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LANDS OF LOST OPPORTUNITY: WHAT CAN BE

DONE TO SPUR REDEVELOPMENT AT AMERICA’S BROWNFIELD SITES?

HEARING

BEFORE THE

SUBCOMMITTEE ON FEDERALISM

AND THE CENSUS

OF THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

APRIL 5, 2005

Serial No. 109–63

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

TOM DAVIS, Virginia, Chairman

CHRISTOPHER SHAYS, Connecticut

DAN BURTON, Indiana

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

GIL GUTKNECHT, Minnesota

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

CANDICE S. MILLER, Michigan

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

GINNY BROWN-WAITE, Florida

JON C. PORTER, Nevada

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

CHARLES W. DENT, Pennsylvania

VIRGINIA FOXX, North Carolina

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. DUTCH RUPPERSBERGER, Maryland

BRIAN HIGGINS, New York

ELEANOR HOLMES NORTON, District of

Columbia

———

BERNARD SANDERS, Vermont

(Independent)

MELISSA WOJCIAK, Staff Director

DAVID MARIN, Deputy Staff Director/Communications Director

ROB BORDEN, Parliamentarian

TERESA AUSTIN, Chief Clerk

PHIL BARNETT, Minority Chief of Staff/Chief Counsel

SUBCOMMITTEE ON FEDERALISM AND THE CENSUS

MICHAEL R. TURNER, Ohio, Chairman

CHARLES W. DENT, Pennsylvania

CHRISTOPHER SHAYS, Connecticut

VIRGINIA FOXX, North Carolina

——— ———

WM. LACY CLAY, Missouri

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

EX OFFICIO

TOM DAVIS, Virginia HENRY A. WAXMAN, California

JOHN CUADERES, Staff Director

SHANNON WEINBERG, Counsel

JULIANA FRENCH, Clerk

ADAM BORDES, Minority Professional Staff Member

(III)

C O N T E N T S

Page

Hearing held on April 5, 2005 ................................................................................ 1

Statement of:

Dunne, Thomas, Deputy Assistant Administrator in the Office of Solid

Waste and Emergency Response, Environmental Protection Agency;

and John Stephenson, Director, Natural Resources and Environment,

Government Accountability Office ............................................................... 6

Dunne, Thomas ......................................................................................... 6

Stephenson, John ...................................................................................... 20

Plusquellic, Don, president, U.S. Conference of Mayors; James E. Maurin,

chairman, International Council of Shopping Centers, board member,

the Real Estate Roundtable; Jonathan Philips, senior director, Cherokee Investment Partners, LLC; and Douglas L. Steidl, president, the

American Institute of Architects ................................................................. 46

Maurin, James E. ...................................................................................... 59

Philips, Jonathan ...................................................................................... 81

Plusquellic, Don ......................................................................................... 46

Steidl, Douglas L. ...................................................................................... 119

Letters, statements, etc., submitted for the record by:

Dent, Hon. Charles W., a Representative in Congress from the State

of Pennsylvania, prepared statement of ...................................................... 141

Dunne, Thomas, Deputy Assistant Administrator in the Office of Solid

Waste and Emergency Response, Environmental Protection Agency,

prepared statement of ................................................................................... 8

Kanjorski, Hon. Paul E., a Representative in Congress from the State

of Pennsylvania, prepared statement of ...................................................... 144

Maurin, James E., chairman, International Council of Shopping Centers,

board member, the Real Estate Roundtable, prepared statement of ....... 62

Philips, Jonathan, senior director, Cherokee Investment Partners, LLC,

prepared statement of ................................................................................... 85

Plusquellic, Don, president, U.S. Conference of Mayors, prepared statement of ........................................................................................................... 50

Steidl, Douglas L., president, the American Institute of Architects, prepared statement of ........................................................................................ 121

Stephenson, John, Director, Natural Resources and Environment, Government Accountability Office, prepared statement of .............................. 22

Turner, Hon. Michael R., a Representative in Congress from the State

of Ohio, prepared statement of .................................................................... 4

(1)

LANDS OF LOST OPPORTUNITY: WHAT CAN

BE DONE TO SPUR REDEVELOPMENT AT

AMERICA’S BROWNFIELD SITES?

TUESDAY, APRIL 5, 2005

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON FEDERALISM AND THE CENSUS,

COMMITTEE ON GOVERNMENT REFORM,

Washington, DC.

The subcommittee met, pursuant to notice, at 10:17 a.m., in room

2154, Rayburn House Office Building, Hon. Michael R. Turner

(chairman of the subcommittee) presiding.

Present: Representatives Turner and Foxx.

Staff present: John Cuaderes, staff director; Shannon Weinberg,

counsel; Juliana French, clerk; Stacy Barton, Representative Turner/chief of staff; Neil Siefring, Representative Turner/legislative assistant; Adam Bordes, minority professional staff member; and

Cecelia Morton, minority office manager.

Mr. TURNER. Good morning. A quorum being present, this hearing of the Subcommittee on federalism and the Census will come

to order.

Welcome to the Subcommittee on Federalism and the Census’s

oversight hearing entitled, ‘‘Lands of Lost Opportunity: What Can

Be Done to Spur Redevelopment at America’s Brownfield Sites?’’

In every community across this Nation there are abandoned parcels of property marring the faces of our cities and towns. Behind

rusted chain link fences are broken windows and crumbling buildings. Beneath the surface there are substances contaminating the

local environment, robbing the communities in which they exist of

new jobs and other economic opportunities.

There are an estimated 450,000 to 1 million of those parcels,

known as brownfields, across our Nation, contributing to community blight and thus lowering property values and decreasing tax

revenues. These sites lay abandoned and unused due to Federal environmental laws and regulations that encourage abandonment of

contaminated property by creating disincentives for cleanup and redevelopment.

Current Federal law triggers liability for remediation of contaminated properties once landowners have knowledge of the contamination. If redevelopment begins and contamination is discovered,

the owner may be liable for remediation costs. If an owner abandons the property without disturbing the contamination, remediation costs may be avoided. The net effect of these laws and loopholes is the encouragement of abandoning brownfields.

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If we are to achieve our goal of restoring these properties to productive use and redeveloping them into centers of economic and

community vitality, we must craft a Federal response to a federally

created problem. We cannot leave brownfields and abandoned factories as monuments to their once productive past. The redevelopment of brownfields will create jobs, new living and shopping options, and spur the improvement or development of transportation

and infrastructure.

If we make redevelopment of brownfields more attractive, we can

also help reduce urban sprawl and save green space. In my home

town of the city of Dayton, over 50 acres of land surrounding our

downtown are brownfields that would attract jobs and spur economic expansion—if the city had assistance in addressing the environmental contamination from past use of the parcels.

In 2002, the President signed the Small Business Liability Relief

and Brownfields Revitalization Act of 2001. While the law codified

and secured independent appropriations for the EPA’s brownfields

programs, the shining accomplishment of the act was providing

some relief from the daunting amount of potential liability for acquiring and attempting to redevelop a brownfield site. Specifically,

the act limits liability for owners of land that is contaminated by

adjoining property as well as for prospective purchasers of known

contaminated property.

The act also clarified the CERCLA ‘‘innocent landowner’’ defense

and created additional liability relief by forbidding the Federal

Government from intervening at sites being cleaned up under a

State program except in certain circumstances.

These are strong first steps in encouraging brownfield redevelopment, and the subcommittee looks forward to hearing from the

EPA on the effect of the program and the new liability relief and

what it has achieved in this field.

We also look forward to hearing from the Government Accountability Office. Last year, I, along with Chairman Tom Davis, requested that GAO study the status of brownfield redevelopment

across the Nation. GAO’s report shows that stakeholders are generally positive about EPA’s brownfields program but that additional incentives, such as a tax credit, are needed to spur

brownfield redevelopment and really make a difference in communities across our country.

Last year, I introduced H.R. 4480, the Brownfields Revitalization

Act of 2004, to address these two greatest impediments to redevelopment—liability and redevelopment costs. My bill proposed a tax

credit of up to 50 percent for qualified remediation expenses of

brownfields in certain poverty rated areas. Specifically, credits are

available for redevelopment projects where a local government entity includes a census tract with poverty in excess of 20 percent,

although the project need not be located within that tract.

H.R. 4480 also provides additional liability relief by allowing potential responsible parties that contribute at least 25 percent of the

remediation costs to receive liability release for 100 percent of the

approved remediation plan and demolition costs.

I plan to introduce this bill in the near future with a few key improvements. The revised bill will clarify the liability relief provisions, making clear that the relief is limited to the approved remeVerDate 11-MAY-2000 09:59 Oct 19, 2005 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 D:\DOCS\23259.TXT HGOVREF1 PsN: HGOVREF1
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diation plan, while liability for other types of claims, such as liability to adjacent property owners or for outstanding health complaints, is unaffected. The bill also provides that an environmental

remediation plan be approved by the State environmental agency.

The EPA’s brownfields program has assisted a number of communities in brownfields assessment and cleanup. Stakeholders are

appreciative of EPA’s brownfields program, especially with the easing of the regulatory regime. However, when choosing between

brownfields, grayfields and greenfields for development projects, it

still comes down to a cost-benefit analysis. Unless we significantly

address the cost of redevelopment and cleanup of these sites, the

EPA’s brownfield program will continue to affect only a few thousand sites, leaving a major gap and burdening many communities

with land that cannot be redeveloped and that remain a blighting

influence.

We have two panels of witnesses before us to help us understand

the state of brownfields redevelopment efforts nationwide as well

as the impact of the EPA’s brownfields program, only 2 years into

its statutory existence. We will also hear opinions from stakeholders on their ideas for improving and implementing the EPA’s

brownfields program in order to encourage more aggressive redevelopment.

First, we will hear from Mr. Thomas Dunne, the Deputy Assistant Administrator in the Office of Solid Waste and Emergency Response at the Environmental Protection Agency. Second, we will

hear from Mr. John Stephenson, Director of the National Resources

and Environment team at the Government Accountability Office.

The second panel of witnesses consists of representatives of the

stakeholder community.

First, we will hear from the Honorable Don Plusquellic, Mayor

of Akron, OH, on behalf of the U.S. Conference of Mayors. Mayor

Plusquellic, I understand that you have a plane to catch, and I

hope that you will be able to stay for at least a little portion of the

questions and answers, but I certainly know that you will be excusing yourself and will not be able to stay for the rest of the hearing.

