Seeing Green in Brownfield Development

Seeing Green in Brownfield Development

We are somewhat puzzled in analyzing a potential mixed-use development opportunity on a very well-located brownfield. The site is fairly large (almost 50 acres) and used to house significant former manufacturing facilities. Many of the old buildings were demolished into the basements. There are also historical landfill areas and building foundations. What are the best approaches to minimize cost and maximize value?

Todd Davis:
I have two types of news for you: bad news and good news. The bad news is that your puzzle is more like a Rubik's Cube than one of those ten-piece jobs you did as a kid. The good news is that you have just described the sweet spot of any savvy brownfield developer -- integrating the development plan with the remediation plan to maximize value and minimize cost. So, how do you do it? Well, I will try to distill the essence of brownfield site development into four simple steps:

  1. Integrate Your Master Plan with Relevant Site Constraints
    Evaluate all applicable site development constraints on a detailed site map. Identify all applicable environmental issues, geotechnical issues and zoning constraints. Further, delineate environmental areas using a highly sophisticated tool we refer to as "blob mapping." Blob mapping is a risk tool that identifies, in gradations of color, portions of the site meeting relevant risk-based standards (i.e., compares areas of the site exceeding residential, commercial and industrial cleanup standards).

    The exercise of putting these site constraints in different layers on a site map will generate an invaluable planning tool for your project team. In fact, I would argue that it would be impossible to reach the best development decisions without creating this detailed baseline.

  2. Identify Project Value Drivers
    Evaluate the project's value drivers. For your mixed-use development, determine the appropriate combination of residential, commercial, parking and green space needs for the project. Based on this analysis, consider how much flexibility you can retain in your development planning while still achieving your goals for the project's development components.

  3. Conduct a Cost-Benefit Sensitivity Analysis
    Starting with a baseline value of the project site in its fully remediated state, conduct a cost-benefit sensitivity analysis comparing the cost to address necessary site constraints with the property's future real estate value.

    For instance, what is the cost of removing all of the constraints compared to leaving (or relocating) impacted materials or geotechnical constraints? Are you better off leaving materials in place and utilizing an engineering control (e.g., parking lot or cap) or an institutional control (e.g., use restriction for that area) instead of conducting active remediation?

    While in some instances, only remediation to residential standards will satisfy prospective end users from a market value perspective, you may be able to modify your baseline development plan by placing commercial uses on more "impacted" areas and utilizing the "cleaner" areas for residential purposes. As you can see, the Rubik's Cube effect starts to take hold of the development process.

  4. Creative Planning
    At Hemisphere, we firmly believe that adopting a team approach to brainstorm with all team members, including our planners, environmental consultants and legal experts, in one room at the same time, is the best method for generating creative ideas designed to tackle complicated brownfield problems. In our experience, this creative "free-for-all," designed to beat up thorny development issues, undoubtedly results in not only the best master plan but also the lowest development cost.

    In fact, particularly on large projects, we often take this step to the limit by bringing in outside experts to try to tear apart or critique our plan. While this exercise can sometimes be a bit gut-wrenching (like somebody calling your baby ugly after you've spent nine months creating him), there is no better way to ensure your product is the highest quality development and that you have minimized the chance of making significant error in your analysis.
Hopefully, this analysis has demystified the brownfield redevelopment process for you. My friends in the brownfield redevelopment industry shouldn't think my advice is akin to a masked magician detailing the secrets of cutting his assistant in half.

Unlike the magician, the results of good brownfield development are not illusory. The trick is not in hiding the process, but in executing the plan with creative magic.

Todd S. Davis, Esq. is the CEO of Hemisphere Development LLC. He is also the author of the American Bar Association's book Brownfields: A Comprehensive Guide to Redeveloping Contaminated Property.

This column has been reprinted courtesy of Brownfield News. It was first printed in the July/August 2005 issue of that publication.