Keys to Administering a Successful Brownfields Revolving Loan Fund

Webinar

May 28, 2014

Empowering localities to revitalize their communities through the exchange of strategies, tools, and best

practices for brownfields reuse

• More than 2000 brownfields leaders in the community, non-profit, government and private sectors

• Overcoming barriers by convening experts, preparing white papers, and educating decision makers

• Providing technical assistance and sharing lessons learned through regional workshops, webinars, and conferences

Thank you to NALGEP’s Sponsors

Webinar Speakers

Ken Brown, Moderator• Executive Director of NALGEP

Kate O’Hara• Brownfields Program Manager, Land of Sky Regional Council, NC

Laura Clark• Senior Development Finance Analyst, Cuyahoga County Department of

Development, OH

David Misky• Assistant Executive Secretary, Redevelopment Authority for the City of

Milwaukee, WI

NALGEP Webinar May 28, 2014

Four Key Elements in The RLF Program

EPA Project Officer

RLF Recipient (Grantee)

Borrowers

Sub-Grantees

EPA Role

Provide technical assistance

Assist in document reviews

Approve site & borrower eligibility*

Monitor financial, environmental, and periodic progress reports

Monitor program & ensure compliance with cooperative agreement

Grantee Role

Administer the RLF Program

Create the manager/coordinator role

Ensure compliance with administrative & programmatic conditions

- Environmental cleanup

- Financial management

- Compliance with federal, state & local laws

Borrowers

Are contractually responsible to the RLF Grantee, not EPA

Are responsible for cleanup & documenting RLF fund uses

Can be for-profit or non-profit

Sub-grantees

Cannot be private parties

Cannot be responsible parties

Applicant must own the site

No administrative costs

Fund Manager- Key Role

Qualified Environmental

Professional – Key Role

Loan Review Committee

Community Involvement

Specialist

Public Relations

Report Manager

Database Manager (ACRES)

Marketing Manager

Legal Expert

Fund Manager

Establishes or adheres to criteria for borrowers

Ensures prudent lending practices

Establishes payments & disbursements

Adheres to eligible cost requirements

Ensures cost share & program income requirements are

met.

Qualified Environmental Professional-

QEP May work directly with EPA

Works with EPA or state program to determine best

cleanup options

Prepares the Analysis of Brownfields Cleanup

Alternatives (ABCA)

Prepares the remedial action plan

Coordinates & oversees cleanup

Prepares the Quality Assurance Project Plan (QAPP)

Ensures compliance

Quality Assurance Project Plan

(QAPP)

Prepared by the QEP

Outlines the quality assurance

methodology

If property was assessed using

EPA funds, the QAPP may be

amended for cleanup

Eligible use of funds under

RLF

Analysis of Brownfields

Cleanup Alternatives (ABCA)

Prepared by the QEP

Approved by EPA

Gives site information

Identifies cleanup

requirements (may be

determined through VCP)

Offers various cleanup options

Offers cost analysis

Who Can or Will Do This?

Davis Bacon (DB): RLF requires compliance on cleanups for sub

grantees (municipalities & non-profits) & borrowers

DB rates should be in bid docs & in contract. Can be done by

grantee or QEP

DB compliance: interview workers. Can be done by QEP or grantee

Prepare bid documents, review bids & award contract: QEP &

grantee

Authorize payment requests to EPA: grantee

Manage loan payments: grantee or contracted service

All are eligible costs

Who Does What?

General program oversight- Fund Manager

Develops program policy & guidelines- Fund

Manager/Project Manager/Loan Committee

Holds pre-application meeting- Project Manager/Fund

Manager

Reviews application- Project Manager/Fund Manager

Performs underwriting review- Fund Manager or Loan

Board

Kate O’Hara

Senior Planner & Brownfields Program Manager

Land of Sky Regional Council

339 New Leicester Hwy. Suite 140

Asheville, NC 28806

828.251.7454

kate@landofsky.org

DEPARTMENT OF DEVELOPMENT

BROWNFIELD REDEVELOPMENT DIVISION

Department of Development Brownfield Redevelopment Mission

• Attract, expand and retain businesses in a county that is nearly built out

• Compete with greenfield counties where land is cheap and sites are ready to go

• Our advantages

– Logistics – airports, trains, highways, port

– Existing infrastructure – water, sewer, electric, high speed broadband, gas, steam, chilled water

