CCIMs help communities strike it rich through brownfield redevelopment.
What was once an unusable chunk of
Bethlehem, Pa.'s taxable land base is under redevelopment to become the
Bethlehem Commerce Center, which is expected to generate $1.5 billion in
investment capital and add 6,000 jobs to a once economically depressed area.
Lehigh Valley Industrial Park bought the 1,000-acre brownfield in Bethlehem,
the land harbored scars from 140 years of steel mill operation including
contaminated groundwater and soil and a buried building foundation. But a
little more than three years later, the Bethlehem Commerce Center serves as an
example of how like-minded environmental organizations, commercial real estate professionals,
and community officials can turn useless land into profitable developments.
opportunities for brownfield redevelopment abound. There are more than 450,000
brownfields across the U.S., according to the Environmental Protection Agency,
and many are located in urban areas prime for development. Cleaning up and
rebuilding on these valuable land parcels not only reaps environmental
benefits, but it is an effective way to curb urban sprawl, increase local tax
bases, and create jobs in the community.
redeveloping a brownfield is no small task, and the time, capital, and
liabilities involved sometimes can discourage commercial real estate
professionals. "Investors considering brownfield properties must have a
high tolerance for risk, excellent environmental consultants, substantial cash
- because banks rarely will finance brownfields - and the ability to negotiate
with state officials," says Stephen R. Collins, CCIM, executive vice
president of Environmental Liability Transfer in St. Louis, a division of the
Commercial Development Co., which specializes in the purchase and redevelopment
of brownfield properties.
the time and effort are worth it, according to CCIMs who have undertaken these
projects. The three CCIMs whose brownfield case studies follow are examples of
how informed and civic-minded commercial real estate professionals can help
revive environmentally challenged properties into developments that benefit
their communities and offer profits to investors.
A. Zache, CCIM, SIOR, president,
Place Real Estate, Middleton, Wis.
Photo caption: A Madison, Wis., brownfield property sat vacant for years before Central Place Real Estate remediated it and built this office complex.
Photo credit: Central Place Real Estate
Central Place Real Estate committed to constructing a commercial office
building on a brownfield at 660 John Nolen Drive in Madison, Wis., it became
clear that patience and hard work would be necessary to get the development out
of the ground. A 32,500-square-foot brick, stone, and metal-shingle class A
office building was planned for the southern end of an isthmus between
Madison's Monona and Mendota lakes - the strip of land that encompasses the
city's thriving downtown.
construction could begin, Central Place assembled several parcels owned by
private and public entities for the redevelopment. In all 4.5 acres were needed
to provide sufficient land for the proposed office building. Central Place also
wanted to control the surrounding land use to keep it compatible with the
the site had been used for bulk petroleum storage and other commercial uses,
including home-insulation and lawn-care businesses. The property sat idle for
several years until Central Place purchased it in 2001.
determine the property's environmental condition, Central Place hired BT
Squared, a Madison-based engineering firm, to perform Phase 1 and Phase 2
environmental site assessments. The investigations revealed petroleum and
chlorinated solvent contamination in soil and groundwater. BT Squared prepared
and executed a site remediation plan that included:
excavation and off-site disposal of heavily contaminated soils;
underground storage tank removal;
design of an engineered cap, in this case a parking lot, that allowed for
natural cleanup of lightly contaminated soils and groundwater;
groundwater monitoring to confirm that natural cleanup progressed as expected;
civil, grading, and utility planning for the project development.
remediation costs were approximately $211,000 - plus approximately $175,000 to
address soft soils with a deep foundation system and another $29,000 for
demolition of remaining concrete structures.
a meeting with the Wisconsin commerce department to discuss the viability of
requesting a grant, BT Squared received positive feedback regarding the
project's economic development and job creation benefits and completed the
grant application. The application emphasized the financial need, innovative
remediation, and job creation to highlight the importance of the
redevelopment's location at the gateway to downtown Madison. Letters of support
from local officials also were included to show public enthusiasm for the
project. The commerce department's Blight Elimination and Brownfield
Redevelopment program gave a $129,500 grant to help fund the remediation and
While Zache thought the remediation costs were
hefty, total remediation expenses have dropped in the past few years.
