Environment and Society Institute

Non-Profit Facilitation of Brownfield Redevelopment

Final Report

Participants in the project from the University of Buffalo include: Professor Robert S. Berger from the School of Law; Professor Thomas F. Disare from the School of Law; G. William Page, Professor and Chair of the Department of Planning; A. Scott Weber, Professor of Civil, Structural and Environmental Engineering and Director of the UB Center for Integrated Waste Management, and Mr. Louis Zicari from the UB Center for Integrated Waste Management.

 

Introduction

In this report we present our findings and conclusions for our project, "Non-Profit Facilitation of Brownfield Redevelopment," funded by a grant from the UB Environment and Society Institute. New York, like other older industrialized states across the U.S., has an abundance of previously developed properties that have fallen into disuse or are used at less than their potential. Many of these properties have or are feared to have toxic contaminates in the soil or groundwater. Known as "brownfields", these sites pose a substantial problem for communities undergoing economic transition. The failure of the private real estate market and public sector efforts to solve the brownfield problem has drawn a new player into the process. Around the country a number of non-profit organizations have begun to play a role in brownfield redevelopment.

This project has sought to gather data about how these non-profits operate in order to evaluate the desirability of creating a brownfield redevelopment non-profit in Western New York. Although many of our findings and conclusions are applicable to the entire Upstate New York area, our effort has been aimed at laying the foundation for starting such a non-profit locally. Thus, the project has twin aims, research and implementation, and both components are presented in this Report.

 

Background

In Chapter 1 the challenge of redeveloping brownfields is discussed and the roles that a non-profit organization might play in helping to meet that challenge are presented. Non-profits involved in brownfield redevelopment vary in the role they serve in the redevelopment process. Some organizations are financing vehicles that provide funding for brownfield redevelopment. Other non-profits act primarily as coordinators, serving to facilitate contact and communication among the various stakeholders in the process. Some non-profits use their brownfield redevelopment expertise to provide consulting and advisory services.

From a national search we identified 11 non-profits about whom we collected information concerning their goals, the roles they play, the value-added benefits they provide, their linkages with other organizations, their funding bases and the successes they have had. From our contacts with these organizations and others interested in the role of non-profits, we articulated a number of claims that are associated with non-profit organizations involved in brownfields redevelopment regarding the value they add to the process. These claims are listed in Chapter 2 and evaluated in detail in Chapter 3.

 

Value-Added Claims

Fourteen different value-added claims were identified and divided into three general categories:

1. Increased flexibility in the types of projects chosen, approaches taken, and goals . As a result of this increased flexibility, most non-profits believe they are able to facilitate redevelopment of brownfield properties that are normally passed over, particularly smaller, more complicated and/or less marketable sites. Due to the relative newness of brownfield non-profits it is difficult to judge their success in meeting the challenges posed by these sites. Private foundation funding allows some of the organizations to pursue projects that may not have strong private market value, but do have great value to the local community.
2. Improved access to funding, services, and other benefits Most non-profits assert that they are able to bring additional resources into the brownfield redevelopment process. By securing foundation funding and government grants, and at times by attracting donations of cash, land or services, non-profits have been able to bring a new source of money into brownfield redevelopment. Several of the non-profits examined in this report have had some success in financial packaging leading to redevelopment.
3. Better able to fill role as coordinator/facilitator Most of these organizations believe that their non-profit status makes them uniquely able to serve an intermediary role in land recycling projects and to generally promote brownfield redevelopment in the regions where they operate. A non-profit's perceived neutrality may allow it to better facilitate projects than other private or possibly even public organizations. In addition, providing specialized expertise is a core function for those non-profits currently active in the brownfield redevelopment process. The value-added that non-profits provide appears to be combining the numerous and varied disciplines required to effectively address brownfield redevelopment issues.

 

Viability of a Western New York Non-Profit

The evaluation of these claims of non-profits around the country is important in and of itself. A primary purpose of this project also has been to investigate and analyze the existing brownfield non-profits in order to determine whether such an entity should be created in Western New York. Chapter 4 applies the results of our survey to the question of the viability of a brownfield non-profit in Western New York.

