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344 Slater Street, Suite 200 Ottawa, Ontario Canada KlR 7Y3 Tel.: (613) 992-7189 Fax: (613) 992-7385 E-mail: admin@nrtee-trnee.ca Web: http://www.nrtee-trnee.ca

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anda te
The National Round Table on the Environment and the Economy explaining (NRTEE) was in all of created to play the role of catalyst in identifying, sectors of Canadian sustainable environmental identify actions society and in all regions Specifically, and promoting,

of Canada,

principles

and practices

development.

the agency identifies

issues that have both and attempts preservation. of to

and economic

implications, economic

explores these implications, prosperity with environmental to improve

that will balance

At the heart of the NRTEEs work is a commitment economic and environmental policy development

the quality

by providing

decision

makers with

the information Canada.

they need to make reasoned

choices on a sustainable by:

future for

The agency seeks to carry out its mandate decision makers and opinion

advising

leaders on the best way to integrate into decision making; in any particular

environmental

and economic

considerations

actively seeking input issue and providing issues and overcome analyzing

from stakeholders a neutral barriers meeting

with a vested interest ground

where they can work to resolve

to sustainable

development; changes that will enhance

environmental in Canada;

and economic and

facts to identify

sustainability

using the products conclusion

of research, analysis and national

consultation

to come to a

on the state of the debate on the environment synthesize

and the economy.

The NRTEES state of the debate reports consultations on potential opportunities

the results of stakeholder development. They summarize of

for sustainable

the extent of consensus action or inaction, Gtainability.

and reasons for disagreement,

review the consequences

and recommend

steps specific stakeholders

can take to promote

M embers
individuals environmental round priorities, are appointed

of the National Round Table on the Environment and the Economy

of a Chair and up to 24 distinguished as opinion Members society including business, Canadians. These a by the Prime Minister and First Nations. leaders representing labour, academia,

The NRTEE is composed

variety of regions and sectors of Canadian organizations,

of the NRTEE meet as a work of the agency, set

table four times a year to review and discuss the ongoing and initiate new activities.

Chair Dr. Stuart Smith Chairman ENSYN Technologies Inc. Vice-Chair Lise Lachapelle President & CEO Canadian Pulp & Paper Association
Vice-Chair

Michael Harcourt Senior Associate Sustainable Development Sustainable Development Research Institute Cindy Kenny-Gilday Yellowknife, N.W.T. Dr. Douglas Knott Professor Emeritus University of Saskatchewan Anne Letellier de St- Just Lawyer Ken Ogilvie Executive Director Pollution Probe Foundation Joseph ONeill Vice-President Woodlands Division Repap New Brunswick Inc. Dee Parkinson-Marcoux President CS Resources Limited Carol Phillips Director Education and International Affairs Canadian Automobile Workers Angus Ross President SOREMA Management Inc. and CEO, SOREMA Canadian Branch John D. Wiebe President & CEO Globe Foundation of Canada and Executive Vice-President Asia Pacific Foundation of Canada
Executive Director and Chief Executive Officer

Elizabeth May Executive Director Sierra Club of Canada Paul G. Antle Chairman, President & CEO SCC Environmental Group Inc. Jean Belanger Ottawa, Ontario Allan D. Bruce Administrator Operating Engineers (Local 115) Joint Apprenticeship and Training Plan Patrick Carson Strategic Planning Advisor Loblaw - Weston Companies Elizabeth Cracker Co-owner, Plovers Johanne Gtlinas Commissioner Bureau daudiences publiques sur 1environnement Sam Hamad Vice-President Roche Construction Dr. Arthur J. Hanson President & CEO International Institute for Sustainable Development

David McGuinty

T able of Contents
Preface Executive . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..vii Summary ................................................... ..i x ..x i Introduction.. .......................................................

Brownfield Sites: An Overview Definition of Brownfield Redevelopment Redevelopment Sites ................................ .................................. .2 .3 .3 .4

Barriers to Brownfield Number of Brownfield

.......................................... of Brownfield Sites ...........................

Geographic The Issue

Characteristics

Factors Causing The Economics

Brownfield of Brownfield

Sites ....................................... Sites .....................................

10 13

The Financial Services Sector: An Overview ThePlayers.. Business .................................................... and Challenges ................................ ..18 .20

Opportunities

Encouraging

Brownfield Redevelopmentz Strategies 2 33 .38

TheNeedforIncentives..............................................3 Direct Monetary Indirect Incentives Incentives ...........................................

.................................................

