Foundation support revitalization
This month, we begin a discussion of layered financial strategies that may be appropriate for your next project. Layered financing describes the phenomenon of using various forms of funding on a single project. This is often necessary because for many brownfields traditional mortgage financing is either unavailable or insufficient. Therefore, a variety of financing strategies must be used.
Foundations
Foundations can fill the gap between your individual project and other community needs, making your project more viable. Many brownfields lapse into disrepair because the surrounding area becomes blighted. Thousands of brownfields will remain idle unless the host neighborhoods are also revitalized. Foundation funding can help you turn brownfield cost centers into cash cows.
Why look to a foundation?
Foundations can provide momentum to your revitalization efforts, by financing improvements in the surrounding area. Foundations are formed to promote charitable works. They give away billions of dollars each year towards that end.
What are considered charitable works? Some foundations view physical improvements to neighborhoods as charitable work. In this case, environmental consulting and remediation firms have an opportunity to obtain additional work at nearby sites.
Other foundations focus on education and other types of assistance that do not relate to the physical condition of buildings and land. These types of assistance are vital because they provide people in the community with hope, skills, services and other tools needed to bring the community back to life. Within this context, individual brownfield projects are more prone to succeed.
In some cases, a foundation will contribute heavily to several critical revitalization projects. When this occurs, the stage is set for the area surrounding your project to make a comeback.
People and news
Michael Schneider, spokesman for The Prudential Company of America, Newark, N.J., discussed some of Newark's problems and what Prudential is doing to help. Good corporate citizenship is "just flat out good business," he said.
In 1977, Prudential established the Prudential Foundation, which is the company's philanthropic arm. The foundation has an annual budget of about $20 million. Since it was established, the Prudential Foundation has given away about $300 million. Brownfields are part of the work carried out by the foundation.
One of the projects Prudential has helped along is the New Jersey Center for the Performing Arts (NJPAC), previously a brownfield site. Prudential has donated $6.5 million to this project. The total amount contributed by foundations to this project is $14,740,000. The arts center has cost $180 million and acts as a catalyst for other development; it has encouraged developers and users to invest in nearby buildings that have been vacant for years. The center drew half a million visitors in its first year of operation. This has brought people back to Newark and its hotels, restaurants and other businesses. Prudential further improved the area by turning a 12-acre eyesore across from the arts center into an attractive open space on the Passaic River.
NJPAC is only one Newark development Prudential is backing. Another is the Science Park Project. This 50-acre development will have a big effect on the city. Environmental remediation and physical improvements are only part of the equation. The project will also provide jobs to residents, while at the same time raising education standards. This will ensure that residents are ready to step into the newly created jobs.
Foundations like Prudential cultivate neighborhoods by preparing them for brownfield development. They can be valuable partners in your brownfield efforts.
Lessons learned
- Foundations fill gaps between public and private efforts.
- Identify off-site problems that might prevent your brownfield project from going ahead. Find out which foundations may be willing to help resolve the problems.
- Foundations can contribute more than capital. They can add expertise and connections that are invaluable to the revitalization of a blighted area.
This article originally appeared in the 05/01/1999 issue of Environmental Protection.