Brownfield development continues to be a hot topic for developers and investors, and they offer excellent opportunities – when you do your homework. SCS Engineers, an environmental consulting firm with 40 years of experience, offers a few tips when considering a Brownfield site.
Although we’ve successfully redeveloped hundreds of properties, one of SCS’s most visible Brownfields projects is the San Diego Padres Petco Park in downtown San Diego, completed in the early 2000s. The site for Petco Park was once a commercial and industrial area with former land uses such as auto repair facilities and gas stations, laundry facilities, and paint and lumber storage facilities. On top of that, it also stored petroleum hydrocarbon and hazardous materials.
What is a Brownfield?
Brownfield land is any previously developed land that is not being used or is under-utilized and may require environmental mitigation to redevelop. These properties are common in many urban areas and often present cost-effective, profitable redevelopment opportunities.
The development of Petco Park is a classic example of a brownfield project, which brought the San Diego Padres to downtown San Diego within a 26-city block portion of the East Village area now known as the Ballpark District. Before developing this beautiful stadium, as well as the new hotel, residential, and commercial development that blossomed around it, this area of East Village San Diego was underutilized. The area housed various commercial and industrial properties dating back to the 1800s, many of which had a legacy of environmental issues.
Because of the aggressive development schedule, and to streamline the redevelopment of the Petco Park and the Ballpark District, SCS and the local health department (the County of San Diego Department of Environmental Health) worked together to create a dynamic approach to its redevelopment of contaminated properties. This approach, embodied in the Property Mitigation Plan (PMP) (also known as a Soil Management Plan), is tailored to the specific property uses as an efficient means to address and mitigate environmental issues (such as dealing with contaminated soils) during the property construction and development process. If enrolled under oversight by the appropriate regulatory agency, the PMP serves as the blueprint for mitigation, soil management, and soil reuse. And when followed, it is designed to result in the closure of environmental cases for the site’s approved uses.
Overall, brownfields typically have environmental issues that can impede new development. But suppose these issues are identified during the due diligence process and integrated into the development and construction processes. In that case, redevelopment protecting future occupants and the environment is achieved while often presenting cost-effective and profitable redevelopment opportunities.
What can you put on a brownfield? Can it be used for residential units?
A brownfield is potentially useful for any structures – including residential. San Diego has numerous examples of brownfield redevelopment, including former burn dumps and landfills, railroad facilities, gas stations, automobile repair facilities, dry cleaners, and more. The feasibility and cost are dependent upon the environmental issues unique to each site. Cleanup standards will be stricter for residential uses, and in some cases, it may not be cost-effective to achieve those standards. Evaluations determine what uses are feasible.
How do you evaluate a Brownfields site?
One should proactively address environmental issues to reduce the risk of cost and schedule overruns or future liability issues while operating these properties as-is or during the due diligence or pre-development process. Identifying environmental risks before acquiring properties is critical, as is assigning potential costs to these risks. Depending on the nature of the transaction, these items are often useful as leverage during negotiations.
Brownfields are normally evaluated by performing a Phase I Environmental Site Assessment (ESA) to first study historic site information and previous uses. A Phase II study may be performed if the Phase I ESA identifies potential issues (known as Recognized Environmental Conditions). Phase II includes collecting and analyzing samples (i.e., soil, soil vapor, and groundwater) to assess whether environmental impacts are present. If enough sampling is completed, the extent of impacts can be estimated.
The American Society for Testing and Materials (ASTM) has standard protocols for Phase I ESA studies. However, as an integral part of your team, your environmental consultant can do more than meet these technical standards. The result of the evaluation provides you with an understanding of how this information will impact your project.
If contamination exists, what do I do?
Your first concern is to get an estimate of how much contamination is present and what it will cost to address, which will affect your bottom line and project feasibility. It’s also important to know that cleaning up contamination is manageable and can even be left on-site during construction and through your planned use in some cases. Your environmental consultant helps you mitigate any risks.
Is funding available to help pay for the site investigation and remediation?
The U.S. Environmental Protection Agency has grant programs that can pay for the assessment and cleanup of brownfields, but these programs are only available to governmental and non-profit organizations. However, a private entity may be able to team with these eligible parties. In addition, grants are available from agencies such as the California State Water Resources Control Board or the Department of Toxic Substances Control for certain soil and groundwater contamination types from gas station or dry cleaner releases. Each grant has its eligibility criteria, and in general, the entity that “caused” the contamination is not eligible. Federal, state, and local tax incentives may also be available.
