The Evolution of a Successful Brownfield Remediation Program

The Evolution of a Successful Brownfield Remediation Program
Cuyahoga County Department of Development

By Tracey Nichols
Assistant Director for Economic Development
Cuyahoga County Department of Development

Based on the experiences of a great many people in Cuyahoga County involved in the process of establishing a successful Brownfield Program, some basics steps emerged. It is hoped that these experiences might help other communities succeed in redeveloping properties for sustainability, reduction in blight, restoration of local revenues, job creation and reduction of health risk to the community. These are the steps followed by Cuyahoga County, some deliberate and some in response to issues that arose over the years:

1. Bring stakeholders together to discuss the problem and work on possible solutions
2. Educate elected officials and residents about the reasons to invest in Brownfield Properties
3. Establish a dedicated fund
4. Hire professional staff with financial and legal backgrounds
5. Develop a professional relationship with certified environmental professionals in the community
6. Expand the program with grant writing for State and Federal funds
7. Quantify and Report fund performance at least annually
8. Learn as much as you can from others

In the early 90’s, the Brownfield problem in Cuyahoga County received much attention. Many stakeholders in the local community responded to the call and came together on a regular basis as the “Brownfield Working Group” to discuss the issues and possible solutions under the guidance of the Cuyahoga County Planning Commission. The County also worked closely with the USEPA and was the first entity in the country to receive a Pilot Assessment Grant under which three sites were characterized. In 1993, they published a report entitled: Brownfields: Information and Resource Guidebook.

The group continued to work with elected officials, the banking community and the foundation community. In 1997, Cuyahoga County was selected as one of the first Brownfields Cleanup Revolving Loan Fund (BCRLF) communities in the amount of $350,000. These funds were used to clean up the Schmidt Brewery site in Cleveland, Ohio. In 1998, the Cuyahoga County Board of County Commissioners issued a $15 million dollar bond specifically for brownfields redevelopment. Foundations provided $250,000 for environmental testing and banks pledged to support projects. The Brownfield Working Group continued to work with the County Department of Development, who designed the program parameters and established the fund. The fund is not a revolving loan fund, as repayments are used to repay the bond. It was determined that a part of the funding needed to be a grant or forgivable loan, based on performance of the clean-up to State standards. The debt piece would need to be flexible and it was determined that the loan would be interest-only during remediation. The county made payments from general fund revenues for any amounts due not received from repayments. The real estate market in some areas of the county needed more assistance than others and a sliding scale of forgiveness was established based on distress levels of the fifty-nine communities in the county. A decision was made to only fund projects that had site control in the form of an option or clear title and those that had a committed end user. Unlike most programs, the county allows acquisition costs as well as costs for remediation, environmental testing and demolition under the program. This was a deliberate decision to respond to a very tough real estate market. Programs in fast growing communities would most likely not need this level of subsidy. The program would provide up to $1 million dollars for allowable costs with up to 45% forgiven. The county hired one employee in their economic development division specifically for the Brownfields Program.

The program worked initially and 7 projects were funded in 1999 – 2001. The program was originally developed to assist municipalities and non-profits that purchased brownfields for redevelopment. Two problems arose. Despite the establishment of the State of Ohio’s Voluntary Action Program and it’s “No Further Action” and “Covenant Not To Sue” provisions, many local law departments advised against their municipalities’ ownership of these properties. A majority of the sites that were completed had only asbestos contamination for which the clean-up and risk seemed well defined. The County also required that each community pledge non-tax revenues for the loan/forgivable loan amount. As the economy worsened after 2000, many communities did not have non-tax revenues to pledge. We also realized that most communities flipped properties to developers immediately after receiving our funding. Despite strong returns on investment and good job creation numbers, the program seemed to slow down with only 3 projects completed between 2001 and 2003. A second staff person was added at this time, spending half time on brownfields and half time on other economic and community development projects for the department.

Staff tracked the issues and worked to redesign the program. The most significant fact was that a majority of projects were completed by developers to whom the property was transferred after the municipality applied for funding. Making loans and forgivable loans directly to developers seemed to be the logical addition to the program, decreasing legal fees and making the program more accessible. Staff worked with the Board of County Commissioners to explain the changes and with the prosecutor’s office to assure that the program was in compliance with the Ohio Revised Code. Since our Board of County Commissioners had taken a strong leadership position by issuing a bond to support Brownfield Redevelopment, they had a good understanding of the issues. They also had received annual reports tracking the successes of the fund to that point. Staff also recommended the Cuyahoga County Community Improvement Corporation (CCCIC) be used as the Loan Review Committee for the program. Previously a separate committee had been established, however the CCCIC had already been reviewing IDBs and County Economic Development Loans for several years and the decision was made to simplify the process by having one committee meeting once per month. Changes to the program were implemented in May 2004 and staff worked hard to get the word out to the community. The change, allowing loans and forgivable loans to private entities and developers as well as municipalities and non-profits, generated 4 approved projects in the remainder of 2004 and 9 projects in 2005, thus indicating the change was successful in increasing the number of brownfield sites remediated.

