cleaning up the past, building the future

National Round Tableon the Environment

and the Economy

Table ronde nationale sur l’environnement et l’économie

A National Brownfield RedevelopmentStrategy for Canada

Cleaning up the Past,Building the Future

© National Round Table on the Environment and theEconomy, 2003

All rights reserved. No part of this work covered by thecopyright herein may be reproduced or used in any formor by any means – graphic, electronic or mechanical,including photocopying, recording, taping or informationretrieval systems – without the prior written permission ofthe publisher.

National Library of Canada Cataloguing in PublicationData

Main entry under title: Cleaning up the past, building thefuture: a national Brownfield redevelopment strategy forCanada.

Issued also in French under title: Réhabiliter le passé,Construire l’avenir : une stratégie nationale des sitesurbains contaminés réhabilitables pour le Canada.

Includes bibliographical references.

ISBN 1-894737-05-9

1. Brownfields—Government policy—Canada. 2.Hazardous waste site remediation—Canada. 3. Hazardouswaste site remediation—Economic aspects—Canada. 4.Hazardous waste site—Canada. 5.Urban renewal—Environmental aspects—Canada. I. National Round Tableon the Environment and the Economy (Canada). NationalBrownfield Redevelopment Strategy Task Force.

HD318.C58 2003 363.739’66’0971 C2003-900124-5

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National Round Tableon the Environment

and the Economy

Table ronde nationale sur l’environnement et l’économie

A National Brownfield Redevelopment

Strategy for Canada

Cleaning up the Past,Building the FutureCleaning up the Past,Building the Future

The National Round Table on the Environment and the Economy

(NRTEE) was created to “play the role of catalyst in identifying, explaining and pro-

moting, in all sectors of Canadian society and in all regions of Canada, principles

and practices of sustainable development.” Specifically, the agency identifies issues

that have both environmental and economic implications, explores these implica-

tions, and attempts to identify actions that will balance economic prosperity with

environmental preservation.

Cleaning up the Past, Building the Future: A National Brownfield Redevelopment Strategy for Canada iii

NRTEE Mandate

At the heart of the NRTEE’s work is a commit-ment to improve the quality of economic andenvironmental policy development by providing decision makers with the information they need tomake reasoned choices on a sustainable future forCanada. The agency seeks to carry out its mandate by:

� advising decision makers and opinion leaders onthe best way to integrate environmental and eco-nomic considerations into decision making;

� actively seeking input from stakeholders with avested interest in any particular issue and providinga neutral meeting ground where they can work toresolve issues and overcome barriers to sustainabledevelopment;

� analysing environmental and economic facts toidentify changes that will enhance sustainability inCanada; and

� using the products of research, analysis and nation-al consultation to come to a conclusion on thestate of the debate on the environment and theeconomy.

The NRTEE’s reports synthesize the results ofstakeholder consultations on potential opportunitiesfor sustainable development. They summarize theextent of consensus and reasons for disagreement,review the consequences of action or inaction, and recommend steps specific stakeholders can take to promote sustainability.

NRTEE Members

ChairHarvey L. MeadSainte-Foy, Quebec

Vice-ChairPatricia McCunn-MillerVice-PresidentEnvironment and Regulatory AffairsEnCana CorporationCalgary, Alberta

Vice-ChairKen OgilvieExecutive DirectorPollution Probe FoundationToronto, Ontario

Harinder P.S. AhluwaliaPresident and CEOInfo-Electronics Systems Inc.Dollard-des-Ormeaux, Quebec

Edwin AquilinaSpecial Advisor to the MayorCity of OttawaOttawa, Ontario

Louis ArchambaultPresident and CEO Groupe-conseil Entraco Inc.North Hatley, Quebec

Jean BélangerOttawa, Ontario

Katherine M. BergmanDean of Science and ProfessorDepartment of Geology, University of Regina Regina, Saskatchewan

William J. BorlandDirector, Environmental AffairsJ.D. Irving, LimitedSaint John, New Brunswick

Patrick CarsonNobleton, Ontario

Douglas B. DeaconOwner, Trailside Café and AdventuresCharlottetown, Prince Edward Island

Terry DuguidChairmanManitoba Clean Environment CommissionWinnipeg, Manitoba

Michael HarcourtSenior AssociateSustainable Development Research InstituteUniversity of British ColumbiaVancouver, British Columbia

Marie-Claire HélieVice-PresidentFinancière Banque NationaleOutremont, Quebec

Linda Louella InkpenSt. Phillips, Newfoundland

Diane Frances MalleyPresidentPDK Projects, Inc. Winnipeg, Manitoba

Cristina MarquesCo-owner and Developer of Dreamcoast HomesToronto, Ontario

Angus RossChairmanL & A ConceptsScarborough, Ontario

Qussai SamakUnion AdvisorConfédération des syndicats nationauxMontreal, Quebec

John WiebePresident and CEOGLOBE Foundation of CanadaVancouver, British Columbia

Judy G. WilliamsPartnerMacKenzie FujisawaVancouver, British Columbia

President and CEODavid J. McGuinty

Cleaning up the Past, Building the Future: A National Brownfield Redevelopment Strategy for Canadaiv

Cleaning up the Past, Building the Future: A National Brownfield Redevelopment Strategy for Canada v

Acknowledgements ..................................................................................................................vi

Foreword ................................................................................................................................vii

Executive Summary ..................................................................................................................ix

1. Introduction.........................................................................................................................1

Canada’s Brownfields: Legacy and Opportunity ..........................................................................1The Benefits of Brownfield Redevelopment: Helping Build Sustainable Communities .......................2

2. The Case for a National Strategy: Challenges Facing Brownfield Redevelopment ........................5

3. Recent Progress on Brownfield Redevelopment......................................................................11

Canadian Initiatives ............................................................................................................11Lessons from Canadian and International Experience ................................................................15

4. Strategic Directions: A Blueprint for Action ..........................................................................17

Goals of the National Strategy ..............................................................................................17Strategic Direction 1: Applying Strategic Public Investments to Address Upfront Costs ..................19Strategic Direction 2: Establishing an Effective Public Policy Regime for

Environmental Liability and Risk Management ....................................................................25Strategic Direction 3: Building Capacity for and Community Awareness of

Brownfield Redevelopment ..............................................................................................30In Conclusion: Building a Successful Strategy..........................................................................33

5. Moving Forward...................................................................................................................35

The Leadership Challenge .....................................................................................................36Implementing the Strategy ...................................................................................................38

Annexes

1. Glossary of Brownfield Redevelopment Terms ....................................................................A-32. Brownfield Redevelopment Projects in Canada: Selected Case Studies ...................................A-53. Impact of Brownfield Redevelopment on the Canadian Economy ........................................A-154. Profiles of Selected International Activities on Brownfield Redevelopment ..........................A-195. Market Failures and Optimal Use of Brownfield Redevelopment Policy Instruments................A-296. An Expanded Brownfield Redevelopment Policy Toolkit .....................................................A-37

Table of Contents

To the members of the Task Force who gave of their time and who contributed openly and cooperatively tothis initiative, the NRTEE extends its appreciation. The NRTEE also thanks Osler, Hoskin & Harcourt LLP,in particular Ahab Abdel-Aziz and Shari Elliott, who donated considerable time and expertise to the drafting ofthe strategy. Their contribution laid the foundation on which the strategy and its recommendations are built.

Acknowledgements

Photo credits

Page Photo Credit

4 Vancouver Planning Department

4 Ann McAfee, Director of City Plans and Co-Director of Planning, City of Vancouver

8 Canadian Pacific Railway / Real Estate




30 Urban Horse Developments

30 City of Hamilton Economic DevelopmentDepartment

34 McGill University/Groupe Renaissance

34 Artist’s rendering by McGill University/GroupeRenaissance

37 Multi-Images

37 Canada Lands Company

Cleaning up the Past, Building the Future: A National Brownfield Redevelopment Strategy for Canadavi

Brownfields are contaminated lands that lie unused and unproductive throughout Canada. Left as they are, brownfields can harm local economies and pose threats to human health and environmentalquality. Redeveloped and returned to productive use, they can generate significant economic, environmental, and social benefits.

The Government of Canada recognized this opportunity in the December 2001 federal budget when itmandated the NRTEE to prepare a National Brownfield Redevelopment Strategy. Brownfield redevelopment is an example of sustainable development in action, and the work undertaken by theRound Table on this file constitutes an important component of its wide-ranging efforts to bring aboutchange.

The NRTEE convened a multistakeholder task force to spearhead development of the strategy. TheTask Force, which included representatives from across the country, all three levels of government, theprivate sector and the environmental community, provided invaluable direct knowledge and experiencein the brownfield area. To broaden the consultation process, the NRTEE also held a multistakeholderworkshop where a draft of the strategy was tabled for discussion and input.

This national strategy is a realistic, practical, and innovative blueprint for action. The recommendationsseek to build on the excellent progress made in a number of Canadian communities and provinces onquestions such as environmental liability and incentive financing. With the appropriate public sectorleadership involving the coordinated efforts of all levels of government, the private sector and communityorganizations, Canada’s brownfields can be transformed into vibrant centres of community life.

When implemented, this strategy will pave the way for significant economic, environmental and socialbenefits for Canadians, and for Canada to be established as a global leader in brownfield remediation.

Harvey L. MeadChair, NRTEE

Foreword

Cleaning up the Past, Building the Future: A National Brownfield Redevelopment Strategy for Canadaviii

Angus RossTask Force Chair, NRTEE MemberL & A Concepts

Ahab Abdel-AzizLegal CounselOsler, Hoskin & Harcourt LLP

Paul AntlePresident and CEOIsland Waste Management Inc.

Jean BélangerNRTEE Member

Roger BywaterProperty ManagerDevon Estates Limited

Louise ComeauDirector, Sustainable Communities and Environment PolicyFederation of Canadian Municipalities

James R. EvansManager, Environmental Risk ManagementCanadian Bankers Association

Mitch FaskenPresidentJannock Properties

John HansonConsultantPollution Probe

Cristina Marques Co-owner and DeveloperDreamcoast HomesNRTEE Member

David J. McGuintyPresident and CEO, NRTEE

Luciano PiccioniBusiness Development Consultant/Brownfield CoordinatorEconomic Development DepartmentCity of Hamilton

Adrien PilonPresidentMontréal Centre of Excellence in BrownfieldsRehabilitation

Jeff WesteindePresidentQuantum Environmental Group

Brian WhiffinVice-PresidentCH2M HILL Canada Ltd.

Judy WilliamsPartnerMacKenzie FujisawaNRTEE Member

Task Force Ex-officio Members

Michel BeaulieuChargé de projet, Service des lieux contaminés, direction des politiques du secteur industrielMinistère de l’Environnement du Quebec

Marguerite Ceschi-SmithChair, Federation of Canadian MunicipalitiesBrownfields CommitteeCouncillor, City of Brantford

David HutchisonHead, Technology Transfer, Contaminated SitesEnvironment Canada

Patricia McDowellDirector GeneralNatural Resources Canada

Lynne PetersonManager, Planning Policy SectionOntario Ministry of Municipal Affairs and Housing

Valerie SextonSenior EconomistTransport and Corporate AnalysisFinance Canada

Michael ZemanekContaminated Sites/Risk AssessmentSpecialist, Land BranchScience and Standards DivisionAlberta Environment

Task Force Members

Cleaning up the Past, Building the Future: A National Brownfield Redevelopment Strategy for Canada ix

�Across Canada, as in most countries, contaminated land lies unused and unproductive. Such sites,known as brownfields, may have the potential for rejuvenation, bringing both health and economicbenefits to local communities. Therefore, responding to the Government, the NRTEE has agreed todevelop a national brownfield redevelopment strategy in order to ensure that Canada is a globalleader in remediation.�

The VisionThe transformation of Canada’s brownfields into eco-nomically productive, environmentally healthy andsocially vibrant centres of community life, through thecoordinated efforts of all levels of government, the pri-vate sector and community organizations.

Canada’s Brownfields: Legacy andOpportunityBrownfields are a legacy of a century of industrializa-tion—they are abandoned, idle or underutilizedcommercial or industrial properties where past actionshave caused known or suspected environmental contam-ination, but where there is an active potential forredevelopment.

There may be as many as 30,000 such sites inCanada. They include decommissioned refineries, for-mer railway yards, old waterfronts and riverbanks,crumbling warehouses, abandoned gas stations, formerdrycleaners and other commercial properties where toxicsubstances may have been used or stored. Left idle andunmanaged, brownfields represent a significant loss ofeconomic opportunity. They adversely impact a neigh-bourhood’s image and quality of life, and in some casespose risks to human health and the environment.

Brownfields also represent an untapped opportuni-ty to revitalize older neighbourhoods and generatewealth for communities. With the right kind of incen-tives and partnerships, brownfields can have a brightfuture. Already, several thousand contaminated siteshave been cleaned up in Canada, creating tens of thou-sands of jobs, millions of dollars in additional propertytaxes and thousands of new housing units. With thepackage of supportive measures outlined in this nationalstrategy, Canada’s nascent brownfield redevelopment

Executive Summary

industry could evolve rapidly into a business worthmany billions of dollars a year.

In addition to direct commercial benefits realizedby the developers and users of the land, brownfieldredevelopment within cities (instead of the develop-ment of so-called “greenfield” land on the city’speriphery) has the potential to generate up to seven bil-lion dollars a year in public benefits in Canada.* Thesepublic benefits arise through the increased economicproductivity of surrounding land, increased tax rev-enues, lower municipal infrastructure costs, reducedhealth risks, preservation of agricultural land, less airpollution and improved neighbourhoods.

The Benefits of BrownfieldRedevelopment: Helping BuildSustainable CommunitiesThe case for redeveloping Canada’s brownfields isstrong. Experience with brownfield redevelopment inCanada, the United States and Europe suggests that,while specific circumstances may vary, significant bene-fits are consistently seen in the following areas:

Economic benefits:

� creation and retention of employment opportunities

� increased competitiveness for cities

� increased export potential for Canadian cleanuptechnologies

� increased tax base for all three levels of government.

* Hara Associates, “Estimate of National Public Benefits fromCanadian Brownfield Redevelopment”, backgrounder prepared forNRTEE, 2003.

December 2001 Federal Budget

Cleaning up the Past, Building the Future: A National Brownfield Redevelopment Strategy for Canadax

Social benefits:

� improved quality of life in neighbourhoods (peoplecan live closer to work and recreational facilities)

� removal of threats to human health and safety

� access to affordable housing.

Environmental benefits:

� reduced urban sprawl pressures on greenfield sitesaround a community

� restoration of environmental quality in the com-munity

� improved air quality and reduced greenhouse gasemissions in urban areas.

The Case for a National Strategy:Challenges Facing BrownfieldRedevelopmentThe case for a national strategy for brownfield redevelopment focuses on that large group of brown-fields where both cleanup costs and the potential forredevelopment are high. Brownfields in this group arelikely to be found in established urban areas and alongtransportation corridors, where municipal services arereadily available. The market value of the land itself,once cleaned up, may be slightly above or slightlybelow the combined cost of land plus cleanup.

However, a number of challenges, individually andin combination with one another, serve to keep suchsites abandoned or idle, with little prospect of remediation or reuse without strategic intervention.These challenges typically reflect failures in the market.When markets fail, or are imperfect, those actions thatwould be expected to increase the collective nationalwealth do not take place. In the case of brownfields,the most significant market failures preventing redevelopment include:

� lack of access to capital

� regulatory liability risk

� civil liability risk

� limited access to insurance protection

� regulatory delays

� stigma and risk perception

� lack of awareness among many key public sectorand private sector groups.

A national strategy must tackle these market fail-ures head on, adopting specific actions targeted atovercoming specific failures, to bring these brownfieldsback into the marketplace and back to life in Canadiancommunities.

All participants in the brownfield redevelopmentprocess, public and private sector, must participate ifsuch a strategy is to succeed. Public sector-led initia-tives are central to efforts aimed at overcoming themarket barriers, and in particular those of bridgefinancing and uncertainty around liability.

Making ProgressCanada’s experience with brownfield redevelopmentstems from a limited number of impressive initiativesin several provinces and municipalities. These initia-tives can serve as the foundation of a morecomprehensive, coordinated national strategy. Forexample:

� In 2000, the federal government established theGreen Municipal Enabling Fund, administered inpartnership with the Federation of CanadianMunicipalities, which can provide grants of up to$100,000 for community brownfield inventoriesand assessments of development and policy options.

� The provinces of Ontario and Quebec have intro-duced legislation specifically directed at promotingbrownfield redevelopment by addressing key barri-ers to redevelopment.

� Quebec has established a highly successful fundingincentive program for brownfield redevelopment,Revi-Sols, which provides grants to communities tocover the costs of studies leading to rehabilitationwork, as well as the actual costs of rehabilitationwork.

� Municipal governments in several provinces,including Hamilton, Ontario, with its innovativeEnvironmental Remediation and SiteEnhancement (ERASE) Plan, have demonstratedtheir capacity to be the “on the ground” leaders indeveloping and delivering brownfield redevelop-

ment initiatives, forging community partnershipsinvolving governments and the private sector.

Strategic Directions: A Blueprint forAction The national brownfield redevelopment strategy seeks to:

� put in place the essential building blocks of a coor-dinated, comprehensive national approach tocleaning up and redeveloping brownfields in Canada

� build on recent initiatives in several provinces andCanadian communities to promote brownfield rede-velopment across the country as a practical tool forsustainable development

� engage the full spectrum of public, private and com-munity interests involved in communitydevelopment

� address the priority challenges to brownfield redevel-opment through a mix of policy instrumentstargeted at specific market failures

� focus efforts on the “middle tier” of brownfields,where strategic public sector initiatives are needed toachieve redevelopment.

The strategy proposes actions under three strategicdirections for transforming brownfields into vibrantcentres of community life (see Table E-1 for a summa-ry). Detailed proposals and a rationale are presentedunder each recommendation. The recommendationsrepresent a package of initiatives that address key mar-ket barriers to brownfield redevelopment.

Strategic Direction 1: Applying Strategic PublicInvestments to Address Upfront CostsPublicly funded financial incentives represent a strate-gic investment in the future of brownfield sites andtheir communities. The recommended actions underStrategic Direction 1 seek to:

� apply strategic public investments, by removing taximpediments and providing loans, grants andmortgage guarantees, to lever private capital andovercome the barriers in the market to accessingcapital for the early stages of redevelopment

� establish an effective mechanism through whichthe federal, provincial/territorial and municipal

Cleaning up the Past, Building the Future: A National Brownfield Redevelopment Strategy for Canada xi

governments can provide financial incentives toqualifying brownfield redevelopment projects.

Strategic Direction 2: Establishing an EffectivePublic Policy Regime for Environmental Liabilityand Risk ManagementEffective liability protection for participants in brown-field redevelopment is a cornerstone of a successfullong-term national strategy for revitalizing Canada’sbrownfields. The recommended actions under StrategicDirection 2 seek to:

� provide all participants in brownfield redevelop-ment with a clear, fair and consistent public policyregime to bring greater certainty and efficiency toquestions of liability and risk management

� promote a coordinated effort on liability and riskmanagement among all levels of government.

Strategic Direction 3: Building Capacity for and Community Awareness of BrownfieldRedevelopmentSuccessful brownfield redevelopment projects are builtaround community awareness, support and skills. The recommended actions under Strategic Direction 3 seek to:

� enhance capacity at all levels to facilitate brown-field redevelopment

� build awareness among all partners of the benefitsand challenges of brownfield redevelopment

� build shared objectives around a common vision oftransforming brownfield sites into active centres ofcommunity life

� forge partnerships based on community involve-ment and support.

The Leadership ChallengeThe experience with brownfield redevelopment inCanada, the United States and other countries demon-strates that the single most essential ingredient tosuccess is public sector leadership. Each level of govern-ment has a unique and essential role to play. In thisregard, the federal government has a unique responsi-bility—and a unique opportunity—to launch thenational strategy and begin the transformation of

Canada’s brownfields into special places in Canadiancommunities.Recommendations relating to leadership fall into twokey areas:

1. Government Support for a National StrategyThat the federal government stimulate action on brown-field redevelopment by adopting the strategy andimplementing the measures under its jurisdiction asquickly as possible, including measures such as:

� establishing a federal office to coordinate the par-ticipation of various federal departments andagencies in the strategy

� implementing appropriate financing measures(proposed under Strategic Direction 1)

� moving to harmonize compliance with federal andprovincial requirements

� promoting a coordinated national effort on brown-field redevelopment by encouraging otherjurisdictions to match federal initiatives, whereapplicable, and to undertake complementary initia-tives within the framework of a national strategy.

That provincial governments move toward establishingmulti-faceted programs with essential elements gearedtoward:

� providing financial support to local governmentand private redevelopment efforts

� ensuring legislation is in place to enable municipali-ties to offer a full suite of incentive programs andother measures to promote brownfield redevelopment

� adopting consistent provincial or regional riskassessment protocols and providing the infrastruc-ture necessary for efficient risk assessments

� rationalizing liability regimes conducive to stimu-lating redevelopment.

That municipal governments continue to play a pivotalrole in the delivery of a brownfield redevelopmentstrategy and tools by:

� establishing local redevelopment priorities

� simplifying and facilitating development and build-ing approvals for brownfields

� redeploying municipally held brownfields byreturning them to the marketplace

Cleaning up the Past, Building the Future: A National Brownfield Redevelopment Strategy for Canadaxii

� providing financing and planning incentives toqualifying projects.

2. Governments’ “Own House in Order”That the federal government maintain and enhance itsredevelopment program for federally owned brownfieldsites, such as military sites, railway lands and ports.

That the federal, provincial and municipal govern-ments establish a policy that, when any property ispurchased for their own use, brownfield sites should begiven priority over greenfield sites.

Implementing the StrategyA flexible, phased-in approach is called for in imple-menting the strategy, recognizing that some provincesand municipalities have well-established brownfield ini-tiatives while many do not, and that not all therecommended actions can or should be undertakenimmediately. The goal should be to build on theprogress and successes to date, develop momentum,awareness and support, and strengthen the programover time. The approach should encompass two phases:

� a “quick start” phase during which governments atall levels signal their support for the national strategy and look to those recommended actionsthat could be undertaken or initiated relatively easily and quickly, including amendments to theIncome Tax Act

� a longer-term phase during which governmentsand others can address areas that take some time,such as changes in legislation relating to liability,training and longer-term capacity-building initiatives.

Table E-2 summarizes how the recommendationsoutlined in this national strategy could be structuredwithin a phased approach.

As the strategy matures, governments couldstrengthen the national strategy in response to theexperience gained in the first few years. For example, awider range of communities and interests could beencouraged to participate in brownfield redevelopment.As well, a broader mix of policy instruments could beapplied, building on innovations in Canada and othercountries.

Cleaning up the Past, Building the Future: A National Brownfield Redevelopment Strategy for Canada xiii

Strategic Direction Recommendations Responsibility

1. Applying strategic 1.1 Implement tax system changes to promote brownfield Federalpublic investments to redevelopment Provincial/Territorialaddress upfront costs Municipal

1.2 Remove liens and tax arrears against qualifying Federalbrownfield sites Provincial/Territorial

Municipal

1.3 Provide mortgage guarantees for qualifying Federalbrownfield sites

1.4 Provide revolving loans for qualifying brownfield Federalsites Provincial/Territorial

Municipal

1.5 Provide grants for qualifying brownfield sites FederalProvincial/TerritorialMunicipal

2. Establishing an 2.1 Allow binding contractual allocation of liability Provincial/Territorial effective public policy regime for 2.2 Provide for termination of regulatory liability Provincial/Territorialenvironmental liability and risk management 2.3 Provide for termination of civil liability after a Provincial/Territorial

limitation period Federal

2.4 Create an insurance fund for post-liability termination Provincial/Territorialclaims Federal

2.5 Apply site-specific assessment and approvals regime Provincial/Territorial FederalMunicipal

2.6 Provide for regulatory approvals of remediation Provincial/Territorial

3. Building capacity for 3.1 Increase capacity to undertake brownfield Federal and community redevelopment projects Provincial/Territorial awareness of brownfield Municipal redevelopment

3.2 Facilitate the demonstration of innovative Federal environmental technologies and remediation processes Provincial/Territorial

Municipal

3.3 Raise awareness of the benefits of brownfield Federalredevelopment Provincial/Territorial

Table E-1 Summary of National Strategy Recommendations

Cleaning up the Past, Building the Future: A National Brownfield Redevelopment Strategy for Canadaxiv

Phase 1: A “Quick Start” Agenda (e.g. 12-month horizon)

Ensure all levels of government support a national strategy

Establish a Federal Coordinating Office on BrownfieldRedevelopment

Ensure governments’ “own house in order”

Establish performance measurement framework for strategy

Establish National Brownfield Association

Develop intergovernmental memoranda of understandingon brownfield redevelopment

Implement tax system changes to promote brownfield redevelopment (recommendation 1.1)

Remove liens and tax arrears against qualifying brownfield sites (recommendation 1.2)

Provide mortgage guarantees for qualifying brownfieldsites (recommendation 1.3)

Provide revolving loans for qualifying brownfield sites (recommendation 1.4)

Provide grants for qualifying brownfield sites (recommendation 1.5)

Increase capacity to undertake brownfield redevelopmentprojects (recommendation 3.1)

Raise awareness of the benefits of brownfield redevelopment (recommendation 3.3)

Table E-2 Implementing the National Strategy on Brownfield Redevelopment:Possible Phasing in of Recommended Actions

Phase 2:A Medium-Term Agenda(e.g. 5-year horizon)

Allow binding contractual allocation of liability (recommendation 2.1)

Provide for termination of regulatory liability (recommendation 2.2)

Provide for termination of civil liability after limitationperiod (recommendation 2.3)

Create an insurance fund for post-liability terminationclaims (recommendation 2.4)

Apply site-specific assessment and approvals regimes (recommendation 2.5)

Provide for regulatory approvals of remediation (recommendation 2.6)

Facilitate the demonstration of innovative environmentaltechnologies and remediation processes (recommendation 3.2)

Monitor implementation

Evaluate initiatives/progress

Adjust/strengthen initiatives

Encourage new participants through education and federal incentive funding

Expand range of policy instruments

Cleaning up the Past, Building the Future: A National Brownfield Redevelopment Strategy for Canada 1

1Introduction

The national strategy on brownfield

redevelopment is guided by the following vision: The

transformation of Canada’s brownfields into economically

productive, environmentally healthy and socially vibrant

centres of community life, through the coordinated efforts

of all levels of government, the private sector and

community organizations.

