Dredging up profits for brownfield revitalization

Last month, we discussed layered, non-traditional financial strategies for brownfield revitalization. Layered financing is the use of many forms of funding at a single project. Potential sources of brownfield funding are almost as varied as the properties themselves. This month, we discuss how dredged material can help finance your projects.

How are brownfields and dredging related?
A significant number of brownfields are at, or near, ports and waterways. Dredging sediment is an important part of keeping these waterways operational. In many cases, navigable waterways cannot remain viable without additional dredging to deepen shipping channels. Modern ships need navigable channels with 45-foot depths. Many major shipping channels are only 40 feet deep, and in some cases more shallow.

Waterways across the country, such as the Delaware River, are being considered for dredging. This produces a significant amount of sludge that needs disposal.

A substantial percentage of dredged material is contaminated. Landfills charge handsomely for accepting this substance. Additional funds go toward transportation, which can also be expensive. Therefore, brownfields near dredging operations are cost-effective destinations for this resource.

How can dredged materials provide funds for your project?
Brownfield owners normally pay for grading and cover. However, brownfield developers can be compensated for allowing dredged materials to be placed on their property. This unexpected income might be enough to pay for your services, or to make a marginal project profitable enough to attract investors.

People and news
We talked to Larry Baier, chief of the Office of Dredging and Sediment Technology at New Jersey's Department of Environmental Protection (NJDEP). He views dredged material as a resource, not a waste. These substances can often be used as cover at landfills or for grading at brownfields. However, contaminated dredge material is only allowed onto dirty sites with adequate engineering and institutional controls. The controls are based on remedial action plans at brownfields and closure plans at landfills.

NJDEP ensures that a remedial action plan covers the dredged material, as well as contaminants previously deposited at the brownfield site. The money to prepare these plans and implement the controls becomes an investment, not just an expense. This investment can pay off handsomely - for both you and the developer.

We also spoke with Lillian Borrone, director of port commerce for the Port Authority of New York and New Jersey. The authority is currently entering the first phase of a $733 million dredging and is trying to use the material beneficially. This includes applications during brownfield revitalization and for landfill cover.

Dredge from New York Harbor was used at a nearby development, the Kapkowski Road Landfill. This landfill is being transformed into an income-producing property - a mega mall. Joe Karpa with NJDEP, project manager for the site, discussed the use of dredged material at the Kapkowski Road Landfill.

850,000 cubic yards of sludge was brought onto the site. Normally, substances used to grade a site cost between $4 to $20 per cubic yard. Instead of spending this money, the developers received between $40 and $56 for each cubic yard of sludge placed on their site.

Based on information provided by regulators, this resulted in a gross economic gain of between $40 and $48 million dollars. Of course, various expenses were incurred by the developers. For example, the sludge from New York Harbor was mixed with stabilizing agents such as kiln dust and Portland cement. Still, accepting the dredged material contributed significantly toward this project.

Lessons learned

  • The use of dredged materials from navigable waterways can help finance your revitalization projects. This additional source of financing can make marginal projects viable. This strategy may help remediation firms bid effectively against competitors who don't pursue this opportunity.

  • Your remedial action and closure plans should include the acceptance of dredged material where appropriate. The decision to use dredged materials is a complex one based on factors such as deed restrictions, impact on market value, stigma (from groups such as prospective lenders, buyers and tenants) and other factors we will explore in later columns. Members of your team can help with the decision.
  • Funds for brownfield revitalization can be found in surprising places - like dredging.

This article originally appeared in the 06/01/1999 issue of Environmental Protection.

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