The Strategic Roles of WIS Counties in Brownfields Redevelopment – May 1, 2008 Presented for WACCC by: Dan Kolberg , P.E., LGU Specialist Wisconsin DNR, Brownfields Section Bruce Keyes , Partner Foley & Lardner LLP Presenters Dan Kolberg, P.E. Local Governm ental Specialist W isconsin DNR, Brow nfields Section ( 6 0 8 ) 2 6 7 -7 5 00 dan.kolberg@w isconsin.gov 1
Presenters Bruce Keyes, Partner Foley & Lardner LLP Environmental Regulation and Real Estate Practices (414) 297-5815 bkeyes@foley.com Today’s Presentation � Brownfields Intro. - Dan � County Experiences – Dan � Example Projects – Bruce � Tools Available to Cos. – Dan � Economics & Issues – Bruce � Q & A and Discussion - All 2
Wisconsin’s Brownfields Initiative Budget initiative reflected : Brownfields is an economic development initiative with an environmental component. Brownfield Basics � A brownfield is … � An abandoned or under-utilized industrial or commercial property � With real or perceived contamination � That hinders the reuse of the property � WDNR estimates up to 10,000 brownfield properties in the state � Many are known to be tax delinquent � The RR Program’s goal: To assist local governments with the reuse of contaminated properties. 3
Environmental contamination is…. � A hazardous substance that has been discharged into the water, land or air. � It can come from industrial, commercial, transportation or other sources. � Significant environmental contamination has the potential to impact human health, safety, welfare, and/or the environment. Benefits Of Brownfields Redevelopment � Blight Elimination � Environmental Clean-up � Protect Health and Safety � Infrastructure Re-use � Job Creation � Tax Generation � Smart Growth � Setting Positive Examples � Creation of Teamwork 4
County Experiences How have Wisconsin’s counties been dealing with brownfields? Summary of County Activities � Comprehensive � Obtain grants planning & zoning � Partner with rede- � ID brownfields velopment teams � Promote economic � Assist other LGUs development � Tax foreclosures � Acquire properties � Tax cancellations � Develop lands � Property transfers � Create parks/ trails 5
County Accomplishments � 50 SAG Grants to � 11 Tax cancella- 3 2 different cos. tions (s. 75.105) � Douglas Co. 4 � 16 Tax foreclosure � Chippewa, assignments Outagamie, and (s. 75.106) Winnebago 3 ea. � Tax foreclosures � Acquisitions with and transfers LGU exemptions (s. 75.17) � Numerous GLCL Example County Projects Adam s County Colum bia Co. � Idle 15 years � Work w/ WI Dells � Co. $30K SAG � Green team mtg. � Co. acquired - � Address liabilities– Taxes as match LGU exemptions � Assess, tanks, � Tax foreclosure demolition - Sold � City SAG w/ taxes � Assessed value - � Assess dry cleaner $9000 - $161,000 � Possible work w/ � 2 Vacation Homes other LGUs 6
County Roles with Brownfields � Tax Authority � Address Tax Delinquent Properties � Comprehensive Planning & Zoning � Identify Brownfields � Establish Land Use Directions � Encourage Economic Development � Partner with Redevelopment Teams (Incl. LGUs & Developers) Key Points for County Corp. Counsels � Liability Protection/ Civil Immunity � Tax Incentives for Clean-ups � SAG and other grant programs � LGU Cause of Action – Strong Tool � Laws to Help Counties! � Talk with DNR for Assistance. � Talk with other counties to share experiences! 7
Example Brownfield Redevelopment Projects By Bruce Keyes 8
Why should I take the first step? Pros � Smart growth � Infill efficiency � Tax base � It’s the right thing to do � Com m unity health � Availability of responsible parties � Conditions w orsen over tim e What keeps me from acting? � Cons � Low value of land � Low demand/ economy � Potential costs � High brain damage 9
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The “Brownfield” Deal – Categories of Properties � Market driven – intrinsic value is greater than impairments – redevelopment occurs with no additional intervention � Marginal – environmental, geotechnical, site or ownership issues – market driven as costs reduced or values increased � Brownfields – environm ental and site problems are so great that property will not be redeveloped without a major infusion of public or responsible party funds 12
