continued
community engagement, or relocation assistance. For each project component, estimate its cost, identify specific
funding sources, and keep track of any associated permit application deadlines and any special funding requirements.

Keep the resource roadmap up to date to help your community focus on current revitalization priorities. It will serve
as a guide to project leveraging by matching individual project components to appropriate funding and financing
sources. The resource roadmap outlines a strategy for your community to identify and tap into available funding from
federal, state, philanthropic, private sector, and local financing sources.

Be ready to explain to community members how available sources of capital, incentives, and financial benefits can be
combined to enable reuse(s) that are economically viable despite financing gaps. Sources, incentives, and financial
benefits can include:

~ Tax-increment financing (TIF), or TIF-equivalent

~ Tax credits

~ Tax exemptions

~ Enterprise Zones and Quality Jobs Programs

~ Federal Opportunity Zones or similar state tax programs

~ New market tax credits

~ Permit/impact fee waivers and rent abatement

~ Sales tax revenue sharing

~ Job credits

Your community will need to keep track of the project risks and information gaps you find when completing the site
reuse assessment. Even if you find many risks and information gaps, your community will be able to address some of
them using the conceptual use plan and financial analysis described in Part 2.

Any risks and information gaps you cannot address will also affect the project's financial feasibility. It is important that
your community has a clear understanding of how risks and information gaps could affect the viability of site reuse.

Preparing Your Plan for Site Reuse

PART 2: DESIGN AND CALCULATE SITE REUSE POTENTIAL

Using the project risks and information gaps you identified in Part 1. your community can now create site conceptual use
designs and calculate corresponding financial feasibility scenarios. These key steps will help your community begin to
position a site for reinvestment.

A. EVALUATE FINANCIAL RISK

Financial risk is present in all reuse projects. It cannot be avoided entirely. However, your community can clarify which
project components include risk and how to mitigate the risk.

Evaluate your project's financial risk from the perspectives of both a public (e.g., the municipality) and a private (e.g., a
potential investor) entity. For example:

~ A municipality's goal is to facilitate the property's redevelopment. Its primary goal is to limit the amount of munici-
pal funds that are needed and ensure those funds are used to maximize public benefits.

~ A private developer or investor's goal is to earn a profit. Its primary goal is to invest its funds into a project that
produces a reasonable rate of return.

B. UNDERSTAND FINANCIAL FEASIBILITY

Before your community can determine whether a reuse project is
financially feasible, you need to understand the property's intended
reuse(s) and create best-use scenario(s). The best-use scenario(s) wil
form the basis for determining potential costs and revenues.

Best-use scenarios must be based on
your community goals, as well as the site
conditions (i.e., environmental, infrastruc-
ture, ownership) and the overall market
potential for the site.

1. Conceptual Use Plans

A conceptual use plans is the visual representation of a best-use

scenario for site reuse. Typically, a community will create a conceptual use plan that illustrates a best-use scenario
based on the site's maximum potential redevelopment yield and the potential value of the property. This plan is an
essential part of the initial planning and budgeting phase.

A conceptual use plan is a starting point to begin discussions based on the desired reuse goals. It does not set in stone
the final reuse program for the site. As shown in Examples 2.1 and 2.2, a conceptual use plan can range from basic to
extremely detailed. Both approaches serve the same purpose of illustrating a best-use scenario that is the basis of a
financial analysis for the site.

The design and layout of a conceptual use plan should reflect the environmental and other findings from your site
analysis and preparation work in Part 1. Your community may want to find an engineering expert or other profession-
als to map out the infrastructure and other site-specific features as needed.

Your community may decide to create more than one conceptual use plan to reflect different reuse scenarios and
determine which scenarios are financially feasible.

Preparing Your Plan for Site Reuse

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Example 2.1

A basic conceptual use plan for the redevelopment of an industrial
complex. Even with minimal detail, this example not only shows
the building layout but also demonstrates the access points for
optimal traffic flow throughout the complex.

