1. What is a brownfield site?
A brownfields site is any real property that is abandoned, idled or underutilized where environmental contamination, or perceived environmental contamination, hinders redevelopment. The hindrance comes from the fact that it is very difficult to obtain loans for redevelopment on these properties because they come with potential environmental cleanup liability. The NC Brownfields Program is designed to alleviate that liability for prospective developers of these properties so as to facilitate the redevelopment of the property.
2. What is a brownfields agreement?
The department will enter into an agreement with the developer that is in effect a covenant not-to-sue contingent on the developer making the site suitable for the reuse proposed. The brownfields agreement provides both the site-specific actions necessary to make the site suitable for reuse and the covenant not-to-sue once these actions are complete. A brownfields agreement is designed to break environmental liability barriers that hinder a developer's ability to obtain project financing. The agreement specifies actions to be conducted by the developer that are based on making the site suitable for the use intended. These actions can be costed, and then a business decision can be made by the developer and lenders without uncertain liability. See question 6 for more details on the benefits of a brownfields agreement.
3. I hear about the U.S. EPA Brownfields Program (federal level) and the North Carolina Brownfields Program (state level). What's the difference?
The U.S. EPA began the Brownfields Initiative in 1995 and since that time the states have been heavily involved in supporting these actions through passage of supportive state statutes. The federal and state roles in brownfields differ, but they are all designed to encourage the cleanup and reuse of abandoned contaminated properties referred to as brownfields.
The federal program functions to provide funding to states to develop and operate programs such as this. It also provides grants to local governments, on a competitive basis, for assessment and cleanup of brownfields sites. The federal brownfields statute (Small Business Liability Relief and Brownfields Revitalization Act) became effective in 2002. It outlines environmental liability and under what circumstances it is deferred to the state and under what circumstances it remains with the federal government.
The state Brownfields Program operates under state statute (Brownfields Property Reuse Act of 1997) to offer liability protection to noncausative parties in return for actions on the site that make the site suitable for the reuse proposed and for the public benefit of the redevelopment project.
4. Is there any brownfields funding available and from whom?
This is one of the central differences between the federal and state brownfields programs.
Although the state brownfields program has no upfront funding available to private party prospective developers, a brownfields agreement obtained from the program entitles the developer to a property tax exclusion on the improvements made to the property for a period of five years. This exclusion can more than pay for assessment and cleanup activities on many projects. See our Tax Incentive FAQ for more information on how it is applied.
The U.S. Environmental Protection Agency does have competitive brownfields grants for the assessment and cleanup of brownfields properties as well as grants for setting up local revolving loan funds. Limited funds are also available for job training grants, also on a competitive basis. Under this brownfields grants program, North Carolina local government entities have been awarded millions of dollars for brownfields activities. This list includes Charlotte, Winston-Salem, Fayetteville, Raleigh, Greensboro, Winston-Salem, High Point, Concord, Farmville, Wilmington, the Land-of-Sky Regional Council of Governments and others. Deadline for submittal of proposals is generally in the fall of each year. For more information on how to apply please see our Federal Brownfields Program Links. However, it's important to note that the awarding of such a grant is not required to participate in the North Carolina Brownfields Program.
5. What's the difference between the state's Voluntary Cleanup Program, the Inactive Hazardous Sites Program and the Brownfields Program?
The "Voluntary Cleanup Program" is the shorter name for the North Carolina Inactive Hazardous Sites Program. It has existed since 1987 as is designed to encourage cleanups of contaminated properties. Any party may conduct cleanup activities under this program. Most of the parties who do so are responsible parties who caused or contributed to the contamination at the site. The Voluntary Cleanup Program is separate and apart from the state's Brownfields Program, which was authorized by a different statute in 1997. The major differences are that the Brownfields Program, and its associated benefits, are only available to parties who did not cause or contribute to the contamination at the site and who desire to redevelop the property. For what those benefits are see the next question. Also, a brownfields site by necessity is one that is abandoned, idled or underutilized, and where there is an interest in redevelopment. That may or may not be the case with a Voluntary Cleanup Program Site.