Canada’s Brownfields: Legacy andOpportunity

Brownfields shape the landscapes of communities inevery region across Canada.Brownfields stand as a legacy of a century of industrializa-tion in Canada. They can be found in cities and townsacross the country: abandoned, vacant, derelict or underuti-lized commercial and industrial properties where pastactions have resulted in actual or perceived contamination.But brownfields differ from other contaminated sites in oneimportant way—they hold excellent potential for beingcleaned up and redeveloped for productive uses.

Brownfields exist in a variety of sites: decommissionedrefineries, former railway yards, old industrial waterfrontsand riverbanks, crumbling warehouses, abandoned gas sta-tions, former drycleaners—any properties where toxicsubstances may have been used or stored. They may be pub-licly or privately owned, held under trusteeship or be“orphan” sites, without ownership.

There may be as many as 30,000 such sites inCanada. Left idle and unmanaged, brownfields repre-sent a significant loss of economic opportunity. Theyadversely affect a neighbourhood’s image and quality oflife, and in some cases they pose risks to human healthand the environment.

Brownfields represent an untapped opportunity to revitalize older neighbourhoodsand generate wealth for communities. There is a growing recognition in Canada and othercountries that brownfields represent an untappedopportunity to revitalize some of the oldest and mostneglected neighbourhoods of many communities—torestore environmental quality and to bring new life tothese properties in the form of housing, small business-es and recreational opportunities. Over the past fewyears, experience in the United States, Europe and sev-eral Canadian cities has demonstrated that, with theright kind of incentives and partnerships, brownfieldscan have a bright future.

Already, several thousand contaminated sites havebeen cleaned up in Canada, creating tens of thousandsof jobs, millions of dollars in additional property taxesand thousands of new housing units. With the packageof supportive measures outlined in this national strate-gy, Canada’s nascent brownfield redevelopmentindustry could evolve rapidly into a business generatingmany billions of dollars a year.

Transforming brownfields into vibrant centres ofcommunity life will not be a simple task. Brownfieldspresent a complex array of challenges for communities inevery part of Canada. Long-standing legal, financial andcommunity concerns must be acknowledged andaddressed. The interests of all parties involved in commu-nity development—governments at all levels, the privatesector, community groups—must be engaged around ashared commitment. Above all, public leadership mustlend credibility, support and momentum to the task.

The Benefits of BrownfieldRedevelopment: Helping BuildSustainable CommunitiesNote: Italicized terms marked with an asterisk (*) aredefined in Annex 1.

The case for redeveloping brownfields is strong.Cleaning up and revitalizing a brownfield site cantransform the quality of life in an older neighbourhoodor district, generating a wide range of economic, envi-ronmental and social benefits. And the benefits areseen not only in the neighbourhood, but also at thecity, provincial and even national levels: brownfieldredevelopment can be a key tool for building sustain-able communities in Canada. By restoringenvironmental quality and revitalizing once-abandonedproperties, brownfield redevelopment represents anexcellent example of putting into practice the principlesof sustainable development—development that seeks tointegrate economic, environmental and social goals sothat the needs of today’s generation can be met withoutcompromising the ability of future generations to meettheir needs.

Annex 2 provides examples of economic, social andenvironmental benefits from brownfield redevelopmentprojects in several Canadian cities. Experience withbrownfield redevelopment in Canada, the UnitedStates and Europe suggests that, while specific circum-stances may vary, significant benefits are consistentlyseen in the following areas:

1. Creation and retention of employment oppor-tunitiesBrownfield redevelopment creates employment oppor-tunities both in the specialized areas of cleanuptechnology and development, and in the new enterprises

Cleaning up the Past, Building the Future: A National Brownfield Redevelopment Strategy for Canada2

The City of Brantford, Ontario, was left with a brownfield property ownedby a bankrupt company. No one was in control of the property, and whensquatters subsequently occupied the vacant building, the City had noauthority to evict them. The building eventually burned to the ground in aspectacular blaze that nearly forced the emergency evacuation of thenearby Brantford General Hospital.

Quebec’s Revi-Sols program, established to promote brownfield redevelopment, has created an estimated 1,075 person-years of employ-ment over the last five years in the areas of assessment and cleanup.1

The redevelopment of a small brownfield property in the WestHarbourfront area of Hamilton, Ontario, involving the construction of 27new housing units on land formerly used for rail yards and a gasoline sta-tion, generated personal income of $720,000 from on-site remediationand construction jobs, and created 10 permanent jobs.2

—small businesses and services—that find a home inthe rejuvenated brownfield site.

At the national level, an enhanced capacity forbrownfield redevelopment can also mean increasedexport potential for Canadian cleanup technologies.

2. Increased tax revenuesBrownfield redevelopment increases the tax base for allthree levels of government, through the creation of neweconomic bases to sustain property, income and capitaltaxes. At the municipal level, a redeveloped site increas-es property tax revenues and the funding available tolocal governments to provide public services.Experience in the United States has also demonstratedthat as brownfields are redeveloped, the value of sur-rounding properties within a radius of up to 2.5kilometres may rise by an average of 10 percent, withassociated increases in property tax revenues.3

At the provincial and federal levels, brownfieldredevelopment brings increases in sales tax and goodsand services tax (GST) revenues, as well as an increasein income tax revenues. Indirectly, all three levels ofgovernment can benefit through reduced fundingrequirements for new roads and infrastructure, asbrownfields tend to be located in areas with servicesalready in place.

3. Revitalized neighbourhoods and communities Brownfield redevelopment can be an engine for urbanrenewal and economic growth, particularly where thereare large tracts of brownfields in the central businessdistrict or in heavily industrialized suburbs.

A redeveloped brownfield returns idle lands to pro-ductive uses. It can mean greater access to affordablehousing. It can improve the quality of life in a neigh-bourhood, enabling residents to live closer to work andrecreational facilities. It can directly create new busi-

nesses in the area, which in turn attract additional busi-nesses and services.

In smaller and rural communities—where theimpact of even a single large brownfield can overwhelma community’s resources and blight the landscape—brownfield redevelopment can be a source of rebirth.

4. Reduced urban sprawl Brownfield redevelopment reduces development pressureson greenfields* in the community’s outlying areas, resultingin both infrastructure and transportation savings.

Redeveloped brownfields usually make effective useof existing municipal infrastructure and are strategicallylocated along existing transportation corridors.Development of greenfields, on the other hand, oftenconsumes otherwise productive agricultural land andrequires the installation of costly municipal infra-structure and services. Typically, greenfield develop-ment also consumes much more land than abrownfield project and is less compatible with pedestri-an and public transit uses.


Once completed, the Spencer Creek Village project in Dundas, Ontario,involving nearly 500 new housing units and 40,000 square feet of com-mercial space on the former site of a steel foundry, will generate an esti-mated:

• $1.76 million a year in new property tax revenue for the municipality

• $7.55 million in additional provincial sales tax

• $6.6 million in additional GST revenues.4

Redevelopment of the old CN Rail repair shops in Moncton, NewBrunswick, created 110 acres of new sports facilities in an accessible downtown location. These facilities include 10 baseball diamonds, four soc-cer fields, two football fields and a sportsplex containing four NHL-sizedhockey rinks.5

The redevelopment of the False Creek south shore in downtown Vancouver,launched in the 1970s on 80 acres of decaying industrial lands, stands asa landmark example of how brownfield redevelopment can support com-munity social goals. For example, the city’s development plan explicitlycalled for a housing mix that accommodated households of all income lev-els and age groups. As a result, the redevelopment project was opened toall types of developers, market and non-market, co-op and condominium,rental and ownership, so that all segments of Vancouver society could beincluded.6

Every hectare developed in a brownfield project can save an estimatedminimum of 4.5 hectares of greenfield land from being developed in anoutlying area.8

Every hectare of a brownfield redeveloped for residential purposes cansave as much as $66,000 a year in transportation costs (relative to equivalent greenfield redevelopment).7

For example, it has been estimated that, on average,a suburban resident in the Greater Toronto Area travelsmore than two and a half times further by car on anannual basis than an urban resident living in a formerbrownfield site, due to the latter’s shorter commutingdistances and greater use of public transit. (The latter’saverage annual savings in fuel-based emissions is actuallygreater than this ratio, because reduced car travel resultsin less congestion and increased fuel efficiency for othertravellers, especially at peak commuter time periods.)10

5. Increased competitiveness for citiesThe effects of increased private sector productivity—through compact land use, a reduced tax burden tosupport infrastructure, and an improved business cli-mate from better neighbourhoods and reducedcongestion—all combine to increase the competitive-ness of Canadian cities seeking to attract foreigninvestment.

6. Enhanced environmental quality, health andsafety Many brownfield sites are contaminated with industrialor other toxic wastes that pose a health and safety risk tonearby residents and workers. Cleaning up these sitescan help restore environmental quality in the communi-ty and remove the threats to health and safety.

Channelling growth into brownfields instead ofgreenfields can also contribute to improved air qualityand reduced greenhouse gas emissions in urban areas.The redevelopment of older downtown sites provides analternative to urban sprawl that promotes more compacturban forms and reduces the commuting and transporta-tion requirements of residents, workers and businesses.


A shopping mall was built in Shawinigan, Quebec, on the site of a former chlor-alkali and solvent manufacturing plant that had been locat-ed beside a residential area, protecting the health of neighbourhoodresidents and redeveloping a property that had been derelict for morethan 25 years.9

Brownfield Redevelopment’s Impact onthe Canadian Economy

In addition to providing important economic, environmental and social benefits at the community level, brownfield redevelopment can generatesubstantial economic benefits to the overall Canadian economy, accordingto a preliminary economic study commissioned by the NRTEE in 2002.11

The study sought to identify the goods and services associated with thebrownfield redevelopment sector of the Canadian economy, and model thesector’s income multiplier effects on the economy—how one dollar spenton an activity is re-spent (through several rounds) on further activities andcommodities.

The study concluded that brownfield redevelopment has an extremely highmultiplier effect, reflecting the high service content of the brownfield rede-velopment cluster and the large number of interfirm linkages that typifybrownfield redevelopment activity (e.g. the high degree to which thebrownfield sector purchases goods and services from other sectors of theCanadian economy).

(For more information on the study, see Annex 3.)

False Creek, Vancouver, B.C., before redevelopment, 1950s False Creek, Vancouver, B.C., 2002

If brownfields hold such great potential for revitalizingCanadian neighbourhoods, why is there not more redevel-opment of such properties?

In looking at the challenges to brownfield redevelopment,it is important to recognize that there is no one type ofbrownfield. Each brownfield comes with its particular set ofproblems and opportunities. Its prospects for redevelopmentare driven by both its past—the history of activity on thesite—and its future, shaped by such factors as market inter-est, liability, the municipality’s plans for future use andremediation* technologies.

In terms of their prospects for redevelopment, brown-fields can be grouped into three general tiers:12

� In the top tier are sites whose market values greatlyexceed the costs of remediation, and which account forperhaps 15 to 20 percent of contaminated sites in thecountry. Redevelopment of these brownfields is oftendriven by market forces and, because they tend to bevery profitable, they do not remain abandoned or idlefor long. That is why many former industrialized sitesare redeveloped without any special attention or outsideassistance.

� In the bottom tier, and representing another 15 to 20percent of all contaminated sites, are properties wherethe cost of cleanup far exceeds the value of the landafter remediation. Together, high cleanup costs anduncertainty far outrun any market interest. Many suchsites are in rural or remote areas or in smaller urbanareas. These properties have no realistic prospects forredevelopment in the foreseeable future.


Challenges FacingBrownfield Redevelopment

2The Case for aNational Strategy:

Most brownfields remain in limbo under

conventional market forces.

� The middle tier, with perhaps 60 to 70 percent ofCanada’s contaminated sites, is the most intriguingand complicated group. Cleanup costs are high forthese sites, but so too is the potential for redevel-opment. These brownfields are likely to be inestablished urban areas and along transportationcorridors, where municipal services are readilyavailable. The market value of the land itself, oncecleaned up, may be slightly above or slightly belowthe combined cost of land and cleanup. The sitessit idle because they face too many hurdles for con-ventional market forces to overcome. All the otherpotential social, environmental and economic ben-efits are therefore lost. Under these conditions, thebrownfields remain in limbo, with little prospect ofremediation or reuse without strategic interventionto address the barriers.

The impasse confronting this middle tier of brown-fields is rooted in several areas of challenge that,individually or in combination, can affect redevelop-ment in different ways. These are discussed below.

Brownfield redevelopment is hindered by a lack of access to capital from traditional sources.The lack of access to capital for upfront costs has beenone of the most important obstacles to brownfieldredevelopment.

Traditional sources of capital have generally beenreluctant to support the upfront site assessment* andcleanup phases of brownfield redevelopment projects.Many lenders are concerned about the lack of liquidityin holding a brownfield property as security, and fearbeing unable to realize on security offered in connec-tion with a financing arrangement. Some lenders alsomay fear exposing themselves to regulatory* and civilliability* in the event they come into possession of anunremediated site. The capital-intensive character ofbrownfield projects forces lenders to seek out assur-ances that the risks associated with brownfieldredevelopment are worth taking. However, brownfieldredevelopers can rarely offer such assurances.

Even if traditional financial institutions were ableto obtain sufficient reassurance before lending capitalto brownfield developers, the basic economics of manyprojects still will not attract many investors. This isespecially true when the rates of return on redeveloped

brownfields are compared with those from developedgreenfield sites, which typically have a much shorter devel-opment period. For example, a developer may choose toacquire an untouched greenfield site and build a facilitythat specifically meets its needs. Alternatively, it may purchase a brownfield property that may be contaminatedbut is located in a fully serviced central area of a city. Inthe latter case, the developer will need to spend consider-able time and money having the site assessed to determineexactly what contaminants it may contain. The developerwill have to find the necessary upfront capital to accom-plish even this preliminary task. Additional funding willthen be required for site cleanup. All this must occurbefore site redevelopment commences. These pre-projectcosts can make redevelopment prohibitively expensive.Moreover, when estimating their borrowing needs for aproject, redevelopers must bear in mind the cost of insurance products that help guard against cost overrunsduring the remediation process. Such upfront expensesplace brownfield projects at a disadvantage compared withgreenfield projects on agricultural lands or other openspaces at a city’s perimeter.

Questions over liability increase uncertainty and risks for all partiesinvolved in brownfield redevelopment.13

Under current provincial and federal legislation, partic-ipants in a brownfield redevelopment project may beexposed to liability arising from the contaminationcaused by the property’s original use—even if the prop-erty was managed according to the laws and standardsof the day. Each participant is exposed to potentialjoint and several* regulatory and civil liabilities. That is,each could be individually exposed to the total of allthe liability that might emerge when land use changesfrom vacant or idle to active and occupied.

In certain jurisdictions, regulators will not providean approval for a remedial action plan or a certificationof completion after remediation. Even where these areavailable (in British Columbia, for example), the pro-tection afforded is limited, because liability can bereopened for a wide variety of reasons (principally relat-ed to changes in standards and changes in use).

The absence of reliable closure on liability and theunpredictable duration of the risk of liability, as well asthe amount of that potential liability, affect all interest-ed parties:


� Owners of brownfields may be reluctant to returnlands to other uses because they are unwilling toaccept the risks associated with civil liability tosubsequent third-party owners and occupants ofredeveloped sites, as well as the potential regulatoryliability arising out of changes in land use. Whilesome developers may be prepared to accept a trans-fer of liability, there is no provision in any federalor provincial legislation to permit liability transfersthat would be binding on regulators and third par-ties. Consequently, many owners choose to keepthe sites vacant as the best approach to managingrisk exposures. (Insurance tools are available toprovide some relief from liability, but can provideonly limited periods of protection and have premi-ums that typically are too high for smaller sites).

� Conventional developers may be reluctant to rede-velop because they are unwilling to assume liabilityrisks or, if they are willing, lack access to a mecha-nism that enables them to assume such risks withpredictable closure.

� Lenders may be unwilling to finance redevelopmentprojects for fear they will be exposed to liability.

� Municipalities may feel compelled to impose envi-ronmental requirements and obtain indemnities toease their own liability concerns.

� Provincial agencies may be unwilling to grant rede-velopment approvals because of ongoing concernsover having to assume liability.

� Ultimate occupants or end-users are subject to thesame liabilities that apply to current and formerusers. As a result, some may be reluctant tobecome involved, fearing they will be held respon-sible for the environmental impacts flowing fromcontamination caused by original property uses.

Compounding the issue of liability is the role the“polluter pays” principle has come to play in guidingpublic policy. The polluter-pays principle is an estab-lished policy principle aimed at addressing contaminationresulting from current industrial activity. The principleseeks to ensure that companies manage their activities ina manner that does not create adverse environmentalimpacts beyond established regulatory standards.However, some analysts have suggested that when appliedto brownfield redevelopment, the principle has had theunintended effect of preventing redevelopment and reuse.

The difficulty arises in applying today’s standards toactivities that took place long ago—more than a centuryin some cases. The proponents of such activities—the“polluters” from today’s perspective—are often long gone.In the absence of the original polluter, the polluter-paysprinciple may result in liability being assigned to anyparty that comes into contact with such properties. As aconsequence, many parties involved as subsequent own-ers or potential redevelopers are reluctant to act, fearingthey might attract liability claims. It is not simply privateproperty owners who are affected—many brownfield siteshave passed into the hands of municipalities and othersnot connected with the original acts of contamination.

Prospective developers of brownfieldsmay face inflexible and inconsistentrequirements for assessing risks on theirsites.Provincial and municipal approvals processes oftenrequire brownfields to be remediated to meet a genericset of criteria with universal applicability, even where asite-specific risk assessment indicates that the conditionof the property, and its anticipated uses, may not war-rant this approach.

Various levels of government in Canada do notalways agree on the validity of risk assessments. Forexample, some municipalities do not accept risk assess-ment as a valid basis upon which to remediatebrownfields. Instead, due to concerns about liability,they may impose additional requirements for environ-mental approvals. These can include, for example,requiring remediation beyond provincial standards asthe condition for granting municipal approvals.

Brownfield redevelopment must cut acrossdiverse jurisdictions as well as severaldisciplines.Parties developing brownfields face regulatory require-ments and legislated processes established by federal,provincial and municipal governments. Each level ofgovernment may be required to review and approve aproposed brownfield redevelopment project. Despiterecent efforts to harmonize the requirements of differ-ent governments in some areas (such as environmentalassessment), developers may still face overlapping andeven inconsistent requirements.

7Cleaning up the Past, Building the Future: A National Brownfield Redevelopment Strategy for Canada

At the same time, brownfield redevelopment can becomplex. It necessarily involves a number of disciplinesand responsibility areas within a single government. At theprovincial and municipal levels, for example, there may berequirements or issues in the areas of waste management,water resources, land use planning, economic develop-ment, transportation and finance. Without awell-coordinated approach at each government level thatintegrates planning, review and approval requirements, orclear assignment of responsibilities between governmentsso as to eliminate duplication and overlap, brownfieldredevelopment plans can stall.

Concerns about environmental contamination and liability have dominated community and developerattitudes toward brownfield redevelopment.Brownfield redevelopment has not been a high-profileissue in many communities. There is a general lack ofawareness—among all levels of government, the privatesector and at the community level—of the challenges andopportunities presented by brownfield redevelopment.

As a result, with some important exceptions, com-munity groups, municipal decision makers anddevelopers in Canada have been slow to support theredevelopment of brownfield sites in their neighbour-hoods. Instead, concerns about ongoing liability andresponsibility for cleaning up the properties have tend-ed to dominate the debate over the future of such sites.

Limited awareness also undermines the efforts ofgroups seeking to improve their own capacity to dealwith brownfield issues. Potential developers, for exam-ple, are not always aware of the opportunities forredevelopment or the current best practices for remedi-ation, and may lack the expertise to identify and makeuse of the best available technologies. Such shortcom-ings on the part of developers can, in turn, underminethe confidence of other potential participants in theredevelopment cycle—particularly potential lenders inthe financial sector.

Summing Up: Overcoming Challenges A brownfield redevelopment strategy cannot andshould not target every single brownfield in Canada.The strategy must recognize that different brownfieldsface different challenges and different prospects.Brownfield sites in the top tier do not require specialintervention. Market forces will see to their redevelop-ment. Severely contaminated sites in the bottom tierrequire special and often urgent attention for reasons ofhealth and safety, but from a practical standpoint theircleanup falls outside the focus of this national redevel-

opment strategy.The case for a national strategy for brown-

field redevelopment is founded on theopportunity to cleanup and revitalize that largegroup of brownfields in the middle tier—thosewith very good prospects for redevelopment.For the present, as this section has outlined, anumber of challenges, individually and in com-bination with one another, serve to keep suchsites abandoned or idle.

The challenges to brownfield redevelopmenttypically reflect failures in the market. When mar-kets fail, or are imperfect, those actions thatwould be expected to increase the collectivenational wealth do not take place. This is the casefor brownfields. A number of significant marketfailures prevent redevelopment of brownfields,

even when the redevelopment would create enoughwealth and income to more than repay the cost:14

� lack of access to capital

� regulatory liability risk

� civil liability risk

� limited access to insurance protection


Angus Shops, Montréal, Quebec : half brownfield, half industrial complex, 1978

Aboriginal Peoples and BrownfieldsThe presence of brownfields on Aboriginal lands presents unique chal-lenges. Take First Nation lands, for example:

• the brownfield property may be on existing or former First Nation land(e.g. a First Nation reserve in an urban area, or an abandoned railwayline or reserve land taken for military purposes)

• a First Nation may have an interest in the land on which the brownfieldis located (e.g. it may have a treaty right to hunt on or near the land,or it may have indicated that it wants to select the land as part of aTreaty Land Entitlement process) or

• the land may be subject to outstanding title.

In the case of First Nations, special issues that may need to be addressedinclude:

• the need to conduct formal consultations with the affected/interestedFirst Nation, which can affect project timing, information needs andintergovernmental coordination

• the need to involve the federal government to ensure that its fiduciaryduty and constitutional jurisdiction regarding First Nations are dis-charged

• the need to involve Indian and Northern Affairs Canada in decisionsaffecting First Nation lands, because of the department’s responsibilityfor the Indian Act

• the implications for risk management arising from the unique benefits(e.g. the exemption from taxation in certain circumstances) and con-straints (e.g. the inability to secure a mortgage because the land can-not be legally put up as collateral) flowing from partnerships with FirstNations regarding reserve lands

• the need to recognize and accommodate First Nation approaches tocommunity decision making

• the possibility that property on First Nation land may be subject to dif-ferent regulatory standards

• uncertainty over the legal status of First Nations and the effectivenessof releases for future liability given by Aboriginal communities whencollective rights are involved and not every person gives an individualrelease.

Additional factors may arise when brownfields involve Metis and Inuitpeoples.

Given the scope and complexity of these issues, it may be impractical toinclude brownfields in which Aboriginal peoples have an interest within thenational strategy at this time. Further research and consultation with FirstNations, Metis and Inuit representatives will be required.


� regulatory delays

� stigma and risk perception

� lack of awareness among many key public sectorand private sector groups.

A national strategy must tackle these obstacles headon, adopting specific actions targeted at overcomingspecific market failures to bring these brownfields backinto the marketplace and back to life in Canadiancommunities.

All participants in the brownfield redevelopmentprocess, public and private sector, must participate ifsuch a strategy is to succeed. The financial and insur-ance communities, for example, are essential partnersto any successful strategy. However, the need for gov-ernment leadership and action is particularly strong.Public sector–led initiatives are central to efforts aimedat overcoming the market barriers outlined here, inparticular those of bridge financing and uncertaintyaround liability.

In some Canadian communities, as the followingsection demonstrates, such public sector action isalready underway.

3Recent Progress onBrownfieldRedevelopment

Canadian InitiativesCanada’s experience in brownfield redevelopment is basedon a limited number of impressive initiatives in certainprovinces and municipalities. The lessons from these indi-vidual efforts, though, can serve as the foundation of a morecomprehensive, coordinated national strategy.

1. Legislation Promoting Brownfield RedevelopmentA wide range of federal, provincial and territorial legislationaffects brownfield development in Canada, including legisla-tion relating to environmental management, wastemanagement, bankruptcy, liability and insurance.

Ontario and Quebec have introduced legislation specifi-cally directed at promoting brownfield redevelopment byaddressing key barriers to redevelopment:


The Canadian Council of Ministers of theEnvironmentThe Canadian Council of Ministers of the Environment (CCME) has worked to builda more coordinated and consistent approach to managing contaminated sites inCanada, including brownfields. In the 1990s, for example, the CCME:

• adopted 13 principles governing contaminated site liability

• developed interim soil quality criteria and a protocol for updating the criteria

• developed risk-based approaches to remediation

• issued guidance on developing site-specific soil quality remediation objectivesfor contaminated sites.

Despite the significant challenges, real

progress has been made in redeveloping brownfields in

Canada, the United States and Western European countries.

� Ontario’s Brownfields Statute Law Amendment Act,2001 received Royal Assent in November 2001.The first of two phases of regulations were passedin October 2002 and proclaimed to be in force asof December 1, 2002. The remaining regulationswere expected to be in effect in early 2003. The actseeks to encourage brownfield redevelopment byclarifying environmental regulatory liability andproviding municipalities with more flexibility inplanning and financing (see box 1 for details).