A Foundation Responses

for the Future . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46

to the Strategies

LessonsLearned

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..4~

Endnotes.............................................................54 Appendices Bibliography Responses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...57 to Brownfield Site Survey Questions . . . . . . . . . . . . . . . . . . . . . . . . . . .62

List of Exhibits Estimated Distribution Number of Brownfield Sites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 and Environmental Risk . . . . 22

of Commercial

Real Estate Financing

Acronyms
CCME CDIC CERCLA Canadian Canada Council Deposit of Ministers Insurance of the Environment Corporation Response, Compensation

Comprehensive Environmental (United States) Environmental National National Protection

and Liability Act

EPA NCSRP NRTEE OSFI REUS

Agency (United Sites Remediation

States) Program and the Economy Institutions Michigan, United States)

Contaminated Round

Table on the Environment of Financial

Office of the Superintendent Redevelopment of Urban

Sites Team (Detroit,

Brownfield sites offer opportunities

areas abandoned for revitalization

or underused

because of industrial particularly

contamination of

and redevelopment,

in high-density for development insurance that

urban areas. Despite the economic

potential

of many of these areas, however, members of banks, trust companies,

the financial services sector have often been hesitant to provide funding projects. Some of the barriers to the involvement companies and investment provide little guidance about environmental liability that are confusing; investment in brownfield brokers in such projects include: statutory credit risk management; and the lack of appraisal standards sites. Successful public-sector incentive programs are designed to promote

frameworks sites.

laws relating to lender

for brownfield

Various strategies have been used in the United States and Canada to encourage initiatives have generally focused on practices and to prompt the (NRTEE) , in order The to the which was a combination generation of economic

and indirect incentives such as legislative

innovative

reforms. These incentives of solutions The National purpose

from the private sector. and the Economy a Financial in this area, has undertaken was to identify barriers brownfield condition Services Program.

Round Table on the Environment

to make a contribution of the program issues of redeveloping site-specific barriers

and explore possible solutions of land. This Backgrounder, (CMHC),

areas and other contaminated Corporation

sites, and to improve explores some of the

data on the environmental redevelopment reports produced this Backgrounder:

funded by Canada Mortgage to brownfield and American Program experience.

and Housing

and presents best practices from the Canadian through the NRTEEs Financial Services

Three additional complement

Contaminated

Site Issues in Canada, Improving reports were produced the NRTEE a state of the debate and

Site-Specific Data on the Environmental Redeveloping to promote Financial Contaminated debate and discussion Services Program

Condition of Land and Removing Barriers: As a follow-up,

Sites for Housing. These background among key stakeholders. workshops sponsored and prepared

report on the issue. This report was prepared by Dillon Consulting, TECSULT under the direction responsibility of the Financial for the interpretation GlobalRisk Management Services Task Force. The authors accept full

of the literature. The content of the report does not of the NRTEE or CMHC.

necessarily represent the position

Angus Ross Chair, Financial Services Task Force National Round Table on the Environment

and the Economy

DebraDarke Director, Research Division Canada Mortgage and Housing Corporation

National Round Table on the Environment and the Economy Financial Services Task Force
Chair

J. Anthony Cassils Policy Consultant NRTEE Luc Charbonneau

Angus Ross President SOREMA Management Inc.

Carol Anne Bartlett Assistant General Counsel Head Office, Law Royal Bank of Canada Beth Benson Project Director for Site Remediation Waterfront Regeneration Trust

Director Samson Belair Deloitte Touche

Wayne Proctor Manager Lending Services Credit Union Central of British Columbia

Dick Stephens Douglas M. Bisset Bisset Engineering Inc. Wally Braul Barrister & Solicitor President West Coast Environmental Law Association Director Legislation and Intergovernmental Affairs

The early growth of Canadas urban ports and inland waterways,

centres, usually around in contamination.

rail depots, ocean As traditional inner

has often resulted

city land uses changed,

contaminated

lands were often abandoned initiatives renewed

or underutilized. of inner city

With the recent focus of urban property,

planning

on the revitalization

these areas have come under sites areas abandoned

scrutiny. because urban of industrial areas. They therefore proponents of

Brownfield contamination offer desirable brownfield

or underused

are most often located in high-density

opportunities

for renewal and redevelopment. however, are often hesitant

Potential

redevelopment,

to enter into this type of project and approval; liability;

because of uncertain

expectations

about such issues as clean-up

the process and costs of legal and technical and acquisition; and monitoring

aspects of redevelopment; requirements. of brownfield associated

site assessment

and maintenance to the redevelopment

One of the major barriers financial support.

sites is the lack of with redevelopment, insurance companies

Because of the risks and uncertainties including

the financial and investment Among

services sector brokers -

banks, trust companies, to finance

has been reluctant

redevelopment statutory

projects. provide credit

other contributing to managers

factors, federal and provincial of financial institutions

frameworks

little guidance

on the issue of environmental in such circumstances

risk management. varied. Appraisal

Laws relating standards

to lender liability

are vague and

for brownfield

sites are lacking: as a result, the financial environmental credit risk, contributing

services sector is unable to the overall reluctance Various strategies in Canada, to encourage

to identify to provide

and quantify financing.

