It should be noted, though, that just because a site is known or found to be contaminated does not mean that it is automatically eligible for funding under federal or local Brownfield programs. Applying to a Brownfield program is a complicated, long process, and admission is not guaranteed. Therefore, the more information a prospective buyer has about a property, the better positioned they will be to make educated decisions regarding their investment.
Brownfield properties exist all over the country. They are most often found in urban areas where there is or has been developed infrastructure. Usually, the sites were historically used as manufacturing or industrial facilities such as paper mills, steel mills, automobile manufacturing, or sites that stored fuel oil or chemicals. These facilities often required the use of water for various processes, so many Brownfields are located on waterfront properties.
It is important, then, to understand why a developer would consider purchasing a Brownfield in the first place. After all, there is always some amount of uncertainty and risk in purchasing one. The answer can sometimes be as simple as property value and availability. In a place like New York City, for example, property prices are extremely high. There is also a shortage of inventory following centuries of development and urban sprawl. So, the opportunity to purchase land at a potentially reduced price is very appealing to many developers.
Additionally, the properties tend to be close to highly desired amenities like public transit, schools, shopping, waterfront views, and highways. The location alone can increase the appeal of these properties as places to build homes, commercial buildings, or multi-use buildings, which could help developers realize a substantial return on their investment. For organizations that are not risk-averse, purchasing a Brownfield could turn into a wise investment.
In the case of non-profit developers, purchasing a Brownfield for development may help them achieve several goals. Often, these organizations are based in underserved communities that may be environmentally impacted by historical usages. Not for profit development of these sites can create jobs for residents, eliminate abandoned facilities and properties from the community, promote local pride in the neighborhood, build goodwill in the community
for future work, and stimulate economic development.
That being said, it is usually a private company or government agency that takes on a Brownfield development because they can more easily access capital and other resources. While all potential developers may have different motivations for purchasing a Brownfield, the ultimate goal is the same—to take a derelict or abandoned property or building and rehabilitate it so that it that can be safely used. Private companies typically choose to develop Brownfields because the property is in an area with great potential to acquire revenue through rents, leases, or other means. In these cases, the developer is responsible for securing financing to purchase the property. They will also be responsible for performing due diligence and environmental assessments of the site. Ultimately (if necessary), the developer will be tasked with cleaning up the area under regulatory agency oversight.
Stay tuned for more information on Walden’s Guide to Brownfield Developments: What You Need to Know to Make Sure Your Investment Dollars are Well Spent.