� Quebec’s new legislation to amend theEnvironmental Quality Act and other legislativeprovisions with regard to land protection and reha-bilitation was passed in June 2002. Expected tocome into force in March 2003, it amends the

rules applying to contaminated soil managementand establishes a regulatory system to clarify theroles and responsibilities of the different partici-pants in brownfield redevelopment. It departs fromthe polluter-pays principle, currently reflected inthe Environmental Quality Act, in that persons whohave or have had custody of contaminated land canestablish that they fall under one of three excep-tions to the power of the Environment Minister toorder rehabilitation work to clean up contaminantson the property. Additional protection from regula-tory liability is provided in that, for all regulatedcontaminants, an order from the minister can bemade only if the level of contamination is abovethe regulated use limit.


Box 1

Ontario’s Brownfield Legislation: Key ProvisionsThe Brownfields Statute Law Amendment Act, 2001 adds to and improves the public accountability framework for a set of existing municipal planning andfinancing tools, and creates a new regime for addressing regulatory liability.

Planning and FinancingThe legislation changes the community improvement provisions to accommodate social, economic and environmental activities. It allows municipalities:

• greater flexibility in designating community improvement project areas

• to make grants or loans within such an area to help cover the costs of rehabilitating lands and buildings (including cleanup costs).

The legislation also seeks to encourage owners of brownfield properties to undertake site cleanup by:

• allowing municipalities to freeze or cancel the municipal portion of the property tax on contaminated sites (the Ministry of Finance may match themunicipal tax treatment for the education portion of the property tax)

• providing municipalities with a one-year option to take ownership of land in a failed tax situation (during which time the municipality may go on theproperty to conduct an environmental site assessment).

Environmental LiabilityThe legislation clarifies and limits environmental liability, providing greater certainty for those involved in redevelopment. Clear rules are legislated for:

• site assessment and cleanup standards

• five-year liability protection from environmental orders for municipalities, secured creditors, receivers, trustees in bankruptcy, fiduciaries and propertyinvestigators

• liability protection from environmental orders for owners who follow the prescribed site assessment procedures and file a record-of-site condition statingthat a site meets the appropriate standards

• quality assurance through mandatory use of certified site-cleanup professionals, mandatory filing of a record-of-site condition to a publicly accessibleregistry, acceptance of risk assessments by the Ministries of Environment and Energy, and an enhanced auditing process.

2. Incentive Programs for BrownfieldRedevelopment

Federal Government

In 2000, the federal government established the GreenMunicipal Enabling Fund, administered in partnershipwith the Federation of Canadian Municipalities(FCM). In the 2002 budget, the endowment to FCMwas doubled to $250 million, of which a small portionis allocated for brownfields. The fund can providegrants of up to $100,000 for community brownfieldinventories and assessments of development and policyoptions, but does not cover cleanup costs for brown-field redevelopment.

Provincial/Territorial Governments

Quebec is the only province that has a funding incen-tive program for brownfield redevelopment. ItsRevi-Sols program was launched in 1998 to:

� rehabilitate contaminated sites in the province

� improve the quality of the environment and thehealth of residents

� reduce urban sprawl

� increase economic activity

� promote the use of treatment technologies fordecontaminating soils and groundwater.

Revi-Sols provides grants to communities to cover thecosts of studies (including environmental assessments)leading to rehabilitation work, as well as the actual costs ofrehabilitation work. Proponents eligible for grants includeprivate developers, municipalities or a combination of thetwo. Eligible sites must be intended for development afterrehabilitation, that is, grants are provided only if there isan actual development project. The Quebec governmentwill fund 50 percent of the eligible costs of the preparato-ry studies and cleanup of eligible brownfield sites, with anadditional 20 percent contribution for remediation workthat includes treatment of contaminated soils, materialsmixed with soils, and groundwater.

The program has been well utilized and has result-ed in significant benefits in terms of land arearehabilitated, the level of private sector investment, andincreased property tax revenues (see box 2 for details).

Municipalities

Municipal governments in Canada have demonstratedtheir capacity to be the “on the ground” leaders indeveloping and delivering brownfield redevelopment


British Columbia: Updating Legislationfor Contaminated Sites Management

An advisory panel in British Columbia is reviewing how to make theprovince’s management of contaminated sites more effective and efficient.The panel, established by the Minister of Water, Land, and Air Protection,is looking at issues such as whether current approaches to liability mayhave made parties reluctant to invest in or redevelop contaminated landsin the province, resulting in the creation of numerous brownfield sites.

The panel is also expected to provide recommendations on streamliningthe approvals process for contaminated sites management, funding con-taminated sites administration, and ensuring standards are fair and con-sistent with those of other jurisdictions.

The panel’s interim report was issued in September 2002. One of its rec-ommendations suggests the provincial government should participateactively in the NRTEE’s national brownfield redevelopment strategy.Legislative changes may be introduced in the spring of 2003.

Box 2

Results of Quebec’s Revi-Sols ProgramPhase I of the Revi-Sols program targeted the cities of Montréal andQuébec, where $40 million was earmarked to help finance the study andrehabilitation of contaminated sites between 1998 and 2003 ($30 mil-lion for Montréal and $10 million for Québec City).

Phase I generated so much interest and uptake that the Quebec govern-ment launched Phase II (2000 to 2005) with $50 million aimed at allother urban municipalities in the province. The province’s $90 million willbe matched by a contribution of $90 million from the private and munici-pal sectors, resulting in a total of $180 million directed to the rehabilita-tion of contaminated sites in the province over a seven-year period.

In its first five years, the Revi-Sols program funded the cleanup andredevelopment of 153 projects (101 in Montréal, 22 in Québec and 30in other municipalities) with a total land area of nearly 220 hectares.

In Montréal, the Revi-Sols program has resulted in a $25.6-millionincrease in municipal property tax revenues and 3,400 new housingunits. In the other municipalities, the program has resulted in a $13.4-million increase in municipal property tax revenues.

initiatives, forging community partnerships involvinggovernments and the private sector. For example:

� In Ontario, brownfield redevelopment activities areunderway in many communities as a result of thepromotion and capacity-building activities of theprovincial government in recent years. Ontario’sbrownfield legislation is expected to unlock activityon some of the more challenging sites across theprovince. Hamilton’s leading-edge EnvironmentalRemediation and Site Enhancement (ERASE) Planrepresents the first and largest comprehensivebrownfield redevelopment plan in Canada (see box3 for details).

� Major brownfield redevelopment projects havebeen undertaken in Moncton, Vancouver andCalgary.

� The success of Quebec’s Revi-Sols program hasbeen based on partnerships between the municipaland provincial governments and the private sector(see box 2).

� The Montréal Centre of Excellence in BrownfieldsRehabilitation is an innovative partnership betweenthe City of Montréal, the Province of Quebec andthe federal government (see box 4 for details).

Annex 2 provides details on several recent brown-field redevelopment success stories in Canadiancommunities.

Private Sector Insurance Companies

A number of larger private insurers are offering policiesdesigned specifically to assist in contaminated andbrownfield site cleanup. Among these policies are:

� the cleanup cost cap, which protects developerswhen cleanup costs exceed the estimates because ofthe discovery of contaminants not evident whenthe cleanup was designed and/or because ofchanges in regulatory requirements

� pollution liability, which provides coverage againstthe following types of costs: third-party claims forsite remediation, bodily injury and property dam-age arising from a pollution condition; remediationof newly released or preexisting contamination onthe insured’s property; and legal defence costs

� secured creditor coverage, which reimburses finan-ciers for lost loan payments if a borrower defaults,and also compensates them for collateral value lossarising from a pollution condition.

There are other policies and combinations of poli-cies, depending on the insurer, and most can betailored to the specific needs of the developer/project.Limits have increased substantially, with coverage of upto $200 million now available from a single carrier.However, all these policies, regardless of the carrier ordollar limit, have a time limit within which claimsmust be made. After that time, there is no protection,though the liability risk continues. Although these poli-cies can be offered on any size of brownfield, the price


Box 3

Hamilton’s ERASE PlanThe City of Hamilton has been working on redeveloping brownfields inits older industrial neighbourhoods and waterfront for several years. In1997, an Industrial Redevelopment Task Force, including local govern-ment, business and community representatives, identified the brownfieldchallenges facing the city and the priority sites for redevelopment.

The City prepared a community improvement plan, the EnvironmentalRemediation and Site Enhancement (ERASE) Plan, to promote the cleanupand reuse of brownfield properties in a 3,400-acre older industrial area.The City began consultations with the Province of Ontario on the use offinancial incentives to stimulate redevelopment, and received provincialapproval in mid-2001. In its initial phase, the ERASE Plan offers:

• a grant program to assist with the study and cleanup of brownfields,financed through tax increment financing*—a first for a majormunicipality in Canada

• assistance with marketing

• municipal property acquisition, investment and partnerships.

Results in the first year of the ERASE Plan include:

• redevelopment of 11.3 acres of industrial land

• construction and refurbishing of 228,000 square feet of buildingspace

• leveraging of $15 million in private investment through $1 million incity grants

• an estimated $400,000 a year increase in revenues from propertytaxes.

Over the next few years, the City hopes to expand the range of incen-tives, build more partnerships with local groups, and encourage directsupport from the provincial and federal governments.

ences and improve certainty through legislation, policystatements or guidance initiatives, more projects havemoved forward with fewer complications.

Strategic public investments: The public sector hasplayed a key role in making available financial incen-tives that bridge financing gaps, particularly since fewprivate sector finance companies view brownfield proj-ects as attractive or viable in the early stages ofevaluation. Tax incentives and direct public fundinghave been strategic investments, levering private invest-ment capital and creating jobs. All levels of governmenthave had a role to play in this area. Creating a transpar-ent and accountable delivery system to distribute fundshas been vital to the success of public sector assistanceinitiatives.

for some smaller projects is prohibitive due to the fixedcomponent of underwriting costs for the insurer.

Lessons from Canadian and InternationalExperienceOver the past decade, significant progress has beenmade in overcoming the challenges posed by brown-fields in Canada, the United States and Europe.Governments have established legislative frameworksand financial incentive programs to encourage redevel-opment and build partnerships (see Annex 4 for moredetails on the brownfield redevelopment policies andinitiatives of five industrialized countries).

This experience suggests that there are several keyfactors to launching and implementing a successfulbrownfield program:

Public policy: Where government agencies have madea concerted effort to harmonize jurisdictional differ-


Atlantic RBCA: A Model of RegionalCooperation

Under the Atlantic Risk-Based Corrective Action (Atlantic RBCA) program,Nova Scotia, New Brunswick, Prince Edward Island and Newfoundland andLabrador have joined forces to promote a risk-based approach to cleaningup sites contaminated by petroleum.

Each participating province maintains its own regulations governing envi-ronmental protection. When a spill occurs or contamination is discovered,the provincial department of environment is advised and an investigationis initiated. A standard sequence of RBCA activities is performed for allhuman health and ecological risk/exposure assessments.

The approach seeks to provide greater assurance for all parties—commu-nity residents, industry, investors and local governments—that appropri-ate standards are being applied, that the cleanup is being carried outproperly and that the environment is protected.

Box 4

Montréal Centre of Excellence inBrownfields Rehabilitation

The Montréal Centre, a partnership of the City of Montréal, the Province ofQuebec and the federal government, is a not-for-profit organization thatinvests in brownfield redevelopment technology demonstration projects incooperation with industrial partners and technology developers. Since itwas established in 1997, the Montréal Centre has managed $6 million indemonstration projects involving a wide range of technologies as well asrisk assessment. The Centre has invested another $2.4 million in a technology platform and showcase located on the Lachine Canal, the oldestindustrial area of Montréal.

Cleanup at Angus Shops site, 1998Angus Shops, Montréal, Quebec: Before site cleanup, 1998


Managing Federally Owned Contaminated SitesNew policies related to the management of federally owned contaminated sites were issued by the federal Treasury Board in 2002. The Contaminated SitesManagement Policy requires all federal departments and agencies (with a few exceptions) to:

• make best possible efforts not to contaminate federal real property

• be responsible for the remediation of negative environmental effects resulting from departmental or agency actions

• address the most-affected sites first—priority determined by the Canadian Council of Ministers of the Environment (CCME)’s National Classification System

• where remediation is the appropriate management response, remediate sites to a level consistent with the requirements for its current or intended federaluse as determined by the CCME

• prepare contaminated site management plans within one year of the Treasury Board’s approval of the Management Policy.

Under the Policy on Accounting for Costs and Liabilities Related to Contaminated Sites, federal departments and agencies must:

• account for and report as liabilities expected management and remediation costs related to contaminated sites

• estimate costs using the most appropriate methods for their circumstances.

Community involvement to sustain momentum:Education and training have helped build communityinvolvement and capacity for action on brownfields.Behind most successful projects has been an informedlocal community that is engaged in the issues and pre-pared to examine land use options, cleanup methodsand site design. Informed and well-trained municipaland state or provincial regulatory officials also havebeen able to address the special challenges and oppor-tunities of brownfields in their area.

Leadership: Leadership, at all levels, has often provento be the most critical factor in the success of a brown-field redevelopment project. Champions of brownfieldredevelopment have included local citizens, landown-ers, politicians and business leaders. In the UnitedStates, for example, the consistent leadership of mayorsand governors has been essential in moving brownfieldredevelopment onto the public policy agenda, testinginnovative solutions and sustaining momentum.

� putting in place the essential building blocks of a coor-dinated, comprehensive national approach to cleaningup and redeveloping brownfields in Canada

� building on recent initiatives in several provinces andcommunities to promote brownfield redevelopmentacross the country as a practical tool for sustainabledevelopment

� engaging the full spectrum of public, private and com-munity interests involved in community development

� addressing the priority challenges to brownfield redevel-opment through a mix of policy instruments targeted atspecific market failures

� focusing efforts on the middle tier of brownfields, wherestrategic public sector initiatives are needed to achieveredevelopment.

The strategy proposes a blueprint for action in threecritical areas:

� Strategic Direction 1: Applying strategic public invest-ments to address upfront costs

� Strategic Direction 2: Establishing an effective publicpolicy regime for environmental liability and risk man-agement

� Strategic Direction 3: Building capacity for and com-munity awareness of brownfield redevelopment.


4Strategic Directions:A Blueprint for Action

Goals of the National Strategy –

The national brownfield redevelopment strategy aims to

transform brownfields into vibrant centres of community

life. It seeks to do this through:

The recommendations represent a package of com-plementary and mutually reinforcing initiatives toaddress the key market failures hindering brownfieldredevelopment in Canada. Development of these rec-ommendations was guided by an evaluation of policyinstruments commissioned by the NRTEE (see Annex5).15 Table 1 summarizes the recommendations undereach of the three strategic directions, indicating which

levels of government bear primary responsibility forimplementing each recommendation.

Outside the three strategic areas, the strategy alsoincludes recommendations that do not target specificmarket failures; rather they address the need for publicsector leadership in advancing the redevelopment ofbrownfields. These “leadership recommendations” aredealt with in the section “Moving Forward.”


Table 1 Summary of National Strategy Recommendations

Strategic Direction Recommendations Responsibility

1. Applying strategic 1.1 Implement tax system changes to promote brownfield Federalpublic investments to redevelopment Provincial/Territorialaddress upfront costs Municipal

1.2 Remove liens and tax arrears against qualifying Federalbrownfield sites Provincial/Territorial

Municipal

1.3 Provide mortgage guarantees for qualifying Federalbrownfield sites

1.4 Provide revolving loans for qualifying brownfield Federalsites Provincial/Territorial

Municipal

1.5 Provide grants for qualifying brownfield sites FederalProvincial/TerritorialMunicipal

2. Establishing an 2.1 Allow binding contractual allocation of liability Provincial/Territorial effective public policy regime for 2.2 Provide for termination of regulatory liability Provincial/Territorialenvironmental liability and risk management 2.3 Provide for termination of civil liability after a Provincial/Territorial

limitation period Federal

2.4 Create an insurance fund for post-liability termination Provincial/Territorialclaims Federal

2.5 Apply site-specific assessment and approvals regime Provincial/Territorial FederalMunicipal

2.6 Provide for regulatory approvals of remediation Provincial/Territorial

3. Building capacity for 3.1 Increase capacity to undertake brownfield Federal and community redevelopment projects Provincial/Territorial awareness of brownfield Municipal redevelopment

3.2 Facilitate the demonstration of innovative Federal environmental technologies and remediation processes Provincial/Territorial

Municipal

3.3 Raise awareness of the benefits of brownfield Federalredevelopment Provincial/Territorial

The strategy is intended as a tool for all govern-ments in Canada. However, it is important to note thatnot every recommendation will apply equally to everyprovincial or municipal government. In some cases,one or more provinces may already have introducedmeasures consistent with the objectives of a particularrecommendation, even if the actual approaches differfrom what is proposed here.

Strategic Direction 1: Applying Strategic Public Investments toAddress Upfront CostsThe recommended actions under Strategic Direction 1seek to:

� apply strategic public investments, by removing taximpediments and providing loans, grants andmortgage guarantees, to lever private capital andovercome the barriers in the market to accessingcapital for the early stages of redevelopment

� establish an effective mechanism through whichthe federal, provincial/territorial and municipalgovernments can provide financial incentives toqualifying brownfield redevelopment projects.

Publicly funded financial incentives represent astrategic investment in the future of brownfield sitesand their surrounding communities.

The lack of capital in the early stages of brownfieldredevelopment—for the upfront costs of site assessmentsand cleanup—is a significant obstacle to brownfieldredevelopment. Financial incentives focused on over-coming this “bridge financing” problem are a centralelement of any successful national brownfield strategy.

Public investments in bridge financing can putbrownfields and greenfields on the same “level playingfield” by eliminating the upfront cost disadvantages ofbrownfield redevelopment. Public investments can leverfar greater amounts of private sector capital for redevelop-ment projects, resulting in substantial economic benefitsin the form of new jobs, new businesses and more taxrevenue. Public investments at this crucial stage can helprestore environmental quality, reduce threats to humanhealth and contribute to community revival.

No single type of financial assistance can address allof the problems facing brownfield properties. Differentpolicy instruments will be needed for different partici-pants and different brownfield sites.


1.1 Implement Tax System Changes to PromoteBrownfield Redevelopment

Recommendation

That the federal government amend Sections 18 and20(1) of the Income Tax Act to allow remediationexpenses to be treated as a deductible expense incomputing income.

That provincial governments permit the deductionsfor remediation expenses in the calculation ofprovincial income taxes.

That the federal government amend the Income TaxAct to create a Brownfield Redevelopment CurrentDeduction and Investment Tax Credit similar to theScientific Research and Experimental DevelopmentProgram currently provided for in Sections 37 and127 of the act.

That provincial governments with established scien-tific research and/or experimental developmentincentive programs extend the application of theseprograms to qualifying expenditures for remedia-tion work at brownfield sites.

Rationale

The proposed tax treatment:

� makes it possible to deliver funds at early projectstages, where capital market imperfections arehigher because of the unresolved environmentalstatus of the land

� provides developers with greater certainty of receiv-ing the funds, enabling them to reduce the costs ofdelays and incorporate the benefits into their projectplanning; this in turn increases the number of proj-ects that can clear initial cash and feasibility hurdles

� is a cost-effective means of delivering the financialassistance that is necessary to achieve developmentof brownfield properties.

However, the tax system lends itself to simple rulesthat may apply to a wider group of recipients thanintended. Applicability criteria must therefore bedesigned to reduce the likelihood of publicly fundedfinancial benefits going to brownfields in the top tier,which would have been developed in any event.


Discussion

The corporate tax system has traditionally been animportant industrial policy instrument in Canada.Investment tax credits, accelerated depreciation andother sorts of exemptions, deductions and credits havebeen widely used to encourage various corporateactivities.

Well-designed tax incentives can be an effectiveway to encourage the cleanup and redevelopment ofbrownfield sites. Potential Canadian tax incentivesfocused on brownfield sites would have objectives simi-lar to traditional tax incentives aimed at promotingeconomic development—overcoming capital marketimperfections and channelling economic activity toachieve broad public benefits.

A tax-based system generally provides an efficientand equitable means of providing assistance to a widerange of businesses. Compared with other forms offinancial assistance, such as grant programs, taxchanges can be more directly accessed by companies,normally require less administration, and are subjectto the normal standards of tax accountability andcompliance.

The removal of tax-based impediments to environ-mental cleanup would help brownfield sites bettercompete economically with greenfield sites. The taxchanges would also provide a cash-flow cushion forcompanies to help promote development, because capi-tal raised from investors or borrowed from creditorscould be targeted directly to remediation and redevel-opment rather than being used to cover tax obligations.

Under current tax provisions, funds spent on reme-diation at brownfield sites typically have to be treatedas an upfront capital cost rather than an expensedeductible against current annual income. Under theproposed incentive, any party incurring qualifyingremediation expenditures would be entitled to deductthese amounts as expenses in computing income. Thiswould apply at both the federal and provincial levels.(The expenditures could be identified as either pay-ments or capital costs. The deduction could be claimedin the year the cost is incurred or it could be carriedforward without limitation to subsequent years.)

Another option available to the federal governmentis to create a Brownfield Redevelopment CurrentDeduction and Investment Tax Credit to encouragegreater private sector participation in brownfield rede-

velopment. With this approach, qualifying remediationcosts would be classified as deductible business expens-es which could be carried forward and would beeligible for an investment tax credit. Such an incentivecould be valuable to a party that does not earn positivetaxable income in a year in which it incurs qualifyingexpenditures. If the tax credit were claimed, qualifyingexpenditure deductions made in computing incomewould then be reversed.

To promote greater on-site soil remediation, ahigher deduction could be provided for in situ remedi-ation than for cleanup measures involving the removaland transport of contaminated soil to another site. Thiswould encourage active cleanup of contaminated soilrather than relocation of the contamination problem.

Appropriate controls would need to be introducedto ensure that financially viable projects do not bene-fit unduly from using the incentive as a subsidy.

The proposed Brownfield Redevelopment CurrentDeduction and Investment Tax Credit is similar inmany respects to the Scientific Research andExperimental Development (SR & ED) program cur-rently provided for in Sections 37 and 127 of theIncome Tax Act. Seven provinces currently sponsor similar SR & ED incentive programs that deliver addi-tional benefits to qualifying projects carried out in theirjurisdictions. To encourage brownfield redevelopmentprojects, the provinces should extend their SR & EDincentive programs to cover remediation work onbrownfield projects in their jurisdictions. In addition,qualifying remediation expenditures should generaterefundable tax credits at the provincial level (whetheror not incurred by a small business corporation).

1.2 Remove Liens and Tax Arrears AgainstQualifying Brownfield Sites

Recommendation

That the federal and provincial governments jointlydevelop principles and criteria for removing federaland provincial liens and tax arrears in specific situa-tions.

That the federal and provincial governments amendtheir applicable bankruptcy and corporations legis-lation to ensure that when a trustee in bankruptcyquitclaims a property owned by a bankrupt compa-

ny, then the property vests in the Crown; if thecompany is incorporated under the CanadaBusiness Corporations Act, then the property vestsin the Crown in right of Canada; if the company isprovincially incorporated, the property will vest inthe province.

Rationale

Removal of liens and tax arrears:

� reduces upfront costs to brownfield developers andprovides greater certainty of funds to developers atearly project stages (e.g. during purchase negotia-tions), when it is difficult to obtain regularfinancial assistance

� represents a highly cost-effective approach to deliv-ering financial assistance to brownfields, because itcan be delivered for free (except for administrationcosts) to sites that may be of zero or very littleworth to the government in the absence of anyredevelopment.

Discussion

Many brownfield properties are delinquent in theirproperty tax payments to the point where they are sub-ject to a municipal tax sale*. However, such propertiesare often difficult to sell, because of deteriorated condi-tions, known or perceived site contamination, and theanticipated high costs of remediation. If left vacant,these sites typically are prone to vandalism and becomea burden to the municipal government. Althoughmany of these sites do not pay municipal taxes, they dodraw heavily upon municipal resources in the form ofpolice, fire and inspection services, as well as enforce-ment and infrastructure maintenance services.

Often, such properties are also encumbered by out-standing Crown liens*, both federal and provincial,which cannot be cancelled through a municipal tax sale.The combination of back taxes and Crown liens can ren-der a local redevelopment proposal unfeasible. The prioragreement to remove all or part of these liens could be adeciding factor in the financial viability of a potentialbrownfield redevelopment project. This form of incen-


tive has been offered in the past on an ad hoc basis by alllevels of government. (The actual removal of the lien ortax arrears should not be finalized until the completionof cleanup, to prevent a situation where a lien is forgivenand then no redevelopment takes place.)

Some provinces are considering developing a set ofcriteria and protocols to qualify brownfield redevelop-ment projects for removal of all provincial liens in theevent of investor interest. This process would be moreeffective if clear and consistent criteria and processeswere established across all governmental jurisdictions,so that developers and purchasers would know whethera particular site, wherever it might be located, was eli-gible for lien removal. In particular, a federal programto remove liens against affected properties could belinked through a federal-provincial agreement that,among other things, standardizes criteria and protocols.

Changes to federal and provincial legislation arealso needed to address the special question of brown-field sites that are caught up in bankruptcyproceedings. The courts have interpreted section 20 ofthe federal Bankruptcy and Insolvency Act to mean thatwhen a trustee in bankruptcy quitclaims* a property,the property returns to the bankrupt company.However, this in effect creates an orphan site, with noentity in control of the property—a development thatcan have dramatic and even dangerous consequences.

To ensure that there is some entity in control ofthe property when a trustee in bankruptcy quitclaims aproperty, the Bankruptcy and Insolvency Act, the EscheatsAct and the federal Canada Business Corporations Act, aswell as the provincial equivalents, will need to beamended to state that, under these circumstances, theproperty vests in Her Majesty in right of Canada, orthe province, as appropriate. It is also vital that the des-ignated ministry receive the necessary funding tomanage these sites until remediation.

(It should be noted that removal of the lien doesnot release the original debtor from the amount owingto the Crown. Similarly, the vesting of property in theright of the federal or provincial government does notrelease the original polluter from liability, nor, withproper safeguards, would it create any additional liabili-ty for the Crown).


1.3 Provide Mortgage Guarantees for QualifyingBrownfield Sites

Recommendation

That the Canada Mortgage and HousingCorporation provide, under its current mandate,mortgage guarantees for brownfield redevelopmentprojects providing housing.

