Land Banking and Brownfield Redevelopment
Transcription
Land Banking and Brownfield Redevelopment
LAND BANKING AND BROWNFIELD REDEVELOPMENT TRACK 4 – Community Development Presented: Wednesday, May 13, 2015, 8:30-10:15am 1 Presenters TRACK 4 – Community Development • Charles Bartsch, Senior Advisor - Economic Development, US Environmental Protection Agency • Jill Kotvis, Environmental Attorney • Tracey Nichols, Director of Economic Development, City of Cleveland, Ohio • Jim Rokakis, Executive Director, Thriving Communities Institute • Michael Taylor, President, Vita Nuova LLC • Robert “Bud” Sweet, Director, NDC - Moderator 2 NDC ACADEMY Land Banking & Brownfield Redevelopment May 13, 2015 www.RethinkCleveland.org | 216.664.2406 Cleveland’s Industrial Commercial Landbank (ICLB) Properties must be well-located Purchases Land or accepts through donation Remediates under Voluntary Action Plan Perform a Site Assessment to estimate Clean-up Cost Purchases Environmental Insurance City seeks State and Federal Funds, using local funds for match Seeks developers www.RethinkCleveland.org | 216.664.2406 The Health Tech Corridor University Circle Institutions in the foreground and Downtown in the background www.RethinkCleveland.org | 216.664.2406 The Problem Statement We have 2 Major Employment Areas that are strong and thriving- surrounded by weaker areas & a new transit line • How do we connect the two areas and connect residents to employment? • Once we have the transit connection, how do we EXPAND these strong areas, attracting new businesses? • How can we keep incubated businesses in the City after they graduate so we can capture their growth? www.RethinkCleveland.org | 216.664.2406 The Health Tech Corridor- Before www.RethinkCleveland.org | 216.664.2406 Acquiring Multiple Parcels •Property Values decreased in the Health Tech Corridor area from 2001 -2006 by 58% •Property Values increased by 325% from 2006 - 2012 Source: Cleveland State University 2013 Acquire Land to Deter Speculators • ICLB acquired land ahead of transit project • Non-ICLB Land Example: A 6.2 acre used car lot bought in 1984 for $35,000 • Transit announcement: 2005 $75,000 • Transit opens: 2008- speculator $110,000 • Developer acquires for larger project $276,000 • Land Value 2015 $174,000 per acre for clean land per appraisal ($1.08 million) www.RethinkCleveland.org | 216.664.2406 Developer Led Project: Midtown Technology Center 128,000 sf post incubator space New home of Jumpstart, Cleveland Heart Lab and Chamberlain School of Nursing 85% leased www.RethinkCleveland.org | 216.664.2406 ICLB Properties in the Health Tech Corridor To be sold at Council June 2015 University Hospitals 40,000 SF Clinic (yellow) Even with FMV sale for $1.9m, the City had paid $2m plus $2m in State and Federal Grants. Payback is over time! Hemmingway Development Multi phase Med Tech Campus (Red) Sold at FMV $174,000 The ICLB Property Former Tops Grocery Superior and Lakeview Green City Growers Acres 6.46 9.85 End Use Site of Sav-A-Lot, Forman Mills, Advance Auto Food Production—Greenhouse E. 61st & Chester Block 2.53 Medical Tech Campus E. 57-59th/ChesterEuclid Midland Steel 7.37 University Hospitals Women & Children Clinic Listed with Broker Trinity Building 5.6 Ward Bakery 2.5 New 3rd District Police Station Warner Swasey 2 Listed for Sale/Historic Bldg Coke Plant-CVIC 54 Manufacturing Asbestos Abatement Completed. Developer due diligence underway 11 acres sold January 2015. Asphalt Plant Crescent Avenue 2.7 10.77 Marketing the Site Support Maritime Industry Adjacent company pursuing expansion Working with Army Corps on wetland issue. 22.0 125.78 City of Cleveland Kennel Site Status SOLD August 2011 OUTLOT Sold—October 2012 Assembled & Remediated 2010 -2011 SOLD December 2011 To Council for Sale 6/2015 To Council for Sale 6/2015 OEPA Covenant Not-to-Sue 2012 OEPA Covenant Not-to-Sue 2013-Completion 2016 Site Under Development- Completion 9/2015 45.31 acres sold/under development www.RethinkCleveland.org | 216.664.2406 Cuyahoga Valley Industrial Center 54 acre site Tracey Nichols Director Dept. of Economic Development (216) 664-3611 tnichols2@city.cleveland.oh.us www.Rethinkcleveland.org www.RethinkCleveland.org | 216.664.2406 Repositioning + Revitalization: Taking on Tough Projects Michael B. Taylor WWW.VITANUOVA.NET President | Vita Nuova MTaylor@VitaNuova.net (888) 308-1750 ext. 103 Regional Transit Station Consolidation Plan 5 KEY INITIATIVES Reuse Planning Neighborhood Improvements Job