MODULE 1C – Brownfields Reuse

Jirina Bergatt Jackson

This project has been funded with support from the European Commission. This publication [communication] reflects the views only of the author, and the Commission cannot be held responsible for any use which may be made of the

information contained therein.

Presentation content

• Problem holders• Reuse barriers and drivers• Reuse potential• Market reaction• Public intervention• Stakeholders• Partnerships, teamwork and leadership

• BF are not an industrial issue, but mainly a social, an economic and a spatial one.

• BF remediation is a multidisciplinary subject, usually with no defined overall public responsibility for its solution.

• In the CZ several attempts were tried to achieve appropriate brownfield reuse coordination at the level of sectoral interests, but so far they all got nowhere.

• At LA offices there are planning and development departments, but none of them usually has an overall responsibility for the local brownfield solutions.

Brownfield reuse is sitting in-between chairs

Communities – main problem holders• Brownfields are a broad issue, but their main impact is on the local

communities level. But for them it is not too easy to deal with the issue.• Legislation is in hands of National and European parliaments.

• State agencies and SF programs have their own objectives.

• Financing is controlled by private or public institutions.

• Regions may have different priorities.

• Land and investment decision are in hands of private owners.

• Communities knowledge how to deal with the issue is limited.

INCREASING COMMUNITY UNDERSTANDING OF BROWNFIELD REUSE PRINCIPLES IS ONE OF THE MAIN PATHS TO SUCCESFUL

BROWNFIELDS REGENERATION

What land owners do about brownfields?• Active brownfields owners attitudes

• Maximize their return on their investment/ asset• Mitigate their potential liabilities• Work to realize the site reuse potential• Form partnerships to realize the location reuse and development potential

• Passive brownfields owners attitudes• Dead beetle position

• Land/opportunity speculation• Cash or know-how limitation• Limitation of ability to act

• Unknown owners – delays in the reuse processes

OWNERS NEED TO BE ASSISTED TO UNDERSTAND THE REAL REUSE POTENTIAL OF THEIR SITES

Barriers to brownfield regeneration• Superfluous to market needs• Ownership impediments• Unsuitable land use• Effect of surrounding brownfields• Assumed environmental issues • Owners and investors lack of knowhow• Developer and consultants lack of knowhow• Lack of knowhow of local authorities and institutions • Insufficient finance

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Drivers for successful regeneration

• Perspective location• Bankable project• Flexible land use• Broad partnerships and skills of main players• Consolidated or „consolidatable“ ownership• Elimination of private capital risks (some sort of public intervention)

• Suitable strategic goals, priorities and measures• Suitable programs focused onto the essence of the issue• Fiscal inducements or public intervention measures• Public acceptance

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Brownfields reuse potential• Brownfields reuse is affected by:

• Location and Market absorption• Development barriers• Volume/ Size/ Time • Private interests and motivation• Promoters experience• A bankable/sustainable reuse projects• Program or grant availability

NOT ALL BROWNFIELDS HAVE THE SAME REUSE POTENTIAL• Many brownfields in commercial locations of thriving towns may not present a

problem, whereas a single brownfield in a non thriving community may present a serious issue.

NOT ALL COMMUNITIES HAVE THE SAME CHANCE FOR REUSE OF THEIR BROWNFIELDS, LARGE % OF BROWNFIELDS ARE SUPPERFLUOUS TO

MARKET

Which brownfield to regenerate

• When starting with brownfield reuse support a brownfield should be chosen, which is relatively simple one to regenerate and can contain new meaningful activities, which contribute to public domain (regardless to who owns it)

• Reasons for brownfield regeneration can vary:• Economic utiliarization of the site (good location)• Environmental (risky contamination)• Social (unsustainable social situation, which needs intervention) • Program incentives (there exists, or in near future would exist a suitable financial source)

• But for what ever reason the brownfield is regenerated, the regeneration project has to meet the following criteria:• Clear and consolidable site ownership• Fast and helpful approval process• Experienced and able developer• Secured financing • Support of public