That the federal government expand the mandate ofthe Canada Mortgage and Housing Corporation toallow the corporation to provide mortgage insur-ance for residential, commercial or industrialdevelopment for qualifying brownfield sites.

Rationale

Government mortgage guarantees:

� target the market failure of lack of access to capitalfrom conventional sources that arises when lendershave concerns over the reduced value of propertiesand collateral due to contamination

� complement the tax changes and lien relief pro-posed in recommendations 1.1 and 1.2, becausethe impact of mortgage guarantees on capital mar-ket imperfections is likely to be in thepost-remediation stage, when the environmentalstatus of the land is clear enough to attract loanfinancing from conventional sources.

Discussion

Government mortgage guarantees have been one of theprincipal instruments used to encourage brownfield rede-velopment in the United States. In Canada, the CanadaMortgage and Housing Corporation (CMHC) has actedas a vehicle to facilitate higher-risk mortgage financing, aswell as direct lending in certain circumstances.

To encourage Canadian banks and other financialinstitutions, such as insurance companies, to getinvolved in funding brownfield redevelopment,CMHC should, without altering its existing legislativemandate under the National Housing Act, providemortgage insurance for brownfield redevelopmentsites—providing that the purpose of the redevelopmentis to provide housing. Mortgage guarantees could beprovided via programs similar to those that currently

exist under CMHC and the federal Small BusinessLoan program.

Expanding the mandate of CMHC to cover resi-dential, commercial and industrial development ofbrownfield sites would give even more impetus for pri-vate sector action. This type of mortgage insurancecould help encourage traditional lenders to provideadditional loan capital for brownfield developers. Onlyminimal government funding would be needed, asCMHC assistance would remain a self-sustaininginsurance program with fees charged to those develop-ers requiring this type of insurance.

Brownfield redevelopment sites are unlikely to havea higher default rate than the property portfolio forwhich CMHC currently provides mortgage insurance.To the extent that traditional lending institutions agreeto participate in such public initiatives, they will never-theless still rely on their own due diligence investigationsto ascertain the feasibility of proposed projects. Whereprivate sector support is not forthcoming, CMHCwould not be prevented from lending directly.

1.4 Provide Revolving Loans for QualifyingBrownfield Sites

Recommendation

That the federal, provincial and municipal govern-ments establish brownfield revolving loan fundprograms to make low-interest loans available toboth private and public parties.

That all levels of government establish qualifyingcriteria to target loans to brownfield redevelopmentprojects that contribute positively to the economic,social and environmental benefit of the local com-munity and to its revitalization.

Rationale

Revolving loan funds:

� are particularly well suited for the middle tier ofbrownfields that are only marginally unprofitableto private developers, because they deliver a modestlevel of financial assistance in the form of reducedinterest rates while addressing capital marketimperfections that prevent some projects fromaccessing any form of financing

Revolving loan fund programs could be adminis-tered by the Federation of Canadian Municipalities,CMHC, the Business Development Bank of Canada,or qualifying provincial or municipal agencies.

Qualifying criteria for the loans would need to besufficiently flexible to reflect local circumstances. Ingeneral, qualifying projects should demonstrate thepotential for one or more of the following benefits:

� economic benefits, such as the creation or reten-tion of employment opportunities, establishmentof new businesses, and increases in municipalproperty tax revenues

� social benefits, such as neighbourhood or commu-nity renewal and revitalization, and reducedpressure for urban sprawl into greenfield areas

� environmental benefits, such as restoration of envi-ronmental quality (air, water or land), eliminationor reduction of threats to human health and safety,and conservation of biodiversity through the pro-tection or preservation of wildlife habitat.

Consideration should also be given to making apercentage of the loan forgivable in certain specific cir-cumstances, as has been successfully done in a numberof U.S. states.

1.5 Provide Grants for Qualifying Brownfield Sites

Recommendation

That the federal, provincial and municipal govern-ments cooperate to provide a comprehensive grantfunding program for qualifying brownfield sites.

That all levels of government jointly establish quali-fying criteria to target grants to brownfieldredevelopment projects that contribute positively tothe economic, social and environmental benefit ofthe local community and to its revitalization.

That grant funding be available only to municipali-ties and non-profit organizations.

Rationale

Grants:

� complement the other financial incentive recom-mendations, because they can target those


� complement the proposed mortgage guarantees atthe federal level (recommendation 1.3), by allow-ing for substantial incorporation of regional andlocal decision making and application of localknowledge on a targeted, project-by-project basis,thereby enabling loans to be extended to areaswhere primary lenders might not reach.

However, a revolving loan program must be welldesigned and focused in order to avoid delays in project-by-project approval by multiple government partners—suchdelays could act as a disincentive to developers.

Discussion

Revolving loan funds can be a powerful and flexiblefinancial tool for promoting brownfield redevelopmentin both urban and rural areas. (Such funds are called“revolving” because they use loan repayments to makenew loans for the same authorized purposes.) Thisapproach has been used successfully, for example, bythe Toronto Atmospheric Fund (TAF). TAF, establishedin 1992 with an endowment of $23 million from theCity, uses revolving loans (and grants) to finance localinitiatives that support its mandate.

An essential component of the BrownfieldsEconomic Redevelopment Initiative of the UnitedStates has been the creation of cooperative agreementswith states and municipalities to capitalize brownfieldcleanup revolving loan funds. Each loan fund pilotproject is funded with up to US$1 million over fiveyears. Revolving loan funds enable states and munici-palities (as well as specified coalitions) that have shownleadership in local redevelopment programs to makelow-interest loans to public and private applicants tofacilitate the cleanup and redevelopment of brownfieldproperties.

Revolving loan programs of this type in Canadawould greatly encourage the upfront remediation workneeded to trigger action on brownfield properties, andwould help fill the gap created when financial institu-tions refuse to finance remediation costs. They couldsupport municipalities and their private sector partnersthat demonstrate their commitment and readiness toact. They could also help fund brownfield redevelop-ment efforts in rural areas, through funds availablefrom the repayment of initial loans made to urbanbrownfield sites.

brownfields that require substantial, direct financialassistance to realize their potential

� are the most cost-effective and flexible method fordelivering a significant volume of financial assis-tance, because the amounts can be tailored to eachproject’s needs

� avoid the potential risk involved in delivering assis-tance through the tax system, where the benefitscould be enjoyed by a wider group of recipientsthan intended

� provide greater certainty to developers in theirproject planning

� can be administered jointly with revolving loanprograms, so that project evaluation and negotia-tions need only be carried out once.

Discussion

As demonstrated by the Revi-Sols programin Québec, grant funding can be animportant tool for promoting brownfieldredevelopment, particularly where brown-field sites have generated little interest orsupport from the private sector.

Establishing qualifying criteria willensure that public funding is being uti-lized in the most effective manner toovercome market conditions and lever pri-vate capital. Qualifying criteria shouldensure that these forms of public fundingare not provided to properties that wouldbe redeveloped in any case.

As with revolving loans (recommendation 1.4), cri-teria for grants would need to be sufficiently flexible toreflect local circumstances.

Projects that qualify for grants can stimulatemuch-needed site assessment initiatives and the wideradoption of market-ready “green remediation tech-nologies.” They could also promote sustainable designelements within land use planning projects. Thisapproach would help integrate the objectives ofrestoring and redeveloping sites while sponsoringmore innovative approaches to municipal land use

planning and economic development initiatives.Current funding models (such as the Federation of

Canadian Municipalities’ Green Municipal EnablingFund) should be reviewed, adapted or expanded toaccommodate the specific funding needs of brownfieldredevelopment. A new grant funding program, involv-ing all levels of government, could be established withcriteria for site assessment and revitalization demon-stration projects. The criteria should limit theavailability of grants to municipalities and non-profitorganizations (including properties remediated underthe control of these entities) to target those sites whereremediation is not market-driven. (For example, amunicipality may want to remediate a brownfield siteto create a park or build a swimming pool.) However,grant funding could also flow through a municipalityor non-profit organization to eligible private sectorprojects.


A new neighbourhood on the former Angus Shops site in Montréal, 1999

Grant programs generally require a greater degreeof administration and flexibility than other financialincentives, and are more effective when delivered to asmall number of entities for specific projects.

The proposed grant funding program could bedeveloped in consultation with key organizations suchas the Federation of Canadian Municipalities, provin-cial municipal associations, the Canadian BankersAssociation, CMHC, the Canadian Urban Instituteand the Urban Development Institute.

� provide a more controlled framework for futurerisk, enabling developers to better quantify thefinancial implications and spread risk through theusual mechanisms of insurance, reinsurance anddiversified ownership; the result is lower initialcosts to private brownfield developers and redevel-opment of more brownfields.

However, the measure would need to be designedto avoid an unintended bias of behaviour toward pollu-tion and cleanup rather than pollution prevention. Forexample, a polluter might escape liability by capitaliz-ing a shell company (a company that exists only “onpaper” and that possess no appreciable resources) to docleanup and then transferring the land and any futureliability to that company.

Discussion

Landowners who sell brownfield properties remainopen to liability claims despite the sale of such proper-ties. Consequently, brownfield landowners often willnot sell or remediate sites because the magnitude ofpotential liabilities and associated costs exceed potentialreturns on a sale.

To help put brownfields back into the marketplace,a vendor should be allowed to sell or transfer liabilityupon selling a brownfield property to an arm’s-lengthpurchaser. When liability is transferred along with theland, the party that stands to benefit from a futurechange in land use after remediation—the developer—takes on the liability. While parties can currentlyallocate liability by means of a contract, such alloca-tions are only binding between the contracting parties.The allocation of liability is not recognized by courts inliability suits with respect to parties outside the con-tract (i.e. regulators and third parties).

Parties to a brownfield transaction should be ableto designate, by contract, the party that will be respon-sible for responding to civil and regulatoryenvironmental liabilities associated with a site and itsredevelopment. This recommended approach wouldenable all parties to more effectively manage liabilitiesconnected to brownfield sites, whether these are liabili-ties arising in the context of the redevelopment projectitself or subsequent liability claims that may beadvanced until expiration of all applicable limitationperiods*.


Strategic Direction 2: Establishing an Effective Public PolicyRegime for Environmental Liability andRisk ManagementThe recommended actions under Strategic Direction 2of the strategy seek to:

� provide all participants in brownfield redevelop-ment with a clear, fair and consistent public policyregime to bring greater certainty and efficiency toquestions of liability and risk management

� promote a coordinated effort on liability and riskmanagement among all levels of government.

Effective liability protection for participants inbrownfield redevelopment is a cornerstone of a success-ful long-term national strategy for revitalizing Canada’sbrownfields.

Uncertainty over liability affects every participantin brownfield redevelopment, from current owners anddevelopers, to lenders, insurers and municipal govern-ments. Until all governments recognize and address thischallenge in a coordinated and fair manner, liabilityconcerns will be enough to stall progress on too manyof the country’s brownfield sites.

2.1 Allow Binding Contractual Allocation ofLiability

Recommendation

That provinces and territories establish legislationpermitting binding contractual allocations of regu-latory and civil liability among parties relevant to abrownfield site, upon filing of adequate financialassurances to cover site remediation costs.

Rationale

These provisions:

� directly address the market failures stemming from“regulatory and civil liability risk,” includingdownstream failures in the capital markets andinsurance markets

� complement and reinforce other recommendationsrelating to regulatory and civil liability (recommen-dations 2.2, 2.3, 2.4)


In order to ensure the protection of innocent per-sons, the legislation should recognize contractualallocations of liability only if the party assuming theliability lodges sufficient financial assurances to under-take remediation. Whether in the form of a statementof adequate net worth, security or liability insurance,such financial assurances would preclude situationswhere vendors intentionally sell to shell companies,thereby freeing themselves of liability while strandingliability with an entity that is in no position to pay outlegitimate claims arising from remediation.

Implementation of this recommendation to permitcontractual allocation of liability may require a shift inapproach on the part of some provincial governments.

2.2 Provide for Termination of RegulatoryLiability

Recommendation

That provinces and territories establish legislationproviding for clear and unequivocal termination ofall on-site and off-site regulatory liabilities uponissuance of regulatory approval of remediation, sub-ject only to specified reopeners or fraud.

That applicable federal environmental protectionlegislation be amended to provide for federal gov-ernment acceptance of the approvals processimplemented by a province or territory, therebyexempting the property from federal liability.

That provinces and territories establish legislationproviding for the registration on title of any right toregulatory liability termination or allocation.

Rationale

These provisions:

� directly address the market failures stemming from“regulatory liability risk,” including downstream fail-ures in the capital markets and insurance markets

� provide a more controlled framework for futureregulatory risk, enabling developers to better quan-tify the financial implications and spread riskthrough the usual mechanisms of insurance, rein-surance and diversified ownership; the result would

be lower initial costs to private brownfield develop-ers and redevelopment of more brownfields.

However, there would be a need to include meas-ures to protect innocent third parties, such aspurchasers and future occupants.

Discussion

Allowing parties to allocate liability would not, on itsown, be enough to overcome the redevelopment obsta-cles posed by liability issues. All levels of governmentsshould adopt legislation that provides for the clear andunequivocal termination of all on-site and off-site regu-latory liabilities upon the issuance of regulatoryapproval of remediation (reversible only in circum-stances of emergency and fraud, or if the owners ortheir successors do not obey any conditions attached tothe property). Protection from liability should extendto all past, present and future title holders, occupants,polluters, developers, lenders and approving agencies.

Terminating regulatory liability upon remediationwould enable the parties involved in redeveloping abrownfield property to determine more precisely therisks associated with development and to quantify thecost of compliance for financial planning purposes. Inthe event that circumstances leading to regulatory lia-bility arise, third parties would have recourse to aninsurance fund (see recommendation 2.4).

In the United States, some jurisdictions haveadopted the practice of granting liability protectionsubject to defined reopeners* (circumstances where lia-bility termination is reversed). Reopeners should bepermitted for changes in land use, though this wouldbe the responsibility of the new owner and not the for-mer owners. However, liability protection should notbe subject to reopeners based on changing standards, asthis would have the effect of diluting the benefits thataccompany the granting of a regulatory approval.Criteria and standards imposed to guide the cleanupprojects must be sensitive to what can be achieved withthe most current and advanced technology and prac-tices available at the time.

Mechanisms put into place to bring about liabilityclosure should also be harmonized among all levels ofgovernment. That is, compliance with provincial stan-dards should simultaneously lead to closure of federal

obligations. This result could be accomplished inCanada through amendments to applicable environ-mental protection legislation that provide for federalgovernment acceptance of the approvals process imple-mented by the provinces or territories.

To support these recommendations dealing withtermination of liability, provincial legislation is neededto provide for the registration on title of any right toregulatory liability termination or allocation. This reg-istration would provide innocent purchasers and futureoccupants with sufficient information on the environ-mental history of a given site, including in particularthe identity of responsible persons or the availability ofpost-limitation period insurance funds in their stead,should any post-remediation claims arise. Provincialgovernments should be assured that any future claimswould be covered by insurance funds financed by thepremiums levied on parties applying for liability pro-tection, and that these costs would not fall on theprovinces themselves.

Adoption of this approach would require amend-ment of the “discoverability” rule by deeming thelimitation “clock” to start upon registry on title, ratherthan upon discovery of the situation leading to thecause of action. The discoverability of the action isdealt with by the requirement that the approval docu-ment be registered on title and available for publicreview with a simple title search.

As a first step toward this goal, provinces shouldreview and amend current joint and several liabilityregimes to reflect the Canadian Council of Ministers ofthe Environment (CCME)’s principles on apportion-ment of liability.

2.3 Provide for Termination of Civil LiabilityAfter a Limitation Period

Recommendation

That provinces and territories establish legislation pro-viding for termination of civil liability after the expiryof an applicable limitation period.

That provinces and territories establish legislation pro-viding for the registration on title of any right to civilliability termination or allocation.

Rationale

The provision to terminate civil liability after a limita-tion period:

� directly address the market failures stemming from“civil liability risk,” including downstream failuresin the capital markets and insurance markets

� provides a more controlled framework for futurecivil risk, enabling developers to better quantify thefinancial implications and spread risk through theusual mechanisms of insurance, reinsurance anddiversified ownership; the result is lower initialcosts to private brownfield developers and redevel-opment of more brownfields.

However, as with the recommendation regardingthe termination of regulatory liability, this initiativewould need to include measures to protect innocentthird parties.

Discussion

The termination of civil liability to third parties shouldbe provided on the same terms as the termination ofregulatory liability, that is, it should be based onapproval of the remediation by provincial environmen-tal agencies. The party seeking commencement of thelimitation period for civil liability would be required toprovide financial assurance in the form of a statementof adequate net worth, security or liability insurance.Such a statement should provide evidence of sufficientfinancial resources to meet any subsequent obligationto remediate or to cover any proven liability claim thatmay arise during the limitation period.

In order to promote greater certainty in the mar-ketplace while protecting innocent third parties, civilliability should be made subject to a clearly definedlimitation period. The limitation period should startfrom the date of the regulatory approval and publicregistration of the remediation.16 The linking of thelimitation period to a registration, coupled with therequirement to use a public notice by registrationthrough the land registry system, would preserve therights of potential claimants—they would still have theoriginally legislated period of time available to carryout their own due diligence investigations.

The imposition of a more definitive limitationperiod for civil liability would not bar a third party



from suing. However, after the expiry of the limitationperiod, the defendant would no longer be the party thatperformed the cleanup and received regulatory approvalof remediation. Instead, the defendant would be theapplicable insurance fund entity. Therefore, any residualneed for third-party protection arising after expiry of thelimitation period would be addressed through the sameinsurance fund proposed to support the cessation of reg-ulatory liabilities (recommendation 2.4).

Under the liability regime proposed for civil andregulatory claims, the certification of regulatoryapproval ought to suffice as the property owner’sdefence against actions by third parties that allege thatthe certification ought not to have been issued in thefirst place. In this context, claims in relation to certifi-cation become the responsibility of the certifyingauthority.

As with the termination of regulatory liability,provincial legislation is needed to provide for the regis-tration on title of any right to civil liability terminationor allocation to provide innocent purchasers and futureoccupants with sufficient information on the environ-mental history of a given site.

As with recommendation 2.2, provinces shouldfirst review and amend current joint and several liabili-ty regimes to reflect the CCME’s principles onapportionment of liability.

2.4 Create an Insurance Fund for Post-LiabilityTermination Claims

Recommendation

That provinces and territories that agree to post-remediation termination of regulatory and civilliability establish legislation setting up an insurancefund for liabilities falling to the province or territo-ry after exhaustion of the term of post-remediationprivate insurance.

That the federal government work with theseprovinces and territories to assist in initial fundingand establishment of the most efficient and cost-effective means of running the insurance fund.

Rationale

An insurance fund for post-liability termination claims:

� directly addresses imperfections in the insurance

market that follow from open-ended regulatoryand civil risk

� is an essential instrument for addressing the marketfailures of regulatory and civil liability risk, com-plementing the general recommendations onterminating these risks (recommendations 2.2 and2.3)

� helps provide developers with greater certainty inproject planning, by converting the risks of futureliability to a known cost through the premium paid

� is a flexible, selective and cost-effective approachthat can be targeted to those projects that havereceived risk relief from governments participatingin the fund as part of negotiated arrangements forthe redevelopment of selected brownfields.

Discussion

The prospect of open-ended regulatory and civil liability is a key barrier to brownfield redevelopment inCanada. The private insurance industry has developeda number of products to meet the concerns of partiesinvolved in brownfield redevelopment. Based on theexperience of environmental liability claims in theUnited States, however, open-ended coverage is simplynot available—there are time limits put on the term ofcoverage.

The termination of regulatory and civil liability(recommendations 2.2 and 2.3) does create a risk thatinnocent parties will be harmed in the future and haveno recourse for a claim. To protect such innocent thirdparties, the establishment of insurance protection tocover future legitimate claims should accompany anytermination of liability. Private insurance should coverthe first 15 years of exposure following completion ofremediation in an amount to be determined by eachprovince.

Following termination of the private insurance, lia-bility for new claims would fall to the individualprovince and would be paid from the provincial fundbuilt up by premium payments made by the remedia-tor or developer at the time of regulatory approval ofremediation.There are several alternatives for managing the insur-ance fund:

� Each province could manage the premiums andclaims on its own.

� A national fund could be set up and run by theprovinces and territories, with pooled premiumsand claims.

� A federal fund could be set up with the coopera-tion of the federal, provincial and territorialgovernments, with pooled premiums and claims.

� The fund could be handled on a national basis bya private insurer on behalf of the provinces and ter-ritories.

� Coverage could be provided by private insurance,with reinsurance provided by the federal, provincialand territorial governments.

Federal assistance would be needed to facilitate theset-up of the second, third or fourth alternatives.

There are safeguards built into the overall processthrough the involvement of private insurers during thefirst 15 years. The insurers would certainly review theremediation plans and the competence of the remedia-tors, and ensure that remediation is carried outaccording to specifications. Failure to do this wouldseriously increase the possibility of a claim during theinitial 15-year coverage. There is also the possibility ofreinsurance being available to a fund under any of theapproaches, to reduce the exposures on a financial,time or combination basis.

2.5 Apply Site-Specific Assessment and ApprovalsRegimes

Recommendation

That provinces, or regions consisting of severalprovinces, establish effective, scientifically currentassessment regimes, with protocols and sufficienthuman and technical resources to enable site-specificassessment of the commonly occurring contaminantsof concern in brownfields in an expeditious and cost-effective manner.

That provincial governments establish a system forapproval of risk assessment-based remediation.

That the federal government negotiate memorandaof agreement with provinces to accept provinciallyapproved assessments for the purpose of federalenvironmental enforcement, and to provide acovenant not to sue where provincial approval hasbeen provided.

That municipal governments, where applicable,streamline their approval process for brownfieldsand refrain from substituting their own standardsfor those of provinces through the municipalapprovals and permitting process.

Rationale

Comprehensive site assessment* and approval regimes inprovinces and territories will:

� minimize the “regulatory delay” market failureresulting from the uncertainty created by somegovernment planning and approval processes,which deters potential brownfield redevelopersfrom initiating projects

� help developers better quantify and lower costs

� promote the use of best practices in assessment andremediation, encouraging the development of morehomogeneous groups of brownfields, which in turnfacilitate the development of lower-cost standard-ized insurance forms and products.

Discussion

As part of a clear and effective public policy regime forbrownfield redevelopment, governments at all levelsneed to address concerns about risk assessment issues.They need to consider establishing protocols and put-ting in place sufficient human and technical resourcesand expertise to facilitate expeditious and cost-effectivesite-specific risk assessments* for commonly occurringcontaminants of known concern. They also shouldconsider establishing systems for reviewing risk assessment-based remediation on a timely basis.

The first recommendation could be implementedunder the umbrella of the Canadian Council ofMinisters of the Environment, building on theCouncil’s previous work on approaches to managingcontaminated sites.

2.6 Provide for Regulatory Approvals ofRemediation

Recommendation

That provinces and territories establish legislationproviding for regulatory approval and confirmationof the acceptability of remediation efforts.



Discussion

Provincial legislation should provide for regulatoryapproval and confirmation of the acceptability of reme-diation efforts, whether conducted to generic criteria* orto site-specific risk-assessed criteria. Where standards areknown and predictable, expertise can be more effectivelydeployed in the remediation process. In effect, remedia-tion practices developed and employed to achievestandards can themselves become standardized and sub-ject to review and regulation. Costs also become moremanageable, which in turn creates confidence in themarketplace.

As a prerequisite for approval,the party seeking approval (i.e. theredeveloper) would be required topay a premium into an insurancefund that would be available forregulatory or civil liabilities arisingor discoverable after terminationof liability (see recommendation2.4).

Strategic Direction 3:Building Capacity forand CommunityAwareness of BrownfieldRedevelopment

The recommended actions under Strategic Direction 3of the strategy seek to:

� enhance capacity at all levels to facilitate brown-field redevelopment

� build awareness among all partners of the benefitsand challenges of brownfield redevelopment

� build shared objectives around a common vision oftransforming brownfield sites into active centres ofcommunity life

� forge partnerships based on community involve-ment and support.

Successful brownfield redevelopment projects arebuilt around community awareness, support and skills.A major objective of the national strategy, therefore,must be to develop community awareness and capacityin Canada around brownfield redevelopment througheducation, training and demonstration projects.

Rationale

Regulatory approval of remediation will:

� help reduce any “regulatory delay” market failureand bring greater certainty to the project planningprocess

� help developers better quantify and lower costs

� complement and reinforce the recommendation onsite assessment and approval regimes (recommen-dation 2.5), contributing to more standardizedremediation practices and insurance products

� support implementation of the recommendedinsurance fund (recommendation 2.4)

� act as the trigger for the termination of regulatoryliability and for applicable limitation periods relat-ed to civil liability (recommendations 2.2 and 2.3).

Old foundry buildings before redevelopment, Spencer CreekVillage, Dundas, Ontario, 1998

New residential units at Spencer Creek, 2001

Once the network is established in Canada, thefederal government should establish and maintain aninteractive Internet site that contains links to similarinternational information networks. The Internet sitecould showcase Canadian efforts and expertise and fos-ter global awareness of Canadian initiatives. Forexample, it could direct attention to the comprehensivebody of information developed on the field applicationof soil and groundwater remediation techniques, whichis available through the Montréal Centre of Excellencein Brownfields Rehabilitation and the Ontario Centrefor Environmental Technology Advancement.

Ideally, a single group or organization within thebrownfield information network should be designatedto lead and coordinate activities to ensure effectivemanagement. It may be advisable to establish aNational Brownfield Association to take on this role, sothat the lead group has access to the views of all partiesinterested in brownfield issues. A National BrownfieldAssociation could organize an annual brownfields con-ference. It could also help establish brownfieldcommittees at the community level or more widelypromote committees that may already be at work.

