The A, B & Cs of Brownfield Redevelopment in 2012
By: Ann M. Catino
Scattered throughout Connecticut’s landscape are neglected and abandoned manufacturing complexes, relics of Connecticut’s manufacturing past. Large and small facilities are found in almost every town. Once alive with activity, these facilities are now hardly used, if at all, and sit idly with contamination unabated as ghostly reminders of a prosperous industrial past.
Connecticut, recognizing the need to restore these properties and to thwart other properties from falling into a similar abyss, has embarked on an aggressive program designed to stimulate development of these brownfield sites.
During 2012, the General Assembly has continued building a new direction to provide developers and business owners with an array of tools that provide financial assistance, limit liability and streamline the process for redevelopment such that the economic and community value of these properties is restored. And, Governor Dannel Malloy, with the passing of his administration’s first anniversary, has evidenced that he is a strong advocate of brownfield redevelopment. With these new laws and the Governor’s support, novel opportunities are created for brownfield redevelopment.
There are some fundamental A,B,Cs to brownfield development in 2012. “A” stands for agency. The Departments of Economic and Community Development (DECD), Energy and Environmental Protection (DEEP) and the Connecticut Development Authority all have a role. Within DECD is the Office of Brownfield Redevelopment (OBRD), which coordinates these agencies and the funding and liability relief programs. It is a one stop shop for advice, guidance and information.
“A” s for “abandoned” which begins, but does not end, the definition of brownfield: Brownfields include underutilized properties where the presence of, or potential for environmental pollution in the buildings, soil or groundwater requires investigation or remediation before or in conjunction with the restoration, redevelopment and reuse of the property. Owners of underutilized properties who may want to expand operations on their existing sites now may be eligible for certain brownfield programs.
“B” means budget. Projecting development costs for brownfields is uncertain as the contamination must be delineated before remedial alternatives are developed and priced. And, brownfield sites have hidden infrastructure costs (e.g., asbestos, PCBs). Typically, the property is upside down, meaning the cleanup costs exceed the value of the property, making conventional financing problematic. The State, recognizing this hardship, developed financial programs (grants, loans, tax abatement, tax credits and tax increment financing) to provide funding for assessments and remediation.
Already in 2012, $8.7 million in brownfield loans and $7.5 million in grants were awarded to commercial/industrial development and expansion, housing, and mixed use developments. Funding goes directly to businesses and developers and can be used for environmental assessment, planning, design, remediation, and demolition. With these awards, DECD Commissioner Catherine Smith affirmed that “there is a renewed commitment for brownfield redevelopment in Connecticut and DECD is leading the way.”
“C” is for comprehensive reform, a commitment to certainty and controlling liabilities. DEEP is currently undertaking a comprehensive reform of its remediation programs including its hallmark, the Transfer Act. To move ahead, DEEP convened workgroups comprised of business representatives, consultants, engineers, public health professionals, attorneys and environmental groups. Although not complete, any new program will likely involve a risk based approach. While adherence to today’s strict numeric criteria may remain an option, other exit ramps will be designed to provide better certainty. Final recommendations are due in January 2013.
With new laws, liability is also capped. The abandoned brownfield cleanup program offers developers of abandoned properties, who are not responsible for contamination, liability protection from addressing off-site contamination provided that the projects meet certain economic development thresholds and remediation is completed under a voluntary program.
Section 17 of Public Act No. 11-141 offers similar liability relief to purchasers of non-abandoned properties. To encourage owners of brownfield sites to no longer mothball the property and sell it, the prior owner will be granted liability relief for onsite contamination once the property is remediated by the new owner. To be eligible, an applicant must be innocent and have purchased the property after the contamination occurred or be an abutting owner. Eligibility is also restricted to certain properties (e.g., not subject to enforcement) and those fitting certain criteria including geographic distribution and project diversity. Once accepted, remediation must occur within eight years. DEEP approvals and audit will be on an accelerated schedule so the applicant may move faster, efficiently and with certainty.
“D” for development. These programs provide clearer guideposts than ever before, provide the funding available to defray the costs, and tackle liability to minimize risk. It’s time for doing development and turning our state’s brownfields into gold, if you pay attention to your A,B,& Cs.