Legend

Example 2.2

TOTAL BUILDING AREA s 2.1 MM SF

CAPITA! INVhSIMhNf * S1S5.000.000

ESTIMATED JOBS t 1,478

Total Building
Area

Estimated
Jobs

BUILDING 1

± 459,660 sf

310

BUILDING 2

+ 559,520 Sf

378

BUILDING 3

+ 439,920 Sf

297

BUILDING 4

± 216,384 sf

146

BUILDING 5

± 464,360 sf

313

BUILDING 6

* 47,460 Sf

A detailed conceptual use plan for a multi-phased commercial development. This example shows the layout as well
as the phased approach for buildout, to include square footage, specific usage and landscape design. (Courtesy of
NorthPoint Development.)

Preparing Your Plan for Site Reuse

2. Financial Analysis

Your community can perform a basic financial analysis for reuse based on the best-use scenario(s) and conceptual use
plan(s) you developed.

The financial analysis will help your community explore the overall viability of the reuse project. The analysis will
reflect the potential return on investment, including any funding gaps that may require municipal involvement. Your
community can use the analysis to evaluate whether the reuse project goals are realistic and likely to attract private
investment, as well as weigh the financial risks or benefits of municipal involvement.

A sources and uses chart and a pro
forma analysis are based on how the
community intends to reuse the site. The
site reuse is used to determine potential
costs and revenues.

Once you have mapped potential property reuses for the site,
construct a sources and uses chart, and run a pro forma analysis for
each conceptual use plan. Include an estimate of potential costs to
acquire and reuse the property and identify the potential sources of
funds and revenue to implement the project.

The sources and uses chart and pro forma analysis will help your
community identify:

~ Potential expenses and sources of funding;

~ Potential financial viability of different redevelopment scenarios;

~ Relative effect of various cost and revenue assumptions on profitability; and

~ Subsidies or incentives needed to attract investment.

Sources and uses chart: A tool to identify and balance funding sources and needs (see Appendix, Part 2: Template 1

A sources and uses chart provides a mechanism to identify and balance potential expenses, sources of funding, and
funding needs. Your community can use this chart to evaluate public (municipal-led) as well as privately-led reuse
projects.

Pro forma analysis: A tool used to predict financial viability of reuse
(see Appendix, Part 2: Template 2

A pro forma analysis is a set of calculations that results in the amount
of expected financial return from the proposed reuse. It is the basic
"go/no-go" analysis that developers use to decide whether to move
forward with a project.

Your pro forma analysis needs to be
well-structured and contain all project
elements pertaining to revenue and cost.
Ensure your expected cost and revenue
assumptions are accurate before using
them in the analysis.

Using a pro forma analysis, your community can prepare a financial

estimate for the reuse project that is based on expected revenues and costs associated with the best-use scenario.

Adding various cost and revenue assumptions to the pro forma analysis based on different uses and site configura-
tions will enable your community to compare scenarios.

A set of assumptions—based on the overall revenue and costs for the project—is central to the pro forma analysis.

These assumptions are derived from the market, environmental, and infrastructure information as discussed in Part 1

Basic cost assumptions are:

~ Land cost - acquisition costs of purchasing the property if needed

~ Hard costs - infrastructure/property redevelopment/site preparation costs (based on findings of the infrastructure
assessment) and building construction costs (costs associated with best-use scenarios for buildings and regional
construction costs, as determined through market assessment)

~ Soft costs - site preparation costs that are not included in hard costs, such as legal fees, permit fees, and architec-
tural drawings

~ Capital costs - interest and fees assumed through debt

~ Environmental costs

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-	Investigation, environmental assessment, and cleanup

-	Legal or consulting fees associated with investigation and cleanup

-	Maintenance of institutional or engineering controls

-	Environmental liability insurance

Basic revenue assumptions are:

~	Sale of a property that is shovel-ready (as whole or divided parcels)

~	Sale of an individual building or units within a building (sales price determined by the best-use scenarios and
regional market)

~	Rent for leased buildings or units within a building (lease rates determined by the best-use scenarios and regional market)

~	Sale or lease of pad sites (as driven by the regional market)

~	Tax revenue

~	Other revenue from using the site for advertising (i.e., signage), renewable energy production, or cell towers

Once you complete the pro forma analysis, share and discuss the results with your community.

