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Local and State Perspectives on Brownfields in Massachusetts |
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Michelle E. Portman, Senior Planner
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Brownfields have become an important issue in the field of planning because of the implications use or non-use of these lands has on development patterns. This is especially true in and around older, densely urban areas where brownfield properties are often found in greater numbers. Implications are observed in terms of property values, development costs, regulatory constraints effecting types of land uses and geo-technical limitations. This paper attempts to cover some of the basic issues concerning brownfields redevelopment relevant to city planners through a review of the current experience in Boston and changes in state legislation.
Environmental contamination is one of the biggest roadblocks to the redevelopment of blighted urban sites or "Brownfields". It contributes to developer preferences for suburban "Greenfields", thus encouraging urban sprawl and causing disinvestment in older cities. In recent years, many inner-city areas have become abandoned wastelands as businesses and industry move to suburban regions where development costs less.
Brownfields is a national issue, very much on the forefront of public debate and action and therefore of great concern to planners. In a survey of underutilized industrial sites in the metropolitan Boston region for example, it was found that one of the major roadblocks to urban redevelopment is the threat posed by environmental contamination. (MAPC, 1992)
While there have been major efforts made to revitalize the inner city areas in Massachusetts and much public money spent towards that goal, the task of encouraging investment remains difficult. In some of these areas, many prerequisites for successful economic development may be present: an available workforce, existing infrastructure and proximity to demand centers, yet cleanup required by current environmental regulation is discouraging or prohibiting economic activity.
In this paper I would like to outline some of the difficulties and solutions proposed to encourage brownfields redevelopment through a review of the current experience in Massachusetts (reflected in recent proposed changes in the legislation) and in Boston through the City's brownfields redevelopment pilot project.
In the recent amendment to the Massachusetts General Law chapter 21E (M.G.L. c. 21E) - governing the cleanup of sites containing hazardous substances - "brownfields" are defined as "abandoned, idle or under-used industrial and commercial facilities where expansion or redevelopment is complicated by real or perceived environmental contamination." In common usage, the term 'brownfields' refers to vacant or unused land contaminated by hazardous wastes or material.
Jurisdiction over the mandatory cleanup is regulated by both state and federal legislation.
Regulation is stringent and should be. Even if spills are not large or widespread in an area, the danger of groundwater contamination over time can be much more severe. One gallon of gasoline, fuel oil or industrial solvent, can render hundreds of thousands of gallons of drinking water unfit for human consumption. (Weltman, 1996)
Legislation and regulations are constantly evolving as government is trying to expedite the cleanup of inner-city lands. While environmental regulation and control has become more stringent over the years to project public health, it is now recognized that much public encouragement is needed to bring about environmental cleanup and eventual redevelopment of brownfields.
Statutory Background
The federal legislation, known as the Superfund Law - the Comprehensive Environmental Response Compensation and Liability Act, or "CERCLA" - was enacted in 1980 and amended by the Superfund Amendments and Reauthorization Act of 1986. The main goal of this legislation is to remove hazardous substance threats to public health and the environment in a cost-effective manner.
The guiding policy behind CERCLA is for preferred private party cleanup, either voluntary or through enforcement actions, with federally financed cleanup implemented when states and the federal government determine it appropriate. Today the act is again up for reauthorization and crucial changes have been proposed in the new version of the law.
Overtime the Supefund law has acquired many critics. In its 15-year history despite tens of billions of dollars of both private and public expenditures, only a fraction of the waste sites targeted by the EPA under Superfund have been fully cleaned. According to a 1994 report in Business Week, only 49 of 1270 waste sites listed as Superfund sites "have been completely cleaned up". (Regan, 1994)
Another criticism is that of inefficiency of costs. Critics argue that due to the cumbersome law, exorbitant amounts of money are spent towards legal and bureaucratic ends rather than on actual cleanup. The insurers studied in a 1992 RAND report, spent 88% of their Superfund-related expenses on transaction costs. (Acton, 1992)
The Massachusetts version of the Superfund law - M.G.L. c. 21E - was enacted in 1983. It requires an inventory of confirmed and suspected hazardous waste sites and includes goals and standards for cleanup. Like its federal counterpart, the state legislation establishes liability that is "strict, joint and several" meaning that everyone - municipalities, innocent owners, lenders and others - can be held fully liable for all contamination on a site. Another point addressed in the state law is that of funding where no Potentially Responsible Party (PRP) can be identified.