Clintonville - Wisconsin Clock � Tax delinquent � Suspect contamination � Asbestos deteriorating � EPA assisted with removal action � Tax enhanced elderly housing developer interested in site � Lisa Kotter – the City champion Clintonville Current Sources and Uses Estimate Redevelopment Project State & Local SAG Funding Total Cost Description In-kind Buyer Funding City General Funds (Estimated) Grant Funds County Funds Contribution by City Phase II $ 2,000.00 $ - $ 2,000.00 $ - $ - $ - Phase II $ 18,000.00 $ 18,000.00 $ - $ - $ 9,000.00 $ 9,000.00 NR 716 Investigation $ 30,000.00 $ - $ - $ - $ - $ 30,000.00 Demolition $ 95,000.00 $ 64,799.00 $ - $ 30,000.00 $ - $ - Asbestos Abatement $ 60,000.00 $ 17,000.00 $ - $ - $ - $ 43,000.00 Petroleum Tank $ 5,000.00 $ - $ - $ - $ - $ 5,000.00 Payment/Cancellation of Deliquent Taxes $ 55,000.00 $ - $ 55,000.00 $ - $ - $ - Acquisition Cost $ - $ - $ - $ - $ 100,000.00 $ (100,000.00) Site Maintenance $ 2,000.00 $ - $ - $ 2,000.00 $ - $ - Legal $ 45,000.00 $ - $ - $ - $ - $ 45,000.00 Inventory & Equipment Sales $ - $ - $ - $ - $ - $ - TOTALS $ 312,000.00 $ 99,799.00 $ 57,000.00 $ 32,000.00 $ 109,000.00 $ 32,000.00 Liens Total Cost Mortgage $ - U.S. EPA Costs $ - TOTALS $ - ** City Costs & (Revenues) 13
Central Wisconsin Site � Industrial Park � Bankrupt prior owners/ causers � Low intrinsic value � But… � Contamination is spreading � Proactive current owner � Located user for site � Strong support from state Racine � Obsolete structures � But favorable economics on demolition � Interim user until redevelopment is ripe � City controlling cleanup schedule � Environmental issues not as bad as feared � Final remedy will be implemented in context of redevelopment 14
Lessons learned � The best solutions come when there is a viable seller – don’t let it become a brownfield! � Identifying an end use is helpful; � Every project will have heroes and villains � The heroes get projects done despite the villains Lessons learned � True Brownfield deals are very complex and take time � There are resources at your disposal- EPA, DNR, Commerce, and statutory tools (condemnation, cost recovery, foreclosure, etc.). � Any of the “tools” will work for small projects � The right project team is worth its weight in gold. � The transaction costs can total 30% of project cost 15
Budget – $14M Project $3.5M Extraordinary Costs 16
Additional Lessons Learned � Developers often need certainty; � If not certainty, then a commitment and confidence in their public partner; What Tools are Available to Help Counties? By Dan Kolberg 17
Wisconsin’s Brownfields Initiative Assisting local Governm ents ( incl. cos.) w ith the reuse of properties. Goals of BF Initiative � Help LGUs to understand that they are the key to successful redevelopment � Encourage more parties to cleanup their properties � Move properties through system quickly � Achieve redevelopment without sacrificing public health and environmental protection 18
Legal Tools for Cleanup and Redevelopment � Liability Exemptions (ss. 292.11 & 292.23 SS.) � Ability to Recover Costs (s. 292.33 and 292.35 SS.) � Civil Immunity (s. 292.26, SS.) � Delinquent Property Tax Tools � Inspection Authorities (Chs. 66 and 75, SS.) � Cancellation of Taxes (s. 75.105, SS.) � Assignment of Foreclosure Judgment (s. 75.106, SS.) � County Property Transfer (s. 75.17, SS.) Overview of the LGU Exemption 19
Overview of the Exemption Eligible acquisition includes: • tax delinquency • bankruptcy proceedings • condemnation • eminent domain • escheat • slum clearance or blight elimination • using Stewardship funds, if signed cleanup agreement VOLUNTARY PARTY LIABILITY EXEMPTION (VPLE) 20
Who can enter the VPLE Process? � Any person who submits application and pays fees. � A person may be an individual, business, developers, or government unit � A contaminant release must be documented on the property What must a VP do? VP is required to: • Investigate property & discharges that migrate off-site • Remediate discharges • Maintain property as required 21
What is reward at end of VPLE process? Certificate of Completion: • Awarded once DNR approves site investigation and cleanup. • Provides “finality” to person’s liability. • Exempt from spill law and certain provisions in other state laws. Local Government Cost Recovery Tool A tool to give local governments clear authority to recover environmental costs. (s. 292.33, Stats.) 22
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