Preparation & Job Training Safety Youth Engagement PARTNERS U.S. EPA Region 5 | City of Toledo | Cherry Street Legacy Project – St. Vincent’s Hospital | Toledo Design Center | Toledo Community Foundation | Funder’s Network for Smart Growth | Toledo Port Authority | Old West End Neighborhood Initiative | NeighborWorks Toledo | Toledo Land Bank | Lucas County Department of Planning and Development www.TOLEDOAWP.com Brownfield Redevelopment: Key issues, best practices to promote Opportunities for Contaminated Site Transactions Charlie Bartsch Senior Program Advisor for Economic Development US Environmental Protection Agency NDC Academy May 13th, 2015 Bartsch.charlie@epa.gov What this discussion will cover… • Brownfields and the environmental context for economic redevelopment • Emerging federal policies linking environmental/ brownfields and economic development • Financing tools that can support brownfields reuse as part of an economic development strategy • Examples along the way… Current context for brownfield opportunities – re-development again makes sense, often in a greener market context • Growing demand for sustainable end-uses – “Green” = reduced O&M = market appeal; fits well with smart growth, redevelopment strategies • Decline in traditional infill/reuse = search for new uses – i.e., health centers, public facilities, renewable energy • Public sector incentives poised to play an even more important role as catalyst, gap funder, partnership foundation – Traditional programs can be better adapted to new situations – and they are evolving – New opportunities may be emerging – bond financing – Alternative packaging strategies more important Environmental overlay on the economic development process…. • Promoting brownfield reuse is consistent with goals related to sustainability, community development, smart growth – Makes the most sense to promote new economic activity in areas that have hosted it before – Infrastructure, workforce, core community amenities/ advantages adjacent – and paid for! • Reusing sites and facilities almost always triggers an assessment to determine what residue from past uses might remain, how it can be minimized to address future liabilities Environmental overlay on the economic development process…. • Developers, investors, lenders will not consider previously used properties unless they are comfortable that any risk can be defined and managed – and this includes environmental risk • Federal/state/local financial tools, regulatory procedures, technical assistance, and revitalization strategies can enhance the local economic advantage • Addressing this overlay is “Step 1” in the economic redevelopment process – for all previously used sites Legal stuff you should know up front… New re-development reuse of formerly used properties may be influenced by several federal environmental statutes – and there is often confusion about what might apply: • RCRA – Resource Conservation and Recovery Act – Governs disposal of solid waste and hazardous materials – “Cradle to grave” regulatory, tracking requirements • LUST/UST – Leaking Underground Storage Tanks – Practical reuse options brought under brownfields umbrella in 2002 law Legal stuff (continued) • CERCLA – Comprehensive Environmental Response, Compensation, and Liability Act – Strict/joint/several liability – Absent action: everyone in chain of title liable for full amount of cleanup, forever – Sites on National Priorities List (NPL) • Brownfields – Defined in law 2002 – sites with “real or perceived contamination” impeding redevelopment – Delegates regulatory sign-off to states in most cases, via VCPs • Prevents federal “second guessing” – Authorizes process to achieve liability relief (AAI) – BF-specific assessment/cleanup funding authorized And the practical redevelopment impact of all this legal stuff … • No commercial real estate transactions without environmental due diligence – Site assessments/investigations – Phase 1, Phase 2, legal opinions, AAI • “Buyer beware” – uncertainties over closure, transfer • Investor/lender nervousness – unwillingness to finance cleanup – Private lenders risk concerns, “fear of the unknown” – Federal agencies, local governments conservative in approach to participation in housing, economic development, supportive projects Emerging policies – New “3 Rs” for old brownfield sites Reuse/Redevelop/Reposition • Most interesting and (in most areas) most common strategy involves creative reuse of former brownfield sites – renovations