Brownfields Update for the Pacific Northwest

Low-interest loans are available for private landowners and public entities looking for financial help to clean up contaminated properties.

Revolving loan funds have been established in three of the four states in EPA Region 10: Oregon, Washington and Idaho. (Alaska is hoping to have its revolving loan fund established in 2006. The Kenai Peninsula Economic Development District in Kenai, Alaska, has applied for a $3 million grant from the EPA to capitalize a revolving loan fund for cleanup of brownfield sites throughout that state.)

The goal behind revolving loan funds is to become self-capitalizing over time as loans with low-to-no-cost interest rates and some sub-grants are awarded to support cleanup activities on sites contaminated with hazardous substances and petroleum, and then re-paid.

The EPA awards up to $1 million per eligible entity to capitalize a revolving loan fund. In the case of each of the states in Region 10, coalitions have been formed to capitalize and manage these loan funds. The coalitions then can make loans to other eligible entities, nonprofits, private site owners or developers throughout their respective states. Sub-grants also can be made to eligible entities or nonprofits to clean up a site they own. However, only up to 40 percent of the original grant can be sub-granted.

The money is usually used for cleaning up low-risk petroleum sites, abandoned gas stations, old dry cleaners, old mill sites, leaking underground storage tanks, illegal drug labs and municipal dumps.

Washington has one of the older revolving loan programs in the nation. Formed in 2000, the Washington implementation model has been used in about 10 states, says Sharon Kophs, Washington State Community, Trade and Economic Development manager. The coalition was formed among King County and the cities of Seattle, Tacoma and Spokane. CTED serves the rural communities across the state. Up to $4 million can be loaned by the coalition. It has awarded three loans and one grant. Kophs currently is reviewing another four projects for loans.

Overseeing the newest revolving loan fund in Idaho is the Reuse Idaho Brownfields Coalition, which consists of Idaho’s six economic development districts and the Idaho Department of Environmental Quality (DEQ). It has $3 million available, of which $1.5 million is dedicated for hazardous substances and $1.5 million for petroleum-related contamination. Keith Donahue, Brownfields program manager for DEQ, expects to begin accepting loan applications this spring.

“If we could do three to five loans in the first year, that would be very successful,” Donahue says.

Often, lenders don’t like to loan money to contaminated sites, Donahue says. He sees the revolving loan fund as a “gap filler” for those property owners who can’t get a loan to clean up contamination. However, he warns, the loan program probably doesn’t move as quickly as the private sector would like it to.

Usually, it takes about a year for a loan to materialize. The private sector especially has some fear of working with public agencies because the length of time can be overwhelming for some people, Kophs says.

“Time is money and I think everybody knows that these projects do take a long time,” says Karen Homolac, brownfields program manager for the Oregon Economic and Community Development Department. The Oregon coalition, consisting of the state, city of Coos Bay, Tri-County Metro Transit District and Portland, has $2 million available to loan. It currently is reviewing a loan for $750,000 in Portland.

This funding source doesn’t work with every project, Homolac warns. If a developer calls her and tells her cleanup is scheduled to begin in a week, she tells him a loan from the revolving loan fund probably won’t work for that project. However, this is a good source of money for the developer who’s still a year out from the cleanup stage and is working with a lender who can’t finance that stage, Homolac says.

“I think if I was a lender and I saw that I had DEQ and EPA at the table from the get-go, I’d be confident that the risks were lower and the likelihood of success higher,” Homolac says.

For more information about the revolving loan fund in your state, contact: