"Navigating Brownfield Redevelopment: Challenges and Opportunities"

Welcome to the environmental transformation podcast. I'm your host, Sean Grady. Today's guests are Todd Davis and Bill Dennis. Guys, welcome to the show. We're here at the National Brownfield Conference in Detroit talking about brownfield redevelopment and all the great things that go along with that.

Todd, you are one of the attorneys and the CFO or CEO of Hemisphere Brownfield, the group. Tell us a little bit about what you do and what type of projects you work on and what services you offer.

Yeah, so great to be here. Hemisphere is a, an owner and we work on transactions across the United States as well as in Canada.

Started my company in 1994. So I've been doing this for a very long time. Yeah. Really since almost 30 years. Yep. So a little over and, and I was doing breath of redevelopment before that. My background, I'm an environmental lawyer, wrote the book for the American Bar Association on Brownfield redevelopment.

So hopefully it gives me a really good perspective and background, you know, coming to a Brownfields conference like this, it's like coming home. Yeah. So, you're with your people here. I am with my people. That's for sure.

All right. That's awesome. Bill, tell us a little bit about yourself. Thanks.

Thanks, Sean. Good to see you. I'm currently principal with Arden Environmental Services. We're a full service environmental contractor. Thank

Prior to being in the contracting side, I spent a geochemist by training. There's been a lot of projects in the past, Todd, and the Midwest and the East Coast over the last year.

Oh, that's great. Thanks, guys. Well, Todd, maybe, or Bill, one of you guys, talk a little bit about maybe some of the interesting current projects you currently have that you're working on.

Sure. Well just to start, probably a couple of the biggest projects I'm currently working on. Two are in Canada, in Montreal. Two very large pieces of property owned by Imperial Oil, which is an affiliate of ExxonMobil. We've been working on the projects for a couple of years just to position the projects for disposition and redevelopment.

One's about 125 acres, just an amazingly located infill going to be a very significant, Warehouse distribution facility. Okay. And now there's about 175 acres right on the port of Montreal. There are many different potential end uses for that piece of property. I'm working collaboratively with both the regional government, Quebec Montreal government, the local government.

So really interesting redevelopment opportunity. And, you know, back in the U S working on a major redevelopment right next to the St. Louis arch. 100 acres of brownfield infield property right on the Mississippi. And so you know, kind of both ends of the spectrum there in terms of the nature of projects.

Oh, that's great. So have you had to bone up on your French?

On petite, as they say, and that's about all I remember of my high school French, I wish I paid more attention.

Okay. Bill, tell us a little bit about a project you guys may be working on. Sure. I have to be a little bit careful, because unlike Todd, I don't own these projects, and most of our current work are in confidential stages.

I can't say a whole lot about this. I'll say, just based on past experience, that every single ground call we work on has some level of interestingness to it. You know, some of the premier projects we've done in the past, if there's a unique client, University of Dayton comes to mind. Somebody who's not traditionally a, a brownfield redevelopment expert or even in that space.

So if you have an interesting client, makes this project worthwhile, interesting technical challenges that sort of thing makes all those projects worthwhile. But as far as the current portfolio, I'll, I'll meet you next year.

Sure. Oh, that's good. Well, you know, brownfield redevelopment has been a, a kind of a, a thing, so to speak, for many years now.

But. Talk a little bit about how has it evolved over time that, you know, in your 30 some years of doing this, what's been some changes or perspectives that really have kind of evolved over time that's changed things?

Yeah, so when we first started out in the early 90s, late 80s, early 90s, when Brownfield Development really started to take shape, there was no process, there were no programs there was no predictability in terms of how you would, We can investigate and then remediate these sites and, and have a kind of a beginning, middle, and end to the project.

There was no holistic approach to, to redeveloping these kind of opportunities. With the rise of state voluntary cleanup programs, and really that's what I wrote my, my book about. Okay. It's just, you come up with a really concrete, direct process and structure. To redevelop sites. And that's one, you know, we can better integrate companies and professions like  Bill and his company, you know, he mentioned the project that we worked on collaboratively with the university of Dayton, you know, the integration of those skill sets, but from legal development to environmental consulting, to demolition, to infrastructure, you know, those are things that we think about now that we never thought about, you know, the process.