or demolition and reconstruction • Advantages – unique architecture, historic, prime location to take advantage of new land use patterns • Common types of reuses – – Restaurants – Office/commercial/industrial – Major retail/small retail – Health/other services transportation access – Technology incubators – Private residences – Community centers/recreational facilities/open space Carrying out these policies in practice – what is being done now? Defining a context for brownfield site reuse • Approach brownfield reuse as an economic development issue with an environmental twist, rather than as only a contamination problem • View brownfield projects as real estate deals that further community development goals • Enlighten private parties about VCPs and liability relief • Transform environmental issues at brownfield sites into an approach that creates value, attracts investment, generates jobs, and gathers support What is being done now involving brownfields – across agencies? • Investing in Manufacturing Communities Partnership (IMCP) – White House driven/DOC led – Goal: re-shoring, promote new manufacturing investment, support industrial legacy communities • Strong Cities/Strong Communities (SC2) and Promise Zones – both established by Executive Order/led by HUD – Goal: increasing local capacity to restructure distressed economies, increase capacity and competitive advantage • In all 3 initiatives – EPA/brownfields playing a key role – providing expertise and technical assistance, integrating smart growth, area-wide planning, sustainability practices into investment strategies What EPA is doing now – priorities, partnerships, new initiatives • Administrator’s key priorities framed in a context of sustainable development linked to environmental protection, stakeholder involvement • 50 communities identified • AA’s priorities within this objective – promoting new/enhanced inter-agency, public-private working partnerships aimed at revitalization results – Defining, addressing environmental issues/concerns as part of the economic/community development continuum – De-mystifying environmental component of reuse process – Identifying common program missions – promoting financing leveraging/linkages across agencies EPA Priority in Practice – Brownfield Area-Wide Planning • Rationale – to better integrate brownfields with community economic development strategies • Objective – to explore broader, community wide redevelopment strategies in disadvantaged areas, integrate site cleanup and reuse into coordinated community development/revitalization strategies • Goal – implementing improvements in brownfieldimpacted areas according to a community vision – based on inter-agency, public-private partnerships to be strengthened, developed during the planning process Public Tools Can Be Leveraged in Various Ways to Promote Brownfield Redevelopment To provide resources directly Grants; forgivable/performance loans But also to… Reduce lender’s risk loan guarantees; companion loans Reduce borrower’s costs • interest-rate reductions/subsidies; due diligence assistance Improve the borrower’s financial situation • re-payment grace periods; tax abatements and incentives; technical assistance help Provide comfort to lenders or investors • performance data, risk management/corroboration Which Federal Financing Programs/Tools Are Well Suited to Support Redevelopment on Brownfield Sites? EPA/environmental programs • EPA brownfields – grants for site assessment, cleanup, RLFs HUD/community development programs • CDBG – Grants, locally-determined loans for economic/community development, planning • Section 108 – Loan guarantees for site prep/infrastructure USDA/rural development, utility programs • Business/industry development, rural utilities services EDA/Public works, planning, economic adjustment • Finances business-based, job promoting projects, supports necessary redevelopment infrastructure DOT/transportation • Road/transit system enhancement, construction, improvement Making the “Fit” -- How Have Federal Programs Been Used to Support Brownfield Redevelopment Projects? Eligible program activities can include: • • • • Planning for redevelopment/reuse Site acquisition Environmental site assessment Removal, remediation, capping of contamination from sites or structures • Site clearance • Demolition and removal of buildings and debris • Construction of infrastructure/related improvements/amenities that enhance site value Federal programs – Funding wrinkles & reality check CDBG • • • Projects are locally determined; significant competition for local funds Brownfield activities must be incorporated into CDBG Consolidated Plan and annual action plan Low-mod benefit is primary HUD objective (minimum use of 70% of CDBG funds) USDA • Applications are made to state USDA state offices on a rolling basis; these offices have significant influence on project funding decisions • Population a key determining factor • Private entities eligible for B&I assistance Federal programs – Funding wrinkles & reality check EDA • • Limited funding, significant competition Applications accepted quarterly – Pre-approval at regional office level • Unemployment key eligibility/selection factor • Projects driven by $/job requirements, job potential • Often, a focus on small towns, rural areas DOT • • • State MPOs, transportation agencies key decision makers Historic preservation/rehabilitation/operation of historic transportation buildings or facilities eligible Long lead time for planning, project integration CDBG: Chevy Place – Rochester , NY • 2.2 acre downtown auto dealership, gas station, and service garage site • Key concern -- UST and other contamination deterred developers • Role of CDBG – Critical gap financing; used for site assessment, partial 1st phase cleanup (including tank removal) • Developer funded 2nd phase of cleanup • City $2.35 million redevelopment loan from CDBG-capitalized pool • Brownfield result – 77 new residential units; coffee house with 20 jobs USDA: Potosi Brewery, Potosi, WI • Brewery built 1852 in Potosi (pop. 700), abandoned 1972 • Key concern – owner/developer unclear about reuse process • Role of USDA – $3.3 million B&I guaranteed loan key to securing additional $4.2 million in financing • EPA, state site assessment, cleanup grants • Transformed Potosi’s main street; community involvement key • Brownfield result – Refurbished site transformed into micro-brewery, brewing museum and library • 50 new jobs, 4 new beers EDA: Bates Mill – Lewiston, ME • Textile mill, shut down in 1993, redeveloped in stages as small business incubator • Key concern – retrofitting, positioning contaminated mill site for new small business use • Role of EDA – $1 million in public works funding supported site cleanup and infrastructure upgrading activities, part of $41 million financing package • EPA assessment grant assistance • Brownfield result – Less than 100 employees in 1993; 1,000 today – Mill generated $160,000 in taxes in 1993; today, $543,000 per year – even with tax incentives in place DOT: Former Conoco Tower – Shamrock, TX • Opened in 1936 to serve the new Route 66 cutting thru the city; combined gas station and “U-Drop Inn Café” • Closed in mid-1990s • Purchased by First National Bank of Shamrock in 1997 and donated to city • Restored by city of Shamrock for use as Chamber of Commerce • $1.7 million DOT enhancement grant paid for most of the station restoration, supplemented by local fundraising • Café is being restored as a revenue-generating enterprise to help cover maintenance costs • Fun fact: inspired “Ramone’s Body Shop” in Disney movie “Cars” EPA: housing project – Taunton MA • 6.5 acre, century-old former Robertson yarn mill; vacant 10 years • $52,000 EPA cleanup grant to non-profit Weir Corporation – Key first steps in cleanup, to demonstrate viability of local interest in redevelopment • Set the stage for preparation of site for LIHTC-supported development – 64 housing units – 18,000 sq. ft. commercial space • Leverage -- $15 million local/state/private investment Three key federal tax incentives that can be linked to brownfield revitalization transactions – all at little or no cost to the project…. • New Markets Tax Credits • Rehabilitation tax credits • Low-income Housing Tax Credits New Markets Tax Credits • Gives investors federal tax credits (39% over 7 years) for equity investments in designated Community Development Entities (CDEs), for use in low-income communities • CDEs use their allocations to make loans or investments in “qualified businesses” and development activities – Historically, most common investments -- in forprofit, non-profit businesses and real estate Other eligible activities include -- charter schools, homeownership projects, community facilities All investments at preferential rates/terms Brownfield cleanup and site preparation can be factored into NMTC project New Markets Tax Credits -- highlights of 2013 funding round (announced 6/5/14) $3.42 billion authorized