Training programs are another key element ofbuilding capacity. For example:

� training for municipal and provincial officialsinvolved in reviewing development proposals couldfocus on expert analysis and the formulation ofremediation strategies for individual projects

� peer exchange programs among municipalitiescould quickly bring the knowledge and practices ofmore advanced municipalities to municipalities atthe beginning of the learning curve

� professional associations could offer education andtraining workshops for their members and clients.

3.2 Facilitate the Demonstration of InnovativeEnvironmental Technologies and RemediationProcesses

Recommendation

That the federal government work with the provin-cial regulatory agencies responsible for issuingtechnology demonstration permits to develop andimplement a temporary certificate of approval system;


3.1 Increase Capacity to Undertake BrownfieldRedevelopment Projects

Recommendation

That the federal, provincial and municipal govern-ments seek to make better use of existingbrownfield redevelopment expertise in Canadathrough information networks and exchanges.

That all levels of governments cooperate with theprivate and not-for-profit sectors to establish aNational Brownfield Association to coordinateefforts to build Canadian capacity to undertakethe redevelopment of brownfields.

That all participants in brownfield redevelopmentidentify training requirements and provide appro-priate training opportunities for their staff,members or clients.

Rationale

Capacity-building initiatives:

� directly address the market failures of risk percep-tion and lack of awareness

� like awareness-raising efforts, are highly cost-effec-tive and easy to administer, because they can betargeted to and partnered with selected groups

� strongly complement and reinforce initiativesaddressing the market failures of lack of access tocapital, regulatory and civil liability risk, and regu-latory delays.

Discussion

A comprehensive, national brownfield education, train-ing and communications initiative could takeadvantage of the considerable expertise on brownfieldredevelopment that exists within Canada. In particular,such an initiative could disseminate expert knowledgemore widely by establishing a brownfield informationnetwork to link up groups that represent a range ofprofessionals whose involvement is essential to resolv-ing the brownfield challenge in Canada. Emphasisshould be given to disseminating knowledge of state-of-the-art practices through the network.

the system would focus on the expedient approvalfor demonstration of near-market or commercialremediation technologies on designated brownfieldsites throughout Canada.

That Industry Canada’s Technology PartnershipsCanada Program be extended to include funding forthe demonstration of remediation technologies ondesignated brownfield sites in Canada.

Rationale

Efforts to demonstrate successful emerging technolo-gies and processes:

� directly address the market failures of risk percep-tion and lack of awareness

� complement efforts to address other market failuresassociated with liability risk and risk perception, bygenerating greater confidence in state-of-the-arttechnology

� complement and reinforce efforts to address themarket failure of lack of capital, by lowering rede-velopment costs for brownfield developers andreducing uncertainty in project planning

� can be cost-effective and relatively simple toadminister, through the establishment of strictqualifying criteria.

Discussion

Canada’s national brownfield redevelopment strategyshould support efforts to bring to market made-in-Canada environmental technologies and remediationprocesses. These efforts should strive to provide anadditional platform in support of Canadian innovationthat complements programs already in place to pro-mote the development, demonstration andcommercialization of environmental technologies.

In Quebec and several other provinces, temporaryapprovals or temporary operating permits (certificatesof approval) can be issued for technology vendors thatwant to demonstrate the validity of their technologicalclaims and test the effectiveness of their processes.

The concept could be extended to brownfields,with the assistance of funding programs such asIndustry Canada’s Technology Partnerships CanadaProgram. Where environmental technology vendors are

provided with the financial means to demonstrate theirtechnologies and to bring them to market, they shouldbe granted access, through a formal process, to desig-nated brownfield sites to test and perfect theirproposed technologies and techniques.

If innovators were provided with the requisitemeans and venue to move forward with their innova-tions, brownfield redevelopers in Canada would gainaccess to a broader range of alternatives when evaluat-ing cleanup approaches and remediation techniques.

New Canadian technologies could be marketedthrough a national brownfields Internet site, which couldpost a roster of verified technologies and companies thatcould assist various stakeholders in selecting appropriatetechnologies for specific brownfield circumstances.

The positive impact of such technology demonstra-tion programs has been demonstrated by theSuperfund Innovative Technology Evaluation (SITE)Program, operated by the U.S. EnvironmentalProtection Agency for the past 13 years.

3.3 Raise Awareness of the Benefits ofBrownfield Redevelopment

Recommendation

That all levels of government cooperate to developand implement an integrated communications andeducation strategy to raise awareness among keygroups about the economic, social and environmen-tal benefits of brownfield redevelopment.

Rationale

Initiatives to raise awareness of brownfields redevelop-ment:

� directly address the market failures of stigma andrisk perception, by reducing the over-estimation ofrisk associated with remediated land, which artifi-cially lowers the price at which redevelopedbrownfields can be leased or sold

� are highly cost-effective and easy to administer,because they can be targeted to and partnered withselected groups

� complement and reinforce initiatives addressingmarket failures that increase the costs of brownfieldredevelopment, because improved awareness


among developers, regulators and the public canreduce the likelihood of regulatory delays in proj-ect development.

Discussion

Successful brownfield redevelopment requires a sharedcommitment among a range of participants—all levelsof government, private sector developers, the financialsector and community groups.

A key task, therefore, will be to build awarenessamong these groups of the challenges and opportuni-ties presented by brownfields. Better understandingand support of brownfield redevelopment can turn anegative focus on soil contamination into a positivefocus on land recycling and environmental values. In this effort, all levels of government have opportuni-ties for action. Initiatives that could be undertakeninclude:

� declaring one week a year “National BrownfieldsWeek” to showcase various brownfield redevelop-ment projects proposed, underway and completedacross the country

� sponsoring, in collaboration with the CanadianUrban Institute, an annual national brownfieldsconference as the culmination of NationalBrownfields Week, to provide opportunities for theexchange of information and expertise and to rec-ognize significant achievements in brownfieldredevelopment

� promoting awareness among government officialsat all levels of the need to take an integrated,multi-disciplinary approach to brownfield redevel-opment

� raising awareness among major landowners—pub-lic and private—of the opportunities inherent inbrownfield redevelopment and of the innovativemeasures in place that may help overcome barriersto redevelopment

� preparing and distributing a guide on best practicesin brownfield remediation, to raise awarenessamong developers and the financial communityand to promote greater consistency and efficiencyin cleanup activities across the country

� facilitating greater community involvement inbrownfield issues through consultations between


developers and the public and through neighbour-hood “visioning” exercises, to identify and addressthe concerns and benefits associated with brown-field cleanup and redevelopment

� recognizing, through annual awards, municipalitiesand developers for technological innovations ordesign elements incorporated in recent brownfieldredevelopment projects

� preparing a brownfield primer for elected represen-tatives of all levels of government, outlining thechallenges and benefits of redevelopment and high-lighting Canadian success stories.

In Conclusion: Building a SuccessfulStrategyThe recommendations presented under the threestrategic directions represent a comprehensive, coordi-nated approach to encouraging the redevelopment ofbrownfields in many Canadian communities. The rec-ommendations have been developed based on thefollowing conclusions drawn from previous Canadianand international experience:

There is no single problem.A range of interconnected market failures serve to keepbrownfields idle or abandoned in Canada. Challengesare rooted in financing, the potential for liability, regula-tory delays, attitudes toward risk and lack of awareness.

There is no single solution.Each brownfield is different. Its future will be shaped bya unique set of market failures and redevelopmentopportunities. A successful strategy must be built on pol-icy instruments that recognize and allow for thisdiversity. Just as there is no single problem at the root ofall brownfields, there is no single policy instrument—nosingle tax credit or demonstration project—that canhope to redevelop brownfields on its own.

Specific policy tools must target specific marketfailures.Each policy tool in the strategy must be targetedaccording to the market failure or failures it most effec-tively addresses. Each tool will have its strengths andlimitations, and it will be important to recognize both,


whether in its focus on a specific market failure, itscost-effectiveness, its scope of applicability, its ease ofadministration or its potential for unintended results.

Policy tools cannot work in isolation.The policy instruments should not be considered inisolation from one another. Building a successful strate-

gy is not as simple as choosingone or two financial incentivesand another measure related toliability. Rather, the recommen-dations should be recognized forwhat they are: a package of meas-ures that complement andreinforce one another and that,as a whole, speak to the chal-lenges of brownfieldredevelopment in a realistic andeffective manner.

The rationale provided undereach of the recommendationsidentified the strengths and limi-tations of the individual policytool being proposed. Annex 5provides an analysis of the broad-er universe of potential policytools from which the recommen-dations were drawn, andidentifies the complementaritiesand connections among the toolsselected for the strategy.

Finishing mill complex before redevelopment, Cornwall, Ontario, 2002

New finishing mill residential lofts


Left as they are, brownfields can hurt the local economy andpose a threat to human health and environmental quality.Transforming these sites into vibrant centres of communityeconomic and social life is an excellent example of putting theprinciples of sustainable development into practice.

The national strategy presents a realistic blueprint foraction on redeveloping Canada’s brownfields and helping tobuild sustainable communities in every province. The recom-mendations seek to build on the excellent progress made in anumber of Canadian communities and provinces on ques-tions such as environmental liability and incentive financing.

The national strategy has been prepared, first of all, forthe consideration of leaders at all levels of government inCanada, for the strategy must truly be a national one to suc-ceed. No single government can address all the barriers tobrownfield redevelopment. Each has a unique role to play ifCanadians are to reshape those abandoned, contaminatedproperties along waterfronts and in older industrial neigh-bourhoods into places for new housing, new parks andrecreational facilities, and new offices for small enterprises.

But the strategy’s partners must extend well beyond gov-ernments. Its vision and blueprint for action must challengeand engage all who care about the quality of life in Canada’scommunities—the business and financial sectors, labourgroups, neighbourhood associations, and, above all, thosewho live and work in these communities.

5Moving Forward

There can be few challenges that affect the

goal of sustainable development in Canada more directly and

immediately than the future of our brownfields—those

abandoned, idle and contaminated industrial properties that

blight the landscapes of cities and towns in every region.

The Leadership ChallengeThe experience with brownfield redevelopment inCanada, the United States and other countries demon-strates clearly that the single most essential ingredientto success is public sector leadership. If many of Canada’sbrownfields are to be redeveloped, then governments atall levels must signal their support for a coordinatednational effort, take action on brownfields under theirdirect control, and evaluate and strengthen the strate-gy’s initiatives over the years ahead.

In this regard, the federal government has a uniqueresponsibility—and a unique opportunity—to launch thenational strategy and begin the transformation of Canada’sbrownfields into special places in our communities.

The recommendations in this section are notincluded in the three strategic directions discussedabove, as they do not directly address specific marketfailures.

1. Government Support for a National Strategy

Recommendation

That the federal government stimulate action onbrownfield redevelopment by adopting the strategyand implementing the measures under its jurisdictionas quickly as possible, including measures such as:

� establishing a federal office to coordinate theparticipation of various federal departments andagencies in the strategy

� implementing appropriate financing measures(proposed under Strategic Direction 1)

� moving to harmonize compliance with federaland provincial requirements

� promoting a coordinated national effort onbrownfield redevelopment by encouraging otherjurisdictions to match federal initiatives, whereapplicable, and to undertake complementaryinitiatives within the framework of a nationalstrategy.

That provincial governments move toward establish-ing multi-faceted programs with essential elementsgeared to:

� providing financial support to local governmentand private redevelopment efforts

� ensuring legislation is in place to enable munic-ipalities to offer a full suite of incentiveprograms and other measures to promotebrownfield redevelopment

� adopting consistent provincial or regional riskassessment protocols and providing the infra-structure necessary for efficient risk assessments

� rationalizing liability regimes conducive to stim-ulating redevelopment.

That municipal governments continue to play a piv-otal role in the delivery of a brownfieldredevelopment strategy and tools by:

� establishing local redevelopment priorities

� simplifying and facilitating development andbuilding approvals for brownfields

� redeploying municipally held brownfields byreturning them to the marketplace

� providing financing and planning incentives toqualifying projects.

Rationale

Public sector leadership:

� will be an essential ingredient in the developmentand delivery of the national strategy’s recommenda-tions, which address the full range of marketfailures related to risk perception and lack ofawareness

� will be critical in the development of a comprehen-sive, coordinated national program that willprovide more efficient and cost-effective adminis-tration and delivery of incentives.

Discussion

Federal leadership will be critical to ensuring the suc-cess of a comprehensive national brownfieldredevelopment strategy. Federal leadership can provideimportant financial incentives (through federal tax law,for example) to lever additional provincial and privatecapital and resources, and to provide a clear and consis-tent direction for action by the other levels ofgovernment and the other participants in brownfieldredevelopment.


However, no single level of government can unilat-erally establish a program capable of addressing all theelements essential to successfully stimulating brown-field redevelopment. The constitutional sharing ofjurisdiction on such matters as the environment andeconomic development means that federal initiativeson brownfield redevelopment must be undertakenwithin a harmonized, integrated national program.

Each level of government has a unique and essen-tial role to play if the national brownfieldredevelopment strategy is to succeed.Provincial leadership, for example, isneeded to resolve many of the challengesgenerated by liability regimes. Municipalleadership is necessary to establish aredevelopment vision within the com-munity, broker partnerships, providefinancial incentives and clear away taxarrears and other barriers to cleanup andredevelopment.

There will be tremendous advantagesin establishing an overarching nationalprogram to coordinate the financialincentives offered at the federal, provin-cial and municipal levels. This will helpmaximize the impact of individualincentives while eliminating costly dupli-cation, particularly in the area ofprogram delivery.

In seeking to promote a coordinatednational effort, however, there will be aneed for flexibility—a need to allow forthe fact that some provinces have alreadymade significant steps in brownfieldredevelopment while others have yet toaddress the issue. In addition, there mustbe a recognition that some elements ofthe national strategy will need to beadopted relatively quickly, while othersmay require much more time and effort.

Federal tax measures, for example,must be matched by provincial govern-ments immediately so as not to weakenthe value of the incentives. Initiativesrelated to regulatory liability, on theother hand, will involve extensive stake-holder consultations and legislativechanges (the recent initiatives of Ontario


and Quebec could serve as models for the otherprovinces).

Federal funding should act as an incentive forprovincial action. Following an initial period of per-haps five years, federal funding could be offered on apreferential basis to encourage participating provincesto continue progress on brownfield redevelopment ini-tiatives (though assistance should not automatically bewithheld from provinces that have not acted to facili-tate brownfield redevelopment).

Cleanup at the Moncton Shops site, Moncton, New Brunswick, 1997

Preparation of the new sports fields at the former Moncton Shops site, 2001

Management Working Group, co-chaired byEnvironment Canada and the Department of NationalDefence, could also potentially be a key player in movingthe brownfield redevelopment agenda forward.

Where a government, at any level, is purchasing a sitefor its own use, it should give priority to purchasing andredeveloping brownfield sites where this would result inenvironmental, economic or social benefits to the com-munity. By making redevelopment of these primelocations, rather than purchase of competing greenfieldsites, an article of policy, governments could contributeimmeasurably to the success of the national strategy.

Implementing the StrategyThe details of how the national strategy should beimplemented will require careful discussions among alllevels of government and those private sector compa-nies and community groups committed to the vision ofbrownfield redevelopment.

A flexible, phased-in approach is called for, recog-nizing that some provinces and municipalities havewell-established brownfield initiatives while many donot, and that not all the recommended actions can orshould be undertaken immediately. The goal should beto build on the progress and successes to date, developmomentum, awareness and support, and strengthenthe program over time.

Table 2 summarizes how the recommendationsoutlined in this national strategy could be structuredwithin the following two-phased approach.

Phase 1: A “Quick Start” AgendaIn this initial “quick start” phase of the national strate-gy (e.g. covering the first year), governments at alllevels should look to those actions that can be under-taken relatively easily and quickly and that help:

� focus on increasing awareness and building ashared consensus for action

� link the generally unconnected brownfield redevel-opment initiatives in Canada so as to promoteawareness and share experience

� demonstrate success stories

� provide the foundation for longer-term redevelop-ment of more brownfields through the applicationof an expanded range of policy instruments.


2. Governments’ “Own House in Order”

Recommendation

That the federal government maintain and enhanceits redevelopment program for federally ownedbrownfield sites, such as military sites, railway landsand ports.

That the federal, provincial and municipal govern-ments establish a policy that, when any property ispurchased for their own use, brownfield sites shouldbe given priority over greenfield sites.

Rationale

Direct actions by governments on brownfields undertheir jurisdiction:

� complement and reinforce the other recommenda-tions in the national strategy; they serve aspowerful and positive signals to other participantsin brownfield redevelopment.

Discussion

Direct action by governments on brownfields under theircontrol can be a powerful signal to all other participantsin brownfield redevelopment. The federal government’srecently announced policy on the management of feder-ally owned contaminated sites is a good example of suchdirect action. The federal Contaminated Sites

Measuring ProgressPerformance measurement indicators will need to be developed to monitorimplementation of the strategy. Indicators could include, for example, the:

• number of sites remediated

• total area of remediated lands

• value of new investments generated

• number of new jobs created and sustained

• income and sales tax generated

• return on investment

• amount of new municipal tax revenue generated.

The types and amounts of funding provided by each level of governmentshould also be tracked. Data collected could be used to forecast futuredemand for brownfield funding and budgeting requirements.


Table 2 Implementing the National Strategy on Brownfield Redevelopment:Possible Phasing in of Recommended Actions

Phase 1: A “Quick Start” Agenda (e.g. 12-month horizon)

Ensure all levels of government support a national strategy

Establish Federal Coordinating Office on BrownfieldRedevelopment

Ensure governments’ “own house in order”

Establish performance measurement framework for strategy

Establish National Brownfield Association

Develop intergovernmental memoranda of understandingon brownfield redevelopment

Implement tax system changes to promote brownfield redevelopment (recommendation 1.1)

Remove liens and tax arrears against qualifying brownfieldsites (recommendation 1.2)

Provide mortgage guarantees for qualifying brownfieldsites (recommendation 1.3)

Provide revolving loans for qualifying brownfield sites(recommendation 1.4)

Provide grants for qualifying brownfield sites (recommendation 1.5)

Increase capacity to undertake brownfield redevelopmentprojects (recommendation 3.1)

Raise awareness of the benefits of brownfield redevelopment (recommendation 3.3)

Phase 2:A Medium-Term Agenda(e.g. 5-year horizon)

Allow binding contractual allocation of liability (recommendation 2.1)

Provide for termination of regulatory liability (recommendation 2.2)

Provide for termination of civil liability after limitationperiod (recommendation 2.3)

Create an insurance fund for post-liability terminationclaims (recommendation 2.4)

Apply site-specific assessment and approvals regimes (recommendation 2.5)

Provide for regulatory approvals of remediation (recommendation 2.6)

Facilitate the demonstration of innovative environmentaltechnologies and remediation processes (recommendation 3.2)

Monitor implementation

Evaluate initiatives/progress

Adjust/strengthen initiatives

Encourage new participants through education and federal incentive funding

Expand range of policy instruments

Opportunities for government action include:

� signalling support for a national program

� establishing a federal coordination office to coordi-nate the participation of various federaldepartments and agencies in the strategy

� providing greater “bridge financing” assistance forthe upfront costs of brownfield redevelopment,through tax incentives offered by all levels of gov-ernment

� taking steps to ensure their “own house is in order”

� developing intergovernmental agreements on theobjectives, role and the need for coordinated action

� supporting demonstration projects

� promoting community awareness of and supportfor brownfield redevelopment

� promoting education and training around brown-field redevelopment.

There will be an ongoing need to monitor andevaluate implementation of various initiatives underthe strategy, to learn what is working and what is not.


Thus, there will be an early need to establish a per-formance measurement framework to help monitor theprogress of the strategy.

In addition, the establishment of a NationalBrownfield Association to coordinate the participationof government, private sector and community interestswould help promote awareness of and education onbrownfield redevelopment.

Phase 2: A Medium-Term Agenda Following their initial measures to launch the nationalbrownfield redevelopment strategy, governments could,over the next few years, look to undertaking (if theyhave not already done so) the proposed actions thatcould take some time to complete. These includechanges in legislation relating to liability and longer-term training and capacity-building initiatives.

Using the experience gained in the early years, gov-ernments could also look for ways to strengthen thenational strategy. A wider range of communities andinterests could be encouraged to participate in brown-field redevelopment. And a broader mix of policyinstruments could be applied, building on the innova-tions in Canada and other countries (see Annex 6 forexamples of an expanded brownfield redevelopment“policy toolkit”).

10 Hara Associates, “Market Failures,” 2003.

11 Regional Analytics Inc., “A Preliminary Investigation,”2002.

12 It should be noted that the tiers represent a conceptualapproach for addressing the different needs of differenttypes of brownfields, and are not strictly separated cate-gories with defining criteria.

13 Derived from Ahab Abdel-Aziz and Shari Elliott of OslerHoskin & Harcourt LLP, “Brownfield Redevelopment.What Is Needed for a Successful Program in Canada?”Environment Law, vol. V, no. 3, 2002.

14 A more detailed discussion of market failures as theyrelate to brownfield redevelopment is presented in HaraAssociates, “Market Failures,” 2003; see Annex 5 for asummary.


16 Currently, limitation periods for civil liability are guidedby the rule of “discoverability,” that is, they begin whenconditions that could give rise to causes of civil actionare first identified. Under this principle, a limitationperiod could commence years or even decades afterremediation was conducted on a site.


Endnotes1 Estimate from the Economic Analysis Unit, Quebec

Ministry of the Environment, based on a model devel-oped by the Institut de la statistique du Québec.

2 Regional Analytics Inc., “A Preliminary Investigationinto the Economic Impact of Brownfield RedevelopmentActivities in Canada,” unpublished background docu-ment prepared for NRTEE, 2002.

3 Hara Associates, “Market Failures and Optimal Use ofBrownfield Redevelopment Policy Instruments,” unpub-lished background document prepared for the NRTEE,2003.


5 Ibid.

6 Various materials (1975–2002) provided by AnnMcAfee, Director of City Plans and Co-Director ofPlanning, City of Vancouver.


8 Figures from a major U.S. study in 2001, cited inRegional Analytics Inc., “A Preliminary Investigation,”2002.


Cleaning up the Past, Building the Future: A National Brownfield Redevelopment Strategy for Canada A-1

1. Glossary of Brownfield Redevelopment Terms

2. Brownfield Redevelopment Projects in Canada:Selected Case Studies

3. Impact of Brownfield Redevelopment on theCanadian Economy

4. Profiles of Selected International Activities onBrownfield Redevelopment

5. Market Failures and Optimal Use of BrownfieldRedevelopment Policy Instruments

6. An Expanded Brownfield Redevelopment PolicyToolkit

Annexes


Brownfield

An abandoned, vacant, derelict or underutilized com-mercial or industrial property where past actions haveresulted in actual or perceived contamination andwhere there is an active potential for redevelopment.

Escheat

The reversion of property to the federal or provincialCrown, as provided by law, for example when propertyis abandoned.

Greenfield

A vacant property with no actual or perceived contami-nation, usually located outside urban centres andwithout municipal services.

Liability

Civil LiabilityA legal obligation that arises under the law of pri-vate rights, referred to as common law, incomparison with the criminal or administrativelaw. Civil liability is an action commenced by acourt action.

Regulatory LiabilityA legal obligation laid out by a statute that createsa regulatory offence. Regulatory offences are usual-ly considered more minor than criminal offences,since they are only intended to secure the effectiveregulation of conduct in the interest of the com-munity.

Joint and Several LiabilityThe doctrine of joint and several liabilitymakes any joint defendant against whom a judg-ment is entered in an action liable to the claimantfor the entire judgment, regardless of the defen-dant’s share of fault. The defendant then has right

of contribution and indemnification against theother defendants. If the other defendants are insol-vent, then, despite being as little as 1 percentresponsible for the damages, the sole remainingsolvent defendant must contribute 100 percent ofthe award.

Lien

The right to retain the lawful possession of the proper-ty of another until the owner fulfils a legal duty to theperson holding the property, such as the payment oflawful charges for work done on the property. A mort-gage is a common lien. In its widest meaning, this termincludes every case in which real or personal property ischarged with the payment of any debt or duty; everysuch charge being denominated a lien on the property.In a more limited sense, it is defined to be a right ofdetaining the property of another until some claim issatisfied.

Limitation period

The time within which regulatory or civil actions canbe commenced. If a limitation period is established instatute, then actions would be barred once the assignedtime expires.

Municipal tax sale

This is the statutory process followed by municipalitiesto recover property tax arrears. There is an initial noticeperiod during which the municipality sends notices tothe property owner initiating the process and request-ing payment of a “cancellation price” within a specifiedtimeframe. If the cancellation price is not paid, thenthe property is offered for sale to the highest bidder. Ifthere are no bidders, the property vests in the munici-pality.

Annex 1Glossary of BrownfieldRedevelopment Terms

Site-specific risk assessment

A risk assessment that incorporates characteristics of asite (e.g. physical and chemical characteristics, geology,soil type and biology) to establish the risk posed by aspecific contaminant or hazard present at a site.

Generic criteriaNumerical values for soil, groundwater and airquality that are published by a regulatory agency orother body to gauge whether the presence of a con-taminant is above, at or below an accepted limit.

Tax Increment Financing (TIF)

A tool used by municipalities to freeze local andstate/provincial taxes to the level before redevelopment.Any tax increase stemming from the redevelopmentcan be used to provide financial incentives for siteremediation, new development and rehabilitation ofexisting buildings.

Vested

Having the rights of ownership, although enjoyment ofthose rights may be delayed until a future date.

Cleaning up the Past, Building the Future: A National Brownfield Redevelopment Strategy for CanadaA-4

Quitclaim

A transfer of land or real property without guarantee ofa clear title.

Quitclaim Deed A deed that transfers the owner’s interest to a buyerbut does not guarantee that there are no otherclaims against the property.

Remediation

The action taken to cleanup, contain or remove therisk posed by contamination at a site.

Reopener

An event (e.g. fraud) that would allow claims and/ororders to be made against a party that has been grantedsome form of liability closure.

Risk assessment

The process of identifying and evaluating risks tohuman health, human safety and/or the environmentfrom the actual or potential presence and/or use of spe-cific pollutants.

