In the world of commercial real estate, the effects of environmental contamination can be severe. Environmental contamination impacts property values and can create significant problems with redevelopment efforts. In this FAQ, we will be discussing contamination risk, brownfields, and their impact on real estate. We'll cover the definition of brownfields, the potential risks and benefits of redeveloping contaminated sites, as well as the steps involved in redeveloping a brownfield site.
What is a brownfield site?
According to the United States Environmental Protection Agency (EPA), a brownfield is a property by which the expansion, redevelopment, or reuse of may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant. In other words, brownfields are previously developed commercial or industrial properties that are abandoned or underused due to concerns about contamination. Brownfields can range from old factories and vacant warehouses to abandoned gas stations.
What are the contaminants in brownfield sites?
According to the U.S. Occupational Safety & Health Administration (OSHA), typical contaminants in brownfield sites include petroleum hydrocarbons, lead, construction debris, polychlorinated biphenyls (PCBs), treated wood (cadmium, chromium, arsenic), industrial chemicals, and diesel fuel.
Who is responsible for cleaning up brownfields?
States and Tribal governments bear the responsibility of establishing and enforcing assessment and cleanup standards for addressing environmental contamination at brownfield sites. In certain scenarios, the current property owner shoulders the financial burden of site assessment and clean-up, while in others, the property buyer assumes these obligations along with their associated costs. The EPA does not clean up brownfield sites- instead, they award competitive grants to government entities and certain non-profit organizations that can be used for cleanup activities. Funding for assessment and clean-up can be obtained through federal programs, such as the EPA's Brownfield Initiative.
What is the impact of brownfield sites on real estate development?
There is hesitation among real estate developers to redevelop brownfield sites because the uncertainty around contamination risk adds tremendous uncertainty to development projects. Compared to Greenfield sites, contaminated properties can be subject to a lengthy clean-up process, which can add significant costs to the project and cause substantial construction delays. As a result, many developers tend to avoid brownfield sites in favor of developing greenfield sites that have no previous industrial use. This preference has led to further urban sprawl and the loss of valuable open spaces.
What are the steps involved in redeveloping a brownfield site?
Generally, there are 3 phases involved in brownfield redevelopment that are undertaken by developers:
1) Pre-Development: The pre-development phase lays the foundation for a successful brownfield redevelopment process. In this phase, the developer conducts due diligence and prepares a redevelopment plan.
2) Development: The development phase includes completing the permitting, environmental cleanup, construction, financing, and marketing activities that lead up to the completion of the project.
3) Management: During the management (operational) phase, the developer determines whether they'd like to hold and manage the property or if they'd like to sell the property to another entity that will be responsible for its long-term management. If the developer chooses to sell the property, they must ensure that the ongoing maintenance required under the remedial action plans are transferred to the buyer.
What are the benefits of brownfield redevelopment?
Brownfield redevelopment serves several important purposes, including:
Remediation of polluted sites has the potential to significantly reduce or even eliminate the risk of exposure to hazardous substances, thereby enhancing the overall environmental well-being of the local area.
Reusing brownfield sites can help protect open spaces from development while revitalizing the local community.
Utilizing existing infrastructure for development purposes can save taxpayer dollars.
How can you measure contamination risk?
Typically, contaminated land is identified through a thorough assessment process that is undertaken by an environmental consultant. They will analyze the history of the property and adjacent properties to identify possible contaminant linkages that could be present. Following this study, a formal site investigation is conducted. The site investigation includes an on-site analysis that typically involves collecting soil and water samples. Using this data, a plan can be created to clean up the contaminated site so that it can be redeveloped.
Brownfields are common, and they are located throughout the country. LandGate's PowerData toolkit contains a full map of brownfield sites across the United States.
Coming Soon: Contamination risk scores will soon be available for every U.S. property using our LandApp tool:
