Brownfields: bounty from a $7-billion blue box
(The Globe and Mail, February 11, 2003)

Canada could obtain up to $7-billion in public benefits – as well as strike a blow against urban sprawl – if we grasp the opportunity to clean up the contaminated “brownfield” properties that litter our inner cities.

Canada has as many as 30,000 such abandoned or underused urban properties that have been contaminated by previous use: decommissioned oil refineries, former railway yards, old waterfront properties, abandoned warehouses, dry cleaners and gasoline stations, and other lands where toxic substances have been used or stored.

The National Round Table on the Environment and the Economy has just released a new strategy to liberate these properties from land use limbo. If we do it right, brownfield redevelopment can expand the economy, improve the environment, and help our beleaguered cities. And developers and users of the land aren’t the only ones who will benefit.

Brownfield urban redevelopment has the potential to generate as much as $7-billion a year for Canada. Property values in areas next to reclaimed sites would rise; Canada’s cash-starved municipalities would gain substantial new property taxes and development charges; all levels of government would gain revenues. Public benefits also include reduced health risks, less commuting and resultant air pollution, and preservation of agricultural land by reducing urban sprawl.

But revitalizing brownfields such as the CN Rail site on Hamilton’s harbour-front, Toronto’s eastern portlands or the Hochelaga-Maisonneuve district in Montreal will require removing the legal, financial and regulatory hurdles that discourage brownfield redevelopment. Experience shows that with imaginative incentives and partnerships, brownfields can be returned to productive use. But despite isolated instances of successful brownfield redevelopment, they still represent a largely untapped opportunity.

Brownfield sites, often fully serviced and located along transportation corridors, are potentially valuable assets imprisoned in underuse because the costs and risks of cleanup paralyze current owners, developers, lenders, insurers, municipal governments and future owners. Barriers include “joint and several” regulatory and civil liability rules. These put everyone associated with a project at risk of being held individually responsible for all cleanup costs and damages, with no closure on that liability. It’s a legal situation that discourages up-front financing for land assessment and cleanup.

The Round Table suggests ways around many of the obstacles:

• Strategic public investment – tax incentives, loans, grants and mortgage guarantees – could overcome market reluctance to provide capital to finance the early stages of brownfield redevelopment. It can work. Since 1993, the U.S. Environmental Protection Agency has granted more than $162-million (U.S.) to communities working to redevelop brownfields, seed capital that has leveraged private sector investment of $2.9-billion, and created 11,000 jobs;
• Criteria should be developed for removing federal and provincial Crown liens (arising from tax arrears) that encumber many brownfield sites;
• Provincial governments should establish site-specific risk assessment protocols and authorize custom-designed cleanups rather than applying generic cleanup criteria. Municipalities should streamline their approval processes;
• Provincial regulatory agencies should approve successfully completed clean-ups. The approval would start the clock on a termination date for civil and regulatory liability claims against all parties involved with the site – past, present and future. To protect innocent people from harm that may later come to light, the redeveloper should be required to buy private insurance for as long as 15 years following the termination date, and pay into a special long-term insurance fund to deal with subsequent claims. This would limit redevelopment players’ liability by replacing it with insurance.
• Owners of brownfield sites should be allowed to transfer liability, along with the land, to buyers who lodge sufficient financial assurance to finish the cleanup. Contractual liability transfer would overcome owners’ reluctance to sell brownfield properties to redevelopers.

Redeveloping brownfields makes for more compact, efficient urban growth. A recent U.S. study found that redeveloping one hectare of brownfields means that 4.5 hectares of “greenfields” – croplands, wood lots, park land – would not be required for the same purpose. Compact growth means cleaner air; it gives cities a competitive advantage by reducing the cost of infrastructure.

Ottawa could kick-start the process by signalling support for the Round Table strategy in its upcoming budget. But to reap the full potential benefits, all levels of government, and the private sector, must join in. Recycling contaminated urban lands – it’s like a blue box for real estate.

David J. McGuinty is President and CEO of the National Round Table on the Environment and the Economy.

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