have been employed investment

in the United

States, and to a lesser degree can be in nature.

in brownfield

sites. These strategies are generally

classified as either direct or indirect. Aimed at improving fees, tax incentives

Direct strategies

monetary

investors rate of return, or equity participation

they may include

loans, loan guarantees, help to reduce clean-up

schemes..Indirect regulatory

strategies reforms, planning

some of the risks for investors programs, financial and liability

and may include assurances,

voluntary

and strategic

or information

services that help potential The capacity to evaluate

investors

to better assess risk factors. for Canada is hampered by

the merits of these strategies experience Canada,

several factors. First-hand strategies, including

Canadian

is lacking in many areas. Many of these only recently, in the and financial context. incentives

those outside

have been implemented regulatory, experience judicial

past two to three years. Differences systems make it difficult The limited are more potent combining evidence to transfer available

in legislative, the American

to a Canadian

suggests that, in general, direct, economic incentives. In particular,

than indirect,

regulatory

hybrid programs appear to have

carefully targeted

direct incentives

with indirect

incentives

considerable

potential.

The experience involvement

of other jurisdictions to provide

makes it clear that some the impetus for brownfield on a number

level of public-sector redevelopment.

is necessary

The extent of public-sector

intervention

required

depends

of factors, but hinges primarily brownfield

on the economic

market forces at work where the will be less than

site is located. In strong markets,

the level of intervention

where markets remains. This report

are soft and where the spectre of the real estate losses of the 1980s

identifies

key factors that are common

to the successful

experiences

in

other jurisdictions: Legislative reform on determining cohesive and consistent Levels of government and experiment clean-up national environmental framework. income taxing authority should investigate write-off of liability should provide a

with corporate

with tax incentive

programs,

such as accelerated

expenses, providing

a catalyst for private-sector

involvement. sector to react

These public-sector constructively

cornerstones areas:

would likely lead the private

in the following

A philosophical profit-based Initiatives

shift by the financial

services sector to look beyond

the traditional

behaviourial by the financial risk.

model and actively embrace services sector to become

an issue of public concern. better educated concerning

environmental Innovative

practices

by the insurance

industry

to create new and practical

forms

of environmental Initiatives

coverage. insurance more broadly, as well as other

by lenders to use available risk transfer

private-sector

mechanisms. review of current as a comprehensive research set of food

The above findings and activities

are based on a preliminary

in this sector and are not intended

recommendations for thought among

for action. It is hoped, however, that they will provide stakeholders and stimulate discussion.

I ntroduction
ci :I. a:;: .._- I. c-z; 8, = i .I p.;-;p p: :; .:.--. / _ -*.::;i. = .*-. -~. :-:.:-

Brownfield redevelopment has become a focus for many municipalities across I&:J-,:. ;. - - 2; = x-- _I -j& . - :.-I c i.; : Canada in recent years. This interest has been generated by several factors including i_;-: _ ::..;I .z. .;.. .,_li ..:.i:: $6;: :;$.-.- i.. _i_ i -; increasing move away from an urban sprawl form of development towards urban := ;. *; .<:..-; -I(IF.- -& ;. l;;:Il:y/:; -_.I.=_ .; i _. __ . . . .i :I.-.s_-... __ -intensification; better understanding of site contamination, risk assessment and yJ;.if=r.: , remediation development perhaps redevelopment is the potential essential
:_^

the

opportunities;

a greater focus on affordability a desire to revitalize of the United the example sites. the likelihood insurance

for infrastructure decaying urban

to support

in some jurisdictions; of brownfield for economic

areas; and,

most importantly,

States in successful of a brownfield site

The critical factor influencing banks, trust and loan companies, notential
I

of redevelopment and securities return

success of the project. The financial companies

services sector (i.e., dealers) has an in brownfield private and in financing

role to play in assessing the risks and economic moiects.

I A

However. this sector is onlv one of the stakeholders governments, to site clean-up developers barriers

redevelopment. important
. _: r+ _=. ;.iic-;L _. I, r. :.. L ,z>z-m

Local and provincial

and the public also have role in financing to brownfield incentives,

roles in removing redevelonment.

and reuse. In addition, anm-oath

II

r-.;.~r.i.r,r--~r~jzi:_,-;. l$.--a; ii., .;^i/Zr;:;;

q:j:g:;.