Regulatory agencies now require less work to address impacted soil and
groundwater. Property owners are allowed to cap impacted soils to prevent
exposure and implement natural attenuation of impacted groundwater. In the
past, impacted soil would have required excavation and off-site disposal or
on-site treatment. Impacted groundwater also would have required active on-site
treatment. So, by integrating civil and environmental engineering into the
design of the engineered cap, BT Squared helped Central Place manage
contaminated materials, meet regulatory requirements, and reduce environmental
$5 million office building was completed Aug. 1, 2006. Anchor tenant Chamberlain
Research Consultants leased 18,000 square feet and moved into the building soon
after completion. Other tenants include Xerox Corp. and Central Place is
leasing 6,500 sf.
Zache admits that any brownfield redevelopment invariably encounters some
unexpected costs and delays, in the end the positive quality of transforming an
idle, contaminated site into a valuable community asset is worth the hardship.
J. Uriona, CCIM, MAI, corporate
estate director, Intermountain Healthcare Health Services, Salt Lake City
Rendering caption: This rehabilitated Utah brownfield, which is slated for completion later this year, will be home to a Salt Lake Valley medical campus.
Rendering credit: Intermountain Healthcare
not surprising that land serving as an arsenic and lead smeltering facility
from the late 1800s until just after World War II would need serious
remediation. The 142-acre Murray Smelter site in Murray, Utah's central
business district once was the country's largest lead smelter. Years after the
facility closed, the site's soil, groundwater, and sediment still were
contaminated with lead, arsenic, and other heavy metals.
the early 1990s, Murray officials teamed up with the Environmental Protection
Agency, the Utah Department of Environmental Quality, and the American Smelter
and Refining Co., the mining company that owned and operated the facility, to
remediate and redevelop the site to benefit the community both socially and
used a $176,000 EPA brownfields grant to fund a seismic analysis in 1997,
because the property sits on a fault line, and to hire a real estate consultant
for redevelopment advice. In 1998, the partners also included local developers,
the Utah Transit Authority, and Intermountain Healthcare, a Salt Lake
City-based nonprofit healthcare organization, in the plans, which originally
called for a mixed-use development with retail, restaurants, a movie theater,
and a satellite healthcare facility.
a consent decree and record of decision issued by EPA and UDEQ, American
Smelter was required to remediate materials considered a threat to human health
and safety such as arsenic and lead. The remediation process took four years
and included removing designated soils, relocating other designated soils, and
capping remaining soils through the redevelopment. Thomas J. Uriona, CCIM,
corporate real estate director for Intermountain Healthcare Health Services,
negotiated the consent decree and established a purchaser agreement to
indemnify Intermountain Healthcare from the prior contamination.
original plans for the property included preserving the smelting facility's
historic smokestacks and featuring them as the landmark of a retail center to
be called Chimney Ridge, according to an EPA report. But the smokestacks were
deeply contaminated with arsenic and stabilizing them against earthquakes would
have made a citywide tax raise necessary. When the tax hike was put to ballot,
citizens ultimately voted against it.
smokestacks were demolished in 2000 and the scrapped retail plans freed up an
additional 45 acres for Intermountain Healthcare to purchase. With the
additional land, Intermountain Healthcare decided to build a new hospital on
the site rather than a satellite facility. Uriona worked with more than 24
landowners to assemble and acquire the additional land parcels.
imposed an overlay district on the site, which was approved by EPA and UDEQ,
that specified the type of development that can be placed on the site to best
protect human health and safety. A medical campus is an approved use within the
overlay district. Intermountain Healthcare is funding the redevelopment through
internal reserve funds and bond financing.
redevelopment, the site will be Intermountain Healthcare's flagship facility
containing approximately 1.2 million sf of ambulatory, diagnostic and
treatment, critical care, extended critical care, and trauma center space
situated in the middle of the Salt Lake Valley.
addition to the new healthcare center, Intermountain Healthcare ground-leased
16 acres to Costco Wholesale Corp. to allow for development of a Costco store.