At the same time that staff had been working to change the program, a formal strategy was adopted. Foundation funds had been largely depleted for site assessment work and it was determined that an important part of the county’s brownfield strategy should be to provide site assessment grants so that developers could reduce their costs to evaluate potential sites that could then be remediated through the Brownfield Redevelopment Fund. Staff developed an internal team to apply for a USEPA Site Assessment Grant and was awarded $200,000 for petroleum sites and $200,000 for hazardous materials sites. Based on new funding received, the Board of County Commissioners provided funding for another staff person. The program’s success provided a wealth of employment candidates and allowed the county to hire a recent master’s graduate with an environmental background, a USEPA fellowship and a good background in development finance. The team of three, with some help from other department staff interested in brownfields, worked to develop and implement the Site Assessment strategy. It was determined, due to USEPA regulations, that the county should select five Certified Environmental Professionals (CEPs) to implement the program. To allow developers to use their own CEP would render the program almost worthless as each CEP would need to go through an approval process with the USEPA that could take several months. The approach has worked successfully and the staff is currently seeking additional CEPs through a procurement process due to the success of the program. Staff works closely with CEPs to understand the issues and control the costs of the Phase I and Phase II Site Assessments. The applications are scored and recommended by group of community stakeholders who understand brownfields. The commissioners then approve contracts. During the first year, the Cuyahoga County Department of Development (the “Department”) provided assessment services at 25 brownfields. The County has completed 11 Phase I assessments and has three more in progress. The County has also completed Phase II activities at seven sites and has Phase II activities still in progress at 11 other sites. Of the $800,000 awarded by the U.S. EPA since 2003, a total of $567,313.98 has been expended or committed.

With increased volume in both the Site Assessment strategy area and the Redevelopment Strategy area, additional staff were needed. Since most, if not all, funding sources have no administrative funds, and because Cuyahoga County has faced shrinking revenues, the existing economic development staff of three people were cross-trained in Brownfield areas. The existing staff realized that this additional training would be a good resume builder with communities throughout the country seeking professionals who can work on brownfield projects to increase the sustainability of their region. The staff already understood the finance end of these projects and by teaming up with the existing staff they were able to understand the environmental issues. The county also works with the Cleveland State University Levin School of Urban Affairs to increase local capacity by providing internships to master’s degree students with an interest in Brownfields. This staffing plan currently provides two full-time and as many as seven staff who split their time to work on Brownfield projects. The larger staff approach has allowed more time for grant writing with staff successfully receiving a Housing and Economic Development Brownfield Economic Development Initiative (BEDI) Grant (2004) and USEPA Supplemental Grants (2004 and 2006), as well as the USEPA Site Assessment grants (2003 and 2005).

Additional staffing has also allowed staff the time to work more closely with other communities by volunteering for USEPA Region V’s Mentoring Program. The Mentoring Program is a unique innovation from Region V that brings grant recipients of the various USEPA programs together to discuss issues and problems and learn from each other’s successes and problems. Staff are also encouraged to attend the annual Brownfields Conference which is free and put together by the USEPA and the International City Managers Association (Boston, Massachusetts November 10 -14th, 2006) and to speak both locally and nationally on the subject. This helps the staff stay current on new approaches and issues in the field.

There are 23 redevelopment projects now completed or underway and 12 currently in the pipeline. The initial $15 million has been nearly fully expended and the break-even point for the return on investment to local communities is expected around December 2008. Staff measures the increased revenues from property taxes to the local community, the county and the public schools (around sixty percent of property taxes in Cuyahoga County goes to the public schools) as well as sales tax from construction materials and income taxes from new jobs created. Every year, the new tax data is collected by parcel number for each project. It may take a few years for the full impact to be realized due to the time for cleanup and then for the new construction or redevelopment at the site. Currently the 23 projects in the program have leveraged $176.5 million in other funding, have created 1,847 jobs and have created an increase in the taxes on the property of over $560,000 per year. As more of the projects are remediated and construction is completed, the tax collections will further increase. Communities that have been affected by vacant properties that seek tax reductions are now seeing increased revenues for schools and municipal operations. This report is provided annually to the Board of County Commissioners and the public.

Most importantly there is a need to keep the program flexible and be prepared to make changes to respond to changes in the market and the economy and to issues that may not have been apparent as you designed your program. Everyone who participates in the program from our elected officials to the staff to our stakeholders realize that we need to continually ask, “Is it working?” and “How could this be more effective or easier to implement?” In 2005, the staff realized that while we are successfully remediating sites, there are still local businesses that face the uncertainty and risk of expanding on an adjacent brownfield site, and many are choosing to move out of our mostly built-out county. Most of these vacant industrial sites then become brownfields and a successful company looking to expand would be lost. A Brownfield Prevention program was established called the Site Expansion Program. A company expanding onto an adjacent site can receive a Site Assessment Grant to determine the cost of a potential cleanup and up to $500,000 in a forgivable loan to expand on the adjacent site. Learning from others and being open to change has led the team to some success, but there are still a large number of brownfields in our region and limited funds to address them.

For more information on the reports mentioned in this article, staff contact information, program materials and applications, please visit our website.