___i. ::; .; LI ;I. 1;.3 ..=.E:.. f __ L

_. i :=: ;_

pools of capital (venture brownfield redevelopment

capital groups)

also have an important partnerships among

It is clear that an integrated including expertise regulatory

is nekded: this includes of strategies technical

all of these sectors and the

iii;;;-

use of a combination

reform, financial

;~.$ education, and improved :I,!,-z This paper examines brownfield purposes institutional brokers. redevelopment

and data management. services sector can do to facilitate and challenges insurance that are faced. For the

what the financial

and the opportunities

of this paper, the financial

services sector is defined in terms of the four brokers and investment papers that were prepared of the National to Round of background

pillars: banks, trust companies, for the Financial and the Economy

This paper is one of a number

form the basis of discussion Table on the Environment

Services Program

(NRTEE). These include: Sites for Housing, produced Corporation Condition (CMHC); in in

Removing Barriers: Redeveloping association with the Canada

Contaminated

Mortgage

and Housing

Improving Site-Specific Data on the Environmental association with Statistics Canada; and

of Land, produced

Contaminated Council

Sites Issues in Canada, produced of the Environment Services Program

in association

with the Canadian

of Ministers

(CCME). a series of multi-stakeholder the issues raised in the

NRTEEs Financial workshops

comprises

in major centres across Canada

that will consider

papers described above. It is anticipated that these workshops will result in some .. 1 1 . . 1 .1*1 1 11 .r- . 1 7 1 fi2ir, practical solutions that will help to aciaress some speciric issues; a oackground paper on -g,.-;... :-s=c>; contaminated sites; a higher profile for issues concerning contaminated sites; and 15 s ::::: greater awareness of the need to improve land management practices.

The study team included location of browntield data gaps. Selective telephone the data. The teams primary to investigate strategies undertake brownfield geographic Canada Canadian business summarizes to encourage of the financial A summary provided. the opportunities

members

from across Canada the available and a literature in brownfield

who investigated

the sites, and

sites across Canada, consultation research

data on browntield

review were used to collect review were undertaken redevelopment and the services sector to a definition of

and extensive to encourage in Canada

literature the financial

and challenges

that have been undertaken brownfield redevelopment barriers

and other jurisdictions. 1 provides redevelopment. The location, sites across and of the 4

This report is organized sites and considers characteristics,

into six chapters. quantities

Chapter

to brownfield

and data sources on brownfield redevelopment. in Chapter

are summarized. financial

Chapter

2 considers in brownfield

the factors that created brownfields An overview Chapter 3 as well as some of the

the role of urban

land economics

services sector is provided and challenges redevelopment.

opportunities brownfield

in browntield In Chapter

redevelopment. in Canada

the strategies

that have been undertaken

and other jurisdictions and reaction is 4 are highlighted. redevelopment

5, the lessons learned in Chapter brownfield

services sector to the strategies include a bibliography,

described

of the key strategies Appendices

and models to encourage

as well as greater detail on the status on

the status of brownfield

sites across Canada.

Definition of Brownfield Redevelopment

For the purposes Program of this paper and for consideration of a brownfield by the Financial redevelopment Services of the NRTEE, the definition redevelopment remediable is as follows:

Brownfield economically

is development contamination

on an underutilized

site that exhibits

of its soils and ground water and is a brownfield redevelopment

located in a setting where existing municipal services are readily available. As far as planning and land use reasons are concerned, would, except for the contamination revitalization exist on the site. This definition the Financial decision of brownfield redevelopment for the purposes redevelopment of consideration to the is an economic use of urban water by issue, represent a desirable location for

of the urban core at the same or higher land uses than presently

Services Sector recognizes

the various

factors that contribute vital interest. more intensive

to invest in redevelopment.

Thus brownfield return

process in which the Financial Municipalities core lands. A contaminated all contaminated contaminant considered considered

Services Sector has an obvious through

can also realize an economic

site is one that exhibits, after suitable criteria set by government. sites since there is a spectrum

testing, soil or ground conditions. Some

quality that exceeds quality conditions

Brownfield

sites are a subset of

of contaminant

are so severe that redevelopment

is far too costly to be should be to a essentially immaterial

by the private sector. On the other hand, some contamination to be so trivial that dealing with it becomes proposal. redevelopment. It is difficult definition. The range of sites that falls between the brownfield remediable,

redevelopment

these limits are the that each case is

subject of brownfield should be considered immaterial, environmental first reaction unable

to draw a precise line above or below It is very probable whether contamination

which the site falls beyond economically quality

on its own merits to determine

or too severe for redevelopment. in understanding and concern for the exists, the that such have been

The recent past has seen an increase has naturally

of the nations land resources. Where contamination been one of avoidance, risks. The various set of principles based on the perception in redevelopment stakeholders

sites carry unmanageable Consequently, Characteristics desirable

to agree on a common

that would allow redevelopment. an existing urban setting. issue) of

many sites have become of brownfield

underutilized.