What does the analysis mean for your community site reuse goals?

How much public and private investment is needed to meet your goals?

~	If one or more of the best-use scenarios appear financially feasible, your community may decide to move
forward with site assessment, cleanup and reuse activities. You may decide to create a brownfields investment
package to help your community attract private investment.

~	If a best-use scenario is not financially feasible, your community's reuse project is unlikely to attract private
investment. It may be difficult to secure local leadership support and bring sufficient public resources into
the project as well. Review your pro forma assumptions and inputs in Part 2. How can you adjust the reuse
program for the site? Discuss acceptable options with your community.

16

Preparing Your Plan for Site Reuse

APPENDIX

PART 1: TEMPLATE 1 - MARKET ASSESSMENT QUESTIONS

These questions will help your community produce a basic market assessment that provides enough information to
determine the best potential economic use for the property. Use your local and regional real estate and development
resources (e.g., developer or real estate professionals/experts in your area; real estate "sell sheets" for properties; real
estate correspondence or monthly summary documents on the market and trends).

Key Questions:

1.	What are the market opportunities and challenges for the area?

2.	What type of building is in greatest demand, and in what configurations?

~ Warehouse: i.e., size range, ceiling height, - speculative (spec) and/
or build to suit

Your project may have one or several
distinct areas requiring data. Use the pro
forma to show separate development
areas. You can add or subtract as needed.

~	FlexVResearch and Development (R&D)2: i.e., size range, ceiling height - spec and/or built to suit

~	Manufacturing: i.e., size range, ceiling height - spec and/or built to suit

~	Commercial/office (specific types dependent on region): i.e., size range

~	Other (if any, such as hotel, restaurant, retail)

"Triple net" refers to a lease agreement
on a property where the lessee agrees
to pay all the expenses of the property,
including property taxes, building
insurance, and maintenance, in addition
to the rent and utilities.

3.	Are triple net rents achievable for each type?

~	Warehouse

~	Flex/R&D

~	Manufacturing

~	Commercial/office (specific types dependent on region)

~	Other (if any, such as hotel, restaurant, retails)

4.	What is the average cost per square foot (or range of cost) to build
each type?

~	Warehouse

~	Flex/R&D

~	Manufacturing

~	Commercial/office (specific types dependent on region)

~	Other (if any, such as hotel, restaurant, retails)

5.	What industries or companies are generating interest in your area at present?

~	Outlook for industry/cluster drivers of your region

~	Other

6.	In terms of vacancies/availability, what is the demand for space to accommodate each type?

7.	What is the potential user or industry—and potential triple net rent—for any existing buildings on site?

8.	Other questions relevant to specific site.

1"Flex" is a flexible building design that can accommodate technology and service tenants. Typically, flex is an industrial warehouse with a minimum 25 percent office
space that can be divided into warehouse, distribution, or specific industrial (such as R&D) uses.

2 Research & Development is a subcategory of flex and requires cleaner facilities than typical manufacturing and warehouse, as well as specific space focusing more on
laboratory and high tech manufacturing, with low loading requirements.

Preparing Your Plan for Site Reuse

17

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PART 1: TEMPLATE 2 - RESOURCE ROADMAP (SAMPLE)

A resource roadmap outlines a site reuse strategy that is broken down into several smaller projects. Your community
can use it to identify available funding sources for individual project components and prioritize the resources to pursue.
Include resources from federal, state, philanthropic, and private sector funds, as well as local funding (such as grants) and
financing sources (such as bonds, loans, special districts, funding matches, or tax incentives).

