2007 CPEO Brownfields List Archive

From: "Joe Schilling" <jms33@vt.edu>
Date: 23 Jul 2007 14:12:45 -0000
Reply: cpeo-brownfields
Subject: [CPEO-BIF] Framing--what is a Brownfield Subsidy anyway??
 
Ignacio raises a good point as it relates to California and a large number
of other states.  Perhaps policymakers and the media like things simple, so
instead of breaking down the level and type of government financial
assistance (sometimes it can also be process assistance, like permit
expediting), everyone just calls it a subsidy.  Just saying the word now
makes us all cringe.  Oh my God, did you know they gave that project a
subsidy?  

And yet, I'm reminded from the community development perspective that CDCs
for decades have been required to patch together a variety of programs to
finance and develop their community driven projects--HOME, CDBG, HOPE VI,
LHTCs, etc. I think most of us would agree that if the CDC community didn't
tackle these projects, often in dysfunctional markets and communities,
private investor sure wouldn't. For the large majority of BFs redevelopment
it's pretty much the same if you view it through the lens of Greenfield
development.  Neither BFs redevelopment nor community development can
function without some level of government assistance (financial or
otherwise) b/c Greenfield development is still easier and more attractive
from a variety of angle.   The primary difference between community
development and Bus is most BFs redevelopment is now, thanks to the work of
many of you out there, a legitimate private sector endeavor.  

Unfortunately, in this post-Kelo world, everyone now gets nervous when
public funds/assistance goes towards private development. I'm still think we
should continue to evaluate carefully the types of project and policies that
determine where and how to allocate BFs assistance (as this on-going debate
via the list serv illustrates), but we should be mindful about what we call
them and the potential backlash.  Calling everything a BFs "subsidy" could
become the next target of the Institute for Justice and other such
libertarian groups...and then where will be?

Joe Schilling 

 
-----Original Message-----
From: brownfields-bounces@list.cpeo.org
[mailto:brownfields-bounces@list.cpeo.org] On Behalf Of Lenny Siegel
Sent: Monday, July 23, 2007 2:31 AM
To: Brownfields Internet Forum
Subject: [Fwd: RE: [Fwd: RE: [CPEO-BIF] Brownfield Subsidies]]

Date: Sun, 22 Jul 2007
From: Lydia Tan <ltan@bridgehousing.com>

Tax Credits work well for tax paying private developers, but given that
much of the equity that is invested in these larger scale developments
(at least in California) comes from pension funds (who don't pay taxes),
tax credits are not as powerful a tool across the board as an outright
grant to a developer.

Lydia Tan
Executive Vice President
BRIDGE Housing Corporation
345 Spear Street, Ste 700
San Francisco, CA  94105
415.989.1111


-----Original Message-----
From: brownfields-bounces@list.cpeo.org
[mailto:brownfields-bounces@list.cpeo.org] On Behalf Of Lenny Siegel
Sent: Saturday, July 21, 2007 11:37 PM
To: Brownfields Internet Forum
Subject: [Fwd: RE: [CPEO-BIF] Brownfield Subsidies]

Ignacio wrote a few replies to my earlier query. With his permission, I
am sending one of them out to the list. I think it's useful to our
current discussion. He warns, however, that this is a simplified,
incomplete response and reminds us that the New York state tax credit is
totally different that tax increment financing.

Lenny

Date: 	Sat, 21 Jul 2007
From: 	Ignacio Dayrit <idayrit@ci.emeryville.ca.us>




Fiscal impact analysis is routinely done in large development agreement
projects in CA.  The impacts of the project are estimated based on the
employment, traffic, other environmental impacts, cost of public
services (est. of police, fire, school, recreation, parks, water, power,
etc.).  These can be costed out - cities have their own formulas.

This is calculated against the benefits - taxes (business, property),
fees, cash contributions (yes, many developments give subsidies but yet,
give contribitions as well) and any multiplier effects.  Then, of
course, less the subsidies. The flow of subsidy (all cash vs. over time)
may have an impact.

You can calculate the difference in financial impact of the TIF area by
simply comparing the tax distribution within and outside the TIF.  I.e.,
the TIF may distribute taxes by 50% TIF agency, 25% city, 10% school,
10% transit district, 5% community college, vs the non-TIF area would
have distributed 35% city, 20% school, 15% transit, 10% comm college, 5%
park district, xx% other special tax districts).  Housing funds are
typically included in the city or TIF agency pots.

