Impacts of Brownfield Development

Sep 5, 2013

Impacts of Brownfield Development

Economic Impacts

The benefits of brownfield remediation and redevelopment extend beyond removal of contaminants, in that it brings a site back to active use – returning it to the tax rolls, leveraging private investment, and creating businesses and jobs.

Funds Leveraged

State and local governments have joined the private sector in paying much more attention to outcomes and outputs of public investment, and efforts have been taken to measure the economic impacts of brownfield redevelopment. Some economic impact performance measures for brownfields redevelopment include the number of jobs created, the number of businesses created, the amount of private sector funding leveraged, or the tax revenues added. In a study focused on the state of Illinois, a detailed analysis of 37 brownfield redevelopment projects was done, attempting to quantify all of these measures. It investigated how projects were funded, and how various public (federal, state, or local) funds were leveraged to entice private investment (IIRA 2005).

Dollar Graphic

The graphic portrays how, according to the IIRA study, most investment in brownfield projects is from the private sector ($.75 of every dollar). However, it is important to note that many projects are initially funded through public investment, which is often used to leverage this private investment. The study found median private investments upwards of eight times the initial public investment, depending on whether it was federal, state, or locally funded (IIRA 2005).

It is important to quantify how public funding leverages private funding, because brownfield redevelopment is essentially a private sector project, and communities may question its appropriateness. Furthermore, it is important to note how the ratio of public to private funding is highly dependant on the stage of the project. "For example, state investment often involves assessment costs early in a project and may represent a relatively high investment compared with the overall project cost. This is especially true in projects with serious contamination" (IIRA 2005). Initial public investment, although seemingly expensive at the time, can trigger major private investments in the long-term, thereby creating an economically viable opportunity. These ratios, and how they change over the life the project, are affected by how much is known about the contamination, whether the municipality purchased the property, and whether it tried to recover the initial investment in property.

The study found, that in Illinois, the investments by the public sector brought substantial returns, especially at the state level—a median return of $16 in total investment per $1 of state investment in the brownfield program. "While state investment does not necessarily cause private investment, the external funding can help the local government provide a productive economic environment suitable for business investment, thus representing a successful public-private partnership" (IIRA 2005).

Job Creation

In addition to the amount of private and total investment, many brownfield projects also serve to create new businesses and jobs. IIRA's survey found that an average of 66 full-time equivalent jobs was created per brownfield redevelopment project (IIRA 2005). In addition, a national survey found that of the 72 cities that responded, approximately 83,171 jobs were created due to brownfield redevelopment (21,977 pre-development/construction jobs; 61,194 post-development/permanent jobs) (US Conference of Mayors, 2006). According to the City of Chicago, their Brownfields Initiative has resulted in more than 3,000 new jobs (Graham conversation, 2008).

Oftentimes, these jobs are created in neighborhoods where they are most needed. The US EPA has recognized the import of job creation in brownfield redevelopment and has initiated a grant program to support job training for environmental remediation and redevelopment in communities with numerous brownfields.

Tax Revenues

Brownfield sites are often abandoned and vacant and therefore not producing tax revenues for the municipalities and other taxing jurisdictions. This loss of earnings potential is in addition to the other strains on the economic health of the neighborhood outlined below, making brownfields even more detrimental to a community. According to a national survey, 79% of respondents stated that increasing the municipality's tax base was a primary benefit of brownfield redevelopment. From the survey, 64 respondent communities determined that local tax revenues generated from redeveloped brownfield sites totaled $233 million (US Conference of Mayors, 2006). The City of Chicago estimates that their Brownfields Initiative has increased the City's tax base by more than $1 million annually (Graham conversation, 2008). Returning these abandoned sites to active use not only creates jobs and investment, but increases a community's tax revenue.

Ripple Effect

When done well, a redevelopment project can prompt a series of investments in nearby properties and therefore extend the benefits to a wider area (Chilton 1998; Meyer 1998). The jobs and investments created because of brownfield redevelopment include only those that were direct effects, but these investments also cause a ripple effect throughout the local economy. One recent example found that the effects of brownfield redevelopment had a total output multiplier of 3.8, meaning that an additional $1 generated because of the brownfield project is likely to lead to $3.80 in total investment (NRTEE 2003).

