Raise the Hammer
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.
By RB (registered) | Posted October 25, 2011 at 11:06:52
Well here's hoping that the falling cost will be enough incentive (or at least a good start) for developers to start fixing up some areas in the North End.
Financial incentives usually (for better or for worse) seem to have a greater impact than most others.
By sselway (registered) | Posted October 25, 2011 at 21:11:45 in reply to Comment 70869
The situation is a little more complicated.
One area of the lower city which needs remediation is the Barton Tiffany area in the West Harbour. This is in large part owned by the City, which should simplify the remediation financing. Right now, the City won't even say what the costs might be, nor make public any data on the condition of the site. There are only three possibilities: The City acquired data prior to buying the lands; the City will have to acquire data before selling the lands (in order to set a price); or the City will have to acquire data before building on the lands itself - or greening them, if the data indicate that parkland only is feasible.(Very doubtful.) Instead of clarifying the picture, the Mayor continues to repeat that the cost of remediation is between 3 and 37 million dollars ie to sow confusion. Result: leverage in the reverse direction of what's wanted. The City has driven down the values of property in the Central Neighbourhood by buying up a tract of land forcing a number of houses and businesses into dereliction, and now continues to devalue all properties in the area every time this meaningless estimate of clean-up costs is repeated.
By R-naught Connaught (anonymous) | Posted October 25, 2011 at 11:25:32
Banks seem to be fairly allergic to Downtown Hamilton as well. Is there enough miracle cure to go around?
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