Right. Yeah. I kind of remember, you know, you'd get these brownfield grants and, and most of the stakeholders who could receive them were municipalities and they were really the only ones who could get any grants back in the day. Has that changed over time now where, you know, private industry or private developers can also obtain these types of grants to, to redevelop properties?

Yeah. So, so it's changed. Depending on where you are. Okay. You know, so US EPA tends to, to make sure that eligibility for those grants typically has to run through a nonprofit or a government entity. But there's a lot more collaboration between private developers and public entities now. So, you know, people like me and the ground through redevelopment business, we're always building those layers of connectivity so that we can access grant funding to mitigate those costs.

Right. On the other end of the spectrum, so we're both based in Ohio there's a state brownfield program and a lot of the money that came to me in Ohio is coming through directly from the state. Over the last, now, four years about 700 million dollars in new grants that are available for brownfield redevelopment.

And that money can go directly to developers. So, there have been an explosion of projects across Ohio to address these historically contaminated sites, and it's a very robust market. I don't know how you feel about it.

I was going to mention the Ohio aspect, because that's been the big change, right, since the that the private entity receiving that money makes the project slightly more efficient, and again, it has jump started public.

Wouldn't have moved forward.

Yeah, no, that's good. And then, yeah.

You know, the amount of leverage that you get in those, in those projects, I mean, even when you look at any of the metrics that, that, and they're conservative, the way the state rolls it out, you're getting leverage, like, you know, for every. Public dollar invested.

There's 13 to 15 private dollars invested. So return on investment is awfully good.

Yeah. So that's really good

about how you layer and layer these,

bring all the stakeholders together too, right? That's the key, right? That, that seems to be, how do you bring all the stakeholders together to buy in on the vision?

Like if you're a, if you're a municipality and you know, you've got Brownfield projects or sites in your community that have been. An eyesore, so to speak, for a long time, how do they go about engaging the owners and then identifying a developer or reach out to an attorney that says, Hey, I can help you.

Like I got to imagine they struggle to really get things going to figure out a way to redevelop something that's economically viable for the community.

So, so it's challenging , it really depends on, it goes back to real estate 1 0 1, you know, location, location, location. Yeah. So, you know, when I thought about this from a, from an evaluation perspective, you know, the, the problems that are, or the projects that are interesting to a for-profit developer whose purpose is to not only do great projects and redevelop them, but, you know, make a living at doing that.

They're very different dynamics and metrics that you have to hit as opposed to, you know, you're the stakeholder of a community that's got a contaminated site and it's not really worried about that kind of return. You've got to look at different ways to stack the capital so that you can address those issues.

And I guess what I would say is going back to some of the problems. One of the biggest barriers or problems is that communities like that aren't proactive enough, and they don't do the easy things that you need to do to mitigate risk. So, for example an easy thing would be have the city council have the mayor or the executive be a cheerleader for the project.

Oh yeah. Be a facilitator. Yeah. Instead, they tend to be, or oftentimes are less active. You know, one of the things that developers really look for when choosing whether to participate in a program or a project like that is are we going to have a facilitated government that we can appropriately engage with and work with?

And obviously they've got their interests that they need to protect, which any good developer is going to be respectful of. Right. It's a tremendous difference in working with a community that has a common vision and is looking to help facilitate rather than even be just kind of neutral about the project.

Right. It doesn't cost anything. And that's one of the things that even helping to leverage and get into those U. S. EPA grants that are, you know, there's 1. 5 billion of new grant funding. It was just put into brownfield redevelopment in, in the last round of legislation at the federal level. That's an awful lot of money that's going to be spread throughout the United States over the next few years.

That's going to be great. So it's really going to help communities, you know, deal with these types of projects.

What are some of the biggest barriers that you redeveloping projects today?

With ground truth projects, they're so complex. They've always been complex. Some of that complexity has been smoothed out over time. Regulators are creating some flexibility, creating frameworks. So actually, finally, some of these projects have been targeted. But the complexity remains, and the risk mitigation remains.