By 1990, seven years after enactment of M.G.L.c. 21E, less than one quarter of the 4,200 plus confirmed and suspected contaminated, non-emergency sites were being assessed or cleaned up. The backlog of sites requiring attention by the Massachusetts Department of Environmental Protection (DEP) was growing rapidly. This brought about the redesign of the Waste Site Cleanup Program. New rules for reporting, assessing and cleaning up releases of oil and hazardous material were laid out in the Massachusetts Contingency Plan (MCP) which became effective in October of 1993. This brought about an immediate increase in site cleanups from approximately 100 a year in 1993 to almost 550 in 1995. (DEP, 1995).
Although the redesign of the Waste Site Cleanup Program has been on-going since its inception, the emphasis in the program is aimed at encouraging private sector cleanups, streamlining requirements for response actions and providing a more flexible process for responsible parties willing to engage in cleanups. The key features are:
In relying heavily on private parties and minimizing state oversight, Massachusetts, along with a few other states, differs from most states in which the administering agency plays a greater role in assessment, remediation, oversight and/or approval.
For purposes of this discussion, barriers to cleanup and redevelopment can be broken down into three main categories: legal, financial and those of general economic development.
Legal constraints have to do mainly with liability issues. Some potential developers interested in acquiring a site, may not even be allowed to perform initial environmental assessment at their own expense because knowledge is undesirable. Once the owner knows about contamination, he/she will be required to report it and the clock starts ticking for cleanup. The result is that developers, both public and private, avoid getting involved in redevelopment.
Another problem is that once the cleanup is initiated by an owner or PRP they are still liable in future third party claims even if they have negotiated a 'covenant-not-sue' with the state. Since liability is "strict, joint, several and retroactive", some owners suspecting contamination will be reluctant even to sell.
In many cases, the barriers to cleanup and redevelopment are financial. There is often not enough money in the hands of the owners, potential buyers, developers and public agencies, to embark on a project that involves lengthy and costly cleanup. Lenders are reluctant to get involved, again, due to the strict liability. Frequently, the cost to clean property exceeds the market value of the property after remediation, thus there is no incentive for a private developer to consider the site.
Expenses are often viewed from the start as open-ended. It is often unclear just how much the clean up will cost for both technical reasons and because liability can be never-ending. Standards are viewed as overly strict and AULs, considered too restrictive by potential buyers who may at some point want to develop different uses on the site as markets change.
Funds have been available on the state and federal level for the assessment and remediation of sites that pose an immediate threat to public health even before there was Superfund (brownfields) legislation. However, public funding has varied over the years for "historical" or less lethal types of contamination in which category most brownfields fall. Also, little funding is earmarked for the cleanup AND redevelopment of brownfields.
Finally, barriers to brownfield redevelopment are dependent on community development and planning issues. There may be neighborhood opposition to cleanup projects, that may expose hazardous material or lower property rates. Abutters may be concerned about their own properties being contaminated. There is a stigma associated with brownfields sites - owners have been reported to feel that once a site is on a master list - such as the DEP's List of Confirmed Disposal Sites - it can't be redeveloped. (Goldberg, 1997)
Economic development issues that can be major stumbling blocks to cleanup and redevelopment are often overlooked. Developers are looking for good markets and are not willing to put thousands of dollars into cleanup if they are looking at an area where community development is risky. There can be a 'domino' effect whereas, several contaminated properties in a single area can discourage any development and interest spirals downward. Having a good community development plan in place which addresses various aspects of good city planning such as infrastructure, transportation and employment opportunities, is often a prerequisite to brownfields redevelopment.
At the time of this writing, an amendment to the existing law is before the Massachusetts State Legislature. The draft legislation is based on suggestions of the Brownfields Advisory Committee, a task force of environmental, legal, financial and governmental interests set up by the DEP. The amendment is an attempt to create economic and legal incentives to encourage brownfields cleanup by addressing three recognized barriers to development: 1) fear of never-ending liability for owners and lenders; 2) cleanup standards that act as impediments to action; and 3) the lack of financial assistance available to PRPs for site assessment and cleanup.