The brownfield opportunities

site is likely located within for redevelopment. and planned

sites are that they are (apart from the contaminant This desirability with a location redevelopment

results from the presence that makes redevelopment of urban lands. It is be other lands

existing municipal unlikely

services in combination

sense in terms of the integrated that the redevelopment any of the other urban

of a contaminated

site in a rural setting would have

values associated

with it. There would probably

located in close proximity that would not carry the contamination stigma. Historically, the development of Canada is reflected in the urban settings of brownfield sites. When contaminant issues were not well understood the major transportation in society at large, modes of the Canadas major urban centres grew up around

day. Therefore, urban

contamination

is associated

with transport

by rail and water. Canadian Canadians have historically products. from the support for shipping

centres have grown up around terminals

rail depots. Similarly,

made great use of Canadas ocean ports and inland Where intermodal products industries. As the traditional abandoned revitalization transportation become to underutilized intensification. themselves,

waterways

existed, there is the potential

for contamination

and from the fuels and materials

used in transportation

inner city land uses have changed, Urban planning

these lands have become focused on the the urban core has fall

or at least underutilized. infrastructure,

has recently

of inner city lands. With fewer capital dollars to be spent on the intensification redevelopment of land use within for intensification has therefore factor in itself. Opportunities will naturally tied to urban

a motivating

lands. Brownfield

become

Barriers to Brownfield Redevelopment

In order to understand have a clear understanding In undertaking redevelopment perceived approval. public finality in the planning problems Proponents and define brownfield of the barriers and approval redevelopment, redevelopment, it is important that exist. and to enter into a of the real or and they will to to brownfield redevelopment are hesitant

brownfield

there is often a lack of certainty issues because expectations unclear

process. Proponents contaminant

project with even minor

that may emerge and uncertain Proponents opportunity

for clean-up about liabilities

perceive the process to be arduous,

and likely to generate

concern

and opposition.

are also uncertain and normally

accept in redeveloping otherwise in a competitive to the assessment monitoring

either a site they have owned for some time, or a site they would target for redevelopment with the process and extends process, and This uncertainty Additional uncertainty is associated

find to be an attractive marketplace.

costs of both the legal and technical and maintenance

aspects of redevelopment.

of the site, the acquisition of a remediated

process, the redevelopment

site. Finally, with regard to the economic

aspects of brownfield redevelopment, the range of uncertainties and barriers associated with brownfield sites has meant that the financial services sector is hesitant to finance brownfield redevelopment or has caused transaction uneconomic. support Consequently, and impetus costs to increase a major barrier for projects. to the point at is which projects become the unavailability to redevelopment

of financial

Number of Brownfield Sites

Reliable and systematic not available cross-country times, only subjective sources of information. provides data on the number in Canada. and location of brownfield sites are a for each province estimates. The data vary in level of detail and are, at a more reliable description, of various the findings. Sites for Housing report sites in Canada disagreed
(1997)

In order to establish summarizes

survey was conducted The following

and a review was undertaken Contaminated of brownfield (NCSRP)

published

The Removing Barriers: Redeveloping an upper limit on the number Sites Remediation 30,000, based on estimates Contaminated

at 20,000 to

made by others. The report points Program

out that the National with this estimate,

NOWZ, icund cble on the E-v,mnenl ciid tie Em-my

i-e Fi~mal Swces Secor and Bio~in~~e~dRecerelopmm ~ Backgrounder

suggesting perhaps

that it was too high. The estimates and may overstate provincial

were derived from environmental/toxic The NCSRP commentary officials across Canada
1. I summarizes

real estate advocates

the problem. and municipal

is to make study

more objective. of the number of brownfield sites. Exhibit the

The study team surveyed its own estimate findings. estimates Recognizing

the data inconsistencies this number, the various

and gaps that exist, the present sites across Canada. For example, the number

that there are in the order of 3,000 brownfield were critically

In establishing known location

data sources that may have been used by evaluated. it is well have detailed lists on the of storage sites found in does

others to develop a higher estimate that most provinces and amounts

and the federal government

of PCB waste in storage. In Ontario ways of disposing Indeed,

alone is in excess of 1,000. However, it is known activity and that there are acceptable storage. Therefore, compared browntield PCB waste not stand in the way of redevelopment. to the redevelopment sites. it is likely that automotive district consideration. Similarly, most provincial underground standards. These sites were therefore

that PCB storage is a well-regulated of the PCB inventory a cost of redevelopment

while representing initiative,

in most cases, the cost is so small an immaterial of in the total estimate

in toto, that it becomes not included

fuel service stations

appear as suspect sites in products

office riles. The experience of service stations

of the retail petroleum

sector is that large numbers

have been taken out of service and their to provincial has not been or where the stations ministry sites. to be will be could where contamination spill conditions

storage tank (UST) locations (There are exceptions by independent

have been remediated

to this assumption operators

effectively remediated decommissioning similarly

as a result of large or chronic It is suggested

was carried out before the leaking UST that most of the remaining that any environment with retail petroleum

issue was fully appreciated.)

cleaned up when required.

