Technological developments that give developers faster, more accurate historical information has helped spur the increased interest, but so too has increased federal and state incentives to develop these properties, a sense of corporate social responsibility, and, ultimately, the scarcity of developable land.
In April 2007, Environmental Data Resources, Inc. (EDR) released the results of a survey conducted at the Risk Management Technologies Contaminated Property Transactions Conference in Washington, D.C., that found the number of corporations and municipalities actively pursuing redevelopment and divestment of brownfield sites has grown significantly over the past year. The 200 survey participants — among them the nation’s leading environmental attorneys, environmental consultants and bankers — indicated that valuations of brownfield redevelopment efforts are increasing because of this second look these properties now get.
- EDR polled the people behind the projects and found:
- Seventy-six percent felt the national interest in identifying and divesting brownfields is based on an increased return on investments relating to the remediation of these sites. This compares to previous years when fewer developers were investing time and money in the sometimes lengthy and complex process of redeveloping brownfields.
- Ninety-two percent said the trend will continue and within the next year more owners will divest or redevelop their sites, which is positive economic development news for urban areas and former manufacturing towns where these sites are primarily located.
The federal Environmental Protection Agency estimates there are between 400,000 and 1 million contaminated brownfield sites. These range from former gas stations with deposits of petroleum hydrocarbons and dry cleaner businesses that discarded hazardous chemicals to manufacturing gas plants that left behind significant sludge. Over the years, this presence of environmental issues often prevented the land from being redeveloped.
The history of these brownfield sites can be cryptic and come from many unreliable sources — from the local knowledge of the abandoned lots to the scattered and often incomplete federal records. However, more advanced industry tools are available to help developers identify hidden brownfield sites and the contaminants in these sites. Most of the investors in the redevelopment of these sites begin by identifying a geographic area of interest, and then use the tool offered through an aggregator of historical use information to create a database of property uses to identify potential brownfields in that region.
This is where accurate and easily understood environmental records, Sanborn Fire Insurance Maps, and historic telephone directories are invaluable in confirming where there is environmental contamination, hazardous waste sites, and sites of leaking underground storage tanks. This critical information is discovered during the pre-purchase due diligence phase.
Investors and developers must also consider the new federal All Appropriate Inquiries rule, which has established a new standard of care for a Phase I Environmental Site Assessment. For investors considering brownfield development efforts, environmental attorneys and environmental professionals are paramount for understanding compliance issues such as this.
Taking advantage of Brownfield redevelopment opportunities will not only benefit investors economically, but the environment as well.