– Public transportation for our workforce

History of USEPA RLF and Cuyahoga County

• $350,000 BCRLF award to County Planning Commission in 1997

• $300,000 to Board of County Commissioners for Youth Intervention Center

• Loan repaid in 2004

• RLF Program transitioned to Department of Development (DoD) in 2004

• RLF awards to DoD in 04, 05, 06, 08, 09, 11, 13

Economies of Scale at DoD

• Marketing and Community Relations

• Loan Application and Approval process

• Loan Underwriting, Documentation and Servicing

• ERR and Section 106 Reviews

• Davis-Bacon Compliance

• Environmental Consultant RFQ – CAI program

Marketing

• Website• Brochures• DoD Staff are cross-trained in all programs• Assessment Program Leads• Environmental Consultants• Community development organizations, and

municipalities• Press releases every time a project is funded • Presentations at industry events – real estate

professionals, banking, developers, etc.

Leveraging

• DoD is never the the sole source of funding

• Require at least 20% equity/match from borrower/subgrantee

• Require proof of other sources for project costs

Tips and Tricks

• Mortgages and guarantees – can have subordinate position; up to 90% LTV

• Require adequate cash flow; 1.2:1 DCR

• Charge loan fees – 1% of loan amount

• Terms can be more favorable than a bank –particularly loan term/amortization/interest rate

Tips and Tricks

• Allow for a period of interest-only payments or deferred interest to get cash flow up

• Site must be adequately assessed for cleanup estimates to be relevant and reliable

• Parallel track the document negotiation with the public comment period

• Quarterly loan payments make less paperwork

Redevelopment Authority of the City of Milwaukee (RACM)Brownfield RLF Program

Brownfield Project Loan and/or Subgrant

Amount

Projected Redevelopment

Investment

Projected Jobs

Created/ Retained

Acres Made Ready for

Development

Total Cleanup Cost New Development

Solar Paints and

Varnishes

$760,000 $1,400,000 65 6 $900,000 Marshall Erecting

Milwaukee Road

Shops

$690,000 $60,000,000 1,300 130 $20,000,000 Menomonee Valley Industrial

Center

Ampco Foundry $420,000 $10,000,000 200 17 $2,300,000 Stadium Business Park

Kramer International $650,000 $6,500,000 213 1 $812,000 Affordable Housing/Retail and

Office Space

Stockyards $1,250,000 $16,000,000 200 10 $1,300,000 Ziegler Bence/Proven Direct -

Industrial Space

Pfister & Vogel $1,100,000 $175,000,000 90 8 $7,900,000 Retail Space and The North

End Condos

Aelco Foundries $500,000 $5,000,000 55 3 $1,500,000 National Headquarters/Office

Space

5th and Cherry $550,000 n/a n/a 1 $862,000 MEDC-owned property to be

sold for redevelopment

Milwaukee Fix Project $565,000 $7,500,000 20 1 $765,000 Mixed use/commercial/retail

Bay View Apartments $680,000 $13,000,000 20 1 $1,300,000 Affordable housing/commercial

development

Century City $700,000 $34,500,000 700 84 $7,000,000 Light Industrial/Commercial

Business Park

The Brewery Works $1,250,000 $26,000,000 600 2 $2,500,000 Office building redevelopment

Park East Two $1,000,000 $22,000,000 60 2 $1,800,000 Mixed use/commercial/retail

$10,115,000 $376,900,000 3,523 266 $48,939,000

Paul Davis Restoration:$5 million total project investment

• Demolition and new construction for company headquarters at former Aelco Foundry.

• Site was contaminated and developer incurred considerable environmental cleanup costs to redevelop the site

• RACM EPA Brownfields Revolving Loan Fund

$500,000 3.25% 7/20

• Obstacles/Challenges faced

Before

After

Milwaukee Fix/Clock Shadow Building:$7.5 million total project investment

• New construction for multi-tenant commercial/office and light manufacturing building

• Green building technologies throughout

• Milwaukee Economic Development Corporation Site Assessment Grant for assessment ($15,650)

• RACM EPA Brownfields Revolving Loan Fund

• Obstacles/Challenges faced

$565,000 3.25% 7/20

Before

After

Milwaukee Fix Project -Clock Shadow Building

Lessons learned:

• Start early! Have your team assembled BEFORE you apply.

• Tap into EPA Program Officer’s knowledge and expertise.

• Close 1 loan! RACM’s first loan tied to TIF District.

• Explain all Davis-Bacon requirements ahead of time.

• For disbursements/draws, explain the process and what is required AHEAD of time, and request segmenting MBE/WBE component at time of request.

• Don’t get discouraged: approximately 25% of all inquiries receive loans.

Questions and Discussion

Slides and webinar recording will be available on www.nalgep.org