The Bottom Line Approach

A new process for siting and cleanup analysis promotes successful brownfield redevelopment by combining cost-effective remediation with smart business strategies

• By David E. Koch
• Jun 01, 2005

"Location, location, location." How often have we heard that mantra from developers describing successful projects? Locations balancing access to their target market and proximity to resources of labor, transportation, or public utilities enhance the financial return on investment. A similar concept of balanced location applies to reconstructing brownfields, which are idled or abandoned real property with environmental issues.

Successful redevelopment always involves taking risks. Siting and cleanup analysis is a planning process used with other due diligence efforts to evaluate a project's feasibility. The process looks for optimal locations on contaminated property where environmental conditions least affect the cost of construction. Siting and cleanup analysis increases the odds in favor of the success of brownfields.

How much does it matter where or what type of structure you build relative to contamination? The findings may surprise you. In the following brownfield example, location determined 'no effect' to five times (5x) a baseline cost of construction. Clean areas were not always better locations.

Defining the Brownfield
As defined under the Small Business Liability Relief and Brownfields Revitalization Act, Public Law 107-118, 2002, brownfields are "real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant."

The example used in this article involved 60 acres offered by a thriving Western metropolitan city. Previously home to 90 years of industrial and rail-related use, portions of this tract of land were contaminated with chemicals, fuels, and petroleum. 2003 arrived after a series of regulatory actions, environmental assessments by various parties, some historical cleanup by previous owners, and more than one failed redevelopment concept. The property moved into municipal stewardship. Regional construction was annually transforming thousands of acres into public and private facilities. Physical and regulatory boundaries limited future availability of non-urban land, with the cost per acre having doubled in the previous three years. Seeking a developer's $40,000,000 project, the city offered a portion of the 60-acre parcel.

The developer's project concept required 15 acres, a three-year construction timeline, and no extraordinary deviation from planned costs not offset by donated land value. The developer was considering other property and had to make a decision in 60 days.

Lifecycle of Brownfields
In a perfect world, the buyer considers an idled tract of real property, conducts an investigation using due diligence, discovers contamination on the site, the responsible parties clean up the property, redevelopment occurs, and investors make money.

In our real world example, the purchaser performs his due diligence by having a Phase I environmental site assessment (Phase I ESA) conducted. The environmental consultant conducting the Phase I on behalf of the purchaser discovers conditions related to the tract of land that may have produced contamination. Everyone fears the worst. The capital sources' interest in the project weakens. The perception of contamination can stigmatize and locally devalue the property. The deal stalls. At this stage, the parties involved decide either to throw more resources at a potentially "bad deal" or walk away.

Many developers elect to gamble further by expanding due diligence to a Phase II environmental site assessment (Phase II). As part of the Phase II, the environmental consultant collects and tests samples to confirm or refute actual contamination. The Phase II can be a simplistic "yes/no" for contaminants or a more complex evaluation to determine the extent and the costs to remedy. The Phase II costs are determined by complexity of the investigation. The Phase II ESA confirms the presence of contamination, which perhaps will require a cleanup. Capital sources may flee to deals that better match traditional risk models. At this point, the buyer can also run away from the deal to join urban sprawl, leaving the seller/owner standing with the environmental report in hand. Many do. Astute developers understand all contaminated sites do not pose unacceptable public risk. Developers can manage contamination or do 'surgical' cleanup for reconstruction purposes.

The Analysis in Play
In this brownfield example, the developer's preferred concept was a 15-acre low-rise, campus-like facility. The city asked the developer to consider high-rise alternatives in order to promote land conservation. The environmental consultant chose to use a new siting and cleanup analysis to perform a more complex Phase II evaluation. More than two decades of environmental assessment and cleanup reports were made available. The developer set the limits of the business model: 90 percent construction within three years, consideration of preferred and alternate structure scenarios, evaluation of site chemistry using risk-based corrective action, and cleanups to be completed within three years.

The Phase II evaluation was divided into two-parts: Using the siting and cleanup analysis, the consultant first estimated where construction could occur without environmental effects and then estimated environmental impacts anywhere on the property based upon the location and type of remediation needed. Six structure foundation scenarios were developed ranging from a 15-acre campus setting with on-grade parking to a 5-acre high-rise with parking garage. Building footprints ranged from approximately 700,000 to 200,000 square feet, respectively.

Environmental impacts were mapped and classified from historical reports and the expedited Phase II assessment. Classification depth limits were set where soils could be reused in construction without treatment. Class A areas defined no environmental impairment down to 10 feet below surface. Construction below 7 feet depths required groundwater treatment. Class A areas represented 19 acres as discontinuous subareas. Class B areas were defined to a depth of 5 feet from surface. Class B represented 40 acres of discontinuous subareas and included Class A areas. Class C areas indicated no environmental impairment to a depth of 3 feet. Class C areas encompassed the entire site, likely a result of historical grading/filling and backfill placed during cleanups. Class C overlapped A and B areas.