Other Benefits

In addition to quantifiable measures like tax revenues, job creation, and funding leveraged, anecdotal evidence points to the economic impacts of brownfields as well. For example, a frequent goal of brownfields programs is to bring new resources and previously unavailable products and services to the communities in which they are located – such as a needed grocery store, drug store, health clinic or other amenity. Expansion of existing businesses or investment by new businesses, the slowing or reversing of economic decline, the increased earnings of surrounding businesses are also all indicators of success (ICMA 2002).

Local Case Studies of Fiscal Impacts

A case-study analysis of six different brownfield redevelopment projects throughout the region supports the economic impacts described above. For each brownfield development, the financial costs and benefits were measured, through the perspective of their taxing district. The six projects studied included Metra Station and Gateway Center in Palatine, State Line Industrial Area in Calumet City, Westin Hotel in Wheeling, Homan Square in Chicago, Station Crossing in Downers Grove, and Main Street Station in Roselle. (Details about this case study analysis can be found in the report done for CMAP by S.B. Friedman & Company, available online.)

The analysis identified the total cost of the projects – divided into municipal investment, state and federal grant support, and private investment. It then measured the projects' economic impacts on the site – including the change in equalized assessed value (EAV), the change in property tax generation, and any new annual sales, hotel, and/or restaurant tax generation. In addition, the analysis measured the "indirect" or "secondary" economic impacts of properties located in immediately adjacent blocks to the site, by also tracking both the change in EAV and the change in EAV compound annual growth rates for these properties.

Overall, the analysis revealed significantly positive economic impacts, both on the primary site itself as well as the secondary areas surrounding the development. The property value multiplier, a metric showing the ratio of inflation-adjusted EAV to the project site prior to construction and after completion, ranged from 1.3 to 8.3 (excluding one high outlier). The property value multiplier for the secondary areas were also mostly positive; but perhaps more significantly, the change in EAV compound annual growth rates for these neighboring properties not only grew faster than it had prior to project completion, but it also switched from declining values before the project to increasing values after the project. These increases in EAV translated into significant increases in property tax and other tax revenues for the municipalities.

These case-studies also highlighted how imperative it is to couple brownfield redevelopment with good planning. Factors such as the density of redevelopment, the type of uses associated with the redevelopment, and understanding market viability for the project, all play a key role in ensuring economic benefits.

Environmental Impacts

Much of the impetus behind redeveloping brownfields originated from the environmental sector. Superfund legislation, the precursor to current brownfield policy, was a response taken by the federal government to clean up hazardous, extremely contaminated sites after highly-publicized environmental incidents such as Love Canal and Valley of the Drums (DeSousa, 2006b). New regulations and technology to clean up brownfields have advanced significantly since then, resulting in more effective remediation, and eliminating or mitigating the effects of environmental hazards. In addition, with the increasing interest in sustainability, brownfields redevelopment has also begun to be seen as more than just a tool for cleaning up contamination, but also as a tool to reduce greenfield development and green the urban fabric.

Mitigating Environmental Hazards

By meeting SRP guidelines for clean-up, the IEPA (and thereby, the US EPA) assures that the contamination is either removed or mitigated to safe exposure levels. But the environmental benefits of a cleaned-up brownfield site depend significantly on what contaminants were on the site, the site's location, and what is constructed on the newly cleaned site.

Leaking TankMany brownfield redevelopment programs, driven by economic benefits, have been focused on returning sites back to industrial and manufacturing uses. Sites are capped, physical barriers such as pavement are put in place to prevent exposure, steps are taken to prevent usage of groundwater, and the site is returned to active use. The encapsulation of contamination is an environmental benefit – not only does it prevent exposure to humans, it can also reduce the runoff of toxics into nearby water bodies, and therefore lead to improvements in overall water quality and habitat (US EPA, 2001).