It is unlikely

point to more than a few serious problems Consequently, brownfield sites.

products

except as noted, a small percentage

of these sites are considered

Geographic Characteristics of Brownfield Sites

In the survey of brownfield common thread: browntield occurrences across Canada, it was found that there is a centres, where existing is often higher. Defence sites, it sites. potential sites are primarily located in urban

services are more likely to be in place and the redevelopment Where contaminated is recognized Remoteness examples become sites are located in remote that most of these sites fall beyond here refers to sites that are presently the definition remote;

areas, such as National

for brownfield

of course, there are many but which have since sites is the history of the

of sites that were remote when first contaminated, urbanized. feature of brownfield of each urban

Perhaps the most telling geographic growth and development examples of urban

centre. In each region of Canada, the site of exploitation

there are

centres that grew up around

of a natural

Estimated Number

of Brownfield

Sites

British Columbia

Van files BC provincial Environment Ministry District files from BC Environment Ministry n/a

minor to major. No aggregate number pro rata from the Vancouver data. 100

Alberta

-No provincial

data

Sites identified with oil/gas industry, service stations and wood preservers. Many of these fall outside definition in this report; therefore estimate made Pro rata of population in moderately industrialized province. Landf&, refineries, herbicide plants, transformer facilities, oil rerefineries, scrapmetal dealers, DND sites (radar). Only a fraction of these will meet definition, particularly the urbanity. Range from service stations to former industrial sites. The majority are in urban centres although some are small centres.

50

Saskatchewan Saskatche\

Contaminated (provincial)

Sites List

36

20

Manitoba

ProTiincial resnonse ~ identified a number

50

25

Ontario

Province-wide survey of coal gas plants and industries associated with by-products Database on operating and closed landfills

90

50

1,400 open 2,400 closed

Many in semi-rur *al settings although urban growth has surrounded former (closed) landfills. Collection of file2 approaching statistically significant size. There will be overlap in the counting of these sites. Total 1,500

Large municipality _ rience expe District offices of provincial Environment Ministry has accessible Bles but no compilation known

About 3% of industrialized sites n/a

* Figure is rounded to next 100. Source: Dillon Consulting, and TECSULT, 1996.

resource. natural product

Examples resource

can be thought and refining;

of for any natural

resource

sector: forest products; Similarly, downstream petrochemical

metal mining, production

smelting

oil and gas development. and oil re-refineries the location. Urban

industries

such as steel mills, petroleum smelters, defined

refineries,

plants, secondary

grew up in settings where centres grew up around of a sites

distribution

to markets

these employment brownfield

centres and the modern

city is now often the location at these industries.

site that resulted

from past practices

Present and former transportation in many cities. Across Canada, because cities grew up around cities attracted because intermodal rail dominated transfers product occurred.

facilities define the location

of brownfield

former railway lands are at the centre of the cities the railway. Furthermore, industries distribution. rail lines in and out of the water, of in the first half of this century and the founding

a variety of manufacturing

In many cities located on navigable system. In some unique

This led to the spillage of product transportation sites.

service industries dredging purposes

that looked after the transportation creating

examples

on the Great Lakes, the need for suitable of harbours, these eventually resulted

facilities caused, in part, the for industrial

new lands that were used extensively in brownfield

In Quebec, creation

the importance

of the St. Lawrence River cannot access to raw material around through Montreal

be underestimated. to the In addition, area.

The St. Lawrence provided of major industrial Seaway, further

inexpensive complexes encouraged

which contributed

and elsewhere.

access to the centre of North America St. Lawrence

the Lachine Canal, and later the growth in the Montreal

industrial

The issues surrounding contamination discussed under

brownfield

redevelopment and political

comprise context

the causes of site are is described

and the social, economic

in which redevelopment context

must take place. In the sections first. Following Urban the heading

that follow, the factors causing brownfields and political

that, the social, economic Land Economics.

Factors Causing Brownfield Sites

The factors that have caused brownfield within the country; Within this is discussed the overriding sites appear to be uniform awareness across Canada. issues First, there has been a change in the underlying effect that has led to increased environment. has resulted important. in environmental Finally, public regulation degradation of environmental that affect the awareness, past practice sectors more than in sectors is activity, has led in this

as an awareness context

of our ecology and the political

of societal activities of environmental in some industry demands,

others. An understanding to contamination area are discussed.

of the more heavily implicated infrastructure

industrial

apart from industrial

of land that has its own set of characteristics.