to 87 CDEs in 32 states Allocatees anticipate making investments in 44 states Distribution by area type: $2.01 billion (60%) in major urban areas $680 million (20%) in minor urban areas $742 million (20%) in rural areas Planned loans to or equity investments in include: $2.75 billion (75%) to finance/support business loans $831 million (24%) to finance real estate projects New Markets Tax Credits – fine print and caveats impacting brownfield application • Challenging CDE designation, application process requires significant capacity, technical expertise – Time consuming and complex • Cannot be combined with LIHTCs, tax-exempt bonds • Costly – legal, other fees • Matchmaking a good strategy – find a CDE with allocation! – Recipients must allocate credits within 5 years • Historically, 50% + of all allocations have supported forprofit and non-profit business development – Significant capital investment in distressed areas – often synonomus with brownfields! NMTCs : Artspace Commons North – Salt Lake City, UT Former metal scrap yard • • Redeveloped into 102 rent-to-own units • Includes 53,000 sq. ft. of retail • Key concern – financing gaps stemming from rehab of brownfield into affordable housing • Role of NMTCs – $27.1 million instrumental in attracting private capital from US Bancorp Community Development Corp., American Express Centurion Bank • Significant additional private investment in surrounding area Historic Rehabilitation Tax Credits Taken the year renovated, income-producing building is put into service 20% credit for work done on historic structures, with rehab work certified by state 10% credit for work on “non-historic” structures built before 1936; no certification required In 2013 – 1,155 projects, $1.35 billion in credits Leveraged $4.02 billion in private investment 25% of projects less than $250,000 in size; 39% less than $½ million 21% of projects for office, 20% for commercial Created 55,458 jobs Generated $5 billion in state tax revenues, $4.9 billion in local tax revenues Rehabilitation Tax Credits – caveats and “fine print” impacting brownfield application Rehabilitation costs must be “substantial” – i.e., exceed minimum of $5,000 or the building’s adjusted basis Property must be “income-producing” – multi-family rental housing can claim the 20% credit, but not the 10% credit Rehab work must conform to state historic preservation standards – deter integration of “green” technologies Credit is recaptured on a sliding scale (20% annually) if owner disposes of the building within five years of completing renovation Rehab tax credits: Ford Motor Assembly Plant -- Richmond CA • Built in 1930, 520,000 sq.ft. ; closed 1953 • Original Albert Kahn “ daylight factory” • Rehabilitation work began in 2004 – Included seismic retrofits, green performance measures, including solar panels on roof • $11 million in rehab tax credits • Today – houses several manufacturers of sustainable products, plus 45,000 sq ft meeting and entertainment venue NMTC/rehab credits blend: Family Health Care – Fargo, ND • Former 1920 Pence Automobile Company renovated in 2011 to house consolidated operations of Family HealthCare • $1.4 million in historic rehab tax credits supported the $14.8 million project • $4.1 million in NMTC thru Wells Fargo Bank • Other financing: – $6.6 million HRSA facility improvement grant – $1.3 million from local foundations, corporate contributors – $2.6 million in FHC equity Low-Income Housing Tax Credits Can encourage capital investment in affordable housing on vacant properties, brownfields, other targeted sites States get annual population-based allocation for distribution to communities and non-profits – approx. $1.75 per capita Investors can get 9% annual credit for 10 years for qualified new construction/rehabilitation costs (i.e. 90% of total) for projects not financed with federal subsidy Federal subsidy limits credit to 4% Credits can be used for new construction, rehabilitation, or acquisition and rehabilitation Low-Income Housing Tax Credits – fine print and caveats Loss of tax incentive value on secondary market – from peak of 95 cents/$ to 75-85 cents/$ now – impacts syndication value “Green” priority for credit allocations within states “Difficult development areas” can get greater subsidies Credits support a wide range of housing types/situations Urban, suburban, rural projects Housing for families, special needs tenants, SRO, elderly $3.85 billion in credits issued in fiscal year 2012, supporting 1/3 