And so with that, there's lots of variance within the risk mitigation matrix. Hop up all the time. That

complexity is never going to go away. Thank you. You also have things like technical challenges these 10 years

we've been indoor air. People didn't want

to go down that path, but they have to. Indoor air has become a technical challenge. It's been a bit of a constraint. It's been a little bit of an afterthought in some of the ground floor planning.

It brings along some surprise costs. Now you have things like PFAS popping up. Yeah, they do. It's It's all projects moving forward, but in particular brownfield projects with the complexity and the other constraints we have to overcome on a brownfield site, there's not a lot of funding or risk mitigation left over to handle some of those data challenges that we can't possibly handle.

Oh yeah, i, I see that for sure. You know, and maybe Todd, you can handle this one. You develop a project, you get going and maybe you missed something. Well, let's just say we missed like the V. I.

In theory, in theory, we never missed.

Never. Right. So, so you, you develop the project, it gets in place and all of a sudden he's like the, the, the occupants are complaining and you're like, what's going on? And of course, it's a V. I situation, how do you address say those types of issues? Is it through proper insurance? Is it through, you know, liable liability, you know transfers or, you know, talk a little bit about how you structure, I guess, safety nets for projects like that.

Yeah. So it's, it's, so that's a good way to look at it. So we always look at projects. We break it down into constraints and we break it down into buckets of liability. And then, you know, candidly our approach is belt suspenders and another belt. That's the way we look at mitigating and managing risk. So when I'm doing a project, the metrics that we use to measure ourselves are obviously we want to maximize values.

We want to minimize costs within the applicable regulations, but from a, we want to manage longterm risk and liability comprehensively. Right. So how do we do that? We address it at the federal level by. Addressing all appropriate inquiries and qualifying for CERCLA BFPP safe harbors from liability at the federal level.

We're always taking our projects through state voluntary action programs, doing investigations,  to comprehensively and conservatively address, you know, the impacts to the pieces of real estate. And then, pursuing a no further action letter, a covenant not to sue. And then finally, at the same time, using environmental insurance.

We use environmental insurance on the tool on every single redevelopment that we do. It's an extraordinarily cost effective tool and it protects you during the redevelopment process. And if surprises come up later on the road too, I can say I've placed environmental insurance on every single project.

I've been involved in one claim out of, you know, maybe 100 projects that we've worked on, you know, about. And, and candidly, the insurance responded very directly to the issue that was uncovered. So, great tool to consider.

Oh, that's great.

I think the best thing just to add to that too. At a localized level, the best thing you can do is put together the right team from the get go and get the comprehensive skillsets covered.

Right. And, you know, don't forget about things. Right. You need everything on these projects. Right. You need PR, you need finance, you need banking, you need legal, you need environmental, you need geotechnical. Don't skip out on any of those aspects. If you have the right team in place, that gives you your best ability to mitigate those risks.

That's, that's a good way to look at it because, you know, sometimes early due diligence happens and, you know, you might rely on it, but it wasn't done all that great. Right. And now it kind of catches you off guard when you thought it, you know, you had it covered so I could see why that'd be important.

So it comes up in, you know, how you're underwriting these projects also. Right. I mean, you want to be able to rely on, You know, great professionals, as Bill pointed out firms such as, such as your firm to do the environmental due diligence necessary to comprehensively investigate the site, you know, we lean, we lean heavily on our environmental consulting partners to help us manage that risk comprehensively.

So, you know, one of the biggest issues that you find is that. A lot of people and developers, especially some of my brethren in development business, you know, cost is always an issue. They sometimes go toward the least costs provider of services. That's a huge mistake. Right now. I mean, you know I mean, why is Pam foolish and, you know, the small mistakes or the small cost savings that you can get by using someone who might have the depth.

Services and experience seems like it might be good up front, but if you run into a problem and you don't know how to address it, it makes up for it in the back end.