Motivation for brownfield reuseMarked solution: profit Maximising the real estate

value Maximising development

profits No public finance involved

Market solution: with public intervention Maximising real estate values Maximising public values Ration of public private

finance 1:5 - 1:10 This solution works only on a

rising market on „B“ type brownfields

Socially motivated solution Solves broader public benefits values Can address integrated regeneration Values also other than monetary

values Ration of public to private finance

1:1 - 1:4 This solution works, where no other

economic solution can be applied It needs broad partnerships and public

support and participationMitigatory solution Removes risks to public health or

property Ratio mostly only 0 but can be 1:1 Works where nothing else can work

Development scenarios for brownfield regeneration

• CABERNET project model of the A, B, C classification

• Economic and demographic trends

• Location in a community• Volume of brownfields in

a community• Yearly development

increment• Volume of brownfield

yearly uptake• Volume of available

Greenfields

3

Four categories of brownfield sites

A Market will solve it independently

• Only in best locations• Good market conditions• Private sector pays all costs

B Market will solve it once various barriers are identified or removed

• In good locations• When market is up.• Ratio of public leverage to private finance is: 1:5 to 1:10 and more

C Site has compelling social and/or environmental values beyond its real estate market value

• Ratio of public leverage to private finance is: 1:1-1:4• Not so much depended on the market

D Site is an active health/environmental hazard with no development value

• If no polluter or a perpetrator is found, public usually pays it all

CABERNET brownfields classification A,B,C,(D)

Community classification model - I., II., III.

Indicators for a community type I. Indicators for a community type II. Indicators for a community type III.

It is a part of metropolitan area It is not part of any metropolitan area It is removed from metropolitan area

It is located on EU infrastructure It is located on main nat. infrastructure It is located away from nat. infrastructure

Has positive demographic trends Has stagnating demographic trends Has negative demographic trends

Has highly educated population Has a sufficiently educated population Has a lowly educated population

Has a high % of economically active population

Has a sufficient % of economically active population

Has a low level of economic active population

Has a low % of unemployment Has a medium levels of unemployment Has a high % of unemployment

Has an increasing municipal income Has a stagnating municipal income Has a dropping municipal income

Has positive growth trends Has not very positive growth trends Has failing growth trends

Has a strong cultural, sporting, tourism or other values

Has sufficient cultural, sporting, tourism or other values

Doesn't have sufficient cultural, sporting, tourism or other values

Is an important governance and administrative centre

It is regional governance and administrative centre

It is not a regional governance and an administrative centre

It is a centre for education, culture and research

It has a regional centre for education and culture

It is not a regional educational and a culture centre

It has a positive urban land use recycling policy

It has a not very focused urban land use policy

Has a weak cultural, sporting, tourism or other values

Location of a brownfield in a community

+ -What indicates a brownfield development

potential?• Type of community (I.)• Location in community

(I.,II.)• High yearly development

increment • Positive population growth• Skilled population• Low unemployment• High number of business

operations• High tax generation/head

of population• High number of real estate

transaction• High community

motivation

• Type of community (II.,III.)• Location in community

(II.,III.)• Low yearly development

increment• Depopulation• Aging population• Unskilled population• High unemployment• Low number of business

operations• Low tax generation/head of

population• Low number of real estate

transaction• Low community motivation

Brownfields reuse optionsTemporary uses:OUTCOME: PROTECTS VALUE UNTIL NEW USE FOUND

Re-naturalizationOUTCOME: RETURNED TO NATURE

Reclamation:• Demolition• Remediation• Restoration• Possible change of use• Operation

OUTCOME: AS EXISTING

Redevelopment:• Demolition• Remediation• Restoration • Reconstruction• Change of use • Construction• Revitalization• Operation

OUTCOME: NEW FACILITY

How market reacts to brownfields• Real estate market usually can not deal with the risks related to reuse of

the „B“ and „C “category of brownfields. When the market is low, even the „A“ type brownfields reuse may be difficult for a time. This is why brownfield reuse needs some sort of public intervention in a form of:• Consulting• Favourable land use and fast approval processes• Project preparation and partnership formulation finance (can be a loan)• Covering the profit gap in B type developments

• Where the risks are really high (large amount of brownfields, • high unemployment, helpless social situation), in such situations it is • usually the public sector, who has to start to deal with these brownfields, • start up provide finance and approach the issue in an integrated manner.

