Feature Story

BROWNFIELD REDEVELOPMENT: ONE HIGHLY SUCCESSFUL APPROACH

The story has been told in Brownfield News countless times. How can you take an artifact of industrial history that seemingly has no value but plenty of liability and risk and turn it into property worth millions of dollars?

We've seen thousands of these problems and encountered numerous solutions. In this article, we'll look at one particular firm's integrated approach to remediation and redevelopment that clearly produces infinite potential for such brownfield properties.

MACTEC is a consulting firm headquartered in Atlanta with about 90 satellite offices across the United States. Its focus is on providing engineering, environmental and remedial construction services.

The company's reputation has been built on its experience of applying a three-phased approach to several high-profile projects, including Encap Golf Holdings, LLC in the New Jersey Cardinal Stadium in Louisville, Ky.; Atlantic Station in Atlanta, Ga.; Rocketts Landing in Richmond, Va.; and the Presidio in San Francisco. From this base of varied challenges and projects, MACTEC worked with developers, environmental regulators, contractors and local government officials to optimize the process of redeveloping brownfields.

Effective Combinations

Successful redevelopment of a brownfield requires an end reuse that can attain a fair market price. In other words, most redeveloped brownfields involve some version of a highest and best use that provides a reasonable return on the investment. Yet, there have been many brownfield properties remediated for the purpose of an end reuse that serves the overall public interest of the community, such as public parks, greenways, stream buffers and public parking.

The key is to work successfully with the seller of a brownfield site to attract developers to a property. Through cost-effective site characterizations, sufficient details can be compiled to demonstrate redevelopment opportunities for potential buyers.

A qualified developer and financial resources are essential to successful brownfield redevelopment. The developer's real estate deal will eventually determine the end reuses for parcels within the brownfield tract. The proposed property reuse master plan that is formulated in the pre-real estate closing phase is critical to developing the most cost-effective environmental remediation strategy.

However, equally important is the developer's enthusiasm about the potential of redevelopment consistent with the plan. Therefore, the developer must play a major role in plan preparation, along with the local government officials and other community stakeholders.

The economic reality of a brownfield redevelopment project requires a developer to prioritize the spending of funds for environmental remediation, or to wisely manage the available funds so that the remediation necessary to address the risk-based criteria for each end reuse is achieved. For example, the pathway of exposure for an area under a proposed parking deck will usually be less expensive to remediate (based on end reuse) than the area of a residential component of the redevelopment. As part of its approach, MACTEC uses parcel-specific characterization data to prepare the environmental remediation strategy in conjunction with the developer's proposed reuse of the various parcels to minimize environmental remediation costs, while still providing appropriate remediation to eliminate exposure pathways.

In recent years, most states have enacted specific brownfield legislation to enhance redevelopment. The limitation of liability related to current and/or future property owners must always be evaluated and addressed. Some states provide procedures that enable the developer and future owners to eliminate exposure pathways through engineered solutions and/or institutional controls (restrictive covenants). In addition, several types of insurance are available to the seller and the purchaser to assist in managing the range of potential liabilities related to remediation costs and third-party suits. These limitations of liability, restrictive covenants and engineered remedies and solutions must be kept in place by future owners to ensure protection of end users.

Three Keys

MACTEC's three-phased approach, as described below, optimizes return on investment and minimizes liabilities during property redevelopment:

1. Strategic planning phase:

During this phase, stakeholder goals and objectives are determined. A thorough understanding of stakeholder goals is critical to project success. Private stakeholder goals can be vastly different from public stakeholder goals. The interest and role of local government, zoning boards, planning agencies and environmental regulatory agencies are significant to the success of a project.

2. Pre-real estate closing phase:

During this phase, available site information is gathered and reviewed. Based on the available data and stakeholder goals, an environmental regulatory strategy is developed, evaluated and refined. Input from various stakeholders, including potential buyers, the seller and the regulatory community, is important to demonstrate that the proposed remediation plan will be acceptable. The proposed property reuse master plan is critical to developing an acceptable remediation plan.

Institutional and/or engineered controls are considered during this phase, as these types of controls can limit the cost of cleanup activities while still being protective of human health and the environment. The preparation of the remediation plan and obtaining approval by the environmental regulatory agency are elements of this second phase.

