Overview of Brownfield Redevelopment

Neha Gupta

13 Oct, 2023

Brownfields are properties that are vacant and underused. They may be contaminated due to how they were used in the past. These sites are like forgotten land due to severe and natural contamination and financial and social complexities prevent their redevelopment. They are generally identified as struggling urban areas, mainly in urban centres, peri-urban, and rural areas that were once heavily industrialized. These are the lands previously used for Industrial/commercial purposes with suspected pollution, including contamination due to hazardous waste. Contaminants in brownfields may include a wide range of toxins, such as petroleum, metals, asbestos, pesticides, PCSs, and solvents. When abandoned brownfield lands are neglected, contaminants may migrate offsite, creating hazards for others nearby. The contaminants may create significant health and safety risks for those who live and work close to brownfield properties.

Depending on whether contamination is present, the preparation of brownfield land can be problematic and expensive. Cleaning up these sites helps to improve the quality of the environment in the community. It removes natural and perceived threats to health and safety. Brownfield redevelopment ensures that contaminated land is cleaned up and restored. Recently, the brownfield redevelopment has emerged as a sustainable land use strategy and impetus for urban revitalization.

Examples of Brownfield sites

1. Abandoned tank farms
2. Abandoned canneries
3. Former military sites
4. Dump sites
5. Former gas stations

Examples of Contaminants

1. Petroleum products
2. Lead
3. Solvents
4. Lead-acid batteries
5. asbestos

Benefits of the Brownfield Process

The benefits are divided into three categories-

Environmental benefits

• Cleanup removes contaminates, protecting human health and the environment
• Cleanup lessens the likelihood of contaminates migrating offsite
• Keeps other land pristine by reusing land that was previously developed
• Can restore the ground so that it is safe for food production

Economic benefits

• Reuse of existing structures helps keep costs down. Reusing a brownfield site can raise the value of neighbouring properties.
• Increase employment opportunities

Social benefits                                

• Improves the health, safety, and security of the community by getting rid of contamination and safety risks like condemned structures
• Creates opportunities for development (such as affordable housing) in core areas of communities
• Can provide opportunities for traditional lifestyle activities by restoring subsistence resources

Brownfields Redevelopment Opportunities for Communities

Communities often experience several benefits from brownfield site redevelopment, regardless of how the site is reused. Benefits include:

1. Environmental – By addressing the environmental conditions of a brownfield, the project can reduce or eliminate exposure to environmental contamination and enhance the health and safety of the community.
2. Sustainability – Brownfield’s real estate transactions provide an opportunity to integrate environmental cleanup with sustainable property reuse. Coupling these two activities can ensure site cleanup and address environmental risk.
3. Community Involvement – Local stakeholders may be more likely to become involved when a brownfield site is in a weak market. As a result, the community often is much more invested in the project and its effects.
4. Goodwill – Redeveloping a brownfield site provides an opportunity to create new or improve community amenities nearby

Why Brownfields Redevelopment is Challenging

Brownfield redevelopment is extremely difficult on many levels, particularly in terms of environmental, legal, and financial considerations. Properties that are vacant or underutilized and may be contaminated from prior industrial or commercial activity are known as brownfields. Important issues include:

1. Environmental Issues: Brownfields frequently have varying degrees of environmental contamination, like contaminated soil or groundwater. These contaminants can be difficult, expensive, and time-consuming to remove. To make sure the property complies with environmental standards for safe occupancy or use, site remediation may require extensive investigation, assessment, and remedial measure implementation.
2. Legal Difficulties: Redeveloping brownfields may require navigating several complex legal issues. Common legal problems include ambiguous liability for contamination, property ownership disputes, and environmental regulation compliance. In order to avoid delays and increased project costs, developers must take care of any potential legal obligations, including identifying accountable parties, negotiating agreements, and obtaining necessary permits or approvals.
3. Financial Difficulties: Securing the funding necessary for brownfield redevelopment can be a significant challenge. Environmental evaluations, cleanup, and infrastructure upgrades can come at a significant cost. Private investors and lenders may also be put off by the uncertainty surrounding future property values, environmental liabilities, and return on investment. To get around the financial barriers to brownfield redevelopment, public funding sources, grants, tax incentives, and innovative financing methods are frequently required.
4. Community Engagement Challenge: Brownfield redevelopment initiatives must also address community concerns and win support from the general public. Due to historical contamination, potential health risks, property values, noise, and increased traffic during construction, local communities may harbour mistrust or worry. During the redevelopment process, it is essential to interact with stakeholders, address their concerns, and take into account community feedback to ensure successful and long-lasting project outcomes.