After Mayor Plusquellic’s testimony, we will hear from Mr.

James Maurin as chairman of the International Council of Shopping Centers and as a board member of the Real Estate Roundtable.

Rounding out our second panel, we will hear from Mr. Jonathan

Philips, senior director of Cherokee Investment Partners, and Mr.

Doug Steidl, president of the American Institute of Architects.

I look forward to the expert testimony that we have before us

today on the panel of leaders that are present. I thank everyone

for their time.

As a reminder for those who want to view this hearing, it is on

our Web cast of reform.house.gov.

[The prepared statement of Hon. Michael R. Turner follows:]

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Mr. TURNER. I now recognize Ms. Foxx, if she has an opening

statement.

Ms. FOXX. Mr. Chairman, I do not have any opening statement.

Thank you.

Mr. TURNER. I appreciate you being here today.

We will now start with the witnesses. In this committee we do

swear in our witnesses. If you gentlemen would stand and raise

your right hands.

[Witnesses sworn.]

Mr. TURNER. Let the record show that all witnesses responded in

the affirmative.

We will begin our testimony with Mr. Dunne, Deputy Assistant

Administrator with the EPA.

STATEMENTS OF THOMAS DUNNE, DEPUTY ASSISTANT ADMINISTRATOR IN THE OFFICE OF SOLID WASTE AND EMERGENCY RESPONSE, ENVIRONMENTAL PROTECTION AGENCY;

AND JOHN STEPHENSON, DIRECTOR, NATURAL RESOURCES

AND ENVIRONMENT, GOVERNMENT ACCOUNTABILITY OFFICE

STATEMENT OF THOMAS DUNNE

Mr. DUNNE. Thank you, Mr. Chairman and Ms. Foxx.

I am appearing today to discuss EPA’s Brownfield program and

address the recommendations made in the Government Accountability Office’s report on brownfield redevelopment. I will summarize my statement, but I would also ask my statement be included

in the record.

More than a decade ago, EPA identified a problem facing local

communities in their efforts to develop properties that are contaminated or potentially contaminated by hazardous substances. The

private and public sector were extremely hesitant to get involved

in these sites, now known as brownfields.

Ten years ago, EPA began providing seed money through grants

to local communities to inventory and assess contamination at

brownfield properties. Congress also enacted legislation that provided tax incentives to promote private sector cleanup and development at brownfields. Over the years, EPA added grants to capitalize revolving loan funds for clean up. The Agency also provided job

training grants to promote employment opportunities in brownfield

communities.

Since EPA’s initial efforts, States, tribes, local governments, and

nonprofit organizations have begun to focus on brownfields cleanup

and development. In the year 2002, President Bush signed into law

the Small Business Liability Relief and Brownfields Revitalization

Act. This new Brownfields Law broadened the reach of EPA’s

brownfield program and provided statutory liability protection to

promote private sector participation in brownfields cleanup and development.

Under the new Brownfields Law, EPA can now award direct

cleanup grants to public sector and nonprofit property owners. The

new law also broadened the definition of what could be considered

a brownfields property. EPA can now award its brownfields grants

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for petroleum-contaminated properties, mine-scarred lands, and

sites contaminated with controlled substances.

I am pleased to report that EPA’s brownfields program has been

able to produce significant results. As of March 2005, EPA and its

grant recipients have performed more than 6,800 property assessments; and as of March 2005, brownfield grantees have leveraged

$6.6 billion in cleanup and redevelopment dollars, which has also

leveraged more than 30,000 jobs.

The public investment in brownfields has proven to be a wise investment. Studies show that for every public dollar spent on

brownfields cleanup and redevelopment, $2.50 is leveraged in private investment.

One thing is clear, that, notwithstanding all the efforts of Federal, State and local governments, we will never be able to clean

up the many hundreds of thousands of brownfield properties scattered throughout our country without the funding and know-how of

the private sector.

I would like to take a minute now to comment on the GAO report.

EPA agrees with GAO that more had to be done to develop additional measures to quantify brownfields program accomplishments.

EPA has developed a new data collection mechanism, the Property

Profile Form, to collect information from site assessment, cleanup

and revolving loan fund grantees. Further, a nationwide data collection effort is under way that will collect data from the years

2003 and 2004 grantees. We believe that this new data will enable

EPA to tie program results with property-specific activities to better gauge brownfields program progress.

EPA is also working with State and tribal officials to develop

performance measures to gauge the impact of the EPA’s funding on

the results produced by their voluntary cleanup programs. The performance measures will tie performance to the number of acres

cleaned up and made ready for reuse or anticipated reuse.

In addition, EPA agrees with GAO that more efforts are needed

to monitor revolving loan fund grants to determine why they have

been underutilized. EPA is committed to improving revolving loan

fund performance and ensuring that, if grant funds are not being

used, those grant funds will be closed out or grantees will be required to transition old loan fund grants to the new Brownfields

Law program authority. To that end, I issued a memorandum to

EPA regions in September 2004 to contact revolving loan fund

grantees and request that they transition or close out old loan

funds.

Mr. Chairman, that completes my statement. I will be pleased to

answer any questions that you and other members of the subcommittee have.

Mr. TURNER. Thank you.

[The prepared statement of Mr. Dunne follows:]

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Mr. TURNER. Mr. Stephenson.

STATEMENT OF JOHN STEPHENSON

Mr. STEPHENSON. Mr. Chairman, thank you for this opportunity

to discuss our report and recommendations on EPA’s brownfields

program. The report, as you know, was issued to you and Chairman Davis on December 2004.

Over half a million brownfield sites, such as former industrial

properties, gas stations and warehouses, sit abandoned or unused

across the country. These sites have remained undeveloped for a

number of reasons, including uncertainty about contamination, limited resources and fear of liability for cleanup costs. Cleaning up

and redeveloping these sites cannot only protect human health and

the environment but also improve local tax bases and encourage

smart growth by slowing development of open land.

While EPA has the lead Federal role in encouraging brownfields

development, other Federal agencies, State and local governments,

commercial lending institutions and real estate developers also

fund activities to help redevelop brownfields. EPA provides grants

that support efforts to assess, clean up and redevelop properties,

help create jobs through new economic development and leverage

cleanup and redevelopment funding from other sources. While the

total amount of EPA’s grant funds is small, about $400 million

since the program began, this investment is intended to leverage

more than $10 billion in investments from other sources.

In developing our report, we spoke to numerous grant recipients,

State and local government officials, real estate developers and

other stakeholders, and they all agreed that EPA’s program provides an important contribution to brownfields cleanup and redevelopment. According to them, EPA grants often provide seed

money during the initial stages of brownfields redevelopment for

activities such as identifying the extent of contamination and estimating the cleanup costs that private lenders typically will not

fund.

Stakeholders also said that EPA grants support redevelopment of

sites with complex cleanup requirements, less desirable locations or

liability issues, sites that might not be redeveloped if left to normal

market forces. In addition, State officials told us that EPA grants

have been crucial to establishing and expanding the scope of their

programs to encourage voluntary cleanup of brownfield properties.

While stakeholders generally praised the EPA’s program, we believe that the Agency could do a better job in providing to the Congress more useful information on the program’s accomplishments,

information needed to determine whether the program is in fact

achieving its goals. For example, EPA does not currently report

program results like the number of acres cleaned up or the impact

of grants to States for their voluntary cleanup programs.

Finally, stakeholders identified three options to improve or compliment EPA’s brownfield program.

First, they suggested eliminating the provision of the brownfield

act that makes landowners who purchased the brownfields property before January 2002 ineligible for grants. Stakeholders strongly believe that this clause discourages brownfields redevelopment

by limiting the number of potential grant recipients.

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Second, grant recipients and other stakeholders suggested

changes to expand the use of EPA’s revolving loan funds. As of November 2004, States had loaned out about $29 million or only

about 17 percent of the $168 million provided for this purpose. According to stakeholders, the stringent technical and administrative

requirements to establish a revolving loan fund have discouraged

its use.

Additionally, stakeholders believe that EPA could achieve greater

results by giving priority to applicants with proven administrative

expertise or to coalitions of agencies that could consolidate administrative functions. This could produce economies of scale by spreading the up-front administrative costs associated with setting up a

fund over a greater number of loans.

Third, stakeholders supported a brownfield tax credit allowing

developers to offset a portion of their Federal income tax with

cleanup expenditures. Grant recipients, developers and other

groups with brownfield expertise generally agree that such a tax

credit could attract developers to brownfield sites on a number of

national issues. I am sure you will hear more about these stakeholder ideas on your second panel.

To enhance Federal efforts to support brownfields redevelopment,

we recommended in our December 2004, report to you that EPA,

one, develop additional performance measures to gauge program

achievements; two, weigh the merits of revising the eligibility date

provisions of the brownfield act; three, monitor and determine why

revolving loan funds have been underutilized; and, four, consider

giving priority to entities with revolving loan fund expertise when

awarding these grants. And, as you have heard, EPA agreed with

our recommendations and is taking actions to implement them.

Mr. Chairman, that concludes my summary; and I will be happy

to answer questions as well.

Mr. TURNER. Thank you.

[The prepared statement of Mr. Stephenson follows:]

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Mr. TURNER. I thank both of you for being here and for the time

that you have put into this and again for EPA the effort that you

continue to put into what is an important issue for our communities. As you know, not only do brownfields represent an economic

opportunity, they are many times a blighting influence for people

who either own property near them or for families that live around

them.

What I would like to focus today in the area of questions really

are issues of economics of brownfield redevelopment. It strikes me

in reading both the GAO report and the testimony from EPA that

many of the things that we talk about in the two testimonies do

not quite hit the economics that we have in many of brownfield

sites where the cost of cleanup and demolition of buildings that are

a nuisance upon the real estate might exceed the value of the property and that the economic marketability for these properties to be

addressed and redeveloped just is not there. So I want to go

through a series of questions that really look to the economic problem and then the gap that we have in being able to address it.

My first question is really to ask that I think both of you would

agree that brownfields are a federally created problem, that the

issue of the brownfields being areas where a potentially responsible

party or a landowner has disincentives for its redevelopment, that

our current laws and regulations actually encourage abandonment

of the property; and I want to know if both of you agree with that.

Mr. STEPHENSON. Because of potential liabilities, you mean?

Mr. TURNER. Correct.

Mr. STEPHENSON. The liability requirements established in the

CERCLA and the Superfund program?

Mr. TURNER. Yes.