Below is a sample resource roadmap. For a real-life example, please visit the Resource Roadmap for the City of Glenwood
Springs. Colorado

HTOWN I I
HALL ||

City of XYZVille

Agenda for Sustainable CommunityRevitalization

The City of XYZVille, XY is a community of xy,xyz people that seeks to revitalize closed factories and blighted sections of downtown with
new revitalization. XYZVille's municipal development authority has acquired the vacant factory complex and its 27 acres on the riverfront
on the south end of the central business district along Main Street, a site that has been vacant, polluted and blighted for more than 25 years.
Using U.S. EPA Brownfields Assessment grant funding for reuse planning, the community has created a vision for a vibrant, mixed use
riverfront development that includes a local healthy foods market, commercial offices to serve the growing downtown, mixed-income housing
to replace the 99 affordable units at the severely deteriorated public housing complex, and small retail shops for citizens and tourists. XYZVille
seeks to upgrade Main Street along the new development area into a complete street to improve walkability and connect the project to the central
downtown, and to establish new riverfront public park, recreational, and trail facilities along this beautiful natural area. To put this vision into
action, XYZVille seeks support and resources from local investors, state and federal agencies, philanthropic foundations, and the private sector,
including the following:

Pro ject & Key
Components

Estimated Costs

Funding &
Support Needed

Match & Leveraging

Key Next Steps

Demolition of
obsolete factory
buildings and
structures

$400,000 asbestos
abatement

$200,000 cleanup of
petroleum spill area

$600,000 buildings
demolition

$6-8 million for
restoration and reuse
of historic brick mill
building

$1 million EPA
Brownfields Cleanup
Revolving Loan Fund for
asbestos and petroleum
cleanup

HUD CDBG and Section
108 Loans for site prep and
demolition, and mill
restoration

Federal Home Loan Bank,
Community Investment
Program funding for mill
restoration

S XYZVille Tax
Increment Finance
proceeds

~ State of XY
Brownfields
Cleanup Fund grants
or loans

•f Private developer
contribution

¦S Confirm available level of TIF proceeds

S Complete brownfields assessment and
remedial planning using remaining EPA
Assessment funding

¦S Meet with EPA Regional Brownfields
Office to discuss RLF opportunities.
Deadline for RLF application December
2016

•/ Meet with state HUD office to discuss
Section 108 loan

•/ Find member bank in XYZVille willing to
use FHLB Community Investment
Program

18

Preparing Your Plan for Site Reuse





Historic Tax Restoration
Credits (25% of restoration
costs)



S Work with XY State Historic Preservation
Office to establish plan to use historic tax
credits on mill restoration

Storm water
management
with green
infrastructure

$2 million

•/ Clean Water SRF Green
Reserve loans, coupled with
principle forgiveness
HUD Section 108 proceeds
S Economic Development
Administration, Public
Works Grant

~ XYZVille

Stormwater Fee
proceeds

Work with State of XY State DEP Office
of Water to enter stormwater project on
State Clean Water Intended Use Plan
^ Apply for summer 2016 Green Reserve
grant

Mixed-Use
Development
Center
Construction

$75-90 million

S USDA Business & Industry

Guaranteed Loan
•/ National Development
Council public-private
partnership bonding tool
HUD Section 108 loan
proceeds
•/ New Market Tax Credit

S Private sector equity
and debt investment
~ State of XY
economic
development grant
and loan program

S Meet with USDA Rural Development

office located in State XY
S Contact regional representative for

National Development Council
S Contact community development entity
with allocation of New Market Tax
Credits, and explore potential NMTC
expert to retain as counsel

Complete Street
Improvement on
Main Street

$850,000 for design,
engineering,
permitting and
construction
management

$7 million for
construction

S State XY & MPO for
Transportation Alternatives
Program grant for design
and engineering

•/ CMAQ grant for design and
engineering

•/ Rural TIGER grant for
construction

•/ State XY Surface
Transportation
Priority grant as
match to TIGER for
construction

•/ Work with MPO to secure placement of
Main Street project as priority in
Transportation Improvement Plan

•/ Meet with State DOT district engineering
office to build support

¦S Collaborate with state elected
representatives and Office of the
Governor to build support

S Invite XYZ's congressional delegation to
site visit to review design plans

Healthy Foods
Market

$550,000 for
establishment of local
food cooperative as
anchor tenant of
healthy foods market

S EPA Local Foods, Local
Places technical assistance
award to support planning
to tie foods market to
broader community
revitalization

~ $200,000 USDA

Community Foods grant

~ $75,000 Kresge
Foundation Local
Foods Grants

¦S $200,000 match
from City of XYZ

•f Meet with USDA in state field office

S Invite Community Foundation, Funders
Network, and Kresge supporters to be part
of Local Foods, Local Places charrette

