July 08, 2019

Equitable development and brownfields redevelopment

Letitia D. Moore

A major focus of the federal Superfund program is promoting revitalization of properties across the country to support and improve the communities that host contaminated sites. This broader purpose for brownfields redevelopment is the concept of equitable development. In the context of putting formerly contaminated properties back into economic circulation, regulators, local governments, and community leaders are looking to address a variety of adverse impacts, including blight, urban sprawl, and jobs and housing imbalance in economically distressed communities. Communities and regulators are asking owners and developers of contaminated and formerly contaminated properties to pursue notions of equity in the course of their brownfields redevelopment.

In context, equitable development involves investing in the communities that have been host to the industries that produced contaminated sites and host to the abandoned contaminated or formerly contaminated sites. Equitable development asks that responsible parties engage in sustainable cleanup and redevelopment of brownfields land in order to reduce adverse impacts, stimulate economic development, and promote community benefits. For responsible parties hoping to clean up and market brownfield land, equitable development presents a new measure of success, not just remediation and not just redevelopment, but also economic development, land revitalization, and community improvement. Fortunately, equitable development may also offer a long-term solution to risk management.

For responsible parties looking for freedom from the yoke of a brownfields site, equitable development may sound like a ball and chain. In addition to cleanup costs and the normal transaction costs involved in selling land, there are now community aspirations to contend with: city councils, planning commissions, school districts, and neighbors looking for parks, housing, community centers, commercial centers, or schools. Legitimate questions arise concerning the intersection of remediation obligations and community development. At that intersection we encounter questions about cleanup standards and liability. Are you cleaning up for commercial or residential use? Does a responsible party have a role or responsibility for future development? Will the developer have a role in or responsibility for cleanup? Can the local land use planning authority have a role or responsibility in the cleanup? The right answers to these questions can help you manage your client’s risk and liability.

Regardless of whether a party is interested in righting the wrongs of the past and contributing to the community good, pursuit of equitable development should be part of brownfields asset management. Every owner of a brownfields site wants to manage risk and liability, i.e., limit the risks posed by legacy contamination and prevent future risk to avoid future liability. With the right investment of resources, equitable development can provide a pathway to long-term reduction of both risk and liability by giving a brownfields site a future. While an underutilized brownfields site is a liability, a brownfields site with a development future is an asset. Assets generate income and, as such, are managed to retain value.

The typical discussions of the benefits of equitable development revolve around benefits to the community (e.g., economic revitalization for new land uses, elimination or reduction of environmental contamination, or new community assets/resources such as housing, parks, schools, community centers, civic buildings, and restored green spaces). The benefit to the responsible party is usually described as good will. In some instances, good will leads to financial gain, i.e., a sales price that covers remediation costs. What often is not talked about is that a developed property, hosting a long-term investment in the community, offers long-term risk management. A successful real estate transaction for construction of a viable land use, a use that will not be abandoned and will be managed as a valuable asset, is far superior to an empty or underutilized property. With an equitable development goal, the cleanup will be targeted to a concrete future use. The property will be managed to support that future use, including proper care and maintenance of treatment systems or caps and active efforts to avoid future contamination.

Success lies in approaching the brownfields matter as a real estate transaction, rather than merely a remediation. In this, the responsible party becomes the community partner, playing a role in demystifying the environmental issues and managing expectations. The goal is development of a viable, long-term, community-serving land use at your brownfields site. Under the right circumstances, the cleanup can be tailored to the actual future use. Remediation activities or long-term operation and maintenance may be incorporated into the development design and engineering. In the role of community partner, give thought to the technical, financial, and regulatory resources that can assist local governments and community stakeholders in setting reasonable expectations and achievable goals. Community-serving public projects can attract public, private, and nonprofit investments. The U.S. Environmental Protection Agency provides assessment, cleanup, workforce, and job training grants, as well as revolving loan funds, to local governments and communities to facilitate brownfield revitalization projects. Nonprofit organizations like the Center for Creative Land Recycling bring resources, advice, and expertise that enhance a community’s capacity for effective brownfields development. A successful community development project on a brownfields site can generate long-term stewardship and change a liability into an asset.

Letitia Moore

Letitia Moore is a senior counsel with Holland & Knight LLP in the firm’s San Francisco office.