November/December 2009 Midwest Real Estate News
Large parcels of perfectly located but abandoned Brownfields sites are finally being re-developed after long-time industrial uses, thanks to forward-thinking and careful financial arrangements available to property owners throughout the Midwest.
One example of this trend involves three sites situated close to each other along the Mississippi River at St. Louis where nearly 170 acres of prime property ideally situated near interstate highways are being brought back to life because of the transfer of all environmental risks.
The three sites are the National Lead site of 80 acres, Carondelet Coke site of 54 acres and the Monsanto/Solutia Queeny chemical plant site of 33 acres.
As our society better understands the importance of safeguarding our total sustainable environment, and with property owners and developers being squeezed in a tight economy, the concept of environmental risk transfer is becoming increasingly important, according to Stacy Hastie, chairman and chief executive officer of Environmental Operations, Inc., based in St. Louis and with offices in Illinois and Indiana.
Owner, developer and community benefit. “Environmental risk transfer means that a separate, third party accepts legal and contractual liability, normally at a guaranteed cost, and normally to include a requirement that all surprises are handled, even if that should be years in the future,” Hastie says.
“The benefit is that the polluted site regains economic vitality, becoming both marketable and transferable,” Hastie adds, “and everyone benefits when the property goes back on the tax rolls. Remediation and development programs can be integrated with each other in the re-development planning process,” Hastie says. “We do it every day, with large and small properties.” Many investors, property owners and bankers are surprised at how the environmental remediation industry has become a mature industry, Hastie says.
The industry now offers many workable and predictable techniques and systems or processes to resolve pollution problems than were available just a few years ago.
Explore the new options. “Owners and investors who explore the options available today rather than ignoring opportunities involving polluted properties normally have a pleasant surprise,” Hastie said.
“We tell investors not to run from Brownfields or polluted sites,” Hastie said, “because of the rewards that can come with location, location, location.” Among examples of properties being re-developed in St. Louis is the prime Carondelet Coke site next to the River Des Peres at the Mississippi River. The site had been used by several different companies for many different businesses and processes. The Carondelet Coke site was developed for industry a century ago, long before anyone understood the importance of safeguarding our environment.
Depending on the specific industrial process, even the best and the most caring owners and managers in the early 1900s weren’t as concerned about pollution as are people today, according to Hastie.
For property owners and developers, the most critical challenge in an environmental remediation project is to predict accurately the various types, location, depth and quantity of the various pollutants or chemicals before beginning the work; then to accurately budget the cost and the timeline for each detail of the remediation.
Typically, once clean-up work begins, the work must continue until all the pollution is treated or removed from the property and the re-development can begin. Today’s technology allows straightforward cleanup of most polluted sites, Hastie says.
The real challenge. “The challenge isn’t what we know, but rather what we don’t know, and that is why environmental risk transfer is important,” Hastie adds.
Environmental Operations has a range of tools and techniques that, when used together, allow the property owner or developer to eliminate guesswork and risk, and move both to a third party, safeguarding themselves against multi-million dollar surprises.
The benefits of environmental risk transfer include guaranteed fixed-cost solutions backed by financial assets, mitigation of the risk of all possible future costs, corporate indemnification, direct assumption of compliance requirements from all regulatory agencies and total transfer of long-term environmental liabilities with an immediate and corresponding positive impact on the balance sheet.
The transformation of abandoned, contaminated properties also benefits the community by attracting new investment, creating new jobs, strengthening the tax base and providing a cleaner, healthier environment.
Specific examples Hastie cites includes the National Lead site near the Mississippi River in Lemay, Mo., which, because of environmental risk transfer now is being redeveloped into a large employment center estimated to have a total value of more than $400 million.
And, in Alton, Ill., across the Mississippi River from St. Louis, a 153-acre glass manufacturing plant has been remediated, modern infrastructure added and jobs are moving back onto the property. Estimated value of the redevelopment upon completion is in the range of $100 million.
Hastie’s largest project in terms of geography is a 550-acre site near St. Louis Lambert International Airport where St. Louis County challenged him to transfer environmental risk to private sources and to assure a clean site for the new NorthPark commerce and industrial center. Portions of the large site had served, over the last two centuries, as residential, as industrial and as commercial areas — and some of the site had been used in all three ways.
Estimated total value of the redeveloped NorthPark area, when completed, is to exceed $380 million.
Hastie is convinced, as are many observers, that environmental risk transfer will become increasingly important to Midwest property owners and developers as communities become increasingly concerned about their environment.