Brownfield Redevelopment Scenarios

Stages of Brownfield Redevelopment Process

The three stages of the brownfield redevelopment process are pre-development, development, and management. Each step requires specific actions, funding, and financing.

Pre-Development Phase

Pre-development activities lay the foundation for a successful brownfield redevelopment project. The developer (or local government for a publicly funded project) conducts several analyses, assesses the feasibility of a project, and decides whether the project should move forward. This is the riskiest phase for potential private developers because they invest money upfront without guaranteeing any return. During this phase, the developer usually does the following:

• Conduct Due Diligence – Due diligence involves various activities before purchasing a property and exercises specific to the environmental components of the redevelopment. These activities typically include Conducting property and environmental assessments, Researching land and building titles for the property, and Continuing communications with key stakeholders about the planned redevelopment.
• Conduct Analysis – These may include an analysis to evaluate the physical and regulatory development potential of the property. This initial feasibility analysis usually consists of quick, back-of-the-envelope calculations and a feasibility analysis to evaluate and understand different types of project risk, including financial and environmental risk.
• Determine any Fatal Flaws – Once the due diligence and various analyses are complete, the developer will determine if there are any obvious fatal flaws.
• Develop the ProForma and Agreement for Purchase of Property – If proceeding with the project, the developer will move forward with an in-depth financial proforma and negotiate their contract terms to purchase the site. These negotiations are a method of risk management and address key issues, such as liability, financial risk, environmental covenants, institutional controls, and regulatory assurances. These negotiations lead to an agreement to purchase the property from the seller (i.e., a letter of intent or Purchase and Sale Agreement).
• Use the Proforma to Refine the Site Design -The proforma can be used to guide the site design process by calculating estimated costs and profit derived from different buildable square footage and site constraint inputs. During this stage, a potential developer will probably look into several redevelopment ideas to ensure the project is both financially and environmentally feasible.  
• Prepare a Redevelopment Plan – If a decision is made to go forward, the developer will begin redevelopment planning for the site based on the information gathered and the market assessment.
• Identify Sources of Funding – A combination of private and public sector funds may be used to pay for assessment, remediation, purchase, and redevelopment activities.
• Acquire Environmental Insurance – The developer may decide to purchase a Pollution Legal Liability (PLL). PLL insurance can provide coverage for pre-existing contamination that may be unknown, onsite and offsite third-party bodily injury and property damage, and regulatory reopeners of a completed remedial action. The term of the policy and the coverage amount can vary based on the insurer and the environmental condition of the site. Insurers will generally require a comprehensive understanding of the environmental condition of a site, typically developed through comprehensive site characterizations. In some cases, an approved remedial action plan may be necessary before the insurance will take effect. PLL insurance can provide protection to both the buyer and seller in the case of a property transfer.

Development Phase

This phase includes permitting, environmental cleanup, construction, financing, and marketing activities that culminate with the completion of the project and a formal opening. During the development phase, the developer usually does the following:

• Obtain Permits and Necessary Approvals -This includes local and state land use approvals and construction permits.
• Conduct Environmental Cleanup and Site Preparation Activities – Based on assessment activities and stakeholder input, planned cleanup actions, and developers are typically able to integrate and streamline cleanup and construction activities and ensure all issues are resolved so that the redevelopment process runs smoothly. This phase is an extremely sensitive time. Any delays result in higher costs and may make the project financially unfeasible.  
• Conduct Marketing and Pre-leasing Activities – Leasing begins when the construction schedule is determined. The property may or may not be sold once the construction is finished. For long-term management, a commercial property may be sold or leased. However, in most cases, the property is leased first.
• Complete Construction and Open the Project – A brownfield project may be considered successfully redeveloped after construction is complete, leasing transactions finalized, and the property is occupied and operating as planned reuse.

The Management Phase

During the management (or operational) phase, the developer decides whether to:

• Hold the property for the long term and assume responsibility for operation and maintenance (O&M),
• Sell the property to another entity that will take over long-term responsibility for O&M.

If the developer decides to sell the property, they are responsible for making sure that any institutional controls and ongoing maintenance mandated by the remedial action plans are transferred to the new owner.

Conclusion

Brownfield redevelopment is essential for transforming contaminated or underutilized land into livable and sustainable areas. By repurposing these sites, communities can encourage economic development, enhance environmental quality, and improve community well-being. Brownfield redevelopment offers a chance to make the most of already-built infrastructure, stop urban sprawl, and promote a more diverse and resilient future.

FAQs

Read our Article:How To Obtain A Pollution Board License For Medicines And Pharmaceuticals Manufacturing?