Basics of Brownfield Investing

The taboo and risk of purchasing environmentally degraded property is declining; all thanks to city, state and federal programs. These programs may not only allow for limiting financial liability but also funding opportunities during the purchase and development phases. EPA defines brownfield as “abandoned, idled, or under-used industrial or commercial facilities where expansion or redevelopment is complicated by real or perceived environmental contamination.” These properties hold a high potential for redevelopment since the value usually has been significantly harmed by the brownfield label, making the purchase price favorable.

Houston, Dallas, Fort Worth, Austin and San Antonio have all established Brownfield Redevelopment Programs. The aforementioned cities use grants from TCEQ and the EPA to fund redevelopment of brownfield properties. Financial incentives can include: (1) free environmental site assessments, Phase I & II, (2) tax incentives, federal and state, (3) grants for cleanup, and (4) decreased legal liability. The Texas Railroad Commission also has funding from EPA to remediate brownfield sites contaminated by oil and gas E&P activities.

Purchasing a brownfield property is not for every real estate investor or business owner. There are several considerations to make before taking on such a project. The most important being the availability of resources. Some properties may only have the perception of environmental problems or be a small area, while others constitute large, several year commitments before completion of clean up. Be sure to properly assess your time available for commitment to the project, and funding resources, both your own and governmental. This will allow you to investigate if brownfield investing really is the best avenue to take.

Having an attorney well-informed in both real estate, environmental law, and the governmental processes involved is essential when dealing with brownfield properties. Your lawyer’s knowledge will allow for smoother dealings with several agencies, clean up contractors, etc.; as well as ensure that all possible funding resources are being utilized. Another benefit to brownfield remediation is public relations. During the course of remediation, press releases should be common to advertise the milestones that have been accomplished thus far. Be sure to advertise to the community about your success at the completion of the project as well.

Posted by Jess Bailey at 4/29/2010 9:29 AM
Categories: Liability, Real Estate, Investing, Brownfield
Tags: Real Estate Environmental Law Liability Investing Brownfield
 

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