The Brownfield Blues
Time is running out on environmental cleanup incentives
The latest edition of the Long Island Business News features an informative article on brownfield redevelopment on Long Island. Sustainable Long Island served as a resource to reporter Bernadette Starzee and Executive Director Amy Engel is quoted throughout the piece.
Vacant gas stations that sit on many Long Island streets are going to remain idle for a while.
That's because these sites fall into the category of brownfields - properties whose reuse or redevelopment may be complicated by contamination or potential contamination. Redeveloping a brownfield is an endeavor fraught with multiple challenges.
Roughly 6,800 properties on Long Island are or potentially may be brownfields, according to a 2008 count, the most recent available, made by Sustainable Long Island, a Farmingdale-based organization concerned with economic development and environmental sustainability. Brownfields include shuttered gas stations, dry cleaners, industrial facilities or any property that may have been contaminated.
Benefits of greening brownfields
Cleaning up brownfields has economic as well as environmental benefits, said Amy Engel, executive director of Sustainable Long Island.
"It's a win-win for the region," she said.
Public investment in brownfields leverages private investment and creates jobs, Engel added.
"For every $1 of public investment in brownfields, you get $8 in total investment," she said, citing the publication Brownfields Policy Research. Redevelopment of eyesores will also get them back on the tax rolls, Engel added.
Further, redeveloping one brownfield serves a catalytic purpose, raising property values around it and creating more interest in redeveloping other properties.
"If you could redevelop one closed auto dealership in a visible location, it would help the community by raising surrounding property values and spurring additional cleanups," Engel said.
Contaminants on brownfield sites not only present hazards for the site, but may impact the region's drinking water, as well. And redeveloping a brownfield allows the developer to take advantage of existing infrastructure, rather than taking over pristine farmland, Engel added.
What's the holdup?
In a weak economy, redevelopment of brownfields is particularly challenging.
"Other sites are available at low prices, so sites requiring remediation are left to sit," said John Cameron, managing partner of Cameron Engineering & Associates in Woodbury. Cameron sits on the New York State Brownfields Advisory Board.
"From a developer's standpoint, why go through the regulatory process and other aggravation to remediate a property and potentially take on future liability?"
Adding to the woes is the tight lending environment and lenders' hesitancy to get involved with properties that could lead to liability.
"The state has tried to insulate lenders and developers who were not at fault, but there are still some issues that they're concerned about," Cameron said.
To clean up a brownfield, the investigation phase typically takes one to two years and the remediation phase takes another year or two, said Michael Posillico, principal of Farmingdale-based engineering firm Posillico Inc., which has redeveloped several brownfield sites.
"That time frame may not fit into the financial plans of many developers," said James Rhodes, senior vice president of P.W. Grosser Consulting, a Bohemia-based engineering and environmental services firm that has served as Suffolk County's brownfield consultant since 2006.
Further complicating matters is the high cost of cleanup, particularly for significant contamination.
A typical Long Island Brownfield Cleanup Program remedial investigation may range from $30,000 to $150,000, including the administrative requirements, work plans, consulting, contractor, analytical and reporting costs, said Kris Almskog, vice president of P.W. Grosser Consulting. The remediation costs are even less predictable.
"I have seen remediation projects on Long Island requiring soil removal and disposal and/or groundwater treatment that cost between $200,000 and $5 million," Almskog added.
"Many property owners who want to do the right thing don't have the resources," Engel said. "If the state pushes too hard, the company may go bankrupt, and the state will get nothing. It behooves the state to work with the property owner."
Programs and projects
Several government programs provide tax credits or other incentives to private companies or local municipalities to remediate sites.
The New York State Brownfield Cleanup Program, which was started in 2003 and revamped in 2008, encourages a cooperative approach among the state Department of Environmental Conservation, current property owners, lenders, developers and prospective purchasers to investigate and/or remediate contaminated sites and return these sites to productive use. This program provides brownfield investment incentives, including business and personal tax credits for remediation and development costs, real property taxes and environmental insurance premiums.
Currently, 15 Long Island properties are part of the program, according to the DEC. The program's first certificate of completion was awarded last year for the site of AvalonBay Communities' two-building apartment complex in Rockville Centre, according to Rhodes, whose firm worked on the remediation of the former industrial site.
Posillico purchased Battery at Harbor Isle in the Town of Hempstead out of bankruptcy more than a decade ago. The 12-acre site formerly housed a fuel depot that held 17 million gallons of home heating oil. Posillico has gotten the property rezoned and approved for 172 units of multifamily housing.
"We have finished the investigation and are working with the DEC on final remediation," Posillico said. The company hopes to finish cleanup and start construction by 2014.
Posillico is also a partner in RXR Glen Isle, a 52-acre mixed-use brownfield redevelopment project on the Glen Cove waterfront. About 90 percent of the remediation has been done, Posillico said, and the partners have submitted the site plan.
Another state program, the Environmental Restoration Program, reimburses municipalities for a portion of site investigation and remediation through a grant. According to the DEC, there are currently nine sites in this program.
P.W. Grosser has been involved in investigating and remediating a handful of ERP projects in which Suffolk County acquired brownfields due to tax arrears. The site of a former gas station in Bellport has been completed and is ready for development, Rhodes said.
P.W. Grosser has also remediated a 58-acre parcel at Gabreski Airport, also owned by Suffolk. The state DEC approved the final engineering report, allowing a lease to go forward for the once-blighted site, Rhodes said.
The state Superfund program involves identifying, investigating and cleaning up sites where hazardous waste poses a significant threat to human health or the environment. When parties responsible for the contamination are known, the goal is to get these parties to pay for the investigation. When the parties can't be located or can't pay, the state pays upfront using money from the 1986 Environmental Quality Bond Act and tries to recover the costs after the investigation and cleanup are complete. Currently, 211 properties are enrolled in this program in Nassau and Suffolk and the state has spent more than $215 million to date, according to the DEC.
What the future holds
The Brownfield Cleanup Program has a sunset date of December 2015.
"A project has to receive a certificate of completion by that date to receive incentives," Rhodes said.
That will be a problem for many developers going forward.
"The next wave of projects will be in jeopardy," Posillico said, who added that the state needs to look at long-term solutions. "It's difficult enough to deal with a brownfield site - with the time factor to investigate and remediate the site and the stigma attached. The tax credits are needed to offset that."
State programs require multiple reports, which are time-consuming and costly.
"The state has attempted to streamline the process, creating templates for reports such as site management plans and environmental easements," Rhodes said.
Some in the industry see positive movement on the state level.
"Recently, there seems to be a push to accelerate projects and get more projects into the Brownfield Cleanup Program and move them along, which wasn't the case early in the program," Posillico said.
In October, Sen. Kirsten Gillibrand traveled to Glen Cove to announce a new bill called the Waterfront Brownfields Revitalization Act, which would award grants to local governments and nonprofits that redevelop abandoned, idled or underused industrial properties on waterfronts, with the goals of spurring economic development while protecting the environment.
But that was before Superstorm Sandy.
"Brownfields redevelopment won't improve for the foreseeable future because of the immediate needs on Long Island that resulted from the storm," Cameron said. "With the flooding in the low-lying areas, fuel oil and home heating oil tanks were lifted out of the ground and caused to rupture in some cases. Remediation from this contamination will take top priority because of the public health and safety issue."