Mr. STEPHENSON. Those liabilities were created in fact by Federal law, yes.

Mr. DUNNE. I would agree with that.

Mr. TURNER. In situations where the costs of cleanup of the property exceed its market value and where there is no potentially responsible party that currently exists, either they have ceased operating as a business or if they are an individual corporate entity

that is no longer able to be identified as a successor entity and the

costs exceed the cleanup, would you both agree that there is no private sector incentive, there currently is no ability for the private

sector to come in and address the redevelopment of that property?

Mr. DUNNE. I would agree with that.

Mr. STEPHENSON. Yes.

Mr. TURNER. In looking at the EPA’s loan fund program—and,

first off, let me tell you that I think everyone agrees, as the GAO

report identifies, that the EPA’s programs are very important and

have assisted a number of communities. However, I do believe that,

as the GAO report identifies, there is a gap in our ability to address the need.

The loan fund itself, does recognize that the funds are going to

be returned in some way; somehow the property or project or the

individual receiving the loan is going to economically have a way

to return the funds. Could you discuss that, Mr. Dunne, for just a

moment as to how that might not be able to assist people who have

a property that isn’t going to be market viable as it is redeveloped,

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that is not going to produce the proceeds that would be able to be

applied to the loan? Has that been an impediment perhaps in some

of the loans being applied to some of the more difficult sites?

Mr. DUNNE. I don’t think it’s the repayment ability so far that

has surfaced as a problem. Banks do have bad loans that they have

to cover. I think it is in the early stages of EPA’s working on revolving loan funds that it probably wasn’t stringent enough in

terms of looking at a business plan. We are an environmental agency. We are not a banking agency. And one of the things that we

have learned and agree with GAO is that we have to look at our

criteria and take a look at organizations that have the ability to

manage the loan and also manage a Federal grant because it is a

grant. But the term revolving loan fund is significant in terms of

what it says. The money will be returned to a fund that can be

loaned out later.

So I think that it’s a good idea for us to not only tighten the criteria in terms of a business plan but make sure that the organizations that are going to be the recipients of these grants have a

great opportunity to be able to be successful at making loans so

they can have a viable revolving fund.

Mr. TURNER. Mr. Stephenson, your report addressed some of the

difficulty in the loan fund’s success.

Mr. STEPHENSON. What we heard from stakeholders were a lot

of the up-front costs associated with establishing the fund and administering the fund itself was, in fact, an impediment. You have

set up a payment schedule, an interest rate, etc. This is a relatively

new fund, so it’s not yet self-sustaining. You receive payments over

a period of time, and so there isn’t a funds per se. It’s all been

loaned out to the extent that they can loan it out. But what we

heard from stakeholders was it’s primarily that up-front expertise

you need to establish the funds itself which discourages its use.

Frankly, some developers found it easier just to go to the bank and

get a loan.

Mr. TURNER. Mr. Dunne, in your testimony you indicate that the

assessment grants that have been provided have resulted in more

than 6,800 assessments. The grant programs, the assessments, the

loan program, do you have any quantification that you can provide

that would tell how many brownfield sites have gone through an

EPA process where they have received financial assistance and

have resulted in cleaned up and viable redeveloped property?

Mr. DUNNE. Currently, as I mentioned, Mr. Chairman, we are

putting together a property profile of which I think we will have

for 2003 and 2004 fairly quantifiable information that will demonstrate the performance of the program. We recognize the fact

that there are so many brownfield sites in this country that the

number of assessments we do is fairly minute compared to the

overall number, but we also recognize the fact that we will never

be able to deal with all 450,000 to a millionsites. Some of them just

aren’t going to be viable. But we are looking for more and more

ways to quantify the positive nature of the program and the things

that are successful so that we can look for more successful ways

of providing these funds to the community so they can provide job

opportunities and other benefits.

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Mr. TURNER. As you go through the assessment process, does

your program include any incentives for PRPs, potential responsible parties, to come to the table and participate in the assessment? So many times they have knowledge that would be very important for the success of the assessment and for determining any

environmental remediation plan.

Mr. DUNNE. When you say potential responsible parties, in the

Superfund context they are not eligible for brownfields, nor should

they be in our lexicon right now. We generally want to provide the

funds and let the local entities deal with the developers and the

bankers and the other people who are involved. We don’t want to

be intrusive from EPA’s position in trying to dictate from Washington how to sort out individual problems at the local level.

Mr. TURNER. You made an important point, and that is the difference between brownfield and Superfund. Could you elaborate on

that for a moment? Because people frequently get concerned when

we talk about trying to address the brownfield issue, that we might

impact Superfund.

Mr. DUNNE. As you know, in Superfund law, if we know of responsible parties or even one party, they could be held liable for

cleaning up a whole site. Usually, contamination is much worse at

a Superfund site than it will be at a brownfield site. So I think we

are talking about a magnitude of difference that’s quite wide. And

I think it’s good that this law—brownfield’s— emanated out of the

Superfund law because we were running into the concern that

there were a number of local governments who had this property

but they wouldn’t score high enough with the properties to be put

on the national priority list. So if they are on the national priority

list now they are not eligible whatsoever for brownfields funding.

So, by and large, we are dealing with abandoned properties or you

are dealing with private property owners who have this site who—

because of the liability—do not want to let go of the site.

That has changed because of brownfields. There are people now

that are willing to come in as prospective purchasers and take this

property over and redevelop it if they assure that they are not

going to be liable like they would be under a Superfund project.

Mr. STEPHENSON. It does have to do with the seriousness of the

contamination as well, but it is important to note that it’s potential

contamination on a brownfield site. And in fact a lot of EPA’s assessments have shown that at least 30 percent of the sites assessed

don’t have any contamination at all.

Mr. TURNER. I thought that was encouraging in the information

that we had. But, under brownfields, an individual property party

that was responsible for the contamination of the brownfield site,

they do have liability, do they not, for the cleanup?

Mr. DUNNE. Yes.

Mr. TURNER. Many times the fact that they have that liability

can result in them trying to avoid the liability by the abandonment

of the property or by not fully participating in the redevelopment

or the remediation of the property; and in doing an assessment, I

believe that many times if we could bring those parties to the table

where they would participate in the assessment process, in the remediation process, that their knowledge could be very important

for our success. I was wondering if, in your grant programs, your

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assessment programs, your revolving loan program, if you had any

incentives that could be provided for those individuals to come to

the table and participate? I understand your statement of you want

the communities to be on the ground, so to speak, more involved,

but is there any mechanism, recognizing that the liability that

those individuals have, that EPA has to bring them and assist

them in coming to the table?

Mr. DUNNE. Well, we don’t have anything under the statute that

is going to relieve them of the liability. So in that respect I guess

the answer is no.

Mr. STEPHENSON. Can I add something, Mr. Chairman?

Mr. TURNER. Please.

Mr. STEPHENSON. Brownfields does add the innocent landowner

defense which property owners on contiguous property, if they have

exercised their due diligence and so forth, do have liability limitations. So you’re not automatically liable for all the cleanup.

Brownfields does afford additional liability limitations even beyond

what was done under CERCLA. It sort of codifies the principles

under CERCLA as well.

Mr. TURNER. Getting back to the individual that was responsible

for the contamination, with the grant programs and with the revolving loan funds, does EPA in any way under the area of

brownfields pursue those individuals to recapture the grant moneys

that are provided or the loan funds that are provided?

Mr. DUNNE. No.

Mr. TURNER. Is there a statutory reason for that?

Mr. DUNNE. We don’t have enforcement authority under

brownfields to go do that.

Mr. TURNER. Who would have the responsibility for pursuing——

Mr. DUNNE. Well, States often have enforcement programs that

they could invoke.

Mr. TURNER. I was very encouraged by the information in your

testimony about the redevelopment of brownfields resulting in the

saving of greenfields. Specifically, you cited the statistic for every

acre of brownfields reused you are saving 41⁄2 acres of green space.

Could you tell me how those figures were arrived at? Because I

think this is an important aspect for us to focus on, that it’s not

just the issue of cleaning up these sites and bringing economic opportunity back to these sites but it’s also the opportunity to conserve, which is certainly an environmentally conscious way to proceed.

Mr. DUNNE. We had a study done by George Washington University that defined this problem and the successes in terms of saving

these acreages. So we would be happy to supply you with any of

that background.

Mr. TURNER. Mr. Stephenson, you had indicated that, in looking

to stakeholders, that you did find a degree of support for a tax

credit for addressing the remediation costs. My bill, House bill

4480, would provide a tax credit that could help address those

properties where the cost of contamination exceeds the value of the

property, giving them more—a marketability. Could you tell me, as

you pursued your study and report of the feedback you received,

why is it that you believe that a tax credit was something that is

welcomed?

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Mr. STEPHENSON. Well, any incentive like that to offset the initial cost of investment in a property is welcomed; and the tax credit

certainly falls into that vein.

Mr. TURNER. And from EPA’s perspective a tax credit is a vehicle

that you believe would also be able to accomplish subsidizing that

economic viability for the properties.

Mr. DUNNE. EPA is not in the tax policy business, Mr. Chairman,

so I’ll be careful about how I answer that. Maybe you should have

a Treasury Department official up here. But certainly if it furthers

the objectives of the brownfield program, tax incentives would be

a very viable tool to have.

Mr. TURNER. Gentlemen, do you have anything else you would

like to add before we conclude our first panel?

Mr. STEPHENSON. No, we’re just encouraged that EPA has accepted our recommendation as implementing them; and we think

the brownfields program has a lot of promise.

Mr. TURNER. Gentlemen, thank you very much.

We will go then to our second panel.

Gentlemen, I appreciate you being here. We have on our second

panel the Honorable Don Plusquellic, president, U.S. Conference of

Mayors; James E. Maurin, chairman, International Council of

Shopping Centers; Jonathan Philips, senior director, Cherokee Investment Partners; and Douglas Steidl, president, the American Institute of Architects.

Gentlemen, would you please stand to receive the oath.

[Witnesses sworn.]

Mr. TURNER. Let the record show that all the witnesses have responded in the affirmative.

Since we understand that the mayor has a plane to catch, we are

going to let him give his testimony and answer questions, and I understand that he will be leaving us. Mayor.

