Brownfields Update for the Pacific Northwest

ACME Scenic & Display President Jan Pederson had his eye on a prime piece of property in northeast Portland. There was only one hitch. The land was contaminated with pesticides from an agricultural chemical company that once operated there.

That might have stopped some buyers in their tracks. But Pederson knew the parcel was a perfect fit for his creative team of set designers and trade-show display makers. His company-whose clientele includes big names like Nike and Adidas-was growing fast and needed room to expand.

But finding financial backing to purchase the five-and-a-half acre parcel was proving tough, if not impossible. Pederson began looking for a bank in 2004 and had come up empty-handed each time. The stigma of redeveloping a brownfield made it a tough sell.

Then, in August 2005, Pederson decided to attend the Oregon brownfields conference in Portland. It proved a pivotal moment. Pederson was put in touch with a lender-the Bank of Astoria.

A year earlier, he had reached out to Oregon’s Economic and Community Development Department (OECDD). The department was the recipient of an EPA Brownfields Cleanup Revolving Loan Fund grant, enabling the department to capitalize up to $2 million in loans, as well as provide some grant opportunities to Oregon’s communities.

“He really wanted the property and it met his needs. He was willing to work with us to meet all the programmatic requirements of the funding,” says Karen Homolac, Brownfield Program and Policy Coordinator at OECDD.

OECDD officials loaned ACME $658,000 in cleanup money-the department’s first-ever revolving fund loan. The state’s Brownfields Redevelopment Fund added another $144,000 loan to the mix, also earmarked for cleanup. Meanwhile, the Bank of Astoria financed the purchase of the property, loaning $1.25 million (including $82,000 earmarked for cleanup). All together, cleanup costs are estimated at $894,000.

“They had a plan in place to clean it up, a way to monitor it and funding in place for cleanup,” says Walt Postlewait, assistant vice president and loan officer at the Bank of Astoria.

If this sounds like a simple story about a company, a contaminated piece of land and a quick-fix ending, it isn’t. An extra-large helping of perseverance was required to make it work.

ACME signed a purchase and sale agreement in April 2006-two years after embarking on an odyssey that included securing funding, creating legal agreements to protect the company from liability and jumping through plenty of hoops.

“It goes on and on as far as the paperwork and the people who review it,” says Ayrica Bennett, a human resources manager at ACME. “I think people sometimes lose patience. You have to want the property you’re looking for to stick it out.”

To make this particular sale work required some specific legal agreements. ACME and the seller negotiated what’s called a Prospective Purchaser Agreement with the state’s Department of Environmental Quality. This version gave more protection to the buyer by making the previous owner responsible for all off-site contamination.

Chas. H. Lilly, had operated an agricultural chemical company on the site until 1996. Toxic chemicals, such as DDT and arsenic, had begun leaching into the ground in 1959 when the Miller Products Company bought the land from an automobile manufacturer. The land changed hands a few times but agricultural chemicals were formulated there for nearly 40 years.

Fortunately, most of the contamination was concentrated in discreet areas. Even so, a groundwater plume containing pesticides, petroleum VOCs and arsenic extends an estimated 900 feet onto adjacent property. The prospective purchaser agreement makes the previous owner responsible for those cleanup costs instead of ACME.

The prospective purchaser agreement also requires the purchaser to contribute to the cleanup. ACME agreed to build a new storm drain system to protect groundwater from additional contamination, and to conduct soil hot spot removal and capping to protect current and future users, including construction and utility workers. Contaminated soil is being carted off for incineration. Environmental agencies will monitor the site for the next seven years to make sure the remedy is effective.

But ACME isn’t waiting to finish cleanup work to make use of its property. The company has already moved into its new digs. The early move was possible because the warehouses and other existing buildings aren’t contaminated.

“People shouldn’t be scared of the (brownfields) process,” says Bennett, the company’s HR manager. “It’s helping retain jobs in this area. We’ve already added four employees since being at this location. And we keep growing.”