Obtaining a grant or loan with the help of a qualified environmental consultant or an environmental attorney can be the difference in acquiring, cleaning up, and redeveloping a property. The grants don’t typically cover all the costs associated with the necessary cleanups, but they can cover most of these costs.
I hear insurance can help pay for cleanups as well as help protect buyers.
It can. A new property owner can obtain an environmental insurance policy to cover cleanup requirements, third-party claims for bodily injury and property damage, and associated legal expenses resulting from pollution or contamination. These insurance policies are available with various term lengths, and deductible amounts to satisfy the concerns of lenders or equity investors.
Other solutions include “insurance archaeology” to find old insurance policies that may have coverage for “pollution conditions.” Many firms, including SCS, do this type of work, sometimes on a contingency fee basis.
What are some good risk management strategies for brownfields?
The most important risk management strategy is to have a thorough understanding of the environmental issues on the site and how those issues can impact your redevelopment plans and bottom line. It is critical to have environmental and legal support experienced in strategies for identifying, anticipating, and managing risks on Brownfields.
Are brownfields sites good investment opportunities?
Brownfields can be excellent investment opportunities if you perform thorough due diligence and understand the risks of each site. Many potential sites exist in desirable locations or emerging areas. They should be available below market value and may have been on the market for a long time.
With proper planning and the help of a qualified environmental consultant, the mitigation or remediation of these impacts can be incorporated into the acquisition and development processes and result in a vibrant, profitable project that is protective of human health and the environment.
Author Luke Montague is a vice president with SCS Engineers in its San Diego office.
You’ll find resources for funding brownfield redevelopment here.
California’s 2021 and 2022 budgets provide $500 million to the Department of Toxic Substances Control to support community revitalization. The funds are available over four years to accelerate the investigation and cleanup of contaminated properties in environmental justice communities. This funding is referred to as the Cleanup in Vulnerable Communities Initiative. A portion of this funding is for establishing the Equitable Community Revitalization Grant (ECRG)—a grant program to incentivize cleanup and investment in disadvantaged areas of California.
Equitable Community Revitalization Grant – Learn more about the program and how to use this funding to advance your communities brownfields and remediation projects.
Brownfields and Voluntary Remediation – Brownfield and voluntary remediation projects protect human health and the environment while restoring beneficial use to properties. SCS Engineers is a pioneer in supporting the public-private partnerships for these types of redevelopment. SCS helped redevelop environmentally impaired real estate more than 25 years before the term Brownfield was coined. Learn more about the possibilities for your community and how to select a brownfields remediation professional for timely and compliant delivery of the benefits.
ECRG Flyer – Provides the basics on this new and important funding along with a timetable.
The main thoroughfare in Madison, Wisconsin, leading to the state capitol, is going through a major renaissance. Once an idle brownfield, and before that an active industrial-commercial area, the entire block has now been converted to residential, commercial, and office spaces, as well as a youth art center. After extensive due diligence to assess, then successfully remediate significant adverse environmental conditions from past uses, the property’s new mixed-use buildings are open for occupancy. The community art center opens in 2021.
The block formerly housed a dairy operation, gas station, auto maintenance shops, a print shop, and a dry cleaner. These past uses and the historic fill placed on the property resulted in chlorinated solvents, petroleum, polycyclic aromatic hydrocarbons (PAHs), and heavy metal contamination.
Remediating and mitigating environmental contamination and redeveloping brownfields like this one into vibrant, revenue-generating community assets takes pooled expertise from multiple disciplines, including hydrogeology and environmental engineering.
While these projects can provide high value for communities long into the future, they are complex and require large investments up front, explains Ray Tierney, an SCS vice president. Having a team that gets a full picture of the property’s environmental condition, knows regulators’ expectations, and can identify technically sound, cost-effective remediation and mitigation approaches can translate to substantial money savings.
In this case, a solid knowledge base and vetting key details resulted in seven-digit figure savings and facilitated prized redevelopments.
“We identified the amount of soil and groundwater contamination, evaluated strategies to best address the issues, and came up with a cost estimate for remediation. Based on the estimate, along with documentation validating the scientific rationale for our recommendations, the seller reduced their price to account for the legacy environmental liabilities which the purchaser agreed to accept and address as part of the property’s redevelopment.”
SCS Engineers assessed for contamination; oversaw the management of contaminated soil and groundwater during construction according to the materials management plan; supported the client in securing grants, permits and documented compliance with the approved planning documents.
For this project, as is often true in historic urban areas, the greatest expense was dealing with widespread contamination found in the historic fill soils and with groundwater issues.