This site will be an "empty chair" for expansion of the medical campus
20-plus years down the road. This ground-lease arrangement provides tax revenue
to Murray and provides Intermountain Healthcare with a revenue stream on that
land until it comes back to them at the end of the ground-lease term.
the remediation, the area surrounding the site produced $50,000 in annual sales
tax revenues; now city officials predict tax revenues of $1.4 million per year,
according to the Salt Lake Tribune. Other expected economic, social, and
environmental benefits of the remediation and reconstruction include:
$1 million in annual local tax revenues from Costco;
increased local business and additional tax revenues from hospital employees
presence of a quality regional healthcare facility;
reduced congestion and improved access to Salt Lake City via a light-rail
improved quality of life for city residents from remediation and beautification
of a previously contaminated site.
on the medical campus began in 2004 and is expected to finish in October 2007.
P. Bennett, CCIM, CPM, director of
Port of Bellingham Bellingham,
Rendering caption: Upon completion the Bellingham, Wash., harbor will have a 450-slip marina in addition to retail, multifamily, industrial, and institutional properties.
Rendering credit: Stephanie Bower
more than 100 years, Bellingham, Wash.'s waterfront has supported industrial
facilities such as pulp and paper mills, landfills, fish-processing plants, and
ship-building and bulk-fueling sites. But as the local and national economies
changed, the waterfront lost its traditional natural resource-based economy and
many waterfront properties were left vacant and contaminated. The abandoned
pulp, paper, and chemical plants on the downtown waterfront faced environmental
issues including mercury and petroleum contamination in groundwater and soil,
as well as exposed solid waste.
2004 the Port of Bellingham and the city partnered to create a development plan
for the remaining waterfront brownfield. Working with Waterfront Futures Group,
a group of business and civic leaders including Lydia P. Bennett, CCIM, CPM,
the team launched a plan that spanned all 11 miles of Bellingham's waterfront.
The plan included service organizations, environmental groups, developers,
labor groups, business leaders, landowners, regulatory agencies, and community
the port acquired the 137-acre Georgia-Pacific pulp mill on the waterfront in
2005, Bennett was hired as the port's director of real estate. As the first
broker to negotiate a commercial lease with the port, a member of the
Waterfront Futures Group, and a local and regional expert, she was a natural
fit for the director's post, which required her to work with the various groups
involved in determining the best use for the waterfront. She also was
responsible for helping to implement the project's master plan, including
cleaning up the property, building a marine infrastructure, and providing land
for parks, public space, and walkways to the city at no cost.
the 18-month project, the community spoke loudly in favor of a new waterfront.
The most difficult part of the project was trying to determine a use and
cleanup procedure that would fit with all the various community groups' needs,
city committed to construct the necessary public infrastructure and create a
regulatory framework that would attract private investment. The port agreed to
pay for the cleanup using grants from the Washington State Department of
Ecology and revenue from future land leases and sales. After performing
environmental due diligence, the port estimates cleanup costs for the mixed-use
redevelopment of the GP facilities will total $40.3 million. This does not
include the wastewater treatment lagoon, which is the largest of the
waterfront's state-listed cleanup sites. The lagoon suffers from mercury
contamination released into Bellingham Bay in the 1960s and 1970s by a chemical
plant built to bleach wood pulp. Cleaning up this site alone will cost an
estimated $44 million dollars and involves removing, transporting, and capping
the port and city are developing a master plan for the entire 220-acre property,
including the former GP facility. GP estimates that after redevelopment, the
assessed value of the property in 2025 will be $750 million to $1 billion with
$2.2 million to $3 million in estimated city property taxes.
vision for the waterfront includes new homes, light industry, and businesses
surrounded by large waterfront parks, miles of new public access to the
shoreline, moorage docks for visiting boaters, a new waterfront campus for
Western Washington University, and a 450-slip state-of-the-art marina.The
port redevelopment project will offer value to the Bellingham community in
several ways. The redevelopment effort will include removing wastewater
treatment sludges from the waterfront, meeting a strong demand for moorage
slips, adding marina-related jobs to the local economy, providing the community
with waterfront trails around the breakwater, and creating a new habitat for
endangered salmon. Final plans for the property are expected to be approved
early this year.