The siting and cleanup analysis indicated that construction without environmental remedy was not feasible within the project limits. Class A areas could not assemble sufficient contiguous acreage. Class B areas provided nominally enough acreage for some low-rise footprints. Class C limitations on depth precluded almost all construction but surface parking.

Using the siting and cleanup analysis, the consultant tried to determine the best remediation approach for the site by weighing the relative advantages and disadvantages of 13 different environmental cleanup remedies. Some of these remedies included natural attenuation, excavation with off-site landfill disposal, on-site thermal treatment, and in-place chemical treatment. Remedies were plotted relative to their general cost and time to bring about final remedy. Eight remedies appeared feasible for achieving completion of the project within a 3-year timeframe. Seven proposed remedies were considered economically viable.

Class A, B, and C depth limits were used to calculate potential volumes of contaminated soil and groundwater for each scenario. The siting analysis process used a modified version of RACER 2003™, a remediation cost estimating software program that was developed through the collaboration of several federal agencies and is now sold by Earth Tech. The software can be made specific to regional costs of construction and labor to clean up contaminants. Sixty-five models were run; 21 representing constructions in Class A, 21 in Class B, and 23 in Class C conditions. Uncontaminated baseline models for all scenarios were developed in order to identify overlapping construction and remediation elements and thereby segregate environmental effect.

Previous cleanups placed uncontaminated fills in many areas. There is little incentive for a responsible party to invest in engineered fill for cleanup when future land use is unknown. Uncontrolled fill can be unsuitable for foundation support. The siting and cleanup analysis estimated that there would be added costs for special foundations in these areas, including the replacement of old fills and drilled piers constructed to lower bearing zones.

Results of Brownfields Siting and Cleanup Analysis
The values shown represent a potential multiplier of cost over and above normal construction necessary to address environmental impairment. For example, if normal construction of a foundation were to cost $200,000, the cost to construct that same foundation in an area having an environmental multiplier of 5 would be $1,000,000. Actual costs cannot be provided due to client confidentiality requirements. The siting and cleanup analysis indicated the environmental effect could produce an overall average factor of 2.0, ranging from 1.0 to 5.5, across all scenarios as an increase on the baseline earthwork and site preparation related to foundation construction. For example, using the siting analysis process, the consultant estimated Class A areas produce an average factor of 1.9, ranging from 1.0 to 2.7. There was "no effect" (a factor of 1) for the preferred low-rise campus setting that uses a shallow foundation scenario, but there was insufficient contiguous acreage for a campus-like facility. Class B areas produced an average factor of 3.0, ranging from 1.0 to 4.8. Again, the lowest factor could not provide sufficient contiguous acreage. Class C areas indicated an average factor of 3.7, ranging from 1.9 to 5.5. Higher factors involved larger building footprints using rapid, less mainstream remediation technologies with a high per unit treatment cost.

Elevated regional land costs made donation of previous cleanup seem a significant incentive, reducing upfront capital investment. The construction baseline cost was compared to the value of land. The land value did offset negative environmental factors for low-rise and high-rise with surface parking construction. The added cost of special foundations in "cleaned" fill areas was compared to the baseline construction cost. Special foundation factors were combined with those of environmental effect and land savings to determine the cumulative project effect.

Summary
Sufficient acreage could not be assembled without considering the remedy within the project limits set by the siting and cleanup analysis. The technology could remedy contamination in three years. In low-rise scenarios, the environmental effect appeared reasonably offset by the value of donated land. The balance tipped unfavorably with the added cost to deal with soils placed as fill as part of the historical cleanups. Consequently, the developer did walk away from this brownfield property and choose the other property.

Success in brownfield redevelopment requires combining cost-effective environmental remediation with business strategy. It necessitates considering more than only the cost of the removal of hazardous substances from the site. The issue of geotechnical construction costs factored as heavily as the environmental effect into the overall construction equation. "Clean" areas were not better. Comprehensive analysis tipped the site selection in favor of the developer's alternate choice.

Admittedly, project limits requiring a short-term three-year remedy were imposed by the developer. A longer period to achieve the cleanup would have allowed consideration of cost-effective longer term remedial technologies. A longer period of conducting the siting and cleanup analysis might have identified site-specific risk management to further reduce the environmental effect. Today, other incentives such as remediation tax credits would be factored into the estimate of the net environmental effect. However, the business of redevelopment cannot move at the speed of environmental regulation. The consultant performing the brownfield analysis must resist the urge to always know more before rendering a planning decision and not fall victim to the dreaded "paralysis by analysis" syndrome. There comes the time you must sit down and talk money or knowledgably walk away. The consultant performing the brownfield analysis must resist the urge to always know more before rendering a planning decision and not fall victim to the dreaded "paralysis by analysis" syndrome.

This article originally appeared in the 06/01/2005 issue of Environmental Protection.