We used a number of methods to arrive at our assessment of the specific attributes of this region relevant to the question of establishing a brownfield non-profit here. We examined and analyzed the existing laws and programs in New York applicable to brownfield redevelopment. As is true in most other states, the main attempt to address brownfield redevelopment at the state level in New York was the creation of its Voluntary Cleanup Program (VCP). Unlike other states, however, New York's is only a "regulatory" program. There may be legislative changes in the near future which will establish a new program in New York. If this were to occur there would be increased value to a non-profit in New York, because there would be a new program which would not yet have a "track record".

In New York, there also is a promising new program for brownfield redevelopment undertaken by New York municipalities. The Clean Water/Clean Air Bond Act of 1996 provides for $200 million to be dedicated to "Environmental Restoration Projects" (ERPs). A crucial question in any ERP is how the municipality will fund its share of the cost, normally 25 percent. Any municipality undertaking an ERP must have some readily available source of "up front" funds both to fund its share and to cover costs while awaiting reimbursement from the State. Despite the significant advantages in terms of funding and liability protection available through the Bond Act, this program is not yet being used extensively. The reasons for this are not clear. Raising the 25 percent match may be one problem, and another is just that the program is new and there is a need for expertise on how to use it to develop a brownfield project. This is most likely to be true for smaller municipalities.

We also note the local economic conditions relevant to redeveloping brownfields. Western New York has a serious brownfield problem. There are three primary reasons for this:

1. A large number of brownfield sites resulting from an industrial past,
2. A low growth rate, because the economic restructuring cycle is not yet complete, and
3. A lack of land use controls on the urban periphery combined with existing subsidies that promote development on the urban fringe.

 

Potential for Local Non-Profit to Add Value

We then analyze the value added possibilities of a local brownfield non-profit identified in Chapter 3, in the context of the existing governmental and private efforts to redevelop brownfields in this region. For this analysis, we rely heavily on discussions and meetings we had with individuals knowledgable about governmental and private efforts at brownfield redevelopment in Western New York. Our conclusions are presented in the context of the three categories of claims we identified.

For the first category, increased flexibility in the types of projects chosen, approaches taken and goals, we see significant possibilities for a Western New York non-profit to assist local community organizations and smaller municipalities and counties. We think this is particularly likely if the non-profit has a link with the University at Buffalo. In fact, there may be an opportunity here, unique to this project because of the potential for substantial involvement of the University from the inception, to have a specialized research component tied specifically to the particular structure of a non-profit directly involved in brownfield redevelopment projects. Thus, one possible mission of a non-profit in Western New could be to undertake innovative approaches, whether it be in technology, financing, liability risk reduction, land use or some other area, even if a more "traditional" approach might be an "easier" or even less expensive alternative.

For the second category of possible value that a local non-profit might add, improved access to funding, services, and other benefits , there are a number of areas in which this is likely to be true. One is expertise in financing brownfield redevelopment projects. Throughout New York State there is not yet an established pattern for financing a municipality's 25 percent local share of a Bond Act restoration project. This appears to be a narrow, but potentially significant aspect of brownfield financing where a non-profit could develop a needed area of expertise.

Another area is the ability to access foundation funding and grants or donated services from the private sector. The possibility of attracting significant foundation funding or charitable grants from the private sector for local brownfield redevelopment does require, we believe, the creation of some new and innovative initiative which has a regional focus, such as a non-profit corporation. It also seems that a specific entity devoted to brownfield redevelopment is necessary to make substantial donations of pro bono services practical and likely in Western New York.

The third category of possible benefit that a non-profit can add, better able to fill role as coordinator/facilitator, also could be an important one locally, if the non-profit is carefully established. Based on the initial responses and participation in the process of exploring the idea of forming a non-profit, we are confident that if such an organization were formed, it could easily develop the necessary contacts and relationships to be successful. This assumes that it would be created with the cooperation and partnership of the governmental and private sectors . Indeed, a new vehicle, such as an "independent" non-profit, seems to be needed to harness the substantial interest of the private sector in aiding brownfield redevelopment efforts.