6. For a developer of brownfields properties, what are the benefits of obtaining a brownfields agreement?
In short, a brownfields agreement is designed as a tool for developers to remove uncertainties in environmental liability. Properties with such agreements in place can be viewed as assets for investment rather than uncertain environmental liabilities. The following are specific benefits:
1) The agreement provides strong liability protection in the form of a covenant not-to-sue that can be shown to a lender in order to obtain project financing;
2) The liability protection in the brownfields agreement passes on to all new owners so long as they adhere to the land use restrictions (e.g. don't use the groundwater). This can be a selling point for the property;
3) The site remedies under the program are designed to prevent exposure and make the site suitable for reuse, not to meet environmental standards required of the site polluter in traditional cleanup programs. Thus, they are less costly and less time consuming, particularly with respect to groundwater remedies;
4) Since remedies are put in the agreement up-front and therefore represent known costs, a business decision can be made with much reduced uncertainty;
5) Closure for the prospective developer can be obtained reasonably quickly, typically in much less time than for most other cleanup programs (see 3 above); and,
6) The brownfields property tax incentive significantly reduces property taxes on the improved value for five years after completion of improvements to the property. This benefit typically pays for (or at least offsets) site environmental assessment, risk mitigation, or cleanup activities that the developer may need to conduct under the agreement.
7. Okay, so if I want a brownfields agreement, what's the process like, how long does it take and how much does it cost?
The timeline varies but is typically less than the time to closure in traditional cleanup programs designed for responsible parties. Site-specific factors (such as site complexity, the developer’s responsiveness to data requests, their need for negotiation, and others) and program capacity at the time of application affect the length of time to obtain an agreement. In 2011 the average time from eligibility to completion was approximately 18 months (check with the Program Manager for the present average length of time from eligibility to completion). The time involved is largely due to the set number of project managers funded through the U.S. EPA grant, the popularity of the program, and the queue of sites each project manager has on their plate. While this timeline is fine for most, for those developers who must go even faster, the program has instituted an optional “zero-queue” approach called the Redevelopment Now Program Option, whereby the developer may opt to pay a significantly higher fee for a nearly dedicated project manager which therefore bypasses any normal queue of sites. Again, ask the Brownfields project manager for the current average time to completion in this program option (in 2011 it was 5 months).
The brownfields agreement process is outlined on our flowchart. It begins with the application by the prospective developer who needs the program's services submitting a Brownfields Property Application (BPA) with the data that is necessary for the program to determine if the site and the developer are eligible under the Brownfields Property Reuse Act. The flexibility the Act allows makes for a different process than most other programs as DENR and the prospective developer work in partnership toward the brownfields agreement. The process is less adversarial and more of a partnership since there is common interest for DENR and the prospective developer to reach a brownfields agreement that protects public health and the environment and encourages the reuse of the property.
Obviously the process also is dependent on the conditions at each site, as well as the end use proposed by the developer. For example, residential uses generally require more sampling to assure public health protection than does industrial use. At some sites sufficient environmental data already exists and no further assessment data is necessary. This saves time and expense. Some sites require more assessment than others. Many sites have motivated developers who respond to our technical guidance and sample sites without delay. Others respond less quickly and are in a slower development mode. Also, each brownfields agreement has a 30-day public comment period that needs to be factored into timing. Even with this, when compared to other cleanup programs and the liability protection provided, most developers who have had to deal with environmental issues on other sites outside the Brownfields Program will say this is exceedingly fast.
The ultimate costs are again specific to the site conditions, the existing site data, and the proposed land use. But the built in advantages of the Brownfields Property Reuse Act are designed to make costs for noncausative parties both reasonable and well defined before the brownfields agreement is signed. Costs include any assessment, mitigation, remediation, and transactional costs (e.g., attorney, and/or surveyor).
8. What's the operational history of the program?
As of 2012 the program has provided more than 220 brownfields agreements to date and has more than a hundred others in the pipeline. The projects range in size from a $100,000 small business expansion onto a neighboring lot to large redevelopments valued at more than $100 million. In addition to the private investment facilitated, these projects have created thousands of jobs and returned abandoned blighted eyesores into new tax performers for local governments. There is an inventory of brownfields projects on our web site.