“Our client is obligated to handle contaminated materials properly. We plan and permit the proper procedures, work with contractors to facilitate the work, documenting that procedures and plans are followed while making sure they only invest what is necessary to be judicious in protecting the environment and public health,” says the SCS Project Manager and Geologist Dr. Betty Socha.
During construction, Socha’s team was onsite to assist contractors in complying with environmental plans and permits, documenting that activities were completed safely and in compliance with Wisconsin Department of Natural Resources (WDNR) expectations. The team oversaw soil removal and management during site demolition and construction of the foundation, including piles and a structural slab. This support system reduces the geotechnical requirement of the underlying soils to reuse more onsite soil safely. But knowing what soil is acceptable and orchestrating the separation of contaminated and non-contaminated materials takes specialized expertise and skill.
“During construction, we evaluate soil conditions, so contaminated soil is safely disposed of at a landfill. But landfilling large volumes of soil is a considerable expense, so it’s important to determine what is safe to be segregated as clean soils for reuse elsewhere. Knowing how to do this efficiently will minimize disposal costs and maximize the use of valued resources,” Socha says.
Getting a handle on groundwater conditions and identifying the best management strategy requires equal attention.
“This property sits on a strip of land (an Isthmus) between two large and prized lakes, with a shallow water table. We thoroughly assessed the groundwater (aka, hydrogeologic) site conditions and managed groundwater generated during construction and dewatering activities,” says Tierney.
“We documented the extent of contamination, and the WDNR confirmed our evaluation that no additional remedial groundwater treatment systems were needed. We could show the contamination was contained enough to pose no risk to municipal wells, private wells, surface water, or other sensitive environments. However, the client still needed a permit to dispose of the contaminated groundwater generated during dewatering for construction of the building foundation and underground utilities,” says Tierney.
Major brownfield redevelopment projects are involved with multistep processes. They begin with a Phase I Environmental Assessment entailing an inspection of the property and a historical review.
That’s where SCS initially identifies potential or existing environmental liabilities from contamination. Then the team confirms the presence of multiple soil and groundwater contaminants through a Phase II Assessment, involving collecting and analyzing soil and groundwater samples.
Next comes a site investigation, a robust testing program to see exactly what is going on. This is where the team further defines contamination, locations, how far it spread, and concentrations. That information lays the groundwork for developing the remedial action plan to file with the WDNR. The team then works with the redevelopment contractors to seamlessly and concurrently manage both the property’s remediation and the buildings’ construction.
In Madison, Socha, Tierney, and their team also helped the developer apply for and win a $500,000 brownfield grant from the Wisconsin Economic Development Corporation, a practice that is as much an art as a science. Additional public support for the project was also received through tax incremental financing (TIF) and the Wisconsin Housing and Economic Development Authority (WHEDA) tax credits for low‐income housing.
“We merge our technical backgrounds to show the land has the potential to be turned into a strong asset that addresses the legacy environmental contamination, promotes public health, and delivers a high-value property that pays taxes and supports important city services,” says Tierney.
It takes technical horsepower to show regulators just how you are addressing contamination. You need to show the economic development group awarding the grant that the project will create well-paid jobs and tax revenue. Equally important, it must be shown that the redevelopment helps address a community need for affordable workforce housing and additional market-based housing,” Tierney says.
Tenants have already moved into the two 11-story mixed-use buildings. In addition, The Madison Youth Arts Center (MYAC) is slated to open in early summer, with a grand opening ceremony this fall. The MYAC includes classrooms, offices, rehearsal spaces, and a 300-seat auditorium.
The final project showcases the heartbeat of this popular downtown space situated between two large lakes, with features such as a rooftop terrace, plazas with seating and green space, and soon to come are 3D urban art installations and murals that tell the story of this long-lived community.
“The redevelopment of brownfields and the creation of projects like the Lyric and the Arden align with the City of Madison’s Performance Excellence Framework Vision of Our Madison – Inclusive, Innovate, and Thriving. These types of redevelopment projects help the City act as a responsible steward of our natural, economic, and fiscal resources. While making efficient use of land and cleaning up brownfields, the City is able to provide workforce housing, job opportunities, and cultural venues, all while enhancing the City’s tax base,” says Dan Rolfs, the Community Development Project Manager for the City of Madison’s Office of Real Estate Services – Economic Development Division.
It takes a village, or in this case – a City, to revitalize an urban brownfield!
Brownfields Resources to Organize, Educate, and Implement Plans in Your Community