The proposed legislation sets up liability "endpoints" and clearly defines who is responsible to the Commonwealth and private parties for damages. Under the new legislation, former owners and responsible parties, bear the burden of liability to the Commonwealth (state) and to private parties for the damage they caused during the time they owned the property and up until remediation is performed to the satisfaction of the DEP. After the level of site remediation is approved by DEP, the new owner will bear the burden of any future liability claims. This however, does not protect from third party claims brought against the former owner.
Liability protections are also included for lenders, community development corporations and municipalities (and/or redevelopment authorities) who take part in a loan on a property and for site owners whose property is damaged through no fault of their own.
Another change in the legislation is the creation of 'remedy operation status' which would be in addition to the 'permanent and temporary status' now defined by DEP. This new status recognizes that an owner or operator has put in place a cleanup effort that will successfully address the contamination problems and will lead to a permanent solution. (HR 43-33, 1997) The previous 'temporary status' refers to a temporary solution that is not considered an avenue to permanently cleaning the site.
Financial assistance is proposed in the form of tax credits and the creation of the Brownfields Redevelopment Fund ("Fund") and Redevelopment Access to Capital (RAC) program. The credits proposed will be worth 50% of the total remediation costs against state taxes available upon achievement of a permanent cleanup status or 'remedy operation status' on the site. The RAC will cover unanticipated cleanup costs (up to a specified cap) and will preserve the borrower's ability to create a private sector loan loss reserve and purchase environmental insurance. The $60 million Fund will provide low interest loans and grants to private parties for site assessment and cleanup for projects located in economically distressed areas. (H5013, 1997)
In 1995, as part of Congress's fast-tracking provisions of the Contract with America, the EPA announced a new Brownfields Action Agenda designed to promote the cleanup and redevelopment of contaminated, inner-city properties. As part of the agenda, sites were taken off the Superfund sites list and funding was allocated for 50 Brownfields Economic Development Pilot programs. The City of Boston, through its "Boston Brownfields Partnership Task Force", applied for and acquired $200,000 in grant money to be used over a period of two years. It is through lessons learned from this program that some conclusions can be drawn about the difficulties and possible solutions to brownfields redevelopment obstacles in Boston and many similar areas throughout the state and country.
This program, the Brownfields Economic Redevelopment Initiative, (BERI), is aimed at cleaning up and redeveloping five contaminated sites in the Dudley Square Neighborhood (DSN) area and thus providing a model for successful brownfields cleanup and redevelopment. A partnership was created to initiate redevelopment activities consisting of community organizations and residents, working with city, state and federal agencies.
The targeted DSN area has been harder hit than any other City neighborhood with a disproportionate number of brownfields. DSN has approximately 4% of the City's population and yet 9% of Massachusetts DEP listed contaminated sites. In the 1.5 square mile area targeted, there exist approximately 1300 vacant or abandoned lots, many of which reflect the commercial and industrial uses of the past. Existence of these brownfields and the inability of commercial and industrial enterprises to utilize them relates to the 30% unemployment rate in the targeted area. (Ritchie, 1996)
One of the primary goals of BERI is to create a model for brownfields redevelopment that may be replicated elsewhere in other neighborhoods in the city and state. The program will consist of a mostly market-driven process, involving private industry, hence the selection of the brownfields sites will consider the needs of a potential businesses as well as the community. Other objectives include community empowerment and the community inclusion in the redevelopment process.
Through its outreach, marketing and brownfields redevelopment, BERI plans to create new jobs, increase the tax base, remove environmental and aesthetic hazards, enhance community empowerment and provide further incentive for future economic development.
The basic approach proposed for BERI consists of three phases:
Since it's inception, which began with the award of federal grant money, at the end of 1995, the BERI task force has been meeting in the community with potential developers and municipal, state and federal agency representatives. Residents of the DSN are involved and a Resident Advisory Committee to the BERI Task Force has been formed.
The key element to this process has been the strong community support and involvement, with the focus on "bottoms-up" implementation of the project. While the City's Brownfields Coordinator (project manager) is a city employee, various community and environmental justice organization are the driving force. The EPA participates in an advisory capacity and has funded a preliminary environmental assessment of one of the sites chosen.
