By Ryan McGreal
Published October 25, 2011
A new Globe and Mail article suggests that the falling cost and difficulty of brownfield remediation is making it a viable investment:
[David Harper, a managing partner with the Kilmer Brownfield Equity Fund] says that there has been a recent evolution in policy supporting brownfield redevelopment. His company, which started five years ago, has raised more than $93-million from both institutional and private investors, with four projects in different stages and one finished. He says it can take about three years for brownfields to be cleaned up and ready for construction to commence; investors in such situations are not acting as charities but are looking for value.
"You can go good - and do well," explains Mr. Harper, a specialist in environmental risk management. "No one's going to do this because it makes them feel good, that's a reality," he says. "You can make a return if you do it correctly."
Cleaning up brownfields has a multiplying and leveraging effect for communities, Mr. Harper says. "You're redeploying these lands, getting them back into the economy and collecting property taxes; it's a win-win-win."
Brownfield redevelopment is most viable and lucrative in urban centres where property values are highest, services are available and mixed-use development is most desirable. "You're creating vibrant communities that have significant impact," Mr. Harper says.
A few years ago, Hamilton investor Carl Turkstra argued that brownfields are cheaper to develop but harder to finance than greenfields, due to the fact that banks won't touch brownfields until after they've been remediated.
Municipal incentive programs like Hamilton's Environmental Remediation and Site Enhancement (ERASE) provide a mix of grants, loans and development charge reductions to help offset the financial burden.
However, it remains a challenge for brownfield developers to secure the balance of the funding for the still-risky process of removing toxic contaminants from old industrial sites before building on them.