9. Can you give me a list of available brownfields properties?
Not per se. The list would be tens of thousands of properties long and take resources to create beyond the scope or purpose of the program. Perhaps more importantly, the creation of a list of properties would probably have a stigmatizing effect. The misuse of the list of properties that had or might have had contaminant releases for the Superfund Program to investigate, known as the CERCLIS list, was probably one factor why these properties would not transact in the marketplace to begin with. Therefore, we have little interest in repeating such a list. However, some existing lists might have some relevance and use in such a search. There is a list of sites known as the Inactive Hazardous Sites Inventory created under the Inactive Hazardous Sites Program (Voluntary Cleanup Program). It is a list of sites where there have been releases in the state. Though all the sites on it are brownfields sites (some are very much operating facilities), some of the tens of thousands of potential brownfields are on the list. There is also a list of old landfills that existed prior to the advent of solid waste regulations. Projects have entered into the Brownfields Program that are Landfill redevelopments into recreational and/or greenspace. Finally, although not a listing specific to environmentally impacted properties, you may wish to look at the Department of Commerce's Certified Site Listings. Some buildings or properties on this list may fit the definition of a brownfields property, though it is definitely not a list that is specific to brownfields.
10. What if I redevelop the property and want to sell it afterwards; does the new owner get the liability protection and the tax incentive?
Yes. So long as they did not cause or contribute to the contamination at the site, they get the benefits of liability protection of the agreement just as the prospective developer did. A brownfields agreement should continue to facilitate the transferability of the property into the future. Also note that future owners do have the same responsibility to adhere to any land use restrictions in the agreement (for a hypothetical example, not to use the groundwater). Land use restriction violations are the responsibility of the owner at the time of the violation, so such land use restrictions violations do not come back onto past owners/developers.
11. Do I need a brownfields agreement from the U.S. EPA if I get one from the state?
No. The liability protection at the federal level comes via statute and not via contractual agreement. The federal brownfields statute defers jurisdiction of such sites to the state so that, in effect, the brownfields agreement is the agreement that governs the liability from the state and federal level. Should a site be of interest to the federal government (e.g., they have spent emergency response funds at the site in the past) the program would consult with the U.S. EPA on the site's eligibility for the brownfields program. Unless the site is headed for the National Priorities list, it is a likely candidate for the state brownfields program.
12. How can my local government apply for a brownfields grant?
This grant program is administered by the U.S. EPA and information is passed through the EPA brownfields web page. The NC Brownfields Program has links and announcements as well. Interested North Carolina local governments or councils of government can talk to us or to Michael Norman at the U.S. EPA Region 4 office in Atlanta (404-562-8792, Norman.Michael@epamail.epa.gov).
13. Can individual developers apply for federal brownfields grants?
Only local governments, councils of governments, and in some cases community development corporations can apply for grants. For the criteria please refer to the U.S. EPA's Brownfields Grant Application Guidance which can be found on EPA's brownfields web site.
14. I caused or contributed to the contamination at a brownfields site. How can I take part in this process?
If you caused or contributed, you may not obtain a brownfields agreement. But the program stands ready to help a prospective developer who desires to buy your brownfields site so that the property can transfer and the asset can be sold (so long as the property is abandoned, idled or underused and the transfer is not a real estate transfer for the purposes of continued operation of an already operating facility). Also, while this might facilitate the sale of this asset, it does not legally alleviate your past or future site liability. The brownfields program is not the program who will be making that determination of future liability for responsible parties. The program of cleanup jurisdiction will remain in that role regarding any responsible parties.
15. I already own the site but did not operate it or cause or contribute to the contamination. I may wish to redevelop the site or sell to someone who wants to redevelop. How can I take part in this process?
A prospective developer is defined in the statute as an entity who desires to buy or sell for the purposes of redeveloping the property and did not cause or contribute to the contamination. Note that this takes into account sellers as well as buyers. Policy on this is covered under Issue 1 of the Program's Guidance entitled Brownfields Program Guidelines and Issue Resolutions.
16. Are there any sites that are excluded by their nature from getting a brownfields agreement?
Two types of sites are excluded from obtaining a brownfields agreement. The first is National Priorities List sites. These are sites on the federal Superfund program's worst sites list. There are only 45 of these sites in North Carolina. The second type of excluded sites is underground petroleum storage tanks sites that are subject to the Underground Storage Tank Trust Fund, and which are excluded only if that's the only type of contaminant on the site. Mixed contamination sites that include UST contamination with contamination from another source are still eligible for brownfields agreements (as are sites contaminated by releases from aboveground petroleum tanks). If you have questions regarding this point you may refer to Issue 8 under the Brownfields Program Guidelines and Issue Resolutions.
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Brownfields Program • Mail Service Center 1646, Raleigh, North Carolina 27699-1646 • (919) 707-8383