Typical examples

Eco/ogica~ Awareness
A survey of experience contaminated reasons for this: Societally, the ultimate discharges acceptable. Development anyone of new products and services was seen as an end unto itself and was viewed suspiciously. was in the hands of an elite from industry effects of uncontrolled and the industrial emission practice were not understood and across Canada raised the common observation that sites most often result from past industrial practice. There are many

of the day were viewed as

standing

in the way of new production of industry

Much of the control few with a concern As awareness increasing daunting government acceptable associated remediating example. financial brownfield landowners political

and the government fortunes.

only for their personal

grew through pressure

the sixties and seventies, recognized

government

reacted to The task was

to address the protection the contaminated sites -

of the environment.

and it is fairly uniformly started to quantify soil and ground with contaminated these sites -

that it was not until the early 1980s that land issue and to set criteria for problems with site is one but on innocent costs were identified

water quality. Once the public agency identified and significant the sites acquired purchasers a stigma of which a brownfield declining question. to finance

Not only did prospective institutions redevelopment,

avoid sites with soil contamination, proposals In one province,

also avoided participating, for site clean-up.

because of the liability

are now responsible

Types of Industry
Certain industries industrial the industry It is important contamination Historically, contaminated types of industry has been limited have greater significance by definition for the brownfield are described. redevelopment question than others. In the paragraphs below, these types of industries of brownfield urban The choice of to those

sites likely to be found in a present-day has more than likely been relocated to recognize that an ongoing is not considered the manufacture

setting. In most of the cases, that causes minor distillation products, site of coal has often in

or phased out for a variety of reasons. site.

operation

to be a brownfield

of town gas by the destructive

the cores of many urban

centres across Canada. Also, the residues from of items such as building activity continue type of of

these plants were used in the manufacture the same industrial today, namely Petroleum industry brownfield ,detinition urban in the wood preserving refining browntield

area of a city. Some types of this manufacturing industry. industry and the related petro-chemical association.

is another

with a significant

According

to the definition

used above, many specific examples because exploration

of this industry

type fall outside the are carried out far from and bulk storage a

and, to a lesser extent, refining of examples surround site. development brownfield

centres. However, there are a number is now an urban

of refineries

depots which have had urban remote location

them, and what was originally

Petroleum product distribution outlets, for example, gas stations, are often included in lists of brownfield sites. It was suggested above that,the great majority these sites fall into the immaterial concerned. product operators There remains, (i.e., non-franchises awareness. of industry types that make use of solvents, These industries solvents, include: has occurred, category as far as brownfield redevelopment is however, a concern for sites where a large or chronic

of loss of

or where a site was closed and decommissioned of major oil companies)

by independent

before the advent of modern the past control of

environmental

There are a number

which is suspect by todays standards. formulators manufacturers distributors electronic of products containing

e.g., paints and adhesives

that shape and paint metal, e.g., white goods manufacturers of solvents

equipment

manufacturers

service industries

such as dry cleaners and auto body repair secondary is a defining smelters and recyclers all deal in a market in Environmental have dealt in toxic It has of waste disposal These industries

Scrap dealers, re-refiners, which cost competitiveness protection metals (lead and cadmium) long been suspected, has also occurred

feature of their industry.

has been low on their list of priorities. and hazardous and confirmed

solvents and other liquid products.

in many cases, that uncontrolled

at these sites.

Among

primary

industries,

steel mill sites were often located in an urban in which smelters force. sites. National operations, are located within

setting present

while non-ferrous urban

smelters were generally

located in remote areas. This generalization centres because of their need

is not always valid and there are examples for diverse raw materials Large government housed airports, brownfield all manner the location

areas. Steel mills are most often located in urban and a skilled labour operations can be brownfield and maintenance where products brownfield sites.

Defence sites have exists. Similarly, are potential and fuels

of activity and the potential of fuel handling are potential or industries

for contamination

sites, Ports and warehouses,

such as salt, sulphur such as pesticide

are stored or transhipped A brownfield formulation examples remediation redevelopment, from the simplest sites because probably industries

site may also arise from special situations fall outside the definition of brownfield incentive

that used PCB* in their process or products. because the cost of large enough

These

is extreme and there is no economic can be suspected

to encourage and

or because the site has been orphaned. of being a source of contamination space heating of activities, such as providing for facilities. However, Fuel oil leaks or of a brownfield

All types of industry

the broad range of industries

should not be considered PCB-use

as the root cause of brownfield minor. and asbestos can be

much of the contamination

can be considered can be managed, immaterial

spills can be cleaned up, contained redevelopment proposal.

abated. As a result, these issues become

in the bigger picture

Public Infrastructure
The growth of urban infrastructure sewer supplies. Disposal early landfills these historical Harbour in a number industrial brownfield populations to provide has been followed by increasing transportation, to the formation depression, developments, most commonly of brownfield landfills demands undertaken sites. In the past, many of for by and servicing waste management, water, and