of all new construction that year Albina Corner – Portland, OR • 3/4 acre Albina Corner is adjacent to a bus line and near a major light rail station • Abandoned gas station, retail shop • Small scale contaminants have deterred reuse – Tanks, lead paint • Site redeveloped into a mixed-use area that includes 48 units of lowincome housing built over 12,000 square feet of commercial space; includes a child care center and a second floor courtyard and play lot • LIHTCs one of 11 funding sources for the $4.4 million project – Other include CDBG, Oregon Housing Trust, foundations Brian J. Honan Apartments – Boston, MA • Allston-Brighton CDC saw an opportunity to develop former fish processing plant into affordable housing • Low-income housing tax credits key parts of financing incentive package needed to attract capital, convince funders that the project would work • Result – affordable units in a sustainable development: green energy, pedestrian access to groceries, shops, transit State and local financing tools and trends What Innovations Have States Put In Place? A few highlights… • • • • • • • • Cleanup expensing tax incentives (CO) TIF guarantees with brownfield priority (PA) Forgiveness of back taxes on brownfields (WI) Transferable remediation tax credits (MA) Licensed site professional (NJ/CT) Tax refunds to offset cleanup costs (NJ) Sliding-scale brownfield tax abatements (TX) G.O. bonds to capitalize cleanup RLF (OR) Most commonly used local tools for brownfield finance Often, it’s Putting a Brownfields “Spin” on the Local Tried-and-True… • • • • • Tax increment financing/TIF-type financing Tax abatements Tax forgiveness (linked to redevelopment) Special service areas or taxing districts Revolving Loan Funds (RLFs) – including locally defined, managed, and capitalized • General obligation bonds • Property transfers Jersey Gardens Metro Mall – Elizabeth, NJ • 166-acre former garbage dump, across the street from Ikea Center – Elizabeth’s first big brownfield success • $320 million investment – 1.5 million square feet of retail space, resulting in 5,200 jobs and $4.2 million annual tax revenue increase • Bonds being paid off through franchise fees levied within a “landfill reclamation district” established for this project, paid by mall tenants as part of their rent Belmar/former Villa Italia Mall – Lakewood, CO • 22 city block redevelopment at former mall, closed mid-1990s – Contaminants linked to dry cleaner, supermarket, asbestos • Redeveloped into Lakewood’s first walkable mixed-use “downtown” center • TIF-like financing strategy – new sales tax generated from project earmarked to cover costs of roads, structured parking • Saving costs by incorporating renewable energy (solar PV arrays) on top of 3 parking structures – 2.3 million kWh annually, 5% of Belmar’s energy use Waterfront Development – New Bedford, MA • Locally capitalized RLF used to pay for Phase I site assessments at sites served with environmental tax lien • Capitalization sources include local contributions, proceeds from property sales as liens are redeemed How does EPA see brownfields/ development link? • Manufacturing, housing, transportation, community service objectives can be consistent with EPA goals related to brownfields, smart growth, climate change, sustainability, and overall environmental improvement • Expanding ability of communities of all size to recycle vacant and abandoned properties for new, productive reuses in ways that build on local economic advantages. • Leveraging private resources, and other federal and state programs resources to promote site cleanup as part of the redevelopment and reuse process. • Expanding awareness of pro-active role EPA can play in community and economic development and job creation. Take away message on financing transactions on brownfield properties…from Warren Zeevon” “…I took a little risk. Send lawyers, guns, and money, Get me out of this….” Take away message on contaminated property reuse…from me • Creatively use a mix of development and environmental programs to meet the full range of site redevelopment needs, attract private financing for every aspect of a transaction involving contaminated property – including those focusing on renewable energy • Blend cash, process incentives, and cash offsets to make a project work • Focus on creative strategies, ideas, program applications For additional information…. Contact Charlie Bartsch at Bartsch.charlie@epa.gov (202) 566-1054 Plan on attending Brownfields 2015 !!!