Preparing Your Plan for Site Reuse

19

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^ $75,000 USDA Farmers
Market Promotion Program
grant

/ $50,000 grant from XYZ
Community Foundation,
matched with $50,000
Partners for Places grant
from The Funders Network
for Smart Growth &
Livable Communities, for
creation of sustainability
plan for market





Affordable
Housing Center

$28 million for
affordable housing
component of overall
$75 million project
with mixed-income
housing at mixed-use
development

S $2 million HUD Choice
Neighborhoods Planning &
Action Grant

~ HUD Choice

Neighborhoods S25 million
implementation grant

Low Income Housing Tax
Credit allocation from State
of XY housing agency

¦S Private sector

developer equity and
debt

Build local coalition to pursue HUD
Choice Neighborhood support

S Issue Request for Statements of Interest
for private sector development partner

Riverfront Park
& Trail

$2-3 million in river
shoreline restoration

$6 million park and
recreational upgrade

$1 million
pedestrian/bike train

•/ Corps of Engineers Section
22 Planning Assistance to
States, and Section 206
Ecosystem Restoration
grants for planning &
construction of shoreline
restoration and portions of
recreational improvements

J Land and Water

Conservation Fund grants,
via State XY parks agency

S NPS, Outdoor Legacy
Recreation Grant

USDA Community
Facilities grants and loans

•S Local TIF proceeds

•f County parks impact
fee proceeds

•/ Convene with Corps District Office of
Planning & Programs

•f Work with congressional delegation to
build Corps support at District and
Division levels, and in Corps Work Plan
& budgeting process

S Work with County to confirm level of
available impact fee proceeds for grant
matches

20

Preparing Your Plan for Site Reuse

PART 2: TEMPLATE 1 - SOURCES AND USES CHART





SAMPLE



SOURCES AND USES

OF FUNDS

USES OF FUNDS





SOURCES OF FUNDS

Acquisition



$0

Construction Sources of Funds

Transaction Costs



$0



Total Acquisition Costs



$0

1 st C onstruction Loan $0







2nd Construction Loan $0

Hard Costs





Developer Equity $0

Construction



$0

Equity from Federal Tax Credits $0

General Conditions



$0

Equity from State Tax Credits $0

Developer fee



$0

Grant Source # 1 $0

Demolition/Property Improvement



$0

Grant Source #2 $0

Remediation



$0

Other $0

Hard Cost Contingency

10%

$0

Deferred Developer Fee $0

Total Building Loan Hard Cost



$0

TOTAL CONSTRUCTION SOURCES $0

Proiect's Soft Costs





Permanent Sources of Funds

Borrower's A/E Fee



$0



Bank Engineer



$0

1st Permanent Mortgage $0

Developer Owner's Representative



$0

2nd Permanent Mortgage $0

Bank Legal



$0

Developer Equity $0

Developer Legal



$0

Equity from Federal Tax Credits $0

Accounting



$0

Equity from State Tax Credits $0

Environmental Phase I



$0

Grant Source #1 $0

Environmental Phase II and III



$0

Grant Source #2 $0

Other Environmental Professional Fees



$0

Other $0

Survey



$0

Deferred Developer Fee $0

Title Insurance



$0

TOTAL PERMANENT SOURCES $0

Appraisal



$0



Bank Commitment Fee



$0



Construction Interest



$0



Insurance



$0



Real Estate Taxes



$0



Building Permits



$0



Other



$0



Letter of Credit/Bond Fee



$0



Soft Cost Contingency

10%

$0



Other



$0



Total Building Loan Soft Costs



$0



Operating and Lease-up Reserve



$0



TOTAL USES OF FUNDS



$0



Preparing Your Plan for Site Reuse

21

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A Step-by-Step Summary for Preparing a Sources and Uses Chart

A sources and uses chart is a worksheet that shows where all the funding for a project comes from and where all those
funds will be used in the redevelopment.

The main requirement of a sources and uses chart is that the total sources of funds must match the total uses of funds.
When they do not match, the chart will show where funding/financing gaps or surplus funds exist.

