Member Article

The State of North Carolina recently put into place policies to help encourage brownfields redevelopment. These policies respond to cuts in federal funding to states for brownfields programs while encouraging brownfield redevelopment projects. Though fees for the development of brownfield agreements have increased, programs have been developed to aid the marketing of brownfield properties in an effort to help fast track brownfield projects.

Under the North Carolina Brownfields Property Reuse Act, fees associated with the ultimate entry of a Brownfields Agreement (BFA) must cover the full cost to the Department of Environment and Natural Resources and the Department of Justice for activities related to the BFA, including negotiation, community involvement and implementation of the BFA. Total fees are negotiated and become part of the BFA.

Average total fees had been estimated at $5,500 per brownfields site. With the loss of EPA funding, the Division of Waste Management of the Department of Environment and Natural Resources projects the average will rise to $8,000 per site, effective for sites entering the program after May 31, 2012.

Redevelopment Now, which began in 2009, is evidence that fees are not a significant obstacle to the demand for brownfields projects. This program recognizes that expediting the BFA process may pay for itself by reducing the carrying costs to the developer. An applicant for a prospective brownfields project pays a considerably larger fixed fee of $30,000. The higher fee covers hiring additional project managers and legal expenses. Additional fees may arise if the project has unforeseen complexity.

North Carolina’s Ready-For-Reuse Agreement Program was recently launched to encourage participation in the brownfields program. Under the program, a property owner who is not eligible as a prospective developer under the Brownfields Property Reuse Act may negotiate a draft BFA with a “to-be-determined” prospective developer. Ineligibility is generally due to the fact that the property owner caused or contributed to the contamination at the brownfields property. The program was developed to make a brownfield property more attractive to prospective purchasers/redevelopers if the preliminary work on negotiating a BFA is completed at the time of purchase. Theoretically, all the prospective developer would need to do is have an end use consistent with the BFA, sign the draft BFA and mobilize. The Division of Waste Management anticipates higher costs associated with the Ready-For-Reuse program and estimates total fees of $15,000 on average per site.

The faster a brownfields project can move from concept to completion the less carrying costs the developer will have to shoulder. Developers are finding that the carrying costs that can be saved outstrip even five- or six-fold increases in fees for brownfields projects. Demand is increasing for single-person households, urban locations and proximity to convenient public transportation. Many brownfields sites can tap into all of these demands. The North Carolina brownfields program is responding to the trend with positive outlooks for redeployment of underutilized properties and more cost-efficient clean up of contaminated sites.

Craig A. Bromby is a partner in the Raleigh, N.C., office of Hunton & Williams LLP and a leader within the firm’s environmental law group. His practice focuses on administrative law and environmental compliance, particularly matters involving water quality, wetlands, stormwater, industrial wastewater and development-related regulations.