When LTV declared bankruptcy, the issue of brownfields moved to the forefront as people speculated on the site’s future.
Decades of heavy industry have tainted the soil and water at the LTV site and many others like it throughout Northeast Ohio, leaving government officials and potential developers of contaminated locations looking for solutions.
A brownfield is any site that has contamination either above or below ground. They range from sites with a building on them to vacant lots to an overgrown parking lot.
“Chance are these are properties that are in wonderful locations from a transportation standpoint,” says Joe Biaglow, project manager and senior hydrogeologist with Tetra Tech EM Inc., an environmental consulting firm. “A lot of them are strategically located next to water, rail lines or highways. Many are in the inner city and many are near a river.”
Brownfields may have a transportation advantage, but the environmental liabilities and decaying neighborhoods around the sites typically offset it.
“It’s hard to convince someone to build a new plant in a dilapidated area,” says Biaglow. “Somebody has to be willing to take the risk (that) business will flourish in an area not too many people are interested in. It’s difficult to convince workers to go in to some of these areas.”
With government assistance, many of the brownfield properties with the highest potential have already been redeveloped, leaving the sites with higher risk factors or higher costs to redevelop.
How much of the environmental problem a developer or business inherits depends on each situation.
“You might inherit some of it, negotiate on some of it if the site is owned by a viable ownership group, or the current ownership might be responsible for all of it,” says Biaglow. “In other cases, innocent buyer laws protect a buyer from contamination they didn’t know about.
“Environmental liabilities are a complicated matter. Those liabilities are often just factored into the purchase price.”
LTV is a perfect example. The entire company sold for approximately $125 million, with another $200 million in environmental liabilities being transferred to the new owner.
Ohio established a program in the mid ’90s to encourage businesses to tackle environmental cleanup themselves without Ohio EPA oversight. If certain guidelines were met, which varied depending on the planned site use, the state would issue a covenant not to sue.
Unfortunately, that didn’t prevent the U.S. EPA from suing, meaning a company might invest in a cleanup and get approval from the state, only to be sued by the federal government for additional cleanup.
“The Ohio program was viewed as not too successful,” says Biaglow. “Liability is a scary thing. If you spent a few hundred thousand or even a million dollars on a cleanup, you don’t want to have to go back in and rip something up. If the government can close the door of liability, that’s a huge component to getting these sites cleaned up.”
Even if you’re fortunate enough to get tax abatements from the city and possibly some form of assistance from the state, the costs to clean up a brownfield site can make redevelopment prohibitive, depending on the level of contamination and what the contaminants are. A large part of the cost comes from just figuring out what the problem is.
“There are a lot of consultants that have made a living off of this,” says Biaglow. “Just to do a Phase I study can cost $5,000 to $15,000, while a Phase II, where you are actually doing sampling to identify contaminants can cost hundreds of thousands of dollars and can even top a million. And this initial characterization doesn’t include any cleanup, which can be costly also.
“The property might not only have a zero value, it might have a negative value because of the money you would have to put into it.”
President Bush signed a bill that attempts to stimulate activity in brownfield redevelopment, but Biaglow says more help is needed. Because many of these sites are in the inner city, interest is often low. But the next wave of brownfields might be in your own suburb.
“We’re going to be looking at the new brownfields not in Cleveland but in Walton Hills or Parma or Avon Lake,” he says. “The brownfield issue is not going to be a strictly inner city type of problem in the future. I only hope there are more cooperative efforts between the federal, state and local government as well as industry and developers — because they’re the ones putting up the money.”