STATEMENTS OF DON PLUSQUELLIC, PRESIDENT, U.S. CONFERENCE OF MAYORS; JAMES E. MAURIN, CHAIRMAN,

INTERNATIONAL COUNCIL OF SHOPPING CENTERS, BOARD

MEMBER, THE REAL ESTATE ROUNDTABLE; JONATHAN

PHILIPS, SENIOR DIRECTOR, CHEROKEE INVESTMENT

PARTNERS, LLC; AND DOUGLAS L. STEIDL, PRESIDENT, THE

AMERICAN INSTITUTE OF ARCHITECTS

STATEMENT OF DON PLUSQUELLIC

Mr. PLUSQUELLIC. Thank you, Congressman. I’m very pleased to

be here on behalf of the U.S. Conference of Mayors and the citizens

of my city, Akron, OH.

I want to thank my good friend, Congressman Mike Turner, who

invited me here to speak. Many of us throughout the world of mayors across the country as well as many of us in Ohio know of the

great job that you did as mayor of Dayton, and I am proud that

you have not forgotten your roots and your background as you

joined this fine group of individuals here as a Congressman. You

remembered the problems that face cities across this country, and

we appreciate very much your support of the community development block grant program, the brownfields issue that you have

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been so engaged in discussing and attempting to find solutions as

well as other urban issues.

I want to acknowledge all of the fellow panelists. In one way or

another they have all helped or assisted the U.S. Conference of

Mayors and the many issues that face us in particular in

brownfields over the past number of years.

I want to give sort of a personal perspective here. Thirty-two

years ago I was elected city councilman in Akron; and at that time,

watching the mayor and his activities, I can tell you that, for the

most part, mayors, pretty much indicative of mayors across the

country, we are sort of cheerleaders with economic development.

The private sector was over here and did their thing. The public

sector was over here. But as we transitioned in a terrible process

that we went through, unfortunately, with the loss of 35,00 rubber

jobs, we on the public side, the mayors and council members and

community leaders almost on every level have had to be directly

engaged and involved in what we call economic development.

Akron has repositioned itself as a diverse manufacturing, technology, education and research center; and a couple of years ago

Newsweek magazine picked Akron as one of America’s top 10 hot

tech cities.

When I became mayor, I realized early on the importance of

being directly involved in the redevelopment efforts of our community, and now I spend more than half of my time dealing directly

with businesses, business leaders. I think the question remains,

what is the proper role for local, State and the Federal Government

to play in facilitating the economic development and specifically

brownfields redevelopment?

Mayors and local governments are responsible, I think, in today’s

complex and competitive world, this global marketplace we all live

in, to facilitate and be responsible for assisting businesses to retain

and create jobs. We are always actively recruiting and trying to

work to retain jobs as well as facilitate new expansions. As a matter of fact, the plane I have to catch is to go overseas where I will

be attending at least two different trade missions or participating

in at least two different trade missions.

But in our cities we find it impossible to get the job done without

the proper tools and resources, and many of those are not directly

related to the public side. Regarding the benefits of brownfields, for

instance, or the redevelopment of brownfields in our communities,

our U.S. Conference of Mayors last survey shows that 121 cities

have successfully redeveloped close to 1,200 brownfield sites consisting of nearly 11,000 acres of land and the creation of over

117,000 jobs.

While that is very commendable and those successes are wonderful examples of what local governments have had to do or forced

to do, there’s an estimated 500,000 brownfield sites that could be

redeveloped, saving greenfields and providing opportunities for

more job opportunities in our community.

Many cities, I would argue, have done a good job of developing

what might be described as low-hanging fruit or what we might describe as light tan brownfields, those areas that are not completely

contaminated or with little contamination or in a very desirable location, making it beneficial for businesses to take a chance on deVerDate 11-MAY-2000 09:59 Oct 19, 2005 Jkt 000000 PO 00000 Frm 00051 Fmt 6633 Sfmt 6633 D:\DOCS\23259.TXT HGOVREF1 PsN: HGOVREF1
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veloping. But this is certainly not applicable to some cities—

Youngstown, OH would be one—where the difficulties of hemorrhaging of jobs out of their communities is so overwhelming or the

population loss or the difficulties in bringing back economic development is so great or in those cases where the brownfields are so

contaminated that we literally have people walking away from

them. Those sites are very difficult to get people to redevelop, and

those tough cases are really what I think your bill will help to address.

The current market conditions really make it impossible for a

private business person to want to take on that liability issue in

particular. Even if the idea of cleaning up the site is something

that they can take within their budget or within their timeframe,

most developers just aren’t anxious to take the chance on those environmentally contaminated sites; and without those extra incentives it’s impossible to get those developers back.

The mothballing of sites is probably the greatest problem that we

face, where companies realize that it’s so expensive and the liability so great that they just decide to wall it off, fence it off, and

leave it. And in cities across this country there’s really no motivation without some kind of an incentive.

As I address the future, I want to say that the Nation’s mayors

very much appreciate President Bush’s leadership by signing the

brownfields bill into law. The law has resulted in a boost in our efforts to redevelop some of those sites. This program needs to continue and needs to be fully funded, especially the money that is

targeted toward local governments efforts.

Other programs that have been successful include the

Brownfields Showcase Communities program and the EDA program that targets brownfields as well as HUD’s BEDI program.

But the one thing that has been missing is this incentive that

you discussed with the first panel for the private sector themselves

to spur their interest in redeveloping these sites, and that’s why we

are extremely pleased and excited about your bill, Congressman,

with the tax incentive. It is very similar to a program already existing in the Federal Government, the Historic Tax Credit Program, which has seen considerable success in Akron in reusing our

older commercial and industrial buildings.

A key component that I want to talk about is the incentive for

the original responsible polluter to participate. Even if that company only contributes 25 percent of the remediation costs, they receive liability release for 100 percent of the approved plan demo

and remediation costs. I think this is a particularly important

issue, and I want to say and I have stated this before to you publicly, that it is one that the Conference of Mayors supports.

We have always believed in this general rule that the polluters

should pay, and at first blush that always seems to be the right

position to take. We know the result, though, is that companies

mothball sites and walk away; and we need to have something that

motivates the holder of the land to at least provide an assessment

of the property and determine whether or not we can participate

in helping to bring it back.

I want to also say that many of those sites are in the most economically disadvantaged areas. To me, that means the people who

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need the jobs the most are at a disadvantage because they have

sites close to them that could be redeveloped if we had something

that really provided that incentive. So I am very much excited

about that part of your proposal, and we want to work with you

from the Conference of Mayors.

We understand the difficulty in not only the legal liabilities

issues, many of the other issues that both extremes talk about

when they talk about a bill dealing with these environmental

issues, but in a time when we really need to be focusing on creating jobs, reutilizing resources and, I would add, preserving our

green spaces, that the brownfields redevelopment is a way to accomplish these goals in our metropolitan economies that mean so

much to the Nation’s economy.

I want to take just a moment before I answer questions to sincerely thank you for the opportunity to quickly share with you my

perspective as mayor regarding the importance of brownfields redevelopment and your creative way of trying to address the issues

that you know all too well, coming from an older, industrialized

city, the importance that brownfield redevelopment can have not

only to our general areas of concern like tax base but truly in redevelopment of neighborhoods and providing job opportunities where

they were needed. So we look forward to working with you to continue this work to bring back our communities, our neighborhoods,

and I will be happy to answer any questions that you might have.

[The prepared statement of Mr. Plusquellic follows:]

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Mr. TURNER. Mayor, the EPA, when they were addressing us,

talked about acknowledging that this is a federally created problem. They acknowledged that the current Federal laws and regulations encourage abandonment, and they acknowledged that the current programs that provide assistance for assessment or cleanup

are having what they classified as a minuscule impact on the number of brownfields that are out there.

You talked about tax base and, knowing that cities are not structured in a tax revenue collection manner to bring in dollars that

are solely for economic development, you are focusing on fire, police, providing basic services. Since the Federal dollars there are

minimal and the problem is federally created, what do you do as

a mayor when you’re going out and identify a site, you are trying

to bring jobs to your community? You have, as most cities do, an

issue of the availability of land. You have a parcel that has all the

infrastructure that’s there. It’s an attractive site, locationwise.

There aren’t Federal resources available to you. How do you go

about trying to find funds to environmentally remediate and address these sites for redevelopment?

Mr. PLUSQUELLIC. Well, in this difficult time, I would remind everyone in Washington and Columbus, OH, and all the State capitals around the country that we’re all suffering the consequences

of whatever it is that our country is going through. It’s not just the

Federal level and State level. So local governments are even more

impacted by the economic conditions; and in cities where older industrial properties have supplied the economic strength of our

country, the jobs, the tax base for our countries but have been left

behind in this migration, in this global competition, it is even more

difficult for those communities to find the local resources, which is

why this is a very difficult issue for many of us.

In some instances, it is so absolutely necessary that we’ve gone

out—I have personally on behalf of the city—to get involved with

sites because they have such a negative impact on the surrounding

area that we’ve started a process of trying to clean up or clear up

or at least make the initial assessment of the property because it

has such a devastating effect to the property around it.

I would suggest the biggest eyesore in Summit County, maybe in

northeast Ohio, was located in the northernmost building of the

former B.F. Goodrich complex. The B.F. Goodrich complex itself

had been sold and was starting to undergo a revitalization. Meanwhile, there were two buildings left in the northern end, closest to

downtown, closest to our local newspaper and the folks who looked

at it every day out the window, and it had an impact from everybody coming into town on that side, the south side of downtown

Akron. We started out spending our own money trying to start to

assess, first of all, what the cleanup cost would be.

We finally received an inquiry from a company that wanted to

move to Akron from outside of the State. So we spent our own dollars, over $3 million in cleanup costs, and didn’t have time to wait

for a Federal program or a State program to kick in. We had an

opportunity to bring in 200 to 300 new jobs, for the most part, to

Akron, so we ended up ourselves finding a way, struggling with our

budget difficulties, to come up with the local dollars that were

needed. And we accepted the liability because, at that time, it was

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questionable whether or not we were going to have the State system in place to get the letter of no further action and the covenant

not to sue. So we found a way to make it work.

But in many cities that just isn’t possible, and in many instances

we don’t have companies that can wait for us to go and do the assessment when we have a real, live businessperson ready to go on

a site, which is another part of this process that personally I think

it would be worthwhile to have a system where people are involved

early on in not only identifying but doing the assessment so that

you know what the costs are and you know the time period that

you are dealing with. That delay when you do have a

businessperson who you finally find who’s willing to take that risk

and the unknown of how long it might take and the costs they

might incur or the city it might incur makes it more difficult to

find businesses to locate in those areas. That’s just an added problem, I think, that needs to be addressed as well.