But there has been new recognition that brownfield redevelopment also presents an opportunity for "greening" some of the most dirty industrial areas. Rather than returning a site to active use, some communities are using these sites to create opportunities for additional environmental benefits (DeSousa, 2006a). Municipalities like Chicago have started requiring energy-saving and recycling practices during demolition and construction, green building efforts, and open space set-asides on redeveloped sites; in return, the city assists with assessment, cleaning, or acquisition, or taking on the liability issues until the site is ready for redevelopment (Graham conversation, 2008).

Furthermore, some research has begun to quantify the social and environmental effects of transforming brownfields into parks. These "brownfield to green space" projects have the most potential for environmental benefits. Their benefits are comparable to any urban park, except that these sites tend to be located in areas woefully short of green space, and can have even greater impact. They can provide significant stormwater quality benefits, offering opportunities to create detention/retention ponds, constructed wetlands, or simply increasing infiltration within a very impervious urban area. The trees and vegetation growing on these sites work to reduce heat island effect, cooling neighborhoods during summer months, and cleaning the air, thereby resulting in improved air quality (US Conference of Mayors, 2001). These green spaces can also provide habitat opportunities, especially in urban areas, devoid of natural habitat. There is also an argument that these sites are "cleaner" because of the natural processes occurring on them, working to filter the contaminated soil and groundwater, rather than capping them with physical, man-made barriers (DeSousa, 2006b).

Increase in Infill Development

Perhaps the most significant environmental benefit of brownfield redevelopment is the associated decrease in greenfield development. Brownfield redevelopment is sometimes called "recycling" of land because it provides an opportunity to utilize land within developed urban areas (US Conference of Mayors, 2006). This not only preserves the greenfield land at the periphery, but has subsequent additional environmental benefits associated with compact growth. Therefore, redeveloping a brownfield site is considered an infill project because it adapts developed but underutilized land and infrastructure for a new use.

Research has shown that, for every one acre of brownfield redeveloped, up to 5.6 acres of greenfield land can be prevented from development, depending on land use. Industrial land is at the low end of that range (every one acre of brownfield would require 1.5 acres greenfield land), whereas residential land is at the high end of that range (every one acre of brownfield would require 5.6 acres of greenfield land) (DeSousa, 2002, 2006a; Deason, et al., 2001). According to this analysis, there are an estimated 36,000 acres of brownfields throughout the region. The region's brownfields have the potential to absorb significant amounts of development (Simons, 1996).

Staving off the consumption of greenfield land can result in preservation of open space, which has many environmental benefits. For example, water quality is intimately linked to infiltration and impervious surface, so limiting development in these greenfield lands could prevent water quality degradation. A study done in Chicago found that placing a hypothetical low-density development on the urban fringe would produce ten times more runoff than high-density development in the urban core (Hagler Bailly, 1999). Water quality and open space preservation are closely tied to habitat and biodiversity, which would also benefit from decreased land consumption for development.

In addition to the environmental benefits of reducing the consumption of greenfield land, there are environmental benefits of promoting compact, infill development. Compact development affects travel activity, which translates to improved air quality. Dense, compact development promotes walkability and allows more access to transit, which can reduce automobile use and vehicle miles traveled (Harbor et al, 2000). In comparison to low-density development at the urban periphery, compact, infill development causes trip lengths to be shortened. Furthermore, compact development also reduces the need for people to own vehicles, translating in reduced parking needs and consequently less impervious surface. Research quantifying the costs of brownfields redevelopment in comparison to greenfield development estimates that this reduction in travel and its externalities (congestion, noise, parking, emissions) is the most significant public benefit of brownfields redevelopment for both industrial and residential development (DeSousa, 2002).

Do you think brownfields are a key environmental concern facing our region?


Impact on Community Development

In addition to the environmental and economic benefits of redeveloping brownfields, perhaps an undervalued benefit is the impact on the community. Brownfields can transform a neighborhood problem into a source of community pride and value, translating into higher property values, more housing options, increased public health, and decreased crime.

Increased Property Values

There is evidence that redeveloping a brownfield site can result in higher property values, not just on the site itself, but also on neighboring properties. Like any neighborhood improvement, redevelopment of a brownfield site has the potential to transform an eyesore and a liability into a community asset, reflected in the neighbor's property values. This hypothesis has been evaluated in other communities throughout the country, and the results seem to point to its validity.