As a first step in site selection, all potential sites (approximately 15) were researched. That included past and present owners of the site, past uses on the site, any permitting or work done at the site, lot size, building size, current property assessment of the site and zoning. Other criteria were: market-ability of the site, development potential, expressed interest by developers, availability of the site, ownership of the site and the existence of a development plan.
In addition to research and selection of the sites, other activities of the task force include researching remediation techniques, soliciting pro-bono services from LSPs and others, networking with other brownfields pilot project representatives, researching funding sources and educating the public on various aspects of brownfields remediation.
The BERI program is structured as a multidimensional strategy to revitalize DSN and increase awareness of brownfields. While the grant proposal has an overall purpose of promoting the development of brownfield sites, the actual cleanup and development of these sites in the two years of the program is not expected. The program will create a methodology to attract potential developers which includes proposed ways to address remediation issues after acquiring the sites. (Boston Brownfields Partnership Task Force, 1995).
The program has accomplished many of its goals thus far. The community is involved and brownfields are getting the kind of attention needed for more likely development. However, it seems that there is an inherent problem as to what comes first: without any development commitments for a site, it is very difficult to get financing for even the initial environmental site assessment. Without results of an assessment or any knowledge of the extent of contamination, developers are reluctant to show interest in sites or to spend money on preparing development plans.
Now that the project is coming to an end in April 1998, the BERI task force is advocating institutionalizing the program so that a network of local agency staff will be available to communities for assistance on brownfields redevelopment. Next steps are being explored by the task force for when federal funding for the program has expired.
In Boston, while brownfields have achieved the high profile intended through BERI, any methodology developed will be difficult or impossible to implement until public and private partnerships are formed. This will be facilitated by the amended legislation which will make additional funding available, reduce liability risks and entice developers to seriously consider sites requiring remediation.
Through the recent legislative changes and pilot programs throughout the state such as BERI, it is hoped that brownfields redevelopment will take a significant step forward. In doing so, patterns of development can be better directed and regulatory constraints that may have resulted indirectly in effects such as increased urban sprawl and disinvestment in city core areas, may be checked.
Acton, J. P. & Dixon, L. (1992). Superfund & Transaction Costs: The Experiences of Insurers and Very Large Industrial Firms. Santa Monica, CA: Rand, Institute for Civil Justice.
Boston Brownfields Partnership Task Force. (1995). The City of Boston Economic Redevelopment Initiative (BERI). Grant proposal presented to the EPA, Region I, Boston, MA.
Goldberg, S. B. (1997). Let's Make a Deal, ABA Journal, 83: 42-44.
H43-33: An Act Relative to the Cleanup and Reuse of Chapter 21E Sites, (1997, January). Presented to the Joint Committee on Natural Resources and Agriculture, Massachusetts State Legislature.
H5013: An Act Ensuring Environmental Cleanup and Promoting the Redevelopment of Contaminated Property, (1997, October). Presented to the Joint Committee on Natural Resources and Agriculture, Massachusetts State Legislature.
Massachusetts Department of Environmental Protection. (1995). Massachusetts Brownfields Update (BWSC Publication). Boston, MA.
Massachusetts Department of Environmental Protection. (1997) Scope of Work: Waste Site Cleanup Program Evaluation [On-line], Available: www.state.ma.us/dep/bwsc/progeval.htm
Metropolitan Area Planning Council. (1992). Cooperative Economic Development Strategy and Site Survey (MAPC Publication). Boston, MA: Author.
Regan, M. B. (1994). A New Deal to Save Superfund, Business Week, 3368: 30-32.
Ritchie, J. (1996) Brownfields Project Work Plan, April 1996-April 1998. Presented to Boston Brownfields Partnership Task Force, Nov. 1996.
Weltman, E. (1996). A Citizens Guide to the State Superfund: Understanding the Massachusetts Contingency Plan. (Massachusetts Campaign to Clean Up Hazardous Waste Publication). Boston, MA.
Michelle E. Portman, Senior Planner
Boston Redevelopment Authority, Boston, Massachusetts