 

Proposed Non-Profit Profile

Finally in Chapter 4, we offer a general profile of the type of non-profit we envision. Such a non-profit generally would not undertake development on its own. More likely, this entity would assist other entities in both the public and private sector in formulating and executing plans for brownfield redevelopment. Two of its main targets for assistance would be community groups and smaller governmental entities. Ideally, the expertise, energy, contacts and other resources which the non-profit brings to the project would be the difference between success and failure in the redevelopment effort. In order to be successful in this mission, the proposed non-profit would need to possess a number of key qualities:

1. Structure The non-profit must be an entity created with the resources and protections necessary to provide value to brownfield projects otherwise unavailable. It must have a relationship with one or more local governmental entities, be sufficiently "independent" to ensure that it is viewed as a neutral party, and be structured as a regional resource.
2. Expertise Many of the obstacles to brownfield redevelopment involve technical questions relating to the identification and remediation of environmental contaminates, legal liability, redevelopment potential and financing. The proposed non-profit would need to have access to experts in these fields in order to fulfill its mission. The non-profit should try to provide a specific expertise tailored to the region. The use of the Bond Act's provisions for funding and liability protection is a natural area upon which the non-profit could concentrate. Equally important, it must understand its limitations and not attempt to perform functions, such as marketing, for which it is not suited.
3. Contacts One of the most difficult aspects of brownfield redevelopment is the large number of key participants required in order to be successful. These participants include regulatory agencies, municipalities, community groups, developers and both public and private sector funding sources. The proposed non-profit would need to be able to understand and incorporate the perspective of all of these parties into any proposed solution, to maintain contacts with all of these groups and, most importantly, maintain their trust. In addition, the non-profit may benefit from fostering relationships with private sector entities interested in promoting brownfield redevelopment in general, and with the University which will provide additional expertise and credibility to the endeavor.
4. Credibility Eventually, the non-profit's credibility will derive from its successful experiences. Initially, this credibility will come from the institutions and individuals who form the non-profit. Accordingly, prior to the commencement of operations, it is critical that the non-profit assemble a board of directors and other contacts and resources which will create this credibility. This requires a project that includes all elements of the local community and is formed with their support, including the involvement of the University. It also would be helpful to have the involvement and encouragement of nationally recognized leaders in brownfield redevelopment which would demonstrate that this is an innovative approach, but a credible one.
5. Staff and Budget The proposed non-profit will not be successful without a staff with the time, energy and expertise required to remove barriers to brownfield redevelopment. This staff could be supplemented by assistance of students from the University. This would be not only an addition to the resources of the organization, but a potentially valuable educational opportunity as well. Although no precise budget can be provided, we believe the non-profit needs three years of start-up funding. The total for operating expenses and working capital would be around $225,000 per year.

 

Future Role of University at Buffalo in Brownfield Redevelopment

In Chapter 5, we discuss the role of the University in brownfield redevelopment and recommend various actions that the University at Buffalo should undertake to follow-up this report. The project team has identified important unique qualities the University brings to bear on this issue. First, the University at Buffalo, as a major hub of intellectual and physical resources in the New York State, has as part of its service mission and its own self interest, the revitalization of Western New York. Accordingly, the University has an obligation to take an active role in one of our region's most pressing challenges: the revitalization of brownfields. Second, our nation's universities are being increasing called upon to incubate and bring to practice unique and innovative approaches that break competing stakeholders out of their traditional boundaries for the common good. If used wisely, the independence and credibility of the University can be effectively employed to catalyze and nurture brownfield redevelopment which otherwise might not be possible.

 

Recommendations for Further Action

Brownfield Action Project To energize and focus the University's efforts in brownfield redevelopment, the Brownfield Action Project has been initiated. The Brownfield Action Project has the power to draw upon the extensive intellectual and physical resources in many of the disciplines crucial to brownfield redevelopment located within the University at Buffalo. Clearly the University has the institutional capacity to provide assistance in this arena. The University will work to promote cross-fertilization of ideas among various academic disciplines, as well as between the University and outside government/community/private sector organizations. The University's new multidisciplinary effort, therefore, will provide a forum for research and service projects to be conceptualized and implemented. It will also offer the means to develop educational and training experiences for students (experiential learning, internships, field trips, etc), and educational colloquia and seminars centering on Brownfield issues.

Provide Outreach Assistance Recognizing that the University's multidisciplinary resources described above could be very beneficial to existing or envisioned governmental or community based organizations working to redevelop brownfields, the University is prepared to explore mechanisms to provide assistance to meet their needs.

Catalyze the Formation of a Western New York Brownfields Non-Profit The UB Brownfield Action Project is committed to catalyzing and assisting in the establishment of a non-profit organization dedicated to the redevelopment of brownfields in Western New York. This non-profit should incorporate the lessons learned by other non-profit brownfield organizations around the country, which were identified during the course of this project.