Sure. No, that's a great, great point. And I'm glad you brought that up. I think that's real important because not everybody is going to be taken, you know, The cheap route, but some will go and spend the extra money to, you know, use a, a consultant or, you know, a firm that really has the bench strength to address the, Oh, now what, you know, after you do the initial, right.

So, yeah, you have to be prudent about approaching, especially complicated brownfield sites. You just have to be smart about how you approach.

Yeah, no, I totally agree. How are you addressing, like, the full stakeholder engagement, the environmental justice side of the house when it comes to brownfield redevelopment?

That's such a big, important aspect of the success of making a project work in a community, and especially in a disadvantaged community when they're really, you know, struggling, and historically have a lot of issues. How are you engaging those and bringing stakeholders together to... Bring projects together.

So you want me to start? Yeah, go ahead. So, Bill had mentioned, you know, one of the projects that we worked on jointly was a major redevelopment development from the University of Dayton in Dayton, Ohio. And effectively what we were doing is working with the university to help them double the size of their campus on a major ground field site.

Oh wow. A huge project. Very high stakes for the university. They were landlocked. They were desperately looking for a place to expand and staring at this Brownfield property was really the only place that they could potentially expand for decades. Right. It was owned by NCR national cash register. They built all the cash registers from the beginning of time on this piece of property.

So a 50 acre site. Lots of environmental issues solvent impact to demolition impact, just a litany of different issues. Right. Underneath the site was what was called a critical resource groundwater. So it's highly protected groundwater in the state of Ohio, but it's also in an urban area. We have a tool called the Urban Setting Designation where you basically can work with the regulatory authority to Cut off the drinking water pathway if you can make certain demonstrations for Ohio EPA.

That had never been done on this piece of property, or this kind of... Groundwater resource in the city of Ohio. Enter public engagement. So, the university wanted to reach out to every potential stakeholder, literally, around the city of Dayton. Yeah. In order to engage them in this process. We had 79 public meetings.

Literally. In connection with trying to, to address the concerns of the stakeholders. I mean, it's more public meetings than any private developer would ever do on any project, bar none. But that being said we got critical support. By engaging early and often with the community, that support allowed us to, to secure the urban setting designation on this piece of property.

That resulted in probably a 45 million savings on remediation costs. Of not having to remediate. You know, certain parts on the property. Yeah. Water to drinking water standards. So we still met our requirements under a state voluntary cleanup program. Right. So I guess the, you know, the main point is, you know, sometimes it's uncomfortable to go out and raise issues, especially thorny issues with the community.

The bottom line is it's worth it. It's worth it that you do it. It's going to come back to haunt you if you don't. Yeah. Great point.

And it's a strategy, right? I mean, it's like, it's like doing your phase one. I mean, it's got to be part of your program.

Right. It's, it's a piece of the toolkit that you have to employ, deploy every time you do a project.

Right. And I think, I think you know, early on redevelopment, you know, of course they had stakeholders, but they weren't really like perfecting the engagement process in a way that made it more successful. There's always contention versus. Okay, this is a good idea. We like your ideas or well, we like the idea, but we've got some ideas to and then you collaboratively kind of get to a common goal, right?

So, yeah, I think you know, the way you're describing is correct. I mean, there are some, there are different categories of stakeholders. It's important to be honest and transparent with the process and it can't be just messaging. You have to have open Thank you. And you have to have kind of a blank slate in terms of what your thoughts are.

And then try to reach consensus. It takes time. It's not a one, we'll have two public meetings and we'll reach consensus. This is building a relationship of trust with stakeholders. It won't be perfect. You won't have complete unanimity in terms of approach, but you can't expect that.

No. Yeah, exactly.

Exactly. You know, Todd, maybe, you know, how do lenders look at Brownfield projects? That's things, you know, like who's, how do they want to, how do they see that the value and wanting to lend money to somebody who's got an idea? I mean, I've got to imagine they're really cautious at times.

So it started out, you couldn't get.

Money finance. I mean, simple like if it has an environmental issue until the issues were solved, there was no financing that you could get, or Starting from that basis in that foundation, you know, things have changed dramatically over the years. I think lenders are much more sophisticated, even on complicated projects. I think if you can articulate a vision, you follow the process that we've said, you're, you're approaching it conservatively, you're using good consultants, you have a comprehensive team.

