Two weeks ago I participated in the Ohio Brownfields Conference in Columbus, Ohio. 2016 marks the twentieth (20th) anniversary of Ohio's Voluntary Action Program (VAP) which is implemented by Ohio EPA and is the primary regulatory program for cleanup of brownfields.
To mark the anniversary, Ohio EPA encouraged presenters to reflect on the success of the VAP and other brownfield programs in Ohio. Presenters were also encouraged to discuss ways to accelerate brownfield redevelopment in Ohio.
Despite twenty years of the VAP as well as some of the best incentive programs in the country, Ohio has failed to get ahead of its brownfield problem. I believe it is time to rethink some of the tools used to greatly accelerate brownfield redevelopment. This three part series will cover the following:
- Review the Brownfield Problem- Without looking at the issues created by brownfields it is impossible to properly design policies to address them.
- An Inventory of Ohio Brownfields- The second post will discuss public information regarding the number of brownfields in Ohio.
- Review Ohio's Progress in Tackling its Brownfield Problem- The second post will provide an overview of Ohio's progress using tools like the VAP, Clean Ohio, JobsOhio Revitalization Program and brownfield tax incentives.
- New Strategy to Accelerate Brownfield Redevelopment- The final post will provide recommendations for ways to better utilize incentives, streamline regulatory cleanup and better address public health issues.
OHIO'S BROWNFIELD PROBLEM
What causes brownfields to occur?
Two primary forces create brownfields- market forces and fear of environmental liability.
- Expansion of business- businesses looking to expand in urban areas often find the cost of expansion significantly higher to expand in onto neighboring property versus moving to a greenfield. One study in Ohio found the cost of developing on a brownfield property four times higher then the cost of building on a greenfield.
- Closure/Relocation/Consolidation of Businesses- Businesses close for a variety of reasons. One of the hardest hit sectors has been manufacturing. When these businesses close they often can leave behind contaminated sites.
- Lower Tax Rates or Incentives- Businesses can also be lured away by either lower tax rates or incentive packages.
- Moving to a "Better Area"- Some businesses also move because of the decay of the urban areas where they are located.
- Liability- Expansive liability provisions in environmental laws also act as a strong impediment to businesses choosing to expand on a brownfield. The law with the broadest liability provisions is CERCLA (Superfund) which contains provisions that make any "owner" liable for pre-existing contamination regardless if they created the contamination. Many other environmental laws can also create liability concerns as well (RCRA, underground storage tanks, TSCA, etc.)
- Financing Considerations- Banks understandably are concerned with the risk to their borrowers should they seek to redevelop a brownfield. These concerns can translate into extensive due diligence requirements, more complicated financing or even refusal to finance certain projects.
- Timing/Delays- Navigating the complex environmental liability issues and addressing contamination under regulatory cleanup programs takes significant time. Many businesses simply don't have the time to address the issues presented by a contaminated sites.
What social issues and environmental issues do brownfields create?
- Vacant Buildings- Invite abuse, including stripping of parts, materials vandalism, arson and "midnight dumping."
- Unemployment- Higher unemployment occurs when businesses leave areas and those areas become blighted
- Urban Blight- Discourage investment and contribute to pervasive sense of poverty and hopelessness.
- Infrastructure- Investment shifts from urban core to suburbs. As a result of urban sprawl, more infrastructure is needed to be maintained.
- Taxes- Revenue sources for cities to pay for services are reduced as jobs migrate away from urban core.
- Contaminated Sites- Brownfields present public health risks from exposure to contaminants. Contamination can also migrate onto neighboring properties, discharge to surface water or create vapor intrusion issues.
- Urban Sprawl- Expanded development away from our urban cores results in more impacts to wetlands and streams. Also, urban sprawl results in greater air pollution due to more vehicle miles traveled and less use of public transportation.
The issues discussed above can be simplified into the following chart that demonstrates how the creation of a brownfield can lead to a vicious cycle of decline.