A sources and uses chart is meant to show when and where funds will flow through a project. It is designed to be
forward-looking so that when the community, municipal leaders or outside investors examine the chart, they will quickly
understand a reuse project's scope and complexity.

Start by determining the project costs ("uses") and the timing associated with those costs.1 Once you understand the
costs, determine what funding sources are likely to be available.

Uses of Funds

Break down your reuse project into three main uses:

1. Property acquisition costs: The total acquisition cost is the sum of the amount to acquire the property and any
transactional costs associated with the acquisition. Transactional costs can include due diligence (assessments or
analysis of the property, including conducting AAI), architectural fees, bank fees, appraisal fees, regulatory approval
fees, broker fees, and legal fees. These costs can occur while deciding to purchase a property and/or after you decide
to move forward with the transaction.

2. Hard costs: These costs are directly related to the project's cleanup
and subsequent physical construction. Hard costs cover the material
and labor that go into property redevelopment. Examples of hard
costs include demolition, site remediation and related sampling,
redevelopment construction, and the developer fee associated with
the project. It is common practice to include the average industry
standard of 10 percent of the total hard costs as a contingency within
the sources and uses chart. The contingency will cover excess costs
for specific line items if needed (i.e., sometimes due to unanticipated
contamination, a change in plans, or price increase).

3. Soft costs: These are the costs that are not considered direct physical
construction costs. They are typically associated with non-tangible
items, such as institutional controls, redevelopment design, fees,
interest (or debt service), taxes, and insurance. Soft costs for all
standard development projects include remedy design, site plans,
engineering, legal tasks, soil testing, architectural plans, and marketing
plans. These costs can be a significant part of the project's budget. A

rule of thumb is that the total amount of soft costs is usually estimated at 20 percent of the total amount of hard costs.

It is common practice to include a soft cost contingency in the sources and uses chart. Like the hard costs contingency,
the soft cost contingency will cover excess costs for specific line items, if needed (i.e., sometimes due to a change in
plans, or price increase).

Include any additional costs in the "uses" column, such as operating and lease-up reserves, to determine the total uses
of funds.

The developer fee is the fee a developer
receives for seeing the project through
to completion. This fee should be funded
last so it doesn't compete with other
project resources.

Traditionally, a developer fee is approx-
imately 10 percent of total project cost.
Be wary if the developer fee exceeds
10 percent, or if the fee is very low/
not included. Without an incentive, the
project may lack the leadership needed
to be completed. Additional transaction
costs may accrue as time is needlessly
consumed.

1 If you already have funding set aside for the redevelopment, you can enter those sources before having a complete picture of the project costs.

Preparing Your Plan for Site Reuse

Sources of Funds

The chart's "sources" column demonstrates the project's capital stack. It includes a list of funds, and who is providing
those funds ("capital providers"). The sources are likely to include public, private, and other resources. In the template
above, the sources are traditional debt financing (including subordinate debt), tax credits, grants, and individual equity.

Sources also may include funds received through operations. For example, a portion of a property might yield rent
revenue while another portion of the property undergoes improvements. The rental income is an example of a source of
funds outside the capital stack. Other sources might include grants, donations, or retained equity; these funds may not
show up on a traditional capital stack.

When the "sources" column includes a deferred developer's fee, this suggests the developer is allowing for its fee to be
used as capital. Keep in mind, however, that a deferred developer fee is not hard equity; it is more like an in-kind source,
such as "sweat equity." It is debatable whether a deferred developer's fee can be considered a valid form of equity
investment, and therefore, you should not overly rely on this source of equity.

The "sources" column also should reflect the timing of the overall project. You will need some cash at closing, while you
may escrow other funds for later use. Cash flow is often used to pay future expenses. You may want to break down the
sources of funds into "Construction Sources of Funds" and "Permanent Sources of Funds" as these funds will be used at
different points during the project's timeline.

It is important for planning purposes to understand the timing/availability of debt sources in the short and long term.
Traditional lenders, for example, often release loans in installments as a project progresses instead of the entire loan
amount at the project's beginning.