Mr. TURNER. Being a mayor, you have sat across the table from

potential developers that are coming in and you’re discussing with

them a site. There has been a change in the law, obviously, with

respect to liability. If someone comes in and buys a site, they may

be able to avoid the liability for the cleanup of the site.

But one thing that seems to me to be still a disincentive, because

we don’t have a vehicle like the tax credits that will subsidize the

cleanup, is that an individual who looks at redeveloping a site still

has to weigh the possibility that they would lose their capital investment, that the value of the property, once it is redeveloped, if

contamination is discovered to be more expensive than was thought

or further contamination is found after they have undertaken investment in the property, that risk which they don’t have in a

greenfield, which is separate from the issue of just them being personally liable for the cleanup, but that their value that they have

invested in the property might be lost or devalued is also a disincentive. Have you had individuals when you are sitting across

the table trying to encourage them to go into a site that have

raised the issue of that risk?

Mr. PLUSQUELLIC. Well, the other added part is getting a construction loan and then permanent financing for a project. And

something that a developer normally does—I have actually literally

been in the same example that I used. The developer was an

Akron, committed, dedicated person who wanted to do the right

thing, didn’t have a lot of experience in redevelopment in

brownfield sites, jumped in and started spending his own cash in

anticipation of getting construction loans and literally had the bank

pull out.

I sat in this meeting and negotiated with the banks to get the

loans available for him that I’ve never had to do before. But it was

because of one overriding reason, and you just touched upon it. The

potential for the liability was so great that the banks didn’t want

to have any part in loaning the money, either in a short-term construction loan or in permanent financing; and so we had to help

them structure that. The city of Akron took on all of the liability

in the future for any environmental cleanup that was required beyond the $3 to $41⁄2 million that we spent. We have continuing

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monitoring wells. We do a number of things to test and provide information to the State EPA.

So we ended up taking the risk, but absolutely that is a problem

for not only the developer but for anybody thinking about loaning

money, the concern about the long-term liability.

Mr. TURNER. Mayor, I know that your time is limited, so I will

end my questions at this point and ask you if there is any other

item that you want to discuss or place on the record?

Mr. PLUSQUELLIC. Other than just once again thank you. Obviously, having people here understand firsthand the difficulties that

we have in redeveloping our communities helps considerably when

you’re debating and discussing bills; we are very hopeful that in

this session you will be successful in getting your colleagues to support this.

I think it is a real step forward that adds considerably to our

ability to deal with these correctly stated, I think, in some circles,

very difficult issues. We are all hung up on holding somebody accountable and liable for this. But, in many instances, these folks

are long since gone. The folks who might have dumped something

at the Firestone, the B.F. Goodrich, the Goodyear or the general

sites I can tell you in Akron have long passed. And we have no idea

what might be there but helping get a new business in to take the

place of those major employers is really a great advantage to cities

like Akron and Dayton and Youngstown and Cleveland and places

around the country. So we appreciate your help, your understanding of this issue, and your continued commitment to work with us.

Thank you, Congressman.

Mr. TURNER. Thank you, Mayor.

And we will go on to receive the testimony then of the remainder

of the panel.

Mr. Maurin.

STATEMENT OF JAMES E. MAURIN

Mr. MAURIN. Mr. Chairman, thank you for the opportunity to appear before you today. And while the mayor of Akron is walking

out, I just want to say, as a developer for the last 30 years and

having worked with city and county and, in Louisiana County, parish governments, I was inspired by your comments and particularly

by your knowledge of this whole area and industry. The mayors are

starting to get it, and they are starting to understand what it takes

to be able to develop these types of properties. So I want to thank

you for your comments, Mayor.

My name is James E. Maurin, and I am founder and chairman

of Stirling Properties in Covington, LA, a suburb of New Orleans.

I have been a developer for 30 years in the gulf south and have

redeveloped approximately half a dozen brownfield sites. I am testifying today on behalf of the International Council of Shopping Centers and the Real Estate Roundtable.

ICSC is the global trade association of the shopping center industry. It has more than 50,000 members, and we represent owners,

developers, retailers, lenders and other professionals active in the

industry.

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Collectively, the Real Estate Roundtable members hold portfolios

containing over 5 billion—that’s with a ’b’, 5 billion square feet of

developed property valued at over more than $700 billion.

In recent years, changes in Federal laws have successfully addressed many of the barriers that inhibited private sector efforts to

clean up and redevelop contaminated sites. As the threat of excessive environmental liability recedes, the remaining problem with

most well located brownfield sites is a fairly simple one: Money.

Other things being equal, it costs more to clean up and redevelop

a brownfield than it does simply to buy and develop a greenfield.

Properly conceived, brownfield redevelopments are investments,

whether undertaken by the public or the private sector. And there

are few investments of public dollars that produce such a positive

economic and environmental dividend.

A simple calculation of how much it costs the Federal Treasury

to offer a grant, a loan or a tax incentive is incomplete without factoring into the equation the future jobs and tax revenues that will

be created during and after a brownfield cleanup. Several members

of this subcommittee must recognize this fact, because they are cosponsors of H.R. 280, the Brownfields Redevelopment Enhancement Act. This bill would streamline the Federal grantmaking

process for States and tribes, and make brownfield-related environmental cleanup and economic development activities eligible for

community development block grant assistance. We are reviewing

this bill now, and I feel certain that ICSC and the Roundtable will

be able to formally endorse this legislation in the near future.

Last year, ICSC and the Roundtable endorsed a proposal originated by Chairman Turner. The Brownfields Revitalization Act,

formally H.R. 4480, would dedicate a limited dollar amount for tax

credits tied to the cost of remediating brownfield contamination.

Congress is generally reluctant to create new tax credits. There

is a well-founded worry that excessively generous tax credits would

distort a healthy market. But that is not to say that tax credits

cannot be carefully designed and targeted to address specific problems. As with the low-income housing tax credit program, the private sector would still provide much of the necessary funds for

cleanup, but the availability of tax credits could tip the scales in

favor of proceeding with a project rather than passing over an otherwise promising site.

Under Mr. Turner’s proposal, which we understand will soon be

reintroduced, the tax credits would only be available under projects

conducted pursuant to a State-approved remediation plan. The bill

helps leverage the capital necessary for cleanups by making these

credits transferrable to third parties such as banks. The tax credits

would be available for up to 50 percent of the remediation costs,

including both demolition costs and the cost of cleaning up petroleum contamination. In my written statement, I go into more detail

as to why these two aspects are so vitally important.

While the tax credit approach could benefit even large-scale remediation projects, I suspect that it would prove most valuable to

small and medium scale cleanups where funding options can be

even more limited. We should not underestimate the contribution

that small-scale projects can make to the economic vitality of a

community.

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Another bill that we encourage Congress to pass is H.R. 877, introduced by Representative Weller, Representative Becerra and

Representative Johnson of Connecticut. H.R. 877 would do three

things to encourage brownfield cleanups. It would make Internal

Revenue Code Section 198 permanent. Section 198 allows the expensing of brownfield cleanup costs, but it is currently scheduled

to sunset at the end of this year. It would broaden the definition

of hazardous substances in Section 198 so it covers petroleum, pesticides, lead paints and asbestos contaminants. Again, my written

statement provides greater detail on why this is important. It

would repeal the provision in the law requiring the recapture of the

Section 198 deduction when the property is sold. Without this

change, there is no real incentive.

In conclusion, the ICSC and Real Estate Roundtable urge Congress and this committee to explore tax incentives to induce the

private sector to clean up and redevelop contaminated sites. We believe that a tax credit approach would stimulate economic revivals

in numerous communities, and we encourage this committee to seriously consider such an approach.

In addition, we specifically endorse H.R. 877 and the Brownfield

Revitalization Act of 2005, formerly H.R. 4480. If Congress passes

these sound incentive proposals, the results will be the injection of

new capital into rehabilitation projects. Many small urban-centered

businesses will benefit resulting in substantial job creation and economic revitalization. Also, the viability of existing sites will improve and thus ease the pressure to develop greenfields, allowing

for the preservation of more open space.

I thank the chairman and the members of the committee for this

opportunity to appear before you today and look forward to your

questions. Thank you.

[The prepared statement of Mr. Maurin follows:]

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Mr. TURNER. Thank you.

Mr. Philips.

STATEMENT OF JONATHAN PHILIPS

Mr. PHILIPS. Mr. Chairman, my name is Jonathan Philips, and

I represent Cherokee Investment Partners, based in Raleigh, NC.

Thank you for the opportunity to testify today.

I would like to cover three basic topics. First, I want to provide

you with an introduction of Cherokee, who we are and what we do.

Second, I want to share with you some of the lessons learned regarding brownfield revitalization in communities all across this

country. Finally, I want to comment on two critical pieces of

brownfield legislation introduced during the 108th Congress. Cherokee is the world’s largest brownfield investor. We currently manage over $1 billion of assets and have acquired over 330 sites

across 35 States, Canada and Europe since inception. Our investors, consisting of public pension funds and other institutional investors, have entrusted us to deploy over $11⁄2 billion of equity and

debt capital toward brownfield revitalization. We will spend hundreds of millions to clean up pollution at the sites in our current

portfolio unlocking a potential of over $4 billion of further redevelopment. Our projects range in size from cleanup and redevelopment of a portfolio of 68 gas station pads, with extensive petroleum

hydrocarbon contamination, to redevelopment of the Meadowlands

in New Jersey, a 1,300 acre site with eight former landfills with

remediation expenses of $230 million and a total project cost of $1

billion.

In fairness, though, we rarely undertake a project alone. One of

the key factors of Cherokee’s success has been our willingness to

enter into public-private partnerships to achieve larger community

goals. An example is the announcement of the national joint initiative between the U.S. Conference of Mayors and Cherokee to help

mayors identify contaminated properties with the greatest potential for redevelopment and match them with capital, risk management experience and revitalization expertise.

In partnership with the U.S. EPA and local governments, we

have made strides toward cleaning up America’s contaminated

lands. However, significant barriers prevent the revitalization of

the vast majority of this Nation’s brownfields. Historically, owners

of contaminated real estate often have focused resources on avoiding liability rather than site cleanup. As the true cost of

mothballed sites have become known, the public and private sectors have worked together to create new mechanisms to revitalize

brownfields. These stakeholders have effectuated important

changes in court rulings, environmental laws, regulations and enforcement action, urbanization, insurance, and availability of financing vehicles to address the cleanup and reuse of these properties. Just as our Nation required the public and private sectors,

working together, to produce the important reforms of the past several years, a similar partnership will continue to be important to

ensure an acceleration of the rate of cleanups across the country.