For example, in Woburn, MA, a study and statistical model measured the impact of two brownfield redevelopment projects on house values and prices, as well as "willingness to pay" values on externalities like air quality. Using data on single-family home sales in Woburn from 1975 to 1992, the house prices were measured in the phases of discovery, pre-cleanup, clean-up, and post cleanup, all of which were factors in the statistical model. The total benefits of redevelopment were calculated by evaluating the average house prices in relation to the distance from the brownfield.

The results revealed that the increase in home prices outweighed the costs of redevelopment. Housing prices were found to have increased in increments based on distance, after announcements of action toward redevelopment. After calculating benefits by census tract and totaling all census tracts, the gross benefits were calculated to be $122 million near one site and $72 million near the other. Total costs were estimated at over $70 million for both sites, but when the costs were spread out over a ten year period and discounted, they decreased to approximately $47 million. Thus, according to this statistical model and research, the total benefits outweighed the cost of clean-up in Woburn (Kiel and Zabel, 2001).

Affordable Housing and Housing Mix

Brownfield redevelopment is viewed by both private and public investors as an opportunity to revitalize communities. This includes creating more residential options and affordable housing, especially in areas with existing amenities or infrastructure. However, "while a significant amount of consideration has gone into policies and programs to encourage [brownfield] redevelopment that creates jobs and new taxable activities, little has been done to take full advantage of the potential socio-economic and environmental opportunities that residential redevelopment on these sites can bring about" (DeSousa, 2006a).

One reason for this may be the challenge of obtaining Federal Housing Authority (FHA) insurance for brownfield sites. The current laws on brownfield redevelopment housing require that the developer completely clean-up the site before obtaining insurance from FHA. (Schopp, 2003) Furthermore, HUD has different sets of standards and guidance regarding cleanup than states. HUD uses the Multifamily Accelerated Processing (MAP) for residential standards which will not allow engineering or institutional controls or caps over contaminated sites, but the majority of states in the country allow engineering and institutional controls under certain circumstances (Schopp, 2003). In Illinois, the IEPA determines cleanup standards for redevelopment, and it differs significantly from HUD's MAP standards. IEPA requires "removal of contamination and replacement of just three feet of soil versus twelve feet mandated by HUD…" (Schopp, 2003). Thus the costs for a HUD multifamily project on a brownfield site could potentially be 10-15 times more expensive (Schopp, 2003). Aligning standards and acquiring federal dollars toward a redevelopment project makes the project more affordable to developers, ensures nationwide consistency, and allows cost-savings to be passed along to the potential home owners.

Affordable Housing and Brownfields in Houston

Houston, Texas has an example of a success story for a brownfield redeveloped into affordable housing called Washington Courtyards. A survey was conducted which found affordable housing to be a critical need in the neighborhood. In August 1989, five underground storage tanks were found on a potential site. The tanks were removed and contaminated soil was excavated with LUST funds from the US EPA. In 1998, the soil was tested again and the levels of contamination were low enough to receive approval by the State of Texas for residential reuse of the land. The city partnered with nonprofit groups as well as private consultant firms to gain the most benefit. Currently, there are 74-units of mixed-income housing built on this former brownfield (Schopp, 2003).

Although residential housing is a priority of brownfield redevelopment, there are instances where development has led to the displacement of residents, when property values increased significantly and housing became unaffordable for many families. In Pittsburgh, brownfield redevelopment of an island that was once an industrial center is now a seven-acre residential development with close to 100 townhomes. "Homes on the island originally sold for $50,000 and now are being sold for $650,000" (Schopp, 2003), a 1200% increase. It is important to consider affordability with any residential brownfield redevelopment projects.