After creating a sources and uses chart, check to see if the total cost in "uses" column is higher than the total amount
in the "sources" column. If so, add a new category: "Additional Equity Required." However, if the total funding in the
"sources" column is higher than the total costs in the "uses" column, add a new category: "Cash Flow Distribution."
Eventually, both sides will need to be equal for the project to be completed.

Preparing Your Plan for Site Reuse

-------
PART 2: TEMPLATE 2 - PRO FORMA ANALYSIS

Real Estate Pro Forma for Redevelopment Project

Directions:

Enter information in cells outlined in red, as appropriate

PROJECT COSTS

Cell

Purchase Price

Acquisition Price, may be based on appraised value minus remediation

Remedial Action Costs For Project

Remedial Action (Area 1)

Cost of implementing remedial action (e.g., soil or water cleanup)

Remedial Action (Area 2)

Cost of implementing remedial action

.g., soil or water cleanup)

Total for Remedial Action

Total Remedial Action Cost

Hard Costs

Development Segment 1

New Construction

Retail

Square feet

Cost/sf

$60

Construction cost per sf for retail

Industrial

Square feet

Cost/sf

$50

Construction cost per sf for industrial

Office

Square feet

Cost/sf

$100

Construction cost per sf for office

Residential

Square feet

Cost/sf

$60

Construction cost per sf for residential

Parking

Parking Spots

Cost/unit

$1,200

Construction cost for parking per space

Total Hard Costs (Development Segment 1)

Total Construction Cost Area 1

Development Segment 2

Existinq Buildinq

Asbestos Removal

abatement of materials in building - lump sum

Lump sum cost of asbestos removal

Demolition

Square feet

Cost/sf

$25

Demolition cost per sf

Renovation Costs

Retail

Square feet

Cost/sf

$50

Renovation cost per sf of retail

Industrial

Square feet

Cost/sf

$30

Renovation cost per sf of industrial

Office

Square feet

Cost/sf

$80

Renovation cost per sf of office

Residential

Square feet

Cost/sf

$50

Renovation cost per sf of residential

Total Hard Costs (Development Segment 2)

Total Rehab and Construction Cost Area 2

Total residential units @

2000

Total Hard Costs for Development Segments 1 and 2

Total Construction Costs Areas 1+2

Total Hard Costs for Development Segments 1 and 2 + Remedial Action Costs

Total Construction Costs Areas 1 + 2 plus remedia

action costs

Soft Costs

% of hard costs and remediation costs

20%

Softs costs +/- 20% of construction costs

CARRY COSTS

Carrying cost

Interest costs on

and acquisition for two years

Purchase Price

Months

Rate

8.50%

Soft + Hard Costs + Remediation

Interest Costs on construction, rehab and remediation

Months

(B4+E1+F1 X%

per month X # of months

Rate

8.50%

Total

TOTAL DEVELOPMENT COSTS

Total of all development costs

PROJECT VALUE

Net Operating Income

Rent/sf

Total Income

Industrial Sq.Feet

$5.50

Total industrial sfX estimated net lease rate per year

Office Sq Feet

$18.00

Total office sf X estimated net lease rate per year

Retail Use Sq Feet

$18.00

Total retail sf X estimated net lease rate per year

Total units

$0.00

Total residential units X estimated annual rent

Net Operating Income

Total of annual net rental income

Less Vacancy

Less Long Term Remediation Operating Expenses

Post remedial action operation, monitoring, and maintenance

Less Environmental Insurance

Environmental insurance premium

Adjusted Net Operatinc

Income

Net Operating cincome minus vacancy

minus cost of ongoing remdiation, minus cost of environmental insurance

Capitalization Rate

8.00%

PROJECT VALUE COMPLETED AND OCCUPIED

Adjusted NOI divided be capitalization rate reflecting yield and risk

ill

PROFIT

Project completed value minus total of all development costs

Cash on Cash Return

0.0%

Profit as % of Total Development Cost

I I

A pro forma analysis will help your community estimate the total costs for the site reuse project. It is designed to help you to
seethe project's bottom line. It also helps you analyze the financial viability of the project by determining the end value of the
reuse. You can adjust the pro forma inputs so you can compare different reuse scenarios and site configurations. The Pro
Forma Template is available for download from the EPA Land Revitalization Website.