The economic drivers of brownfield redevelopment are similar to

those found in typical greenfield development, but environmental

contamination introduces several costs, timing and liability hurdles

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to success. Adding to the complexity and costs associated with

cleaning up existing contamination, brownfield developers have difficulty using financial leverage, as has been addressed already

today in this panel, because brownfield appraisal is generally low

and banks require lower loan-to-value ratios to protect themselves

from the risk of having to own and manage stigmatized properties

with questionable value. For this reason, the availability of public

debt financing can be critical to making projects numbers work.

High equity requirements combined with increased expenses due to

remediation costs can lead to low-return investment. In 1998, the

Urban Land Institute reported that the average rate of return for

brownfields was under 3 percent, well below that of greenfield

projects.

When assessing how brownfield investment compares with other

real estate investment decisions, it is clear that brownfields fall

within the upper range of the risk return spectrum. One of the lessons of this data is that, if we wish to foster a more active private

sector participation in the cleanup of our Nation’s polluted land, we

have two levers to adjust. One can either lower the risk associated

with tackling a brownfield project or increase the potential project

return. Absent one or both of these factors, most traditional developers will follow the easy road: content to make sizable returns

converting the next farmstead to suburban sprawl on that proverbial edge of the town.

Given what we know about the causes of the problem, how do we

move beyond our current situation where some sites are being redeveloped while literally hundreds of thousands of others continue

to languish? A friend once told me that, for every complex difficult

problem, there is usually a simple solution, and it is usually wrong.

I think that is true for the brownfield issue. If there were one simple solution, we probably would have found it and enacted it long

ago. It is clear to me that the brownfield problem is a complex continuum and merits some categorization. Some sites are already economically above water; that is to say that, without additional incentives, those sites will likely be revitalized.

Other sites are marginally under water, and with some coordinated efforts, creativity and a modest economic push, these sites

would likely be redeveloped within a reasonable period of time.

And then there are substantial underwater sites typically located

in less attractive markets involving unusually large risks and/or requiring more substantial economic partnership.

When identifying a national prioritization of these categories,

policymakers have certainly differed. Regardless of one’s views, we

would be doing our country a disservice by not understanding this

brownfield market segmentation and crafting policies that target

them appropriately. Given the complexity of this problem, the solution must also be multifaceted with a mix of Federal, State and

local incentives focused on both reducing risk and increasing

project returns. Fortunately, America has built a solid foundation

over the past few years to attack this problem. The EPA grants

program has been an asset to communities across this Nation. In

addition, programs such as Section 198 enacted in 1997 and the

provisions of the brownfield law enacted in 2002 provide creative

tools to crack the brownfield problem. But as good as these tools

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are, we know that we need to do more if we are to solve this problem in our lifetimes. Today, the Federal Government’s challenge

should be to build on this foundation and to look for bold, innovative ways to reduce barriers and create market-based incentives to

attract significant volumes of private capital to help remediate and

redevelop our Nation’s brownfields.

In the last year, Congress has considered two critical pieces of

tax legislation that do just that. These bills are H.R. 3527, sponsored by Congresswoman Nancy Johnson and co-sponsored by

Chairman Turner, and H.R. 4480, sponsored, too, by Chairman

Turner. The first bill, H.R. 3527, was signed into law last year as

part of the Jobs Act. This bill amends the Tax Code to encourage

investment in contaminated lands by allowing tax exempt entities

to invest in the revitalization of highly contaminated sites without

the risk of incurring unrelated business income tax penalties.

These penalties had driven our largest real estate investors away

from brownfields. This law eliminates the unintended penalties and

makes brownfield investment more attractive for the managers of

an estimated 60 percent of the institutional capital in this country,

tax exempt investors such as pension funds, endowments and foundations.

The second bill, H.R. 4480, establishes a transferrable tax credit

that would create a critical early financing solution and allow pioneering developers to attract more capital with the equity created

by that credit and revitalize otherwise economically marginal

projects. Such a transferrable credit will serve to further unlock the

large quantity of environmentally impaired sites around the Nation

and will dramatically accelerate the rate at which brownfield sites

are revitalized in America. Taken together, these two pieces of tax

legislation have the potential to prompt cleanup of more brownfield

sites in the next 5 years than in the last 50 years combined.

Allow me to conclude with a startling statistic: The U.S. Chamber of Commerce estimates that, at the current rate of remediation,

it will take 10,000 years to clean up our Nation’s brownfields.

Clearly, we can and must do better. I sit before you today as testament to the fact that with perseverance, patience, integrity and

prudent financial and risk management, the private sector can play

a substantial role in cleaning up the pollution of this country’s industrial past. This problem is too big for any one organization, government or market sector to take on single handedly, that is, if we

want to have a chance at solving this problem in our lifetimes.

Congress must be bold, and we commend Chairman Turner’s leadership. The transferrable tax credit provisions in Chairman Turner’s legislation will dramatically accelerate the rate and geographic

scope of brownfield revitalization in America. Nearly every Member

of Congress struggles with the problem of brownfields within their

own district. I know many of you—many of your colleagues also do

as well. We look forward to working with Chairman Turner and

the members of this subcommittee to continue to explore new ways

to accelerate brownfield cleanups. Please do not hesitate to call

upon us for these legislative endeavors or for assistance with specific sites that come to your attention.

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Mr. Chairman, members of the committee, it has been an honor

and a privilege to testify here today. I am happy to answer any

questions. Thank you.

[The prepared statement of Mr. Philips follows:]

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Mr. TURNER. Thank you, Mr. Philips.

Mr. Steidl.

STATEMENT OF DOUGLAS L. STEIDL

Mr. STEIDL. Mr. Chairman, good morning. I’m Doug Steidl, president of the American Institute of Architects. On behalf of our

75,000 members nationwide, I wish to congratulate you and this

subcommittee’s insights into our most strategic issue for our communities, and to thank you for the opportunity to appear today as

you begin your deliberation on the state of designated brownfield

sites across America.

Architects have some unique talents. Our most formidable skill

is our ability to capture abstract goals and turn them into tangible

form. We also integrate multi-disciplinary teams to work efficiently

for a common goal, and as a result of that, it usually is that we

are the first professional brought on board to address a project site.

Bricks and mortar are the physical result of our work, but architects do more than create buildings; we believe we create communities. Through our understanding of people and how they interact

with their physical environment, we add vision and value to our

citizens’ lives. In addition, architects are leaders in their communities and help drive the design construction sector of our national

economy. That sector accounts for 8 percent of our gross domestic

product. For these reasons, I believe, we are uniquely qualified to

testify on the issue of brownfields. The American Institute of Architects is intensely concerned about making the Nation’s communities healthy, safe, livable, and sustainable places. As a result, we

have long had an interest in finding imaginative and constructive

uses for urban land that now lies fallow because of the residual

contamination that is part of its industrial heritage.

In 2001, the AIA took a strong position favoring H.R. 2869, Congressman Paul Gillmor’s brownfields bill, which became the Small

Business Liability Relief and Brownfields Revitalization Act. That

statute established the U.S. Environmental Protection Agency’s

current brownfields program and has led the way in changing the

Nation’s perception about abandoned real estate. The AIA is heartened by the progress that has been made under that program but

believes that more rapid progress is both possible and necessary.

I come here today commending you for holding this hearing. I

also come with a message: The time is now for Congress to enact

new brownfields legislation. The AIA has a position. Our interest

in brownfields redevelopment springs from our commitment to fostering vital, healthy communities. The AIA is concerned that abandoned industrial sites in every State threaten local citizens with exposure to toxins. They serve as dead zones in the midst of neighborhoods drastically in need of revitalization, and they isolate and

divide people and cities. The contamination is thus responsible for

stymieing redevelopment and limiting economic investment and job

creation. It often leads to sprawl and uncontrolled growth as land

is sought elsewhere in greenfields.

The U.S. EPA’s use of Federal dollars to remedy such sites has

had notable results. Unfortunately, as the Government Accountability Office’s brownfields report of last December points out, there

are far more brownfield sites requiring remediation than the U.S.

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EPA program could ever hope to address in our lifetimes. As a result, Federal legislation is needed to expedite site cleanup and foster economic redevelopment of these properties. At a time when our

Nation is searching for solutions to sprawl and pollution, these

sites are the new frontier, bursting with community potential and

economic hope. I might add that, in general, and in my personal

practice, the responsible party has not been the party to mitigate

brownfields; it’s either the local government and institutional clients, such as a university, and, in some very rare circumstances

with minor mitigation requirements, the new landowner. These

properties are often in central urban locations where costly utilities

are already in place. This represents a real opportunity for sustainable development that helps the economy and the environment.

In addition, brownfield cleanup offers an opportunity to improve

human health. Though I am not a health expert, I believe that,

without incentives for cleanup and redevelopment, contaminated

properties will continue to pose public health hazards long into the

future. According to the AIA, brownfield reuse will increase the

local tax base, create jobs, revitalize neighborhoods, link vital city

services and extend environmental protection for all citizens.

The GAO reports, between fiscal years 1995 and 2004, the U.S. EPA awarded over 1,200 brownfield grants, totaling about $400

million. Unfortunately, an estimated 450,000 to as many as 1

millionsites remain. More must be done to promote revitalization,

and the most creative way to address this need is to harness the

power of private capital.

There are success stories. Many American cities are undergoing

a renaissance. Young professionals and empty nesters have begun

to migrate to cities and continue to make them the location of first

choice. Brownfield redevelopment capitalizes on this trend and

helps the urban revitalization momentum going. I have included

three detailed success stories, Glen Cove, NY; Charlotte, NC; and

Pittsburgh, PA, for this subcommittee’s consideration. These are

but three of many. They appear in the copy of my remarks that

was submitted for the record.

In conclusion, the American Institute of Architects believes that

Federal tax credits for remediation expenditures at brownfield sites

will provide the needed incentive to induce private parties to undertake the cleanup and rebuilding of these sites. The AIA supported H.R. 4480, the chairman’s legislative effort in the 108th

Congress, which would have allowed taxpayers a credit against income tax for expenditures to remediate contaminated sites. The

AIA is pleased to see that he has improved and reintroduced that

legislation again in the 109th Congress. We look forward to working with you and your growing contingent of co-sponsors. We believe that it is necessary that these incentives be enacted during

this session of Congress. Thank you.

