Brownfields Financing Basics

1. 218 D Street SEWashington, DC 20003202.544.5200 ph202.544.0043 faxwww.nemw.org Brownfields Financing Basics Opportunities for San Diego Presentation by: Charles Bartsch The Northeast-Midwest Institute January 26, 2002

2. What are Brownfields? EPA defines brownfields as abandoned, idled, or under-used facilities where expansion or redevelopment is complicated by REAL or PERCEIVED contamination. A “brownfield site” typically has active potential for redevelopment or reuse…residential and recreational uses as well as commercial or industrial facilities. Brownfields Definition

3. Summary of Key Provisions as Passed by Congress Title II – Brownfield Revitalization and Environmental Restoration Subtitle A – Funding $200 million per year (thru ‘06) for grants to states, tribes, local governments, and non-profit/quasi public redevelopment agencies and authorities for site assessment and cleanup grants (direct remediation grants to governments or non-profits as well as capital for RLFs) $50 million (or 25% of appropriation) may be used for sites with petroleum contamination insurance premiums permitted as eligible use of funds authorizes EPA brownfield program that includes training, research, and technical assistance activities Subtitle B – Liability Clarification Provides Superfund liability relief to: contiguous property owners prospective purchasers innocent landowners Subtitle 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 finality – for sites addressed thru state programs, except.… re-openers – EPA ability to come back is preserved in specifically defined situations 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

4. Lender Concerns The Need for Local Financing Initiatives Why Do Bankers Act the Way They Do When You Say Brownfields? • Market policy-making structure • Sphere of activity or market niche • Level of sophistication and knowledge • Past experience • “Trigger” issues • Comfort level with new remediation technologies

5. Federal Financing Programs 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) • HUD’s Section 108 loan guarantees • SBA’s Section 7(a) and Low-Doc programs Grants • HUD’s Brownfield Economic Development Initiative (BEDI) • HUD’s Community Development Block Grants (for projects locally determined) • EPA assessment pilot grants • EDA Title I (public works) and Title IX (economic adjustment) Grants (continued) DOT (various system construction and rehabilitation programs) DOT’s transportation and community system preservation (TCSP) pilot grants 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 12/31/03) Historic rehabilitation tax credits Low-income housing tax credits Industrial development bonds Tax-advantaged zones HUD/USDA Empowerment Zones (various incentives) HUD/USDA Enterprise Communities (various incentives)

6. State Voluntary Cleanup Programs An Overview of Key Features and Characteristics 47 programs in place today • 10 programs changed significantly in 2000 and 2001 • 23 programs less than 6 years old • Seek to provide predictability and finality to the brownfield process Eligibility • Typically, open to any contaminated site • Most permit allow petroleum, asbestos, or PCB-contaminated sites in • Most do not let PRPs volunteer Oversight • Older programs -- sign-off on remediation plans, review of cleanup activities • Recent approaches -- state oversight varies by level of cleanup required, type of site (I.e., or orphan or prospective purchaser), “privatized” programs Financial assistance/incentives • 13 states offer direct grants or loans • 22 states provide tax credits or abatements • 19 states offer targeted financial assistance or tax incentives

7. Project Examples Albina Corner -- Portland, Oregon • The Albina Corner is located on a three-quarter-acre site adjacent to a bus line and near a major light rail station. The area is a main street to several inner-city neighborhoods, where for several years small scale contaminants have deterred reuse. • Today, the Albina Corner is being redeveloped into a mixed-use area that includes 48 units of low-income housing built over 12,000 square feet of commercial space. Some of the features include a child care center and a second floor courtyard and play lot.

8. Project Examples Kinzie Industrial Corridor -- Chicago, Illinois • Chicago is making a major commitment to revitalizing the Kinzie Corridor, a west side area that was once a declining industrial hub. • Chicago’s strategy includes acquiring former manufacturing parcels and assembling a 70 acre trac that could be used to meet modern manufacturing needs.

9. Project Examples Buffalo, NY -- LTV Steel Plant Site • A site that once produced millions of tons of steel will soon be producing millions of pounds of tomatoes thanks to a public / private partnership to redevelop the south side of the city. • This was accomplished through a cooperative effort on the part of LTV, the former owners of the steel plant, and state and federal agencies including the EPA and NYSDEC. A specific voluntary cleanup plan for the site was worked out. Cleanup tasks were completed in about three months. Since the site is within a New York State Economic Development Zone and a Federal Enterprise Zone, tax incentives were able to be applied to help the economic viability of the project.

10. Web Site 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