Step-by-Step Approach to Preparing the Pro Forma

Cell Instructions

A1 Insert purchase price. This can be the offered sales price or a negotiated amount, or it may be based on

an appraisal. It also is possible that the underlying land title will not change; there may be no purchase
price, and this cell will be zero. In addition, liens or defaults may exist which need to be remedied.

B1 - B3 Insert environmental cleanup action costs. These costs already may be defined as part of the cleanup

plan, or they may need to be estimated. Cell B4 will add these three lines together.

CI - C5 Complete if new construction is involved in the project Estimate the square feet to be constructed and the cost

per square foot, by building type. Delete/leave blank unused building categories. Complete the market assess-
ment and sources and uses template detailing costs to support the various cost elements in the pro forma.

Preparing Your Plan for Site Reuse

Costs can include site clearing and preparation, foundation work, structural and exterior work, mechanicals, and
interior finishing. Ongoing maintenance and upfront infrastructure costs may require funding prior to construc-
tion or during the development phase before revenues are available to cover them (i.e., fencing and mowing).

D1 - D2 Complete if existing buildings are located on the property. Insert estimated demolition costs. Include

asbestos removal and other building preparation required. Costs can include demolition or partial
demolition with renovations. These projects generally have more unknown costs, which adds risk.

D3 - D6 Insert renovation costs per square foot by building type.

El Totals the hard costs for all building types.

F1 Soft costs are calculated as a percentage of hard costs,

usually at 20 percent.

Your project may have one or several
distinct areas requiring data. Use the pro
forma to show separate development
areas. You can add or subtract as needed.

Soft costs for all standard development projects include
site plans, engineering, legal tasks, soil testing, architec-
tural plans, and marketing plans. At this point in your pro
forma, you will not need a detailed breakdown among disciplines.

Though you may have already incurred some of these soft costs and cleanup action costs in your project,
keeping an estimated 20 percent for soft costs overall in the pro forma is still reasonable. Additional due
diligence is required on redevelopment projects, so there may be more investigative costs such as reuse
analysis, negotiating access rights, and project visioning.

Carrying costs This is calculated interest on cash invested or borrowed for redevelopment of the property. While

interest on the initial purchase is calculated from the date the property transfers, interest on redevelop-
ment is calculated based on an average over time. The interest rate generally should reflect current rates.
Adjust as needed based on the overall risk of the project.

HI This is the total of the purchase price, cleanup action, hard and soft construction costs, and carrying

costs. This cell should represent the total anticipated cost of redevelopment.

Use the anticipated cost of redevelopment to match your sources of financing for each phase. Devise a
plan for which sources will cover the earlier/riskier project costs, which phases require different levels of
financing, and how much cash you will need to promote redevelopment.

J1-J4 Insert inputs to determine project end value.

There are generally two approaches for determining end value:

1. Use the property's appraised value based on market comparisons or the property's potential reuse.
Site-specific brownfield conditions, however, are likely to decrease the accuracy of an appraised value.

2. Determine the property's anticipated revenue stream, such as expected rental income.

J5 Net operating income is derived by subtracting operating expenses from rental rates. Use industry

standards by building type to obtain operating expenses and management fees on a per square foot basis.
Use local market conditions and types of tenants anticipated to figure vacancy rates by building type.

J8 Include amounts for longer-term cleanup action expenses, ongoing special cleanup action and maintenance costs

as necessary, reserves and/or environmental insurance. This will calculate an adjusted net operating income.

Cap rate The capitalization rate is used to calculate a rough project valuation. The rate used is based on the market and

risk involved. Consult with industry professionals to determine the cap rate appropriate for your project.

K1 Calculates the project's estimated completed value less development costs and a cash return on investment.

Preparing Your Plan for Site Reuse

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United States	Office of Land and	EPA 540-F-21-001

Environmental Protection Emergency Management November 2021
Agency	(5105T)	www.epa.gov/brownfields/

www.epa.gov/land-revitalization

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