[The prepared statement of Mr. Steidl follows:]

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Mr. TURNER. Gentlemen, I thank you for your testimony and

your insight that you bring, but I also thank you for your commitment to this issue. Because one of the things that is very clear in

your testimony is a love of your communities and a love of the

projects you have undertaken that has brought you to participate

in brownfield redevelopment, because, as you all testified, certainly

greenfield redevelopment is easier and has a greater potential

many times for return. Your dedicating yourself to brownfield redevelopment, we all know, is both a philanthropic as well as a business dedication.

And I wanted to talk a minute about the issue of the cost. We

focus many times on the liability issue, but in undertaking

brownfield redevelopment, each of you have to have a level of expertise that you would not find in the average developer or someone who might want to undertake a redevelopment project that includes the bureaucratic processes of environmental remediation.

Mr. Philips, you talked about the private/public partnerships

many times that have to be brought together. Many times there

are grant programs or other types of financial assistance to address

some of the costs which themselves are complex. The bureaucratic

processes in getting approvals for the undertaking of the environmental remediation, I believe, is a very complex process. Could you

talk about the cost, your experiences there and addressing the bureaucratic processes and working with EPA, State EPAs, some of

the things that you see that are working there, some of the things

that you see that need to be improved? Start with Mr. Maurin.

Mr. MAURIN. Yes. Again, my personal experience is limited to

probably a half a dozen sites, and these sites have been in the

States of Louisiana and Mississippi. And where I’ve heard, quite

honestly, that there have been in the past issues with regard to the

EPA we have found in both States that, working with their local

DER, DEQ, both States have enacted brownfields legislation. And

for the most part, quite honestly, we have been able to be very successful in working with the States directly themselves and have

had little or no interference or problems or issues with the EPA.

Now, my experience is really the last 4 or 5 years, and then only

in two limited States. But I must say that the States do get it. In

the case of Mississippi, we had a very large project in which they

did not have a brownfield law which, as a result of our project, we

induced the State to actually pass a brownfield law about 4 or 5

years ago. So I’ve had very good experiences working with the

States and have had little or no problems on the EPA side.

Mr. TURNER. Mr. Philips, again, also addressing the issue of the

increased costs in going through those processes as you put your

projects together.

Mr. PHILIPS. Sure. First, though, on the EPA question. We found

that, when we come into a situation, we’re generally proposing to

do something that no one has ever proposed to do before. We walk

into a regulator’s office and say we want to aggressively clean up

this site, and we want to do it now and we want to use our own

money to do it. And it’s a very different reception than I imagine

others might receive. And we applaud that the EPA recently maybe

not so recently has taken a fairly targeted and focused approach toward reuse of sites under EPA jurisdiction. And that has also been

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a great program and great to work with them. But the time that

it takes to engage in the regulatory process and to engage in the

permitting onsite is a critical, critical issue, and I’m glad you asked

about it, Congressman. Time is the biggest enemy of a viable return on investment for us, and we are putting money, our investors’ capital, in from day one for cleanup. We want to make sure

that permitting process, that regulatory process can occur quickly,

and that usually happens through the education of the States and

local jurisdictions. And I will just give you a very short case study

on this.

A few years ago, we bought a portfolio of sites. Some were in San

Francisco, another was in Georgia. And we engaged in the redevelopment process concurrently for both sites. By the time we had

cleaned up and redeveloped and permitted the properties in California, the Georgia property had not yet begun to be permitted because we were still engaging in the regulatory process. That is not

necessarily a criticism of Georgia, but it may be just an issue of resource allocation or a familiarity with these sorts of projects, but

it goes to show you how much of a difference States can make, at

least on this level, in the regulatory and permitting process that

you have raised.

Mr. TURNER. Mr. Steidl.

Mr. STEIDL. Approvals are generally not a problem if you have

all your data together. The problem we see with many of our clients, especially in the private sector, is that they want to move yesterday; and in moving yesterday, they don’t have a timeframe in

order to allow for investigation and approvals. So the risk factor

goes up, but it’s primarily a time issue. They make the decision before they get to totally evaluating the dollars. The decision’s made.

We can’t do it time wise, let’s go to the greenfield.

Where we have had projects that moved forward in a brownfield,

they’ve primarily either been institutional, such as a university. We

have a project with a university right now that they have a 5-year

plan, so they started investigating the initial cost, the contamination assessment and everything 5 years ago. When they got to the

project, they had to increase their budget by $800,000 on an $11

million project, and that is a 2-acre site, and it’s an urban site that

is not—it’s basically minor contamination. So, 7 percent for minor

contamination.

The other projects where we’ve had private developers work have

been a negotiated process with the municipal government. And

what usually happens is the municipal government will guarantee

so many dollars in order to abate whatever the materials are, and

then the developer does anything that’s new construction. That is

a real burden on the local citizen, the government, the taxpayer.

The public/private cooperation has to work in a different way, and

I think your bill, if the statutes are set up on how it can be done

and it can be simplified in the approval process, will be a real plus.

Mr. TURNER. Having been a mayor, and then, obviously, any

mayor is active in economic development in their community. When

I look at abandoned properties, I see them differently sometimes

than many others. If I drive by an abandoned house, I don’t think,

someone wants to live there anymore—no one wants to live there

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anymore. I think, gee, the title must be pretty messed up. I wonder

why no one can acquire that house and redevelop and refurbish it.

Similarly with brownfields. When I drive by an abandoned factory site, I think of the environmental contamination, the impediments, the risk, the risk of capital, the liability risks. But there are

many people who think differently. When they drive by an abandoned factory, they think that the usefulness of that property has

passed, that the location is no longer desirable, that economic development as a wave has moved on; and then, if the property is located in the central city, that it is no longer desirable for someone

to redevelop and bring back to productive use.

You all obviously are active in environmental remediation

projects for redevelopment. What is your perspective? Do you believe that if we did provide an incentive, that these properties

would become attractive? That it’s not just that there is more than

just the environmental contamination that’s keeping them from

being redeveloped? Or if we address the issue of subsidizing that

remediation, will we in fact see an engine for economic development in these areas?

Mr. Maurin.

Mr. MAURIN. Well, Mr. Philips made a comment in his testimony

kind of categorizing brownfield sites into three categories. And

those that clearly need no incentive whatsoever, the benefit and

the cost are there. And of course, most of those have been done already. Most of those have happened. The second category needs

slight incentives to make them profitable. And then there is that

third category that we all have to ultimately focus on if we are

going to solve the problems of the cities, and those are the ones

that are just really under water, is the term that was used. And

I think that, as a private developer, when we look at a redevelopment project, we will essentially put it into one of those three categories.

I think that the best thing that we see in the cities, however,

particularly with the old factories or whatever, is the adaptive

reuse of those properties; i.e., a developer stepping forward and

saying that, in the eyes of the people of Akron, for example, that

has been a factory for 80 years or 90 years. But a developer walks

in, looks at the city, looks at the revitalization, and he sees a residential development. He sees a condominium project. He sees

something entirely different. And I think that’s where the marriage

between the private development community together with the

local government, I think that’s really where the ideas are coming

from. There’s kind of an entrepreneurism in this whole area right

now in the area of adaptive reuse. And I think that in some of the

tougher ones that we have to work with, that’s where we have to

be thinking.

Mr. TURNER. Mr. Philips.

Mr. PHILIPS. Yes. I believe in certain cases is more than merely

environmental contamination cost. To use a case study, in our experience, we are leading the largest investment in the history of

the city of Camden, NJ, a city where, like many other cities, there

are a number of brownfield sites. But there are also other problems. There are economic development problems, there is blight,

and there is perceived stigma, and there are questions of assemVerDate 11-MAY-2000 09:59 Oct 19, 2005 Jkt 000000 PO 00000 Frm 00138 Fmt 6633 Sfmt 6633 D:\DOCS\23259.TXT HGOVREF1 PsN: HGOVREF1
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blage: How does one assemble enough property in one mass to really make a critical difference to the residents of a community, and

to encourage a true revitalization of that area? Those are the

things that we struggle with, and we look to public-private partnership, again, to try to help solve.

Mr. TURNER. Mr. Steidl.

Mr. STEIDL. I think the three tiers of classification is a good example, and that the middle tier will be addressed by this issue. Geographic issues and economic issues of a region also play in. Mayor

Plusquellic mentioned Youngstown, OH. I think Youngstown, OH,

will have a tough time just because of the overall demand placed

by the city. But there is a tendency by singles, young professionals

and retirees to enjoy the city again, to go back to a pedestrian lifestyle and to look at the cultural levels that happen in a city. And

I can tell you that two examples, one in Akron, OH, the city is essentially out of downtown land. It’s framed in by some highways

hills, and ravines; I know that Mayor Plusquellic has proposed

tearing out a highway in order to provide land in the downtown

area. And I think there are many cities where these types of sites

are available adjacent to a downtown area that would really stimulate the economy.

I just visited Richmond, VA, and their adaptive reuse of warehouse buildings and storage facilities into housing is at an end or

very near to an end because they are out of the buildings. They’ve

run out of adaptive reuse positions. And I think that these types

of incentives will create in that second tier a great deal of enthusiasm. People want to be in cities and see that as a viable alternative to their lifestyle now.

Mr. TURNER. In the brownfields tax credit bill which I proposed,

4480, there is a provision that allows those who were responsible

for the contamination to step forward and participate in the cost

of environmental remediation in exchange for a release for the remainder of the cost for the redevelopment plan that the tax credit

is applied to. There has been some concern about providing that release. I view it as an incentive to get them to the table. They have

a significant amount of knowledge that’s important for putting together the assessment and the redevelopment plan. Also, their contribution to the overall costs are important.

Mr. Steidl, I believe you had said that many times, that the past

contaminator is not involved in the redevelopment. I would like, if

you would, from your experience, to speak about that issue; whether or not, when you have undertaken the redevelopment, if the past

contaminator has been to the table, has worked with you, if there

is any incentives that you have seen that brings them to the table.

If you believe that the incentive of a release that’s provided in the

bill would be helpful in bringing them to the table and bringing

their capital to the table. Could you speak to that issue, Mr.

Maurin?

