F.I.E.R. Research Report

[Lenny Siegel <lsiegel@igc.apc.org>]

BROWNFIELDS FINANCING INITIATIVE

In February, 1998, the San Francisco-based Development Fund released
a100-page research report for its Financing Initiative for Environmental
Restoration (FIER). While the purpose of the FIER study is to help
develop a new funding vehicle to support brownfields redevelopment, the
report contains information and insights that should prove valuable to
other brownfields stakeholders.

Since 1963, the non-profit Development Fund has established programs
that have generated $700 million in private sector financing for a range
of community development activities, with support from over 200
financial institutions and corporations in eight states. It began FIER
in 1997 with support from the James Irvine Foundation, the Charles
Stewart Mott Foundation, and the Wallace Alexander Gerbode Foundation.

Conducting original research, in which it estimated the number of
brownfields and emerging brownfields sites - it uses the term "impaired"
-  it came up with a range of 67,000 to 119,000, with a likely estimate
of 93,000 individual properties, in California. About 40% of those
sites, it concluded, are not on official lists. It found: "The majority
of contaminated sites could be called small sites that have a size less
than 2 acres, and may be closer to 1 acre or less." (I wonder if that's
true of brownfields in other regions.) Even with the assumption of small
acreage, The Development Fund estimated the combined value of those
properties at $32 billion, although it pointed out that not all such
sites represent feasible projects.

The Development Fund reviewed existing sources for brownfields
financing, including public and non-profit agencies, commercial banks,
and private investment initiatives. It found that banks primarily
support large projects, and that the brownfields-oriented private
initiatives seek a high rate of return. It provides an appendix that
profiles in detail 13 of those initiatives.

The Fund first identified the financial gap by type of owner. It found
that medium and small businesses have difficulty obtaining brownfields
financing. Major corporations in financial trouble, as well as those
unwilling to undertake remediation, have difficulty obtaining financing.
An cities and non-profit organizations are not well served by existing
sources of funds.

The Fund also described the characteristics of projects that are
difficult to finance. It found that small projects, those with marginal
returns on investment, and complex projects - such as those with complex
environmental contamination - are all difficult to fund.

The next step for FIER is to develop a plan for a financial intermediary
that on the one hand represents a sound investment for corporations and
financial institutions but on the other hand helps plug the financial
gaps left by existing investment strategies.

The Development Fund may be reached at 231 Sansome St., Sixth Floor, San
Francisco, CA 94104-2304. Voice: 415/981-1070. Fax: 415/981-1075.
E-mail: info@tdfsf.org.

-- 

Lenny Siegel
Director, Center for Public Environmental Oversight
c/o PSC, 222B View St., Mountain View, CA 94041
Voice: 650/961-8918 or 650/969-1545
Fax: 650/968-1126
lsiegel@igc.apc.org