3. Post-real estate closing phase:

During this final phase, the approved remediation plan is implemented. Coordination of the approved remediation plan with the redevelopment activities (e.g., grading, installation of infrastructure) is where real cost savings can be realized. Moving soil more than once can be costly and time consuming. The final tasks of this phase are to certify, as necessary, that remediation has been completed in accordance with regulatory requirements, obtain available limitations of liabilities from the regulatory authority and put into place a process to recover eligible assessment and remediation costs through available tax incentives.

PROJECT EXAMPLES

ENCAP MEADOWLANDS
New Jersey

MACTEC has been working with ENCAP, the developer, since 2001 to redevelop eight closed landfills on this site. MACTEC's design/build contract with ENCAP provides for a cap of 50 acres of orphaned landfills that were never legally closed. The master plan includes two 18-hole golf courses covering more than 400 acres, as well as residential, hotel and other recreational facilities. A vertical hydraulic barrier (wall) isolates the groundwater existing below the landfills and then contains it within the wall to prevent migration of pollutants to other water bodies on the site. A leachate collection system is in place to transfer the leachate off site for treatment. A passive venting system is in place for the methane. Notable factors for the ENCAP development are significant additional tax revenues, protection of wetlands and the creation of recreational opportunities for the surrounding communities in this area of New Jersey.

ATLANTIC STATION
Atlanta
2004 Phoenix Award National Grand Prize

Beginning in 1997, the 100-year-old deteriorating steel mill in the northwest edge of downtown Atlanta became the focus for brownfield redevelopment. MACTEC facilitated discussions between the developer, Jacoby Development, Inc. (JDI), and Atlantic Steel. The site contains approximately 138 acres, and some environmental remediation was required throughout the property. After the initial remediation was conducted, AIG Global Real Estate became a partner with JDI to develop the property. AIG had previously provided insurance for the project. MACTEC prepared and conducted the site environmental characterization, then used site-specific, risk-based criteria to develop the environmental remedy. Various metals, volatile organic compounds, free product of significant accumulations of oily substances and one million tons of old steel slag were identified on the site. By applying MACTEC's concept of integrating the environmental remediation with the developer's master plan, the steel slag was covered with a cap and left on site. Environmental remediation was sequenced to allow the underground components of the infrastructure to be installed. Remediation was completed in the range of $10 million, instead of the initially projected $30 million. In the last few years of operations, Atlanta Steel per year in property taxes. The redevelopment of the property will generate about $30 million or more in tax revenue for Atlanta.

BELTLINE REDEVELOPMENT
Atlanta

The City of Atlanta is encouraging and controlling redevelopment at one of the nation's more interesting projects by supporting the Atlanta BeltLine project. The BeltLine is a 22-mile loop of historic railroad right of ways (some active, some inactive) that encircles downtown and midtown Atlanta. This nationally recognized project focuses on the adaptive reuse of underutilized railroad property in order to connect more than 45 in-town neighborhoods with parks, transit and trails for commuters, bicyclists and pedestrians. MACTEC provided environmental assessment services for a local private developer who purchased 4.6 miles of the proposed 22-mile BeltLine for redevelopment. This segment of the BeltLine encompasses between 60 and 70 acres and is planned to support various types of development, including some low- to high-rise residential. As part of the pre-real estate closing phase of this acquisition, the developer took advantage of tax incentives in Georgia's brownfield program.

PAPA JOHN'S UNIVERSITY OF LOUISVILLE CARDINAL STADIUM
Louisville, KY
1999 Phoenix Award National Grand Prize

The site of the Louisville Cardinal Stadium was once used as a railcar and locomotive repair shop for a major rail company. For 90 years, activities on the site included motor cleaning, use of solvents, varnishes, diesel fuel, lead lubricants and plating solutions, building up a massive area of contamination. Initial estimates for remediation of the site were approximately $40 million. A risk management plan was developed to sufficiently cap the site, protecting both construction workers and future users from exposure and eliminating the need for more costly remediation techniques. Ultimately, the remediation costs amounted to $6.8 million. BFN

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