You can pull all the pieces together. You can share that vision and that map and that game plan in advance that my experience is that most lenders are very comfortable now lending on those projects. They may wait until you get to a certain phase. So often we use, you know, traditional equity and earlier the riskiest parts of the project.

And then we use loans as a takeout. That being said, there's a lot more public lending programs, especially at the state level that will lend on Brownfield sites. So well, listen, all developers want grants. I mean, that's what we want. Right. But alternatively, and again, speaking in the state of Ohio, you can get, you know, 5 million loans from Ohio EPA to do your initial due diligence, which ultimately can be taken out by, London and you get to that phase.

So

that's a pretty good deal. Different.

There, there's a lot more optionality in terms of how you would structure a deal, which simply wasn't in existence when the program started. Yeah.

That seems like, you know, that they, that evolution of the program over the past 20, 30 years, that's been one of the strengths is now funding is more available.

Absolutely. Yeah. In addition to other technology type functionalities that really help.

Well, lenders are more comfortable, going back to your point, like before there was no comfort at all because their lawyers scared them to death that they shouldn't be lending. And what happens if the developer defaults, the bank's not going to foreclose on a contaminated property.

Now there's a process, you know, again, banks don't want to take over contaminated property. Right. That being said. It's much easier to find a developer who will step into the shoes. It's, it's, it's not voodoo anymore. You don't have to necessarily be a, just a brownfield redeveloper. A lot of traditional developers are getting in the space, as I'm sure you've seen.

And you know, we tend to team with traditional developers often when they want to shift those responsibilities to us. Yeah. But we do a lot more collaboration on issues like that just to make sure that we're hitting all the points that we need.

That's great. That's really good. You know, how, how do you think, or how do you see infrastructure help playing a role in, in redevelopment?

You know, the infrastructure bill that was, you know, issued by the government is loaded with lots of money, but you know, I gotta imagine municipalities or communities are also trying to figure out how do they You know, playing around the development with their infrastructure, you know, talk a little bit about how that kind of factors into the redevelopment

today.

So, so infrastructure is often overlooked. It's part of that comprehensive approach to redeveloping a site that you have to look at. It's one of the more expensive things that is often overlooked, you know, as you're doing your planning. I can tell you. You know, some of the biggest challenges on our site in Montreal are old infrastructure with an old community that hasn't kept up with some of the investments that, you know, newer communities might have have done.

So they're suffering with some of the underinvestment historically. And as we look to redevelop, you know, half a billion dollars of new development, infrastructure costs are critical. How you do it, when you do it, how you can connect a new how you connect the new to the old. Those are critically important.

So, again, go back to team. When you're looking at these sites, you gotta bring in a team. You gotta bring a team in. It's, and Bill articulated, you know, it is a web of professionals do big projects the right way. The great advantage is that now, it's predictable. You know the issues. There's no

success rate is much more, it's much higher,

much higher.

Yeah. If you pick the right team, there is not a project that you can't effectively redevelop. If you do your planning correctly, you have the right team and you're working with within a community that's for it. Yeah.

Yeah. I totally agree with that. That's great.

Well, gentlemen, I mean, thank you for coming on the show today. I really appreciate you giving your insights on Brownfield redevelopment for the listeners. Todd has a good way to get ahold of you. If there's someone's listening and says, I want to work with this guy or Bill, the same thing.

I mean, tell, tell the listeners how to get ahold of you.

So the best way is go to our website. HemisphereDev, W W W HemisphereDev, D E V dot com. That's the best way to get a hold of me and I look forward to the opportunity to work with whomever's listening.

Yeah, right. Absolutely, man. That's the best bet.

So, ardentenvironmental. com. That's A R D E N T O R E V I R O U N V dot com. Be safe with us. We'll be there. We can always call you. Yeah, absolutely. We'll put your contact information up on the website as well. And gentlemen, thanks for coming on the show. Really appreciate it. And all the best of luck and conference.

Thanks a lot. Thanks for having us. All right.