Site assessment (environmental)

An approach for identifying and assessing potentialenvironmental concerns in respect of activities con-ducted at a facility and/or the potential presence ofcontamination at a site in accordance with acceptedstandards.

This annex provides an overview of selected brownfieldredevelopment projects in Canada. Most of the projectsprofiled are still under redevelopment. The economicimpacts were projected based on results to date and anestimate of the impacts that will result from theplanned redevelopment.1 (Some information for severalof the case studies was not immediately available.)

The selected brownfield projects are:1. Moncton Shops Project, Moncton, New Brunswick2. Voisey’s Bay Project, Argentia, Newfoundland3. ICI, Shawinigan, Quebec4. Angus Shops, Montréal, Quebec5. Centre de la Petite Enfance (Familigarde), Ville La

Salle, Quebec6. Barton and Crooks Streets, Hamilton, Ontario7. Spencer Creek Village, Hamilton (Dundas),

Ontario8. West Harbour Lands, Cobourg, Ontario9. Courtald’s Fibres Project, Cornwall, Ontario10. Finishing Mill Lofts, Cornwall, Ontario11. Stelco Swansea Works Project, Toronto, Ontario

The case studies demonstrate the significant eco-nomic, social and environmental benefits that can bederived from brownfield redevelopment, regardless ofthe size of the project or the type of reuse. Even smallprojects, such as the Barton and Crooks project inHamilton, can generate additional employment andincreases (in the hundreds of thousands of dollars) inpersonal income, income taxes paid, and provincial andfederal sales tax revenues, as well as provide additionalproperty tax revenues for municipalities and provinces.Larger projects will generate hundreds of redevelop-ment and full-time jobs, millions of dollars inadditional income, income tax and sales tax revenues,

and hundreds of thousands of dollars in additionalproperty tax revenues.

Significant economic impacts are only part of thestory of brownfield redevelopment, however. The casestudies demonstrate the wide range of social and envi-ronmental benefits that accrue when brownfieldproperties are transformed into community and neigh-bourhood assets. These benefits include:

� neighbourhood, employment area and urban corerevitalization

� provision of affordable housing opportunities

� increased downtown population and housingopportunities

� improved aesthetic quality of the urban fabric

� creation of parkland and public open space

� improved public waterfront access

� elimination of significant environmental hazards

� protection of groundwater resources

� protection of wetlands and wildlife habitat

� protection and improvement of public health

� accessible and open community participation

� increased sense of civic and community pride.

A-5Cleaning up the Past, Building the Future: A National Brownfield Redevelopment Strategy for Canada

Annex 2Brownfield RedevelopmentProjects in Canada: Selected Case Studies

Progress to Date

� Moncton Commons recreational area and sport-splex are complete

� Construction began in September 2002 on the firstcommercial building in Emmerson Business andTechnology Park; the park will take 10 years to complete

Economic Benefits

� More than $200 million from remediation andpotential future development

� Approximately 300 person-years of employmentduring remediation (1996 to 2001)

� Approximately 1,500 person-years of employmentduring construction of the Emmerson Business andTechnology Park

� Potentially 5,000 permanent jobs after completionof Emmerson Business and Technology Park

� Approximately 250 person-years of employmentduring construction of the Franklin Heights resi-dential area

� Approximately 30 person-years of employmentduring construction of the open recreational areaPotential investment of $175 million for futurebuilding development in Emmerson Business andTechnology Park; $20 million for future develop-ment of Franklin Heights; $5 million for theconstruction of the open recreational area

� The potential total property tax base at full devel-opment is almost $9 million (the present propertytax base is $214,000): $8 million from EmmersonBusiness and Technology Park, $550,000 fromFranklin Heights

Other Benefits

� The open recreational park will benefit current andfuture generations of Moncton residents

� The potential for 5,000 permanent jobs inEmmerson Business Park will significantly benefitthe quality of life in Moncton and surroundingarea by supporting local businesses, increasinghome sales and increasing social amenities

� Citizens participated in site planning via a citizenenvironmental committee


1. Moncton Shops Project, Moncton, NewBrunswickDeveloper: Canada Lands Company (CLC)Location: Downtown, Moncton, New BrunswickSite Area: 285 acres

Proposed Use

Mixed use development with:

� 60 acres (500,000 square feet) for the EmmersonBusiness and Technology Park

� 110 acres for Moncton Common recreational area(includes 10 baseball diamonds, two football fieldsand four soccer fields)

� a sportsplex (four NHL-sized hockey rinks)

� 64 acres for (450 to 550) residential units

Site History

� Used as an industrial site for 85 years; formerCanadian National Railway repair shops forEastern Canada

Site Condition

� Numerous industrial contaminants in soils

Cleanup

� CLC undertook comprehensive remediation,which has been completed, and has launched anextensive redevelopment program

� University of Moncton Chemistry Departmentconducted the bulk of the site assessment, usinginnovative site assessment and remediationmethodology (CLC invested $100,000 in laborato-ry facilities at the University of Moncton)

� Site assessment results indicated areas where con-tamination could be managed on site (bymodifying land uses) and areas where soils requiredremediation

Costs

� Initial estimates of cleanup: $50 million to $100million

� Actual cleanup: $12 million to $15 million

2. Voisey’s Bay Project, Argentia,NewfoundlandDeveloper: Argentia Management AuthorityLocation: Voisey’s Bay, NewfoundlandSite Area: 9,000 acres

Proposed Use

� Industrial/commercial

Site History

� Former military base; decommissioning began in1995

Site Condition

� Information not immediately available

Cleanup

� Extensive cleanup

Costs

� Cleanup: $81 million for 9,000 acres

� Environmental consulting (phases 1 and 2): $7million

� Survey: $9.4 million

� Renovations: $2.37 million

� New construction: $3.25 million

� Public money: $5 million to promote and market a9,000-acre site

� Maintenance of site: $9.4 million

Progress to Date

� Site decommissioning and remediation is under-way

� 3,000 acres of land remediated

� 6,000 acres of land classed as rural/recreational

� 149,000 square feet of industrial/commercial spacerenovated

� 57,000 square feet industrial/commercial spacebuilt

� Granite and stone cutting operation: $20 millioninvested

Economic Benefits

� Private sector investment to date: $25.8 million

� Projected private sector investment: $930 million(Voisey’s Bay Nickel will build a $130-millionplant in Argentia by 2006 and an $800-millionplant by 2011

� 630 new construction jobs; average constructionwage: $10 to $12 per hour

� Personal income from on-site remediation andconstruction jobs: $720,000 (to date)

� Income tax from on-site remediation and construc-tion jobs: $216,000 (to date)

� Increase in GST/HST revenues: $900,000 (todate)

� Increase in annual property taxes collected bymunicipality: $195,000 to date

3. ICI, Shawinigan, QuebecDeveloper: The City of Shawinigan, ICI CanadaLocation: Shawinigan, QuebecSite Area: 3 acres

Proposed Use

� Shopping mall

Site History

� ICI operated a chlor-alkali manufacturing plantand a solvent manufacturing plant on this sitefrom 1936 to 1985

Site Condition

� Soils heavily contaminated with mercury andorgano-chloride solvents

� Groundwater in area severely contaminated bychlorinated organic compounds

Cleanup

� The company had already spent $10 million clean-ing up the site between 1985 and 1999; themercury-contaminated soil exceeding the industri-al/commercial generic criteria had been excavated;650,000 litres of free solvents had been pumpedout of the site during the 1990s


� Revi-Sols2 allowed ICI to complete the cleanup byexcavating areas still heavily contaminated by sol-vents; those areas were 400 metres wide and up to14 metres deep

� To minimize impacts on citizens of the nearby resi-dential area, only small surfaces were excavated at atime; in total, 7,000 kilograms of condensed sol-vents were recovered.

Costs

� Assessment and cleanup: $5.567 million (Revi-Solspaid for half )

� Construction: $10 million

Progress to Date

� The site has been cleaned up, and the mall hasbeen constructed

Economic Benefits

� Private sector investment (project cost): $12.8 million

� Increase in municipal property tax revenues(amount of increase not immediately available)

Other Benefits

� Cleanup of a massive source of volatile organo-chloride solvents located next to a residential area,protecting the health of the citizens in that area

� Redevelopment of a property that had beenderelict for over 25 years

� Addition of commercial space near a residentialarea

4. Angus Shops, Montréal, QuebecDeveloper: Canadian Pacific Railway (CPR)Location: Montréal, QuebecSite Area: Total 1,240 acres; Contaminated area:

309 acres

Proposed Use

� 800 houses

� Light industrial and commercial development

� Development of nine parks and other green spacesof different sizes

� Linear park at the west end of the site, which willbe connected to the existing City of Montréal bicy-cle path network

Site History

� Used between 1904 and 1992 for maintenance andrepair of rolling stock; facilities also used for con-struction of new railway equipment, as well asarmament and military equipment during bothWorld Wars; at its peak, the Angus Shopsemployed 12,000 people and consisted of 31 mainand 35 ancillary buildings

Site Condition

� Heavy contamination with heavy metals, petrole-um hydrocarbons, polycyclic aromatichydrocarbons (PAHs)

Cleanup

� Removal and off-site disposal of hazardous waste

� In residential area and central park, removal of allsoil exceeding residential generic criteria, slag, cin-der and demolition debris

� In industrial area, removal of all recyclable materi-al; site then backfilled with soils from an on-sitesource

� In commercial area, removal of waste and contami-nated soil within the infrastructure trenches

Costs

� Cleanup: $12 million

� Residential development: $204 million


� Commercial development: $20 million

� Industrial development: $250 million

Progress to Date

� 500 houses built

� Food supermarket and industrial mall built

� Biotechnology centre under construction

Economic Benefits

� $12 million has been invested to clean up the envi-ronment ($8.64 million invested by private partiesand $3.36 million provided by Revi-Sols)

� $391.6 million invested to date by private partiesto build up a residential neighbourhood, supermar-ket, light industry and a biotechnology centre

� Property taxes have increased to $2.19 million ayear thus far

Other Benefits

� Transformation of a vast non-productive formerindustrial site into a new dynamic neighbourhood,integrating commercial development and a lightindustrial park

� New social and economic development of the area

5. Centre de la petite enfance(Familigarde), Ville La Salle, QuebecDeveloper: Not-for-profit corporationLocation: City Centre, Ville La Salle, QuebecSite Area: 4.8 acres

Proposed Use

� Kindergarten for 60 children and administrativeoffices

Site History

� Filled with rubble of unknown origin, includingfoundry waste and coal

Site Condition

� Soils contaminated with PAHs and various solidwastes

Cleanup

� Removal of all solid waste and soil contaminatedbeyond the generic criteria

Costs

� Assessment and cleanup: $101,500 ($50,750 paidby Revi-Sols)

� Construction: $898,500

Progress to Date

� The site has been cleaned up

� Construction of the kindergarten is almost com-plete

Economic Benefits

� New building on a former derelict property

� 30 new full-time jobs

Other Benefits

� Provision of much-needed kindergarten places nextto a residential area, strengthening the cohesion ofthe neighbourhood

6. Barton and Crooks Streets, Hamilton,OntarioDeveloper: Kimshaw HoldingsLocation: West Harbourfront area, Hamilton, OntarioSite Area: 3.5 acres

Proposed Use

� 10 single residential units

� 17 residential townhouse units

� 10,000 square feet of commercial space

Site History

� Previously owned by Canadian National Railway.Part of the site was used for a gas station from1956 to 1995; the site was also used to dump fill

Site Condition

� Soils contaminated with various substances includ-ing oil and lead



Cleanup

� Residential component of site cleaned using ageneric stratified approach (top 2.4 metres cleanedto residential standards)

� Excavation of soils and off-site disposal

� Sorting and retention of on-site soils meetingindustrial/commercial standards for use below 2.4metres

Costs

� Cleanup: $250,000

� Servicing: $225,000

� Construction: $2.95 million

� Development charges and building permit fees:$216,500

Progress to Date

� Seven of 10 single residential units completed orunder construction

� 17 townhouse units and commercial space nearingcompletion of planning approvals stage

Economic Benefits


� Personal income from on-site remediation andconstruction jobs: $720,000

� Income tax revenues from on-site remediation andconstruction jobs: $216,000

� Increase in GST revenues: $240,000

� Increase in PST revenues: $274,000

� Permanent new jobs: 10

� Increase in annual property taxes collected bymunicipality: $77,500

� Development charges collected by municipality:$183,900

Other Benefits

� Provision of housing close to waterfront publicparks and amenities

� Neighbourhood stabilization and revitalization

7. Spencer Creek Village, Hamilton(Dundas), OntarioDeveloper: Urban Horse DevelopmentsLocation: Downtown Dundas, OntarioSite Area: 12 acres

Proposed Use

� Adult lifestyle community; 498 residential unitsincluding 100 retirement units

� 40,000 square feet of commercial space, includingEurohotel/medical services, clubhouse and com-munity centre

Site History

� Former Bertram Steel Foundry established here inthe late 1800s

Site Condition

� Contaminants included creosote, foundry sand,PCBs and hydrocarbons

� Substantial amount of surface waste

Cleanup

� Excavation and disposal of soils, on-site sorting ofsoils, and some bio-remediation used to removehydrocarbons

� Extensive recycling of demolition materials includ-ing reclamation of bricks, steel beams and woodbeams

Costs (to date)

� Cleanup: $1.85 million

� Environmental consulting: $270,000

� Planning/civil engineering: $130,000

� Servicing: $600,000

Progress to Date

� First phase (48 residential units) of eight phases iscomplete and occupied; construction of secondphase began in 2002

� Projected “build out” of project: 6 years

Economic Benefits


� Personal income from on-site remediation andconstruction jobs: $12 million

� Income tax revenue from on-site remediation andconstruction jobs: $3.6 million

� Increase in GST revenues: $6.61 million (projected)

� Increase in PST revenues: $7.55 million (projected)

� Permanent new full-time and part-time jobs: 40(projected)

� Increase in annual property taxes collected bymunicipality: $1.76 million, based on an actualincrease of $175,000 for the 48 residential units inphase one (projected)

Other Benefits

� Downtown population increased by 1,000 people

� Retirement residences provided in a downtownlocation close to services

� 2.5 acres of new parkland and new public walkways

8. West Harbour Lands, Cobourg, OntarioDeveloper: Cobourg Harbour Development

Corporation (CHDC)Location: Lake Ontario waterfront, Cobourg, OntarioSite Area: Information not immediately available

Proposed Use

� Residential condominiums

� Parkland/open space

� Beach area

� Waterfront trail

� Campground

Site History

� Formerly a busy port from which ore and otherproducts were shipped; the site also contained sev-eral rail spur lines, as well as bulk gasoline andfurnace oil storage operations


Site Condition

� Contaminants included heavy metals, such as lead,arsenic and mercury, and petroleum hydrocarbons

Cleanup

� Numerous cleanup methods applied, including exca-vation and off-site disposal, and bio-remediation.

� Groundwater monitoring to ensure water would beacceptable for public use

Costs

� Cleanup: $2 million

Progress to Date

� The first residential condominium project wascompleted and occupied in 1994; the project wasinitiated by Cobourg Housing and DevelopmentCorporation in 1993 on land formerly owned byMacAsphalt Ltd. and Shell Canada

� The second phase of residential development wascompleted in 1997 on former Ultramar CanadaLands

� Restoration of the former Imperial Oil site wascompleted in 1997; the site was purchased byTown of Cobourg for public use and waterfrontactivities

� The municipality has invested $2.3 million so farin waterfront improvements

Economic Benefits

� Residential construction will generate $162 million

� Increase in GST revenues: $8 million

� Building and construction fees paid to the munici-pality: $2 million

� The new marina will generate $3.1 million annual-ly for the community by 2008

� 100 to 200 new construction jobs

� Annual waterfront festival now attracts 80,000people and generates approximately $3.6 millionfor the local economy


Other Benefits

� Downtown waterfront revitalization

� Increased and improved land for public openspace, park and recreational uses

� Elimination of significant environmental hazards

� Improved tourism business as the waterfront isnow a major destination for residents and visitors

9. Courtald’s Fibres Project, Cornwall,OntarioDeveloper: Noyar Development, Inc. (Phase I)Location: Cornwall, OntarioSite Area: Phase I: 9.8 acres; total site: 100 acres

Proposed Use

� Phase I: 44-lot residential subdivision

� Majority of remainder of site remediated to openspace/residential and some industrial/commerciallevels

� Future development potential not yet determined

Site History

� Used as Courtald’s Fibres’ main complex from1925 to 1992; Courtald’s Fibres produced synthet-ic fibres (rayon) for the garment and other textilesindustries

Site Condition

� Industrial processes used dozens of chemicals,including caustic soda, carbon disulphide, acids,derivatives of benzene, fluorene, pyrene, naphtha-lene, petroleum hydrocarbons, toluene andchromium tetrahydrofurans

� Contaminants in Phase I related primarily to long-term use as employee parking lot for Courtald’sFibres—cinders, oil, grease and suspended solids;some areas contained higher levels of arsenic

Cleanup

� Use of stormwater interceptor or oil/grit separatorprior to stormwater release to the river

� Removal of arsenic (levels now acceptable for resi-dential and parkland use)

� Soils containing cinder were covered with a sub-stantial layer of topsoil

Costs

� (Not available)

Progress to Date

� Construction of 44 single residential units isunderway; approximately a dozen units completed

� Economic Benefits

� Property tax increases

� Employment opportunities for local contractors

Other Benefits

� Waterfront revitalization

� Major public open space along the waterfront

� Provision of additional housing

10. Finishing Mills, Cornwall, OntarioDeveloper: Renaissance Group

(not-for-profit corporation)Location: Waterfront, Cornwall, OntarioSite Area: Finishing Mill Lofts Project: 4 acres;

total site: 12 acres

Proposed Use

� 48-unit affordable housing project with ancillaryoffice and commercial space on first floor

Site History

� Housed former Canada Cotton Mills Complex,including several large multistorey buildings

Site Condition

� Some contaminated soils

� Oil remaining in a bunker under one of the buildings

� Overall structural condition of the buildings isgood, but buildings must be retrofitted andupgraded to resist seismic loads

� Some demolition required

Cleanup

� Removal of contaminated soils

� Removal of oil remaining in bunker

Costs

� Cleanup: $500,000

� Feasibility study (including environmental):$120,000

� Demolition: $380,000

� Construction: $19.5 million

� Parking construction: $1.3 million

� Development charges waived

Progress to Date

� Planning and detailed study stages completed

Economic Benefits

� Private sector investment (project cost): $19.5 mil-lion

� Increase in annual property taxes collected bymunicipality—$88,000 for Finishing Mill LoftsBuilding alone

� 48 new residential units

� 10,000 square feet of new commercial space

Other Benefits

� Provision of affordable housing close to the water-front and an adjacent public park

11. Stelco Swansea Works Project,Toronto, OntarioDeveloper: REON Development CorporationLocation: Humber River and Gardiner Expressway,

Toronto, OntarioSite Area: 12 acres

Proposed Use

� 850 residential units in a mixture of townhousesand three residential towers

� Small parks and green space along southernboundary of site

Site History

� Housed Stelco’s main fastener production opera-tions between 1885 and 1990; facility closed in1990 and vacant until purchased by REON in2001; main production operations were located onthe West property (8 acres) and an office building,parking and materials storage were located on theEast property (4 acres)

Site Condition

� Two large ponds and wetland areas on the site werefilled between 1940 and 1990 with assorted mate-rials including blast furnace clinker, coal ash,building and demolition wastes, assorted wastesoils and other debris

� Surface soils on West property were contaminatedwith petroleum products

� Some surface soils on East and West propertieswere mildly contaminated with metals

Cleanup

� Off-site disposal of soils with high metal concen-trations

� Bio-remediation of most soils containing elevatedlevels of petroleum hydrocarbons without excessconcentrations of metals

� On-site analytical procedures and rapid laboratoryturnaround enabled extensive sorting of materialson site, thus minimizing amount of clean soilremoved from site

Costs

� Not available

Progress to Date

� East property remediation is complete

� West property remediation is one third complete.

� Zoning application is approved

� Detailed site plan has been submitted to the City

Economic Benefits

� Estimated increase in annual property taxes collect-ed by municipality: $2.5 million


� 850 new residential units

Other Benefits

� Funds contributed for construction of a boat houseon the Humber River and for playground equip-ment for four schools in the Swansea area (thiswould not have occurred in the absence of theredevelopment)

� Implementation of an accessible and open commu-nity participation process



This annex summarizes an economic analysis of theimpact of brownfield redevelopment on the Canadianeconomy. It is based on a research paper commissionedby the National Round Table on the Environment andthe Economy in 2002.3

The analysis provides a macro-economic perspectiveof the economic impact of brownfield redevelopment inCanada. In so doing, it complements the case studyanalyses of the impacts of specific redevelopment proj-ects at the community level (see Annex 2).

The goal of the analysis was to gain a better under-standing of the economic impact of brownfieldredevelopment in Canada resulting from the “multipli-er effect” associated with this redevelopment. Themultiplier effect refers to how one dollar spent on anactivity is re-spent (through several rounds) on furtheractivities and commodities.

The analysis:

� proposed a hypothetical brownfield redevelopmentsector (or “cluster”) of the Canadian economy (interms of its economic activities and commodities)4

� modelled the cluster’s income multiplier effects onthe economy

� compared the multiplier effects of brownfield rede-velopment with those of other sectors of theeconomy.

Figure A3-1 presents a simplified picture of themultiplier effect process as it pertains to the brownfieldredevelopment cluster of the economy. One dollarspent by the cluster is allocated to all of those servicesectors that provide critical “front line” inputs, such asenvironmental consulting firms, remediation contract-

ing firms, engineering consulting firms, planning con-sulting firms, and legal services and insuranceproviders. The original dollar of expenditure is allocat-ed to these front-line input providers (the listing offront-line service providers in Figure A3-1 is notexhaustive), and each of these firms uses the income topurchase their critical front-line inputs. The processcontinues until the original dollar is consumed. Alongthe way, each firm, in buying inputs, stimulates pro-duction and activity in the economy, and multiplies theeffect of the original dollar.

As indicated in Table A3-1, the analysis concludedthat Canada’s brownfield redevelopment cluster has thehighest output multiplier of any sector in the economy.That is, funds dedicated to brownfield redevelopmentwould have a larger multiplier (or stimulation) effecton the Canadian economy than would investment inany other sector. The conclusion should not be surpris-ing, given the high service content of the brownfieldredevelopment cluster and the many interfirm linkagesthat typify brownfield redevelopment activity (e.g. thehigh degree to which the brownfield sector purchasesgoods and services from other sectors of the Canadianeconomy).

Table A3-2 summarizes the impact of brownfieldredevelopment activity on the Canadian economy,assuming different levels of current output for the clus-ter (ranging from a conservative estimate of $50million a year, to an optimistic level of $200 million ayear). The findings indicate the impact of the cluster’slarge multiplier effect. For example, if the brownfieldredevelopment cluster sustains an output level of $100million a year (likely a reasonable estimate of currentactivity), the Canadian economy as a whole will pro-duce an additional $375 million a year in output.

Annex 3Impact of BrownfieldRedevelopment on theCanadian Economy


The analysis distinguishes between direct, indirectand induced effects, all of which sum to the total out-put impact:

� direct effects represent those expenditures of thebrownfield redevelopment cluster that go to thefront-line input providers (often local providers ofrequired services and commodities)

� indirect effects represent all the rounds of spendingafter the direct effects

� induced effects are those output impacts resultingfrom induced personal consumption expendituresin the economy flowing from the initial injectionof money.

Table A3-3 illustrates the federal revenue implica-tions from various levels of brownfield redevelopmentactivity (assuming an average wage of $35,000 a yearand 2001 levels for Canada Pension Plan andEmployment Insurance deductions). According to theanalysis, for example, $100 million a year in brown-field redevelopment activity generates an estimated$21.6 million in federal revenues.

The results of the analysis reinforce the growingrecognition that brownfield redevelopment activitiescan generate substantial economic (and, by extension,social) benefits to the Canadian economy.

Sector of the Canadian economy Total output multiplier

Brownfield redevelopment cluster 3.8

Government 3.1

Construction 3.0

Transportation and warehousing 3.0

Forestry and logging 2.9

Manufacturing 2.8

Education services 2.7

Information and cultural industries 2.7

Mining and oil and gas extraction 2.5

Health care and social assistance 2.4

Finance, insurance and real estate 2.2

Utilities 1.9

Table A3-1 Comparison of Total Output Multipliers of Key Economic Sectors in Canada


Assumed current annual output of Total Direct Indirect Induced brownfield redevelopment cluster output output output output

impact impact impact impact

$50 m $188 m $47 m $83 m $58 m

$100 m $375 m $93 m $166 m $116 m

$150 m $563 m $140 m $249 m $174 m

$200 m $751 m $186 m $332 m $233 m

Table A3-2 Impact of Brownfield Redevelopment Activity on the Canadian Economy (in 1998 Canadian $)

Assumed activity levels of brownfield redevelopment cluster

$50 m $100 m $150 m $200 m

Federal personal income tax $4.55 m $9.1 m $13.7 m $18.2 m

Federal indirect taxes $1.05 m $2.09 m $3.14 m $4.18 m(e.g. GST, gas tax)

Employer and employee contributions $3.07 m $6.14 m $9.12 m $12.3 m to CPP

Employer and employee contributions $2.14 m $4.28 m $6.43 m $8.57 mto EI

Other transfers from persons to $0.005 m $0.009 m $0.014 m $0.018 mgovernment

Total impact on federal revenues $10.8 m $21.6 m $32.4 m $43.2 m

Table A3-3 Federal Revenue Implications from Brownfield Redevelopment (in 1998 Canadian $)

Cleaning up the Past, Building the Future: A National Brownfield Redevelopm

ent Strategy for CanadaA-18

Figure A3-1 Simplified Representation of the “Multiplier Effect” in the Brownfield Redevelopment Cluster

Environmentalconsulting firms

Planning consulting firms

Chemical analysis firms

Excavation contractors

Demolition contractors

Wholesalers,retailers andlessors of labequipment

Fuel delivery firms

Manufacturers of lab

equipment

Manufacturers of machinery

and parts

Wholesalers andrefiners of fuel

oils

Heavy equipment

maintenance firms

Surveying andmapping firms

BRC Expenditures

Legal, insuranceand financial services firms

Remediationconsulting firms

Engineering consulting firms

Waste management contractors

Drilling contractors

Wholesalers,retailers and

lessors of heavymachinery


This annex reviews how five industrialized countrieshave approached brownfield redevelopment:5

� United States

� United Kingdom

� France

� Germany

� Italy

Over the past decade, these countries have madesignificant progress in overcoming the challenges posedby brownfields. Each country surveyed has adopted avariety of legislation and policies affecting brownfieldredevelopment. Each has a number of worthwhile ini-tiatives and programs underway. However, only theUnited States and the United Kingdom have trulycoordinated national efforts in place to address key bar-riers and encourage brownfield redevelopment.