Mr. MAURIN. You know, it’s a very good question, and I’m just

personally thinking here, and I’m not sure. I will say that the original superfund law passed well over 20 years ago, quite frankly, I

think in hindsight we look—all of us look at it and say on one hand

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nated property. But in many ways, it tried to deal with the issue

of contaminated properties with one cut, one way, only one way.

And I think that what has happened in subsequent legislation

that’s occurred is being able to look at some of the things that

didn’t work in superfund and basically getting some properties

really out of that category and moving it into another category, the

brownfield category. And I think that’s been a tremendous help. I

think that the incentives certainly very well may help some of

these mothballed sites, as the mayor talked about, that the owners

have simply mothballed them, and they continue to still be a blight

on the cities of America. So I think the incentives will help. I think

that we have to look back upon the last 20-plus years of that rule,

literally, that the polluter pay rule and what success we’ve had,

what limited success we’ve had on it and possibly look at incentives

to get those folks that were involved with that to the table. So I

think this is a move in the right direction.

Mr. TURNER. Mr. Philips.

Mr. PHILIPS. We regularly deal with the question of how to, so

to speak, pry open the vault, how to see what’s behind the doors

of a potential seller. How do we persuade a seller to allow testing

when that seller has never assessed their property, and has never

done so out of fear, frankly, of being put on notice legally that they

would be liable then for cleanup and potentially other penalties?

In an ideal world, there ought to be a way to conduct an assessment even if it’s by a third party that is not so punitive to the

owner of the property who may have had no responsibility other

than through corporate secession, to encourage them to allow a

third party to assess their property and not trigger some of the

penalties and enforcement.

I do on the other hand understand the concern that some have

that they don’t want to completely eviscerate the disincentive for

future bad actors to perform—to allow contamination to occur on

their sites. And so that seems to be the tension.

But I think we need to be progressive thinking and realize that

right now, if we want to clean up these sites, we have to look for

new solutions. And, Mr. Chairman, you have offered a very intriguing solution that we have been working with you to support and

help, and we applaud your efforts in figuring out ways to bring

PRPs to the table. And one of the comments that I didn’t include

in my oral testimony, but I think it’s really important for the private sector to be more involved on the Federal level. The EPA has

a multi-agency brownfields program. There ought to be private sector individuals or entities involved in that, talking about the latest

brownfield evolving changes in climate, and I think that will help

get the PRPs more comfortable. And with some innovative solutions like the ones you have proposed, we will be able to see some

of these sites unlocked for future reuse or redevelopment.

Mr. TURNER. Mr. Steidl.

Mr. STEIDL. This is obviously opinion and not based on fact. I

have one fact, and that fact is that I’ve never been involved in a

project that looked at a brownfield where the principally responsible parties were involved. And so I think that your proposal is a

creative way of testing the waters at this point as to whether that

motivation will bring principally responsible parties back into the

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formula, perhaps with information on the site. But that limitation

of liability or elimination of risk is a creative solution that I believe

should be explored.

Mr. TURNER. One of the things that I’m repeatedly asked when

we talk about the number of brownfields that are out there, if there

is a rule of thumb on evaluating the costs for addressing remediation of these sites. Each of you have experience in this. I wonder

if you have a rule of thumb that you look to on an acreage basis

or a project basis that can give people an understanding of a way

to work toward an estimate of the cost of addressing these sites.

Mr. Maurin.

Mr. MAURIN. We really don’t. And what we find as we evaluate

these sites—and much of our development of these types of sites

have been tenant driven. We have had a developer, an interested

user that wants to be there, and it just happens to be a contaminated site. And what we as developers do, quite honestly, is evaluate the site, look at the cost that it’s going to take to get that site

to kind of back to zero to get the contamination cleaned up, and

we look at our user, we look at—and then we also meet with the

local authority, with the mayor and look at them. And, quite honestly, we have been involved with some sites that were, in terms

of the value of the site were very expensive, but the city was willing to participate in some form or fashion, in some sort of grant

or some sort of inducement. So, on our own, we would have passed

that site. In other cases, between we as the developer and our user,

we were able to fully pick up the cost of the remediation of that

site and move on and redevelop it. So, quite honestly, there is no

real simple formula, I don’t believe, for coming up with what makes

one feasible and another not feasible.

Mr. TURNER. Mr. Philips.

Mr. PHILIPS. Mr. Chairman, I would echo that sentiment. We’ve

looked into quantitative indicators, and they all seem fairly imperfect. The per-acre measure doesn’t reconcile the rural situation

with the urban situation or the coastal situation. Likewise, on a

per-square-foot basis, it’s difficult to quantify with a rule of thumb

what the likely cost of the cleanup might be. It’s so particular to

each site and also to the eventual reuse. Is the site going to be reused? Is it going to be an industrial facility again that needs to be

cleaned up to industrial standards? Or is it going to be a residential facility? That’s going to greatly impact what kind of costs we

are going to assess or calculate as part of the formula for making

these decisions. So each site is so unique.

If I had to guess—this is my own personal opinion, a number like

25 percent to 40 percent may not be too far off the mark. I would

be willing, if the committee were interested, to research our own

internal data and report back the findings.

Mr. TURNER. That would be excellent. I would appreciate it.

Mr. PHILIPS. Sure.

Mr. TURNER. Mr. Steidl.

Mr. STEIDL. I have no figures. I don’t think there’s a formula.

We’ve never been able to find one. I mean, there are things for

some individual specifics, but each site’s so unique. I concur with

what’s been said previously.

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Mr. TURNER. One final question. When I served as mayor I had

the opportunity to travel with the American Institute of Architects

as part of the U.S. Conference of Mayors to look at brownfield sites

in Europe and what they were doing there to address redevelopment and cleanup. So I’m certainly aware from that, that what

other countries are doing in addressing this both in the manner of

cleanup and in liability provisions may be different. I wondered if

any of you would like to speak on the issue of what other countries

may be doing so we can also look at that as opportunities for us.

Mr. Steidl.

Mr. STEIDL. Well, that tour was made I believe in 2001, and

there were some fantastic examples of what can be done that came

out of it. I personally do not have that data, but we can go back

as the American Institute of Architects and collect some of those

examples and get them to you. Europe has a different approach or

atmosphere that allows some of those items to be executed as opposed to what might happen in this country. But we will be glad

to get back to you.

Mr. TURNER. Excellent.

Mr. PHILIPS. We at Cherokee buy sites in other countries and

have some desire to expand our program, started in the United

States, to other areas of the globe. And our experience has been

mostly in Europe, and it has been telling. In some European countries, the national government has actually approached us to assist

with a particular site. That was something that surprised us,

frankly, and it was a breath of fresh air. Clearly, brownfields have

plagued Europe as much or more than our own Nation, and the

leadership there has recognized the problem. But beyond a recognition, European countries have taken some bold steps. Our London

office has marveled at the legislation that was passed in the United

Kingdom which required that 60 percent of all new development—

I believe this is correct, 60 percent of all new development shall

occur on brownfield sites. Imagine what that mandate has done to

educate the traditional development community about brownfields.

In places like the African continent, cleanup may encounter more

hurdles. Our pro bono projects in Ethiopia, for example, encountered a legal system that did not adequately support the core concept of property rights, individual property rights. And this makes

it difficult to make bets on how and when the future value of what

you’re going to clean up and revitalize is going to pay back, or to

know the costs associated with the cleanup and the other project

costs.

So I think it varies drastically depending where on the globe one

looks. But we certainly have plenty to learn from other countries,

although I believe our country may be leading the pack in many

respects.

Mr. TURNER. Excellent point. We want to ask if anyone has anything else that they would like to add?

Mr. MAURIN. No. Not really. Again, I’ve had no personal experience on that. I would only say that, just with my travels with the

International Council of Shopping Centers this year, where we do

have some 90 countries that are members, in my travels around

the world, I have seen a wide variety on the issues of redevelopment and cleanup, particularly inner city. When you go from China

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all the way to Western Europe, and even within Western Europe

you see a wide variety of rules and levels of concern on this. So I

agree with the comment made here that I think the United States

is probably kind of the leader of the pack right now with regard

to, on a Federal level, being able to be as involved and as focused

on the cleanup of our environmentally contaminated sites. I’ve

found no other examples that might be ones that we could follow.

Mr. TURNER. Excellent. Well, are there any other additional comments that any of you would like to put on the record before we

conclude?

Great. Well, before we adjourn, I would like to thank each of you

for participating, and both of our panels, for their participation

today. I appreciate your willingness to share your knowledge and

experiences and thoughts with us today. I also would like to thank

the participation of the staff and the members of the committee for

their support for us undertaking this hearing.

Clearly, there are numerous remediation redevelopment success

stories, thanks to EPA’s brownfields program, and I commend the

EPA for their accomplishments thus far. With 450,000 to 1 million

brownsites lying idle across the Nation, we must recognize that

there remains room for improvement. I am encouraged by the

EPA’s continued work in the area of performance measures development. We cannot effectively evolve this program unless we know

where improvements may be necessary.

One area we already know needs improvement is aid in the postassessment and cleanup phase. That’s why we need to address the

redevelopment phase. According to landowners and developers, the

two largest impediments to redevelopment of brownfields are liability and the high cost of redevelopment. The Brownfields Act addressed liability by providing some relief from the superfund law.

We must now address the remaining gap. Without reasonable financial incentives, we may be looking at a problem that is too big

to address through regulation and grant programs alone. As we

have heard from both GAO and the representative stakeholders on

our panel, a tax credit for remediation costs would go a long way

toward encouraging more aggressive redevelopment of these blighted properties. Redevelopment brings new economic vitality to areas

that badly need jobs, new or improved infrastructure, and the economic activity of new shopping services and living choices. As I

mentioned at the beginning of today’s hearing, in the very near future, I will be introducing the legislation directly on point here. At

the same time, the subcommittee will continue its oversight of the

many issues discussed before us today. In early May, I plan on

holding hearings in Ohio on the subject of brownfields. I believe the

perspective from stakeholders outside the Beltway will give the

subcommittee a better understanding of this issue. It is my hope

that we will hear from those who are faced with the issue on a dayto-day basis at those hearings.

Again, I want to express my thanks for the witnesses for their

time today. In the event there may be additional questions that we

don’t have time for, I appreciate your willingness to answer additional questions, and the record will remain open for 2 weeks for

submitted questions and answers by other members of the subcommittee. Thank you.

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[Whereupon, at 12:08 p.m., the subcommittee was adjourned.]

[The prepared statements of Hon. Charles W. Dent and Hon.

Paul E. Kanjorski follow:]

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