Brownfields lead to affordable housing
When it comes to redeveloping brownfield sites, there are probably more profitable business endeavors than affordable housing. However, these projects can be important to communities, especially those in need of housing opportunities for lower income families.
Because many brownfields are in already developed and established urban areas, these sites also can provide an opportunity for cities to stem the flow of people to the urban fringe, says Clark Henry, program coordinator for the city of Portland’s brownfields program. Not developing these sites creates much unwanted displacement, he says.
As cities revitalize their communities, they are seeing a resurgence of investment in formerly unwanted properties, according to Henry. Property that once was the site of a dry cleaners, gas station or warehouse can provide a home for people when cleaned up properly. These properties provide an opportunity for people who don’t want to, or can’t, move to the urban fringe, he says.
The Rainier Court development in Seattle is an affordable housing project that won the 2005 Phoenix Award for EPA’s Region 10. A multi-use development on 7 acres in a poor neighborhood, Rainier Court will provide up to 500 housing units for seniors and families, says Pat Chemnick, economic manager for the nonprofit SouthEast Effective Development (SEED), which is heading up the project.
While affordable housing isn’t always the best use of a brownfield, in a tight housing market like Seattle, these projects are important, Chemnick says. However, they can be financially complicated too. Rainier Court is a perfect example of the complexity of partnerships and financing options required to make a project like this a reality.
Affordable housing projects often require innovative financing techniques including tax increment financing (TIF), bonds and special tax assessments from local governments, and state and federal funding. The first two phases of the Rainier Court project were paid for mostly by tax-exempt bonds and taxable bonds with help from numerous partners. King County and the City of Seattle applied for an EPA assessment on SEED’s behalf. The county also funds the Environmental Coalition of Seattle (ECOSS), which offers free technical assistance to businesses dealing with contamination. The county provided $25,500 in EPA funds to remove underground storage tanks and for groundwater sampling. Seattle’s Office of Economic Development and its Office of Housing are providing more than $7.6 million in Community Development Block Grant loans and $1.6 million in other federal grants. And Rainier Court received a $440,000 cleanup loan from the state of Washington’s brownfields revolving loan fund.
A private developer, Ed McNamara of Turtle Island Development in Portland has worked on a few affordable housing projects that utilized brownfields sites. One current project is the Sitka Apartments in the Pearl District of Portland, a 40-acre site once owned by Burlington Northern. The Sitka Apartments, which has 209 apartments and 7,200 square feet of retail space, has completely leased out its first two buildings.
When dealing with lenders, it’s important to be honest and upfront with them, McNamara says. Make them a part of the solution, he says. And make sure you have a good remediation plan and are working with the regulatory agencies, he adds.
Developers should do their environmental assessments as early as possible so they know what they’re dealing with. Then, when the assessments are complete, share the information with your financing agencies, McNamara says. “I think the last thing you want to do is surprise a lender or investor.”
In Portland, the city has established a TIF district to help developers with housing projects. In return, developers agree to help the city by building a range of affordable housing projects matching the city’s demographics.
“You can make money doing other stuff, but you wouldn’t be getting the city’s help,” McNamara says.
The Low-Income Housing Tax Credit is another tool meant to fill that financial gap. Run by the IRS, it allows companies to invest in low-income housing and receive 10 years of tax credits. The program works with state housing finance agencies to administer the program on a state level.
One issue that has come up in affordable housing is the question of whether developers are compromising people’s well being by building housing on a brownfield. “The concern unique to affordable housing is that lenders and public agencies want to make sure you’re not putting poor people on contaminated land,” McNamara says.
While this is a legitimate concern, if developers do their jobs right and clean up these properties, it could be a last chance to preserve this land and prevent people from moving out, Henry says.
“This is a great opportunity, as long as we are responsible and creative in how we clean it up,” Henry says. “If you’re not going to clean it up very well, it isn’t fair. It’s an injustice.”