A review of this international experience can helpidentify the key factors in launching and implementinga successful brownfield redevelopment strategy inCanada.

1. United States

Scope of the Brownfield ProblemThe U.S. Environmental Protection Agency (EPA) esti-mates that there are between 500,000 and one millionbrownfield sites in the country. More than $2 trillionworth of property within the U.S. is devalued due tothe presence of environmental hazards. The total costof restoring these sites to productive use may be inexcess of $650 billion.6

Annex 4Profiles of SelectedInternational Activities onBrownfield Redevelopment

Policy ApproachesThe U.S. has addressed the challenges of contaminatedsites for many years. Specific initiatives targeted tobrownfields began in 1993, with the EPA’s BrownfieldsEconomic Redevelopment Initiative. In 1995, the EPAannounced its Brownfields Action Agenda. Even as thecommitments laid out in the Action Agenda were met,it became clear that the momentum for ongoingbrownfield redevelopment could only be sustained withfurther federal, state and municipal involvement as wellas greater private sector participation.

In 1997, the Clinton Administration combined theresources of more than 15 federal agencies to expandthe brownfields initiative and created the BrownfieldsNational Partnership Action Agenda. This provided aframework for cooperation among governments, busi-nesses and non-governmental organizations. The U.S.federal program currently operates in conjunction withthe brownfield programs of 48 states and more than300 local governments. Federal and state jurisdictionscontinue to strive for harmonization of the legal, scien-tific and financial incentives designed to spur thedevelopment of brownfields.

In general, U.S. federal brownfield incentives aretargeted to state and local governments, and few areapplicable directly to the private sector. In essence, thestates and local governments have become “partners” inthe delivery of federal programs. This approach hasbeen criticized as an inefficient and indirect means ofproviding funding. For example, administrative struc-tures are required at the federal, state and localgovernment level in order to deliver brownfield incen-tive programs. On the other hand, such a systempromotes greater accountability and flexibility to meetspecific local community needs.

Progress

Federal Government

Federal actions on brownfield redevelopment focus onpilot projects, revolving loans, small grants and techni-cal assistance. About 20 federal agencies are involved,including the EPA, the Department of Housing andUrban Development (HUD), the EconomicDevelopment Administration (EDA), the SmallBusiness Administration (SBA) and the Department ofAgriculture (USDA) (see Table A4-1 for a summary offinancial assistance incentives, by agency).

The EPA provides three types of financial incentives:

� Demonstration Pilot Grants of up to $200,000each to states, cities, towns, counties and tribesacross the U.S. to conduct environmental assess-ment-related activities and develop remediationand redevelopment plans

� Cleanup Revolving Loan Funds of up to $500,000($1 million under the new Small Business LiabilityRelief and Brownfields Revitalization Act) awardedto states, cities, towns, counties and tribes to pro-vide low-interest loans to carry out cleanupactivities at brownfield sites

� Job Training Pilot Grants of up to $200,000 eachto provide job training for residents of communi-ties affected by brownfields.

Since its inception in 1993, the U.S. EPA’s brown-field program has provided over $280 million in pilotproject funding and grants to spur brownfield projects.The EPA reports that this has levered $4 billion inpublic and private investment and over 19,000cleanup, construction and redevelopment jobs.

The Cleanup Revolving Loan Fund has been criti-cized by some observers for having onerous legal,environmental and administrative requirements thathamper its usefulness and effectiveness. New U.S.brownfield legislation is expected to focus more ondevelopment financing, conventional developmentunderwriting and loan evaluation related to cleanup.This should help to make the Cleanup Revolving LoanFund program more useful. The key lesson that can belearned from this financial incentive program is theneed for harmony between federal legislation and thelegal, environmental and administrative requirementsof any financial incentive program.

In 1997, the U.S. federal government passed theTaxpayer Relief Act (TRA), which included a new taxincentive to spur the cleanup and redevelopment ofbrownfields. The TRA allows environmental cleanupcosts to be fully deducted from income in the year theyare incurred. The $1.5 billion TRA incentive for brown-fields was expected to lever $6 billion in privateinvestment and return 14,000 brownfields to productiveuse. However, the TRA incentive has not been widelyused. Possible reasons include developer misunderstand-ing of the tax incentive, procedural requirements that areconsidered cumbersome, a perception that the tax creditis insignificant and does not justify the amount of work(and related costs) needed to get the tax credit, and thedesire of some developers to re-sell the property asquickly as possible. The conclusion is that an income taxdeduction for remediation expenditures may not beeffective unless the credits are significant and proceduralrequirements are minimal.

State Governments

At the state level, departments of environment and eco-nomic development generally deliver programs relatedto voluntary cleanup, liability relief, tax abatement,technical assistance and low-cost loans.

A recent study compared the performance of statesoffering fairly comprehensive brownfield programswith that of states offering only limited programs. Thestudy correlated the success of individual state pro-grams (as measured by the number of brownfield sitesremediated under the program) with the presence orabsence of six key program features:

� civil and regulatory liability

� responsible person protection

� tax incentives

� loans, grants and guarantees

� risk-based remediation

� memorandum of agreement.

Of the 48 states with brownfield programs, 18 hadeither five or all six of the key features, 20 had three orfour, while 10 had fewer than three of the features. Thosestates with five or six of the features far outperformed theothers, accounting for more than 12,000 remediatedsites, compared with 3,333 for the second group andonly 142 for the third group (see Table A4-2).



Differences in history and location did not appearto account for the differences in results. The studyfound that states that are otherwise similar in character,but which incorporate a different range of features intotheir brownfield programs, often obtain significantlydifferent levels of site remediation. For example, NewYork and New Jersey are neighbouring states with simi-lar industrial legacies. Moreover, market forces in bothstates have failed on their own to stimulate significantbrownfield redevelopment. Yet, after each state imple-mented a brownfield program, widely different resultswere achieved: New Jersey, with five of the key pro-gram features, has remediated 2,341 sites; New York,with only three program features, has remediated only265 sites. This appears to confirm the correlationbetween program performance and feature selection.

The study also considered the relative importanceof each of the program features, concluding that three

features were particularly important success factors: lia-bility protection, risk-based remediation, and loan andgrant programs.

Local Governments

Local government initiatives in the U.S. generally focuson tax-increment financing incentives, tax abatementand low-cost loans. Examples of many brownfield “suc-cess stories” at the local level in the U.S. can be foundthrough the EPA’s Internet site:http://www.epa.gov/swerosps/bf/success.htm

Future ChallengesFuture work on brownfield redevelopment in the U.S.likely will focus on streamlining the administration andstrengthening the coordination of the various federal,state and local initiatives.

Loans• Economic Development Agency (EDA) Title IX (capital for local revolving

loan funds)

• Housing and Urban Development (HUD) funds for locally determinedCommunity Development Block Grant (CDBG) loans and “floats”

• Environmental Protection Agency (EPA)-capitalized brownfield revolvingloan funds

• Small Business Administration (SBA) microloans

• SBA Section 504 development company debentures

• EPA-capitalized clean water revolving loan funds (priorities set/pro-grams run by each state)

• Loan guarantees

• HUD Section 108 loan guarantees

• SBA Section 7(a) and Low-Doc programs

Grants• HUD Brownfield Economic Development Initiative (BEDI)

• HUD Community Development Block Grants (for locally determined projects)

• EPA assessment pilot grants

• EDA Title I (public works) and Title IX (economic adjustment)

• Department of Transport (DOT) (various system construction and rehabil-itation programs)

• DOT transportation/community system preservation (TCSP) pilots

• Army Corps of Engineers (cost-shared services)

Equity capital• SBA Small Business Investment Companies

Tax incentives and tax-exempt financing• Targeted expensing of cleanup costs (through December 31, 2003)

• Historic rehabilitation tax credits

• Low-income housing tax credits

• Industrial development bonds

Tax-advantaged zones• HUD/U.S. Department of Agriculture (USDA) Empowerment Zones (vari-

ous incentives)

• HUD/USDA Enterprise Communities (various incentives)

Table A4-1 U.S. Federal Financial Assistance Programs Applicable toBrownfield Redevelopment

Source: Regional Analytics Inc., “A Preliminary Investigation into the Economic Impact of BrownfieldRedevelopment Activities in Canada,” unpublished background document prepared for the NRTEE, 2002.


2. United Kingdom

Scope of the Brownfield ProblemAcross the U.K., brownfield sites result from a widerange of former industrial activities, including mineralextraction, coal and steel production, gasworks, electri-cal generation, traditional engineering-based activities,transport infrastructure and chemical production, aswell as a wide range of more minor industrial activities.In 1996, the Department of Environment (DOE)(now part of the Department for Environment, Foodand Rural Affairs—DEFRA) published a series of near-ly 50 “industry profiles,” which provide informationon the history of different industrial activities in theU.K. and identify the likely contamination problems tobe found on the sites involved.

A National Land-Use Database was started in 1998to assist in the identification of previously developedsites that might be, or might become, available for newdevelopment uses. Work continues on populating thedatabase, but interim statistics released in May 1999reveal there are some 33,000 hectares of land inEngland that are previously developed and eithervacant or derelict, and that might be suitable for rede-velopment.

Experience suggests that many potential brownfieldsites would not be revealed by such database or surveyexercises, because they become brownfield (sometimesonly for a short period) as their previous use comes toan end.

Policy ApproachesThe key national land use policy aims “to promote asustainable pattern of physical development and landand property use in cities, towns and the countryside.”It includes the following goals for promoting brown-field redevelopment:

� economic and social regeneration of the surround-ing areas

� environmental improvement of the sites themselves

� reduction in “development pressure” on greenfieldsites.

This objective is backed up by specific PublicService Agreement (PSA) targets for 60 percent of newhousing to be provided on previously developed landor through conversion of existing buildings, and forbrownfield land to be reclaimed at a rate of over 1,100hectares per annum by 2004, reclaiming 5 percent ofcurrent brownfield land by 2004 and 17 percent by2010.

The land use objective is also specifically linked toa further objective “to enhance sustainable economicdevelopment and social cohesion through integratedregional and local action, including the promotion ofan urban renaissance.”

In 1999, an Urban Task Force set up by thenational government examined the current and poten-tial role of national government and other public sectorbodies in urban policy, including the promotion ofbrownfield redevelopment. Its report, Towards anUrban Renaissance, made a series of detailed recom-mendations for future action. The government set out

Programs with 5 or 6 Programs with 3 or 4 Programs with less key features of key features than 3 key features

No. of states 18 20 10

Total no. sites remediated 12,167 3,333 142

Average no. remediated sites 676 167 14 per state

Table A4-2 Performance of State Brownfield Redevelopment Programs Correlated with Program Features

Source: Based on Ahab Abdel-Aziz and Shari Elliott, “Facilitating a Brownfield Redevelopment Strategy forCanada,” unpublished background document prepared for the NRTEE, 2001.

its own framework of policies and programs, andresponded to the Task Force’s recommendations, in anurban white paper, Our Towns and Cities: TheFuture–Delivering an Urban Renaissance, published inNovember 2000 by the Department of Transport(DETR). This paper included what was described as a“new vision of urban living,” in which:

� people shape the future of their community, sup-ported by strong and truly representative localleaders

� people live in attractive, well-kept towns and citiesthat use space and buildings well

� good design and planning make it more practicalto live in a more environmentally sustainable way,with less noise, pollution and traffic congestion

� towns and cities are able to create and share pros-perity, investing to help all their citizens reach theirfull potential

� good quality services—health, education, housing,transport, finance, shopping, leisure and protectionfrom crime—meet the needs of people and busi-nesses wherever they are.

The white paper included specific proposals to “usethe tax and planning systems to bring previously devel-oped brownfield sites and empty property back intoconstructive use, turning eyesores into assets.”

In general, comprehensive systems of land useplanning regulations have been used to control howredevelopment takes place on brownfield sites, and notto force it to happen.

The main legal control on any development is thesystem of land use planning set out in the Town andCountry Planning 1990.7 Any development requiresspecific planning permission, which may control notonly the location of development, but also the natureof that development and the way it is carried out. Inthe context of brownfield redevelopment, the planningpermission may contain specific conditions relating tosite investigation and assessment and, where appropri-ate, remediation of contamination. Guidance toplanning authorities on contaminated land aspects ofplanning is set out in Planning Policy Guidance notePPG 23 Planning and Pollution Control. This guidanceis currently being revised, with a view to publishingspecific planning guidance for development on landthat may be affected by contamination. Brownfield

redevelopment projects above a certain size also requireenvironmental impact assessments as part of the plan-ning approval process.

In addition, the Building Regulations impose a sys-tem of controls over the details of construction of anybuilding. These cover a range of issues from the integri-ty of the foundations, through to issues such asdisabled access to public buildings. They include spe-cific requirements to ensure that buildings andbuilding services are protected from the effects of anycontaminants in the ground under the building.

Land remediation activities may need prior regula-tory approval under the waste management licensingsystem under Part II of the Environmental ProtectionAct 1990 (which implements the European WasteFramework Directive) or the system of IntegratedPollution Prevention and Control (which implementsthe directive of the same name).8 Some remediationprocesses are defined (under the directive) as “wastedisposal” or “waste recovery” operations, and thereforehave to be licensed to ensure that they are carried outwithout risk to human health and the environment.Other licensing regimes may also be relevant in somecases (e.g. the Groundwater Regulations 1999). Thegovernment is currently reviewing the operation ofwaste management and other controls as they apply toland remediation projects, and may introduce a morespecific form of regulatory control in the future.

ProgressIn many urban areas of the U.K., the redevelopment ofbrownfield sites is led largely by the private sector. Asignificant proportion of projects take place with verylittle direct involvement from public bodies and gov-ernment agencies, except in their roles as regulators,issuing and enforcing necessary approvals and legal per-missions (such as town and country planning). Thisprivate sector focus may be the result of a combinationof the following four factors:

� the fact that most of the current brownfield landstock is already privately owned

� the particular “economic history” of the sites andthe industries that were formerly on the land

� the current state of the national and regionaleconomies and, in particular, the demand for landin urban areas



� conscious political choice by successive nationalgovernments.

However, there are also significant governmentprograms to promote and support brownfield redevel-opment. These programs can be split into four types:

� spatial planning

� technical support

� financial support

� direct development by public bodies and agencies.

Spatial Planning

The system of “town and country planning” promotesbrownfield redevelopment largely by inhibiting or pre-venting development projects on greenfield sites, andby making brownfield land available for development.This is brought about by a hierarchy of:

� national planning policy (set out by national gov-ernment in Planning Policy Guidance notes)

� regional planning policy (set collectively by localgovernment bodies in the region, and the regionaldevelopment agency), which also includes overall“structure” planning for the region

� local structure and development plans (set by thecounty and district councils), which make zoningdecisions for the future use of particular areas ofland, and

� individual decisions on applications for planningpermission (made by local planning authorities),which normally should conform with the relevantdevelopment plan.

This structure of guidance cascades the nationalPublic Service Agreement target for 60 percent ofhousing to be on previously developed land or in con-verted buildings into more detailed regional and localtargets. To promote the achievement of these targets,there is a new requirement, set out in a DETRPlanning Policy Guidance Note, for a “sequential test”for new developments. This test means that a localplanning authority must first satisfy itself that there areno suitable and available sites that have been previouslydeveloped before it can allocate any greenfield sites fornew housing projects.

Technical support

Technical support takes both proactive and reactiveforms. On the proactive side, national government andother private sector-led groups fund research and devel-opment and the development of “best practice” adviceto assist the development and construction industriesin working on brownfield sites. On the reactive side,the focus is on removing factors that might inhibitbrownfield redevelopment. This work includes:

� research and development on the application ofnew remediation techniques and technologies

� confidence-building initiatives with the financialand property sectors

� setting out a system of liability for contaminatedland

� reviewing the licensing system for land remediationactivities

� wider policy development on issues such as “landassembly” for larger development projects, andchanges to the system of compulsory purchase bypublic authorities.

Financial support

Brownfield redevelopment is eligible for direct publicsector financial support where this is necessary toachieve social and economic policy objectives. In someregions, public sector intervention is essential to ensureredevelopment. Financial support for the private sectorcan take a number of forms, such as:

� grant aid, either for particular elements of the costsof development or as “gap funding”

� support for loans, including payment of interestand guarantees

� other guarantees (e.g. income stream guarantees,support for warranty purchase)

� partnership projects with risk and profit sharing.

Direct funding is generally provided by nationalgovernment through arm’s-length public sector regener-ation agencies, such as English Partnerships and thenetwork of regional development agencies in England,the Welsh Development Agency and ScottishEnterprise. In some cases, the funding is providedthrough local authorities, either directly from national

Key challenges identified for the U.K. include:

� improving understanding of the social, economicand environmental factors related to brownfieldredevelopment

� quantifying and assessing the contribution made bybrownfield redevelopment to sustainable develop-ment

� integrating brownfield considerations into otheraspects of regeneration, such as architecture andsocial development

� building confidence in brownfield regeneration(e.g. risk communication methods)

� developing tools to promote good practice inbrownfield redevelopment (e.g. by demonstrationof technologies, better integration of technicalapproaches with management needs)

� ensuring holistic approaches to managing largeareas of brownfield, especially in dealing withregional groundwater issues

� maximizing the benefits from brownfield regenera-tion (e.g. in terms of recycling and reuse ofresources on the sites)

� developing cost-effective methods for assessing sitesfor contamination problems

� strengthening the evaluation of contaminationmanagement technologies (e.g. in terms of practi-cability, long-term effectiveness and their widerenvironmental and resource-use impact)

� improving approaches for communicating withand involving stakeholder groups.

For the future, a major issue is the desire of devel-opers for a “one-stop shop” approach to licensing andapprovals. Many aspects of the current regulations arealready under review, in particular the licensing ofremediation activities and the guidance issued to plan-ning authorities.


government or via the national or regional regenerationagencies. In addition to these national sources of fund-ing, other projects receive support through Objectives1 and 2 of the European Regional Development Fundand other structure funds.

Recent years have seen a slowdown in governmentfunding for private sector schemes due to legal prob-lems. The European Commission has identified themain programs involved as “state aids” and thereforepotentially contrary to European Union competitionpolicy. This means that the programs, and in somecases individual projects, have to be approved inadvance by the Commission. The move also placesstrict limits on the geographic availability of financialsupport for private sector development and on theamount of support for any individual project.

Other indirect financial tools have been used in thepast, such as tax breaks for development projects indesignated “enterprise zones.” The 2000 urban whitepaper committed the national government to investi-gating new fiscal instruments, in particular sales taxreductions for properties in economically disadvan-taged areas and tax credits for cleaning upcontaminated land. The Finance Act 2001 has takenforward this second idea, allowing companies to offset150 percent of the cost of remediating contaminatedland against the profits on which they pay corporationtax. In some cases, this tax allowance can be claimed asa payable tax credit.

Direct Development

The public sector regeneration agencies and localauthorities also carry out direct development projectsof the following kinds:

� “fully worked up” developments

� preparation of “development platforms” for subse-quent development by the private sector

� simple site clearance projects

� provision of roads and other infrastructure on ornear potential redevelopment sites.

Future ChallengesGaps and obstacles in brownfield redevelopment havebeen reviewed extensively in the U.K. by a number oforganizations, including the Parliamentary Office ofScience and Technology and the Urban Task Force.

3. France

Scope of the Brownfield ProblemSince the 1970s, brownfield sites have been attractingconsiderable interest in some former industrial regionsof France (in particular, Lorraine and Nord–Pas deCalais), and more recently in other regions because ofextensive urban development (Paris Île-de-France andRhône-Alpes).

It is estimated that there are about 200,000 formerindustrial and service sites that can be consideredbrownfields, as well as about 200 former mines. Thestock of industrial brownfields is estimated at about20,000 hectares, concentrated in the traditional indus-trial areas of the northern and eastern part of thecountry, especially in the region of Nord–Pas de Calais(9,400 hectares) and Lothringen (2,500 hectares). Mostof these are large sites (more than 10 hectares) in sub-urban or outlying locations.

The stock of brownfields has not decreased in thelast decade despite considerable reclamation activities.

Policy ApproachesLong-term policies and programs exist in the tradition-al industrial regions. Since the 1980s, however, specificbrownfield reclamation programs have been developedin the context of the national “contact de plan” (fund-ed by the state, region and the European Union).

France has no specific brownfield redevelopmentlegislation. Instead, legal aspects are addressed through:

� law on environmental permits for industrial sites

� the Mining Code, for the former mines (the Codewas recently modified to take into account theclosing and abandonment of mine sites)

� the Civil Code (liability on harm caused by ownedproperties)

� the Urban Planning Code for the redevelopment ofbrownfield sites in the urban context

� some specific regulations on historical buildingpreservation and requalification.

Due to the regional dominance of derelict land, ajoint intervention of national, regional and localauthorities has been necessary. As it was clear from theoutset that it would not be possible to find new uses

for this land immediately, the derelict land strategydeveloped in 1986 concentrated on rapid improvementthrough large-scale landscape treatment—to overcomethe negative image of derelict land. Preparation of theland for new uses, which involves much higher costs,will be a medium- and long-term task.

The strategy’s priorities were based on:

� rapid identification of derelict land

� the establishment of a regional development agency

� a clear and comprehensive methodology (known as“requalification sommaire”)

� adequate and regular funding

� a partnership of all parties involved

� support for preparing and developing derelict landfor new projects.

The derelict land strategy involves:

� demolition as well as clearing work in the area

� construction of terraces, planting and use ofscreening trees

� construction of recreational paths

� where necessary, treatment of contamination usingall legal instruments to make the polluter pay.

Subsequently, the properties are managed on aregional level and in individual cases left to the freemarket. The regional development agency, Établisse-ment Public Foncier de la Métropole Lorraine(EPML), is responsible for implementation of thisstrategy.

ProgressThrough financial support from the state, the regionalcouncil, the agency itself and the European Fund forregional development, a total of 120 million euro wasmade available between 1986 and 1997 to implementthe new derelict land strategy (Lorraine Region, EPMLand the French government provided two thirds of thefunding, and one third came from the EU).

By 1997, 3,350 hectares of derelict land had beentreated, representing, 97 brownfield sites in 109 com-munities.

Since treatment, 30 percent of the sites have beenreused for economic purposes, 22 percent remain


available, 17 percent are used for parks, 27 percenthave designated for nature, and 4 percent have beendeveloped for housing. Thanks to the efforts of EPML,the industrial land owners were persuaded to sell theirproperties at reasonable prices. At the same time, par-tial sales by owners of attractive and unencumberedproperties were prevented.

The strategy has succeeded in linking the interestsof the private property owners, the community andother actors. Regional stakeholders are cooperating in acommon network with research activities and interna-tional services.

Future ChallengesWork is underway to address the following challenges:

� the definition of liabilities related to soil contami-nation

� current land planning tools that do not take soilcontamination into account (bringing reclamationwork to a halt when pollution is suspected orestablished).

4. Germany

Scope of the Brownfield ProblemGermany has about 362,000 suspected contaminatedsites, with brownfields covering an estimated 128,000hectares. The presence of brownfields hampers eco-nomic development in the affected regions: theirunsightly appearance and the risks associated with theenvironmental hazards are major obstacles for invest-ment. At the same time, demand for greenfield land isincreasing, with 129 hectares per day being bought fordevelopment.

In the last 10 years, Germany has made a consider-able effort to solve the environmental problems arisingfrom contaminated sites. However, the task of revitaliz-ing derelict land and of developing effective conceptsfor bringing the land back into economic use remains akey challenge.

Policy ApproachesGermany has no special legislation for brownfield rede-velopment. Legal aspects are covered by the Federal SoilConservation Act, by regional planning acts and by the

Building Code. The Federal Soil Conservation Act cameinto force on March 1, 1999, setting out requirementsfor contaminated land remediation in terms of country-wide standards for risk assessment and cleanup. The SoilProtection Act gives some guidance as to a cleanup planand a remediation contract. The regional planning actsand the Building Code include regulations for unsealingsurfaces and restricting greenfield development, and pro-vide basic guidance for the careful handling of soil.

In 1998, the federal environment ministry pub-lished the Draft Environmental Program and set thefollowing objectives for brownfield redevelopment:

� rehabilitation of industrial sites and elimination ofhazards to human beings and the environment

� reintegration of rehabilitated sites into the economic cycle

� reduction of land consumption from 120 hectaresper day (in 1998) to 30 hectares per day by 2020.

ProgressVarious development agencies have produced regionalbrownfield initiatives in the federal states, such as the“Landesentwicklungsgesellschaft Nordrhein-Westfalen.”By establishing a property fund in 1982, this regionhas made the redevelopment of brownfield sites andidle buildings central to its policy of creating an inte-grated urban development model. The activities of theproperty fund go beyond the establishment of attrac-tive new business parks. They include:

� placing quality targets in urban construction (e.g.architectural plans for commercial buildings, sur-rounding landscaping, and recreational areas andfacilities) ahead of strict economic considerations

� preserving abandoned industrial architecture that ispart of the state’s heritage

� safeguarding monuments, such as the coal mineZollverein XII in Essen and the Landscape Park inNorth Duisburg, which are now becoming touristand cultural attractions within the Ruhr area.

To date 2,400 hectares in 178 locations have beenpurchased in the state. Of these, 971 hectares havealready been rehabilitated, developed and placed on themarket. About 61 percent of the developed business siteshave been sold. Work is underway to place additionalland on the market within another two to three years.


One important development involves projects forthe International Building Exhibition (IBA) at EmscherPark, completed in 1999. The IBA aimed to serve as afocal point for demonstrating the ecological, economicand social benefits of brownfield redevelopment. Thepark includes new landscape schemes, technology cen-tres, innovative housing schemes and other activities.

In 2001, the state of Saxony, which has an estimat-ed 18,000 hectares of brownfield sites, launched a new,integrated and interdepartmental brownfield redevelop-ment program funded by the European RegionalDevelopment Fund (ERDF) of the EuropeanCommission.

Future ChallengesKey challenges include:

� overcoming developers’ preference for greenfieldsites, which are easier, cheaper and faster to devel-op than brownfield sites

� high legal, environmental and financial risks forinvestors

� lack of integration of environmental and spatialplanning policy and procedures

� insufficient awareness of available legal options toenhance the redevelopment of brownfield sites

� few incentives for investors

� overcoming stigmas associated with brownfieldproperties.

5. Italy

Scope of the Brownfield ProblemRegional governments in Italy are still developing localinventories of contaminated or potentially contaminat-ed sites. Brownfields are concentrated in the northernindustrial regions of the country, including Lombardia,Piemonte and Veneto. Properties include old industrialplants such as oil plants, chemical plants, steel and ironworks and mining sites.

Policy ApproachesItaly has no specific legislative or regulatory frameworkfor addressing brownfield redevelopment, other than

the legislation and funds generally relevant to contami-nated site rehabilitation.

In 1998, national legislation was established toprovide public funds for a number of selected sitesdefined as “sites of national interest.” These are definedas contaminated sites with special features (e.g. loca-tion, heavy environmental contamination, economicand social stresses, urgency of redevelopment) thatlocally might justify a “brownfield” label. The originallist has been expanded by a recent (2001) decree, andthere are currently about 40 sites of national interest.The initial public budget for rehabilitation of thesesites is over 500 million euro for the next three years.

ProgressMany initiatives are driven by municipal governmentsin the northern region, hard hit by economic down-turns in recent decades. These activities typicallyinvolve the private sector, community groups and pub-lic authorities. Some projects are co-financed by theEuropean Commission, including:

� “urban pilot projects” (municipalities of Genoa andVenice), financing specific programs for renewal ofhistorical or traditional urban areas

� “municipia” (municipalities of Terni and Trento), anetwork of towns managing the urban environ-ment.

The municipality of Milan has been particularlyactive in brownfield redevelopment, constructing 4,300housing units, four urban parks and commercial servic-es on former brownfield sites. About 700,000 euro hasbeen invested, mainly by private companies.

Future ChallengesChallenges to brownfield redevelopment in Italy include:

� the absence of specific redevelopment programs

� insufficient technical, legal, liability and adminis-trative references

� limited participation by the public

� lack of incentives for investors

� developers’ preference for greenfield sites

� overcoming the stigmas associated with brown-fields.



The following text assesses the potential effectiveness ofalternative policy instruments for brownfield redevelop-ment. It is based on a review and analysis of policyinstruments used in the United States and Canada.9

This work, which was commissioned by theNRTEE, provides a qualitative social benefit-cost per-spective on the effectiveness of alternative policyinstruments. The objective was to identify general char-acteristics of an effective brownfield developmentstrategy, and to rank groups of policy instruments inorder of likely effectiveness. Ranking by group recog-nizes the interactive impact of some policyinterventions.

1. Background on Market FailuresMarkets, the free exchange of goods and services, donot always work well. When they fail, or are imperfect,actions that increase the collective national wealth maynot take place. This is the case for brownfields. Thereare a number of significant market failures that preventredevelopment of land, even when the redevelopmentwould create enough wealth and income to more thanrepay the cost.

Markets fail when a developer or landowner lacksimportant information, or when decisions have impactson those who are not parties to the transaction. In thelatter case, redevelopers and landowners will naturallyefficiently in their own commercial interests. Whenthere are additional social interests or third-party inter-ests to be taken into account, it is the role ofgovernments to find cost-effective means of introduc-ing these considerations into the private sectordecision-making process.

2. Market Failures Relevant to BrownfieldRedevelopmentMarket failures restricting brownfield redevelopmentmay be broadly divided into those that cause privatedevelopers to:

� undervalue commercial benefits

� overvalue costs

� exclude social and environmental benefits.

The first two categories above are discussed brieflybelow. They are particularly important to the NRTEE’sbrownfield redevelopment strategy as they define the“middle tier” of brownfields (Tier 2) for which redevel-opment is feasible and likely to attract private interestbut where market barriers currently discourage activity.If these market failures can be corrected, then privatedevelopers will see redevelopment as profitable anddevelopment may proceed. Equally, if the market fail-ures cannot be corrected directly, but can be offsetthrough financial incentives, then development willgenerate sufficient wealth and income in the tax base torepay the incentives from the public budget. Solving ormitigating these sources of market failure will increaserate of redevelopment for Tier 2 brownfields, with con-sequent economic, social and environmental benefits.

The third category of market failures (exclusion ofsocial and environmental benefits) is caused by privatemarkets failing to capture collective benefits such asenvironmental benefits, improved neighbourhoods,preserved wetlands and greenfields, and health impactsnot effectively recoverable through court action.

Annex 5Market Failures and Optimal Useof Brownfield RedevelopmentPolicy Instruments

Market Failures that Undervalue CommercialBenefits These are market failures that cause undervaluing ofthe income-generating benefits of redevelopment to allaffected parties.

� Third-party wealth and income impacts.Developers may not account for the positiveimpacts of redevelopment on the ability of otherfirms and assets in a city to produce wealth. Theseimpacts are particularly significant on lands sur-rounding a redevelopment project. Impacts onneighbouring property values have been estimatedat 10 percent for commercial, 30 percent for resi-dential and 50 percent for neighbouringbrownfields.

� Infrastructure cost savings. Developers choosingbetween greenfields and brownfields may notaccount for the infrastructure cost savings from theincreased compactness of a city. These may be inthe order of $18,000 per hectare annually.

� Transportation cost savings. Developers choosingbetween greenfields and brownfields may notaccount for the impacts on congestion and relatedindirect transportation cost savings. These may bein the order of $66,000 per hectare annually.

� Municipal services cost savings. Owners ofbrownfields deciding whether to sell or redevelopwill not fully account for the ongoing burden ofthe vacant land on municipal services. Theseinclude fire, police and other services to surround-ing land whose security is compromised.

Market Failures that Overvalue CostsThese market failures cause potential developers toassess higher project costs than the true cost to society.

� Tax system impediments. Aspects of the tax systemcan artificially increase costs by placing incentives inthe wrong place. For example, land remediationcosts are immediately deductible as an expense forcurrent landowners (advantageous for them), butmust be capitalized and written off over time by anyredeveloper as part of redevelopment costs.

� Regulatory risk. High rates of return are requiredby any potential investor because regulators mayapply future increases in cleanup standards retroac-

tively. Liability is joint and several so that evenminor participants can be liable for the whole ofthe cleanup costs.10 This makes the project morerisky, especially when normal market mechanismsfor diversifying risk are not functioning (such asinsurance markets—see below). This risk overstatesthe true cost to society, which must bear the risk ofunremediated land if nothing is done.

� Civil risk. The same joint and several liabilityextends to private lawsuits for health or environ-mental damages arising from brownfields.Redeveloping land increases the number of landusers and potential claimants. Participants cannotescape from the liability through development andsale of the land, and new participants who mighthelp are discouraged.

� Information asymmetries. When buyers knowmore than sellers about the environmental risks ofland, problems of adverse selection are introduced,and some exchanges of land that should take placedo not. The problem is compounded by theunwillingness of sellers to permit their land to beassessed. Discovery of contamination may triggerregulatory requirements for costly cleanup, withoutassurance that the buyer will remain interested.

� Insurance market failure. Developers are oftenunable to adequately mitigate civil risk and regula-tory risk in the normal way through insurance.Some environmental insurance products are avail-able that can cap cleanup costs duringredevelopment, or cover future pollution liabilities.However, the costs of these products is often toohigh to be feasible for smaller projects.

� Lack of access to capital. Risk issues combinedwith insurance market failure reduce the value ofland as collateral, since the lender may end up incontrol of the land with the attendant risks previ-ously experienced by the owners. In addition, it isvery difficult to obtain capital for the early devel-opment phase since, by definition, this is prior tothe land being assessed and the project goingahead.

� Regulatory delays. Governments themselves createadditional risks to investors through undue delayin regulatory processes. This includes delays in gov-ernment programs to redevelop brownfields. For



example, the U.S. Environmental ProtectionAgency recently instituted attractive special taxprovisions allowing expensing of cleanup costs forqualifying sites over a three-year period. Out of anestimated 30,000 qualifying sites, only a few dozenapplied. Process delays, for example those causedby the need to link with qualifying provisions ofother government programs, were suggested as onereason for the low uptake. U.S. state brownfieldprograms appear to receive higher investor interestwhen processes include legislated time limits.11

� Stigma and risk perception. The ability of devel-opers to turn their projects over to final users maybe limited by exaggerated perceptions of risk asso-ciated with remediated brownfields.

� Economies of scale in institutional develop-ment. The decision of each developer regardingpotential projects does not take into account thecollective impact of increased brownfield develop-ment on remediation costs. Remediation becomescheaper as the volume of projects increases. Ideally,volume leads to the development of professionsand specialist firms that can lower costs. In turn,the existence of new professions improves the abili-ty to provide standardized environmental insuranceproducts, permitting even lower costs through thediversification of risk.

Solving or mitigating these sources of market fail-ure will increase the rate of redevelopment for Tier 2brownfields, with consequent economic, social andenvironmental benefits.

3. Key FindingsA variety of policy instruments is available to addressthe sources of these market failures. Table A5-1 listssome of the most commonly used instruments, sum-marizing findings on the market failures addressed and

the effectiveness of the instrument. The instrumentsrecommended in the NRTEE strategy are indicated inthe Policy Instrument column by recommendationnumber.

The review of brownfield policy instruments alsoproduced the following conclusions on the desirablecharacteristics of an effective brownfield redevelopmentstrategy:

� Strategic measures should address both risk andfinancial incentives. While a great deal of discus-sion has occurred around the market failuresstemming from uncontrolled risks faced by devel-opers, correcting this alone would not lead to fullrealization of the benefits available from redevelop-ment of Tier 2 land. The value of third-partywealth creation would still be missing in the deci-sions of private sector redevelopers. Availableliterature suggests that the magnitude of these ben-efits is significant. To introduce this factor intoprivate decision making, some form of financialincentive is needed.

� Project-by-project assessments are required. Toeffectively deliver financial incentives, whether aslow-interest loans or outright grants, a strategy willrequire components that assess the need for incen-tives on a project-by-project basis. The alternatives,such as broad rules-based tax credits, have twodrawbacks if used exclusively: first, their effective-ness might be diluted by transfers to Tier 1 sites(i.e. those sites where the market values greatlyexceed the costs of remediation and where redevel-opment might proceed in the absence ofassistance); and, second, there is a risk of transfer-ring the entire social benefit of redevelopment tothe redeveloper, at the expense and administrativecost of the taxpayer.

These conclusions are reflected in the package ofpolicy instruments recommended by the NRTEE.


Table A5-1 Effectiveness of Commonly Used Policy Instruments for Brownfield Redevelopment

MOST RELEVANT EFFECTIVENESS POLICY INSTRUMENT MARKET FAILURES FOR

ADDRESSED REDEVELOPMENT

Tax Reforms/Incentives

Deductible remediation expenses. Tax system High—when combined with simple rules to (NRTEE Rec. 1.1) Allows redevelopers to impediments limit abuse, such as a percentage cap on share deduct remediation costs as a current of expenses, or professional certification of expense, rather than capitalizing as part of requirementsredevelopment costs. The tax benefit is moved to the year the expense is made, rather than spread over future years.

Tax credits. Provides funds through tax Undervaluing Low-Medium—if unrestricted, credits could reductions matching expenditures on third-party wealth go to Tier 1 sitesremediation of brownfields. impacts High—if restricted to land pre-qualified as

Tier 2, and for historical pollution onlyUndervaluing

Abatements. Includes abatements of infrastructure, High—if applied on a project-specific, property taxes, development charges, transportation, and as-needed basis. planning fees, etc. municipal services cost

savings.

Tax forgiveness. (NRTEE Rec. 1.2) Tax system impediments High—if applied on a project-specific, Historical taxes owing on lands, such as as-needed basis; liens may be worthless if landfederal liens, may be forgiven. not redeveloped; application limited to where

liens exist

Direct Financial Assistance

Grants for assessment/cleanup. Information asymmetry High—if applied on a project-specific basis; (NRTEE Rec. 1.5) Money given to support levels playing field with greenfields and site assessment and remediation. Capital market failures delivers funds at early stage when external

capital is less available Third-party wealthimpacts

Grants for project support. Third party wealth Medium—if applied on project-specific, (NRTEE Rec. 1.5) Money given directly to impacts as-needed basis; potential for excessive support a project through grants, funding and funding of Tier 1 or Tier 3 free services, etc. Undervaluing projects

infrastructure, transportation and municipal services cost savings




Capital Market Interventions

Assumption of liability. Through individual Regulatory and civil risk Low—public institutions do not manage thisproject agreements, governments can assume form of accumulated risk well; as the the liability for future civil and regulatory Lack of access to capital accumulated risk mounts, public cost of risk once given remediation requirements borrowing is affectedare met. Insurance market failure

Remediation loans. (NRTEE Rec. 1.4) Lack of access to capital High—if applied on a project-specific, Loans may be for assessment and remediation. as-needed basis, and in combination with

other measures. Access to capital is delivered early in project where market failure is greatest; however, administrative costs can be a significant deterrent to applicants where the program is stand-alone

Project loans. (NRTEE Rec. 1.4) Lack of access to capital High—if applied on project-specific, Low-interest loans may be provided through as-needed basis; the subsidized interest rates devices such as revolving funds,. Funds provide modest financial support, while “revolve” by using loan repayments (principal overcoming a key market failure and interest) to provide new loans.

Loan guarantees. An alternative to direct Lack of access to capital Medium—as with assumption of liability, lending; a portion of or all loans to a project public bodies do not manage this form of may be guaranteed. accumulated risk well: if a high percentage of a

loan is guaranteed, the public body is effectively making the loan directly with weakened due diligence; if a low percentage of a loan is guaranteed, the impact on the project is weak

Mortgage insurance. (NRTEE Rec. 1.3) Lack of access to capital High—in Canada, there is a market-making A specific form of loan guarantee where the institution in the form of the CMHC,* loan is secured by the land being redeveloped. Insurance market failure which has the ability to manage portfolio risk

and ensure appropriate degrees of coinsurance and precaution by primary lenders

Lender liability limits. Lack of access to capital High—removes a major barrier for mortgage (NRTEE Recs. 2.2, 2.3) Lenders, especially lenders, who might otherwise find themselves those that assume control of land after Regulatory and civil risk full bearers of civil and regulatory risk in the mortgage defaults, are protected from event of loan default; removes the value of regulatory and/or civil liability from pollution land as collateraland cleanup requirements.

Civil Law Reform

Time limits. (NRTEE Rec. 2.3) A limit Insurance market failure Medium—with the assistance of land registrymay be placed on how long someone may be and public notice process; shifts burden onto held liable after publicly approved Civil risk claimants after time limit; places time horizon remediation has taken place. This allows on risk but leaves quantity of claim open for closure of risk at least in terms of time. Lack of access to capital all parties




Proportionate liability. Insurance market failure High—allows new parties, such as (NRTEE Recs. 2.3, 2.4) Liability can be redevelopers, to enter picture and be limited to a party’s role with respect to the Civil risk accountable for their own actions only, not source of pollution. In the current regime, historical acts of others; makes risks more a minor player may bear the whole cost of Lack of access to capital knowable and controllablea claim.

Transferability. (NRTEE Rec 2.1) Parties Insurance market failure Low—potentially very effective in promoting may pay others to take on the full liability for given brownfields, but opens the way for future claims. For example, a landowner may Civil risk strategic behaviour that makes future pay a redeveloper or a specialist firm in land pollution and cleanup more attractive than remediation to assume full risk. Lack of access to capital pollution prevention

Regulation

Force Majeure. Aggressive public pursuit of All cost-related market Low—this is a Tier 3 strategy, not Tier 2. site assessments and subsequent cleanups as failures It requires significant funding since the costs required by the regulatory framework. of forced cleanups may not be fully

recoverable from the liable parties; the approach has a chilling effect on any involvement of redevelopers for Tier 2 land, since it increases perceived regulatory risk

Certificates of compliance. Regulatory risk High—relieves redevelopers of further (NRTEE Recs. 2.2, 2.6) Government regulatory risk: after meeting requirements, approval of remediation efforts, usually they are “done”; although civil risk remains, accompanied by a commitment not to take the larger perceived risk is from government, further regulatory or administrative action which has the funds and instruments to except under specific circumstances. pursue cases

Flexible standards (site-specific assessment). All cost-related market Medium—with land registry to implement (NRTEE Rec. 2.5) In exchange for failures ongoing use restrictions; makes restrictions on future land use, allows sites to redevelopment feasible where otherwise not, meet remediation standards appropriate to but creates ongoing institutional requirements the land use. for monitoring containment procedures, etc.

Public insurance funds. (NRTEE Rec. 2.4) Regulatory risk High—if risk controlled through A complement to measures limiting project-by-project screening; a needed regulatory risk. A compulsory fund to pay for complement to certificates of compliance in cleanups required after owners or redevelopers order to ensure a source of financing for are released from responsibility. Financed cleanups as new pollutants or toxic effects are from premiums from same. discovered




Information

Training/capacity building. Regulatory delay High—e.g. it has been suggested that a (NRTEE Rec. 3.1) Ensures public and private significant contributor to poor markets for sector actors share full and common Information asymmetries environmental risk insurance products is lack understanding of the policy instruments and of knowledge on the part of municipal methods available for brownfield Insurance market failures officials responsible for land and risk redevelopment. management

Technology dissemination. Information asymmetries High—awareness of feasibility of best (NRTEE Rec. 3.2) Information on the most practices increases likelihood that redeveloperscost-effective practices shared among key will at least assess potential projects actors and/or demonstrated in pilot projects

Public information. (NRTEE Rec. 3.3) Regulatory delays High—positive public support can reduce Information on social value and safety of delay in municipal approval processes and brownfield redevelopment delivered to the Stigma and risk increase acceptance of redeveloped sites as public. perception places to live and work

Institutional Development

Standards of practice. (NRTEE Rec. 2.5) Regulatory delays High—in association with other policy Development of standards of practice for site instruments; common and integrated assessment and remediation, ideally integrated Economies of scale standards of practice with regulatory processes and requirements.

Insurance market failures

Deed registration. A public system of Regulatory delays High—as a complement to other policy registering environmental remediation history instruments such as flexible standards of and related land use restrictions. remediation

Land pre-qualification. Programs to Regulatory delays High—reduces regulatory delay in processing pre-qualify land as eligible for other project proposals and also provides a means to brownfield redevelopment initiatives. Economies of scale more effectively focus other policy

instruments on Tier 2 landInsurance market failures

Direct Redevelopment

Land reclamation banks. Agencies may be All cost-related market Low—ties up considerable funds and public created either publicly or privately to hold failures initiative for work that could be encouraged brownfields, remediate them and return them on a private basis with greater flexibility byto market. redevelopers

*Canada Mortgage and Housing Corporation


Table A6-1 provides a policy tool kit for brownfieldmanagement, cleanup and redevelopment. These policytools are based on initiatives undertaken in various juris-dictions such as British Columbia, Ontario, Quebec, theMaritime provinces and some U.S. states. The tools rep-resent different approaches to brownfield policy. Theyinclude comprehensive legislation, financing incentives,planning processes, environmental liability and riskmanagement, education and promotion, administrativepractices and monitoring activities that support both pri-vate and public sector brownfield activities.

This policy tool kit is not intended to be anexhaustive list of tools available in Canadian

Annex 6An Expanded BrownfieldRedevelopment Policy Toolkit

provinces and territories. Rather, it is intended as achecklist of the main policy tools that are in use orare being introduced for review by jurisdictions thatmay not yet have considered them. These tools can beused in any combination and can be refined,improved and augmented to suit policy and programobjectives and to fit within specific legislative frame-works.

Many of these tools fit within the strategic direc-tion set out by the NRTEE: applying strategic publicinvestments to upfront costs; establishing an effectivepublic policy regime; and building community aware-ness of and capacity for brownfield redevelopment.


Table A6-1 Expanded Policy Toolkit for Brownfield Redevelopment

1.Strategic Public Investments Financing Incentive Toolsto Address Upfront Costs • Municipal grants and loans provided within a community plan framework

(e.g. core area grants, building facade improvement loans, building renovation loans)

• Tax increment-based municipal grant program for brownfield properties (TIFs)• Tax relief for cleaning up contaminated properties• Property tax freeze and cancellation• Development charge exemptions and reductions• Reduction or waiver of planning fees• Heritage conservation grants or loans• Infrastructure programs • Tax arrears cancellation• Provincial contaminated sites grant program (Quebec)

2.Effective Public Policy Regime Environmental Provisionsfor Environmental Liability • Regulated risk assessment standardsand Risk Management • Regulated site investigation standards

• Registry systems for sites that have been cleaned up• Immunity provisions from government administrative orders under certain

circumstances or where regulated actions (e.g. cleanup) have taken place• Accountability mechanisms to ensure quality cleanup • Review of statutes of limitations provisions respecting environmental liability• Insurance programs for cost-capping and civil liability protection

3.Building Capacity for and Marketing, Training and Economic Development Community Awareness of • Internet sites and conferences dedicated to brownfield redevelopment Brownfield Redevelopment • Brownfield projects (emphasizing cost and benefits) showcased in government

publications as examples of economic and community renewal • Post-secondary education focused on the planning, environmental and business

aspects of brownfield cleanup and redevelopment• Government support for new remediation technology development• Private sector advertising of services related to its brownfields expertise

(technologies, assessment, insurance products)• Brownfield education and training programs • Partnerships between different levels of government to increase awareness of

brownfields

Other Tools Institutional Capacity Building• Historical use inventory• Contaminated sites inventory• Contaminated and environmental sites registry system• Performance measurement and monitoring• Streamlined approvals process and improved decision-making process

(time savings and increased certainty in process)• Contaminated sites policies, legislation and regulations• Power-of-entry rights to perform environmental site assessments on lands

subject to a failed municipal tax sales process


• Public consultation process for brownfield planning • Compatibility guidelines (noise, setbacks, etc.)• Compact urban form programs• Firm urban boundaries• Mechanisms for municipal incentive programs (e.g. community plans that

permit financing programs through a land use planning framework)• Process model aligning the environmental approvals process with the

planning process

Planning and Incentives• Flexible zoning requirements• Mixed use policies• Brownfield policies in planning documents• Flexible parking and building regulations• Development permit system• Compact urban form programs• Flexible parkland dedication requirements• “Density bonusing”

Source: The brownfield policy tool kit was developed by the Provincial Planning and Environmental ServicesBranch (PPESB) of the Ontario Ministry of Municipal Affairs and Housing (OMMAH) with the assistance of stafffrom the Ministries of Environment and Energy, and Finance.

Analytics Inc., “A Preliminary Investigation into theEconomic Impact of Brownfield RedevelopmentActivities in Canada,” unpublished background docu-ment prepared for the NRTEE, 2002; information onother countries was provided by H. Kasamas, networkcoordinator, and Adrien Pilon, Montréal Centre ofExcellence for Brownfields Rehabilitation, personal com-munication, July 2002.

6 U.S. research studies, cited in Regional Analytics Inc., “APreliminary Investigation,” 2002.

7 This is administered by local planning authorities, whichare usually the municipal or district authority for thearea.

8 In so far as these regimes affect land remediation activi-ties, they are administered by the Environment Agency(EA) in England and Wales, and by the ScottishEnvironmental Protection Agency (SEPA) in Scotland.

9 Hara Associates, “Market Failures and Optimal Use ofBrownfield Redevelopment Policy Instruments,” unpub-lished background document prepared for the NRTEE,2003.

10 In considering the impact of regulatory and civil risk onbrownfields, it is important to recognize that the risksthemselves represent real costs. The market failure is nota failure to recognize these costs but the inability to sharethem in a way that permits appropriate diversification ofproject risks.

11 ICF Consulting and E.P. Systems Group, 1999, cited inHara Associates, “Market Failures,” 2003.


Endnotes1 Regional Analytics Inc., “A Preliminary Investigation

into the Economic Impact of Brownfield RedevelopmentActivities in Canada,” unpublished background preparedfor the NRTEE, 2002.

2 Revi-Sols is Quebec’s provincial funding incentive pro-gram for brownfield redevelopment.

3 Regional Analytics Inc., “A Preliminary Investigationinto the Economic Impact of Brownfield RedevelopmentActivities in Canada,” unpublished background docu-ment prepared for the NRTEE, 2002.

4 There is no “brownfield redevelopment cluster” in theeconomic data maintained by Statistics Canada. Instead,the research paper structured such a cluster from existingStatistics Canada data on environmental goods and serv-ices, based on a survey of developers and governmentagencies involved in brownfield redevelopment. The sur-vey sought to identify the input-output profiles of thatportion of the development industry that is redevelopingbrownfield sites. Based on the results of the survey, theanalysis assumed that the process of brownfield redevel-opment begins with the developer, who conceives aredevelopment project, commissions studies, securesfinancing and hires remediation contractors, planningand construction firms, etc., to see the project throughto completion.

5 U.S. information was based on Ahab Abdel-Aziz andShari Elliott, “Facilitating a Brownfield RedevelopmentStrategy for Canada,” unpublished background docu-ment prepared for the NRTEE, 2001, and Regional

cleaning up the past, building the future

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