Brownfields as a Public Health Threat and Environmental Justice Concern in Baltimore

A study based in southeast Baltimore found 182 vacant industrial sites, many of which had historical uses of recycling and manufacturing, making them likely candidates for brownfields. After thorough examination of city health records (population of 45 years or older between 1990-1996), it was found that the leading causes for mortality in the area were heart disease, total cancers, diabetes, COPD, influenza, pneumonia, and liver disease. Additionally the records of the departments of waste management, water management, air and radiation, and real estate tax assessments were also examined during this study to further assess the sites.Although a claim cannot be made that the existence of brownfields caused any deaths, it was found that in communities living in the worst (?) brownfield zones, when compared with those living in lower zones, there were statistically higher mortality rates due to cancer and respiratory diseases, and other major causes such as liver disease, diabetes, and stroke were also in excess (Litt, Tran, Burke, 2002). These illnesses corresponded with the effects of substances found at brownfield sites during a chemical inventory. Some of the more dangerous chemical substances included lead, nickel, chromium and polychlorinated biphenyls. Overall, of the 105 substances found and examined, 68% had indications of respiratory effects, and 66% had indications of neurological effects (Litt, Tran, Burke, 2002).

These finding were even more interesting because Southeast Baltimore is also highly populated by minorities and lower-income residents, as compared to surrounding areas (Litt, Tran, Burke, 2002).This raised concerns of an environmental injustice to area residents, demonstrating that public health risks of brownfields may more commonly afflict minority and low-income groups.

Despite these barriers and challenges, the region has pursued residential redevelopment of brownfields and affordability. In a study focused on Chicago, 52 residential brownfield redevelopment projects were completed or in the latter stages of planning and development from 1997 to 2004, generating 7,362 units. Almost 36% of the units (2,653) were affordable. Furthermore, many of the projects mixed market rate and affordable housing, and were scattered throughout the City. These mixed projects generated about a third of the overall affordable housing units studied (DeSousa, 2006a). This is a much greater percentage of affordable housing than the majority of cities throughout the country.

Impact on Public Health

Public health is a major concern of idle brownfields. Oftentimes at brownfield sites, health hazards, in the form of leaking gas or contaminated water, are not detectable by residents and thus even more ominous, especially with long term exposure. As brownfields continue to capture interest and funding for redevelopment, the health impact on surrounding communities is being investigated. This is often viewed through the framework of "environmental justice," which is based on the principle that all people should be protected from environmental pollution and they have the right to a clean and healthy environment (US EPA 3). It is commonly found that many neighborhoods already facing isolation and disinvestment also face the challenge of brownfield redevelopment.

Under the 2002 Brownfields Law, public health and health monitoring were included as activities to promote cleanup and redevelopment. The law allows the local governments to spend up to 10% of brownfield grants for "(i) monitoring the health of populations exposed to one or more hazardous substances from a brownfield site; and (ii) monitoring and enforcement of any institutional control used to prevent human exposure to any hazardous substance from a brownfield site" (US Code, Section 104(k) of CERCLA).

Additionally, examples of proposed activities for US EPA brownfield grant use include:

  • Blood lead testing in the target community in collaboration with the city and state lead programs and asthma tracking in school children;
  • Examining vital statistics in areas near brownfield sites;
  • Testing of air and water with health agencies based on assessment results; and,
  • Assessing community progress in meeting Healthy People 2010 objectives, national health goals of the Department of Health and Human Services that serve as the basis for state and community health plans, as they relate to brownfields communities (US EPA 2006).

Impact on Safety and Crime

Another aspect of brownfield redevelopment is the opportunity to improve a sense of community, increase safety and decrease crime. In many cases, especially in urbanized and low-income areas, brownfields take away from the "livability" of a neighborhood. "A livable place is safe, clean, beautiful, economically vital, affordable to a diverse population, and efficiently administered" (Balsas, 2004). When brownfields are left unmanaged and undeveloped, this can lead to negative results in a community. Vacant properties in general are often tied to crime, and the costs of responding to and addressing crime can be significant for municipalities.

In addition, there is the necessity of public maintenance on these abandoned properties, involving cleaning up trash and other illegal dumping. These costs can add up to millions of dollars invested by the city or state to keep these grounds manageable. For example, Detroit has spent $800,000 each year to clean up vacant lots (National Vacant Properties Campaign, 2005). The response by some states and cities has been to encourage volunteerism around clean-up programs and increase opportunities to rehabilitate housing structures that are vacant. Programming also includes the push for redevelopment and clean-up of brownfields by both private and public organizations.

What health or safety concerns do you have regarding brownfields? Who is responsible for ensuring these sites are clean and safe?


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