Market effect onto brownfields

How to increase the value of a brownfield

Public intervention into brownfields• Public intervention is needed, when the market can not cope with

brownfields reuse risks. Public intervention can be provided in different forms. Investment intervention is useful, but not as much useful as may be various forms of the non-monetary intervention such as:

• Development partnership fomation support• Active, enlightened and well informed and helpful local administration• Suitable legal and fiscal framework and sufficient tools• Suitable institutional formats• Know-how transfer and methodical support

• Only a financial intervention, without any suppor of the other forms of public intervention can often miss the poit.

AIM OF PUBLIC INTERVENTION: MAKE „A“ categ. BROWNFIELDS FROM THE „B“categ. BROWNFIELDS

The value of stakeholders input• Brings in a different point of view• Brings in different skills and experiences• Brings in users reality• Enriches solutions with new ideas• Can introduce new uses• Represents the community and users interests• Improves an overall acceptance of a final solution • Helps to market the solution to „their“ section of

community

BUILDING UP OF A SYNERGY WHERE 1+1= 3

Levels where stakeholders matters

Stakeholders on personal level• Owners, individual consultants, specific

NGOs, individual citizens, individual administrators, project promoters

Stakeholders on local level• Owners, investors, NGOs, local authorities,

regulators, financing institutions, technical and real estate consultants, citizens

Stakeholders on regional level• Regional authorities, regional development

agencies, regional institutions, regional statutory regulators, regional investors, public

Stakeholders on national level• Parliament, government,

ministries, national regulators, national public and private institutions, national finance institutions, national investors

Stakeholders on EU and Global level• EU commission, parliament,

departments, EU and global finance institutions, global investors global owners

Which consultants are involved?

• Brownfields reuse projects are more complex, time consuming, expensive to finance and are also more risky than are a new built ones. Achieving an appropriate site solution requires an involvement of variety of consultants.• Real estate consultants• Environmental and remediation consultants• Cost consultants• Project managers• Design consultants• Technical consultants• PR consultants• Community and employment consultants, etc.

BROWNFIELDS REMEDIATION REQURIES SOPHISTICATED MULTIDISCIPLINARY AND MULTICRITERIA SOLUTIONS

Cross-professional solutions• The team work, creativity and stakeholders participation are

essential to drive the success of brownfields projects. Cross-professional working and sharing of experiences, which is so necessary for brownfield redevelopment also brings benefits to development of the individual professional understanding. It also brings benefits to projects, as it makes them:

• NOVEL, EXITING, EQUITABLE, USABLE, BUILDABLE, FINANCEABLE

• IT ALSO BRINGS THE CROSS-FERTILARIZATION OF IDEAS, DEVELOPMENT OF CROSS-PROFESSIONAL UNDERSTANDING AND HEPLS INDIVIDUALS TO DEVELOP SECOND PROFESSION SKILLS

Leadership and institutional set ups• Brownfield regeneration is a long term process, which may span across several

local elections. This apples especially for regeneration of the „B“ and „C“ types of brownfields in not too much prime locations. Here the local administration commitment and leadership to brownfield regeneration is of the upmost and decisive importance for a successful development.

• To retain the executive interest and support during the long regeneration period, a suitable structures needs to be set up. For an example, the Uherské Hradiště regeneration executive team was for more than 10 year of the development period headed by the town mayor. This has given the town statutory organ the full knowledge what was going on with the site and mate the technical and financial decision much easier to procure. It has also increased the trust between the elected members and the officers.

OUTCOME: THE NATIONAL REGENERATION AWARD FOR THE SITE

Conclusions – brownfield reuse

• Brownfields are land use, planning and real estate issue, which affects entire society and needs broad and integrated solutions.

• Not all brownfields can be developed or reused or have the same reuse potential

• Development scenarios for brownfield regeneration should aim for 1+1=3 and reasons for brownfields regeneration may to vary

• Various classification and indicators help to understand and communicate the state of the brownfield issue.

• Market is very mean to brownfield projects and their promoters need to understand such market effects.

• Stakehoders´ involvement, leadeship and suitable institutional setups are prerequisite to successful brownfield reuse.

Thank you for your attention

http://browntrans.vsb.cz

„This project has been funded with support from the European Commission. This publication [communication] reflects the views only of the author, and the Commission cannot be held responsible for any use which may be made of the

information contained therein.“