The kind of consultants that do this in CA include Keyser Marston,
Economics Research Associates, Rosenow Spevacek, Applied Development
Economics, Hausrath Associtaes, etc.

My own 2 cents is that if a city wants to throw $ into any deal, call it
what it is.  Calling all of those subsidies a "brownfields tax credit"
give brownfields subsidies a bad name.  Portions of these are job
creation, infrastructure, housing AND environmental subsidies.  I figure
it would have created too much political opposition if the subsidy was
called too many things.

Take care.

-----Original Message-----
From: brownfields-bounces@list.cpeo.org on behalf of LSchnapf@aol.com
Sent: Fri 7/20/2007 7:44 PM
To: brownfields@list.cpeo.org
Subject: [CPEO-BIF] Brownfield Subsidies

thanks all for your comments. Not being an economist, I was just
wondering if there was some formula that can be applied to figure out
the taxes that are likely to be thrown off by a project without going
into a detailed study if the project results in a "net" benefit to the
state as  a whole.

For example, if we know a developer will be building a $200 million
project, arent there multipliers are other metrics that can be used to
figure out the jobs created, income taxes generated, sales taxes from
raw  materials used and sale of condos, property taxes from the
development, etc. This might simplistic but at least it presents an
estimate of some of the benefits thrown off by a project that can
offset the tax credit liability generated by the project.

I do not think that the creation of an environmental fund for use by the
state to acquire, remediate and then sell property to developers makes
any sense. First, the state cannot cleanup as many sites as developers
can and certainly not in the time frame required by the market. The
Wollman Rink in Central Park was a perfect example. The City tried for
years to get it reconstructed.
Trump stepped in, hired contractors that were incentivized to  complete
the work within certain time periods (and without having to do the
bidding
procedures) and had the rink built in a year. When the state gets
involved, the low bids frequently up with sloppy and sometimes  tragic
results like what happened with the Boston Harbor tunnel.

Having done a numerous brownfield sites across the country either
representing developers or lenders, my experience is that tax credits
are the  most efficient and fastest way to redevelop contaminated
properties. Loans and  grants may be ok for local governments to perform
assessments but tax  credits work great for developers since they dont
have to deal with bureaucratic delays and inadequate staffing, and the
developers along with their contractors  are incentivized to get the
project done quickly so they can then file  for their financial
benefits.

Also, there was a comment about subsidies and  trivial level
contamination.
Regulators and environmental  professionals may view some amounts of
contamination as trivial but  contamination still sends shudders through
the development and lending community  because of the cost and timing
uncertainty.

Despite liability reforms, many developers are still nervous about
touching even slightly contaminated properties. I've been involved in
situations where I  have spent more than a year explaining the benefits
of a state brownfield program before a client was willing to pull the
trigger on  a project. These projects are viewed as risky and high risk
money demands  high rewards. With construction costs increasing 5-10% a
month, any  delays can have devastating effects on the rate of return
and  make projects uneconomical.

And of course, it seems each year we become concerned about more types
of chemicals at ever lower levels of exposure. Thus, I would never
underestimate the impact of "trivial" amounts of contamination at a site
or the incentives needed to convince developers to take a risk on a
contaminated property instead
   of a nice undeveloped parcel or land with a fairly benign  use.

Larry

Lawrence  Schnapf
55 E.87th Street #8B/8C
New York, NY 10128
212-876-3189  (h)
212-756-2205 (w)
212-593-5955 (f)
203-263-5212  (weekend)
www.environmental-law.net



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-- 


Lenny Siegel
Director, Center for Public Environmental Oversight c/o PSC, 278-A Hope
St., Mountain View, CA 94041
Voice: 650/961-8918 or 650/969-1545
Fax: 650/961-8918
<lsiegel@cpeo.org>
http://www.cpeo.org

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-- 


Lenny Siegel
Director, Center for Public Environmental Oversight
c/o PSC, 278-A Hope St., Mountain View, CA 94041
Voice: 650/961-8918 or 650/969-1545
Fax: 650/961-8918
<lsiegel@cpeo.org>
http://www.cpeo.org

_______________________________________________
Brownfields mailing list
Brownfields@list.cpeo.org
http://www.cpeo.org/mailman/listinfo/brownfields

_______________________________________________
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http://www.cpeo.org/mailman/listinfo/brownfields

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