These infrastructure of municipal

public agencies, have also contributed solid waste was disposed

waste in non-engineered of in any convenient

is an example.

gully or stream valley, and and former landfills new land forms

were located on the fringes of cities. As with other examples, sites are now surrounded sites. particularly in the Great Lakes Basin, produced dredging, by urban development

are now brownfield

of major urban locations

centres. These new lands were located close to existing There are now significant sites. In some provinces, sites in the is

areas and, as such, were heavily industrialized. in these centres. plays a role in creating away from urban revenue

Finally, demographics the movement less attractive redevelopment. of population vacated neighbourhoods.

brownfield

centres created brownfield

In this case, the site is created because the neighbourhood from redevelopment demographic is too low to stimulate pressure exists. There is a

and the potential

In other cases, the opposite

* PCB use here means actual use in the process or product, as opposed to the use of PCB in contained applications, such as electrical transformers, where the PCB waste issue has been well regulated and is now simply a question of routine proper management.

demand redevelop

for housing urban

in downtown be developed.

areas in some cities, but the resulting by the brownfield

pressure

to

core lands is being frustrated

factors that mean

these lands cannot

The Economics of Brownfield Sites

Evcduating
The potential integrity businesses

Potential

Success
redevelopment depends on the economic site location include: for of browniield strategy. The various development. factors influencing

for success of a brownfield

of the redevelopment need to be considered versus greenfield

along with the relative advantages

redevelopment labour

Factors to be considered

characteristics

transportation financing tax exemptions market land costs and availability construction availability regulations quality-of-life characteristics States have shown that the majority with greenfield of financing, availability, of highly rated siting of costs of energy and raw materials and incentives

Studies in the United factors are typically greenfield environmental to capitalize redevelopment clean-up, urban sites include

associated

sites. Some of the advantages

availability housing

land costs and land availability, and, often, other social characteristics Consequently, careful planning of a geographic is needed area, sites. Considering the brownfield the potential include:

regulations,

such as crime rates and the rating of schools. on the advantages within renewal

offered by brownfield revitalization redevelopments

a larger strategic plan for redevelopment or community brownfield of brownfield

project may improve to succeed.

for larger or more complex Some of the advantages It is apparently

sites that need to be considered

more cost effective to develop lands that already have municipal sites. close proximity. transit for workers.

services than to extend services to greenfield Brownfield

sites may offer a pool of workers within

A dense transportation

system may be in place often including of commuters.

The site may offer access to a large market

The redevelopment renewal

of large tracts of urban projects. the likelihood other spin-off

lands can be a catalyst for other urban

and development

Redevelopment Redevelopment and lot levies. Urban

will increase can produce

that taxes, often in arrears, are paid. revenues such as development charges

intensification environmental

avoids expansion

of urban

lands into greenfield

areas with

associated

effects, and avoids the costs of servicing

and other urban

sprawl effects. Populating areas. inner urban areas can bring vitality and safety to otherwise under-used

Sfrufegic
likelihood

P/tanning

for Brownfield
that undertaking investment

Redevelopmenf
planning enhances the opportunities for brownfield on the extent of sites (with clean-up Birmingham, redevelopment, for larger States: part of larger city investment options strategy is

There is some consensus of identifying redevelopment. contamination interrelated negotiated Alabama, brownfield are investigated

strategic

and attracting

In such a strategic plan, an investigation over a geographic area covering various or geologic characteristics). to prospective

is conducted old industrial Preliminary purchasers.

hydrogeologic to provide

and reviewed with authorities greater certainty

and a plan or approval approach to brownfield

is taking this type of comprehensive jurisdictions is supported areas. by brownfield clean-up

and some Ontario This approach Wherever

are also considering

strategic planning

experts in the United efforts should become allowing developers,

possible, brownfield and land banking

land assembly governments, decisions. commercial

strategies,

and other involved business districts,

parties to make more strategic strategies for neighbourhoods,

Area wide redevelopment that attracts

industrial

zones, on the other hand can produce a coordinated program, public investment and a local

the kind of environment sector, a targeted community that supports

private investors:

and assured infrastructure development.2

Public Funding
potential provision for return

ond Srownfield
on investment

Sites
sites that have more limited it is likely that only the economically unattractive States, to the reuse of

For some more highly contaminated

brownfield

from redevelopment,

of public funds will tip the balance response sites that otherwise

to make site redevelopment to be permanently to support

feasible. This is a reasonable many urban for redevelopment. Despite this increasing initiatives, brownfield it is important

that has led, in the United

might be considered for public funding

demand

browntield of

to carefully target such funding. environmental

Given the spectrum risk and high

sites (from those with insignificant

redevelopment potential), benefits urban advantageous renewal),

potential

to those with high contamination to focus public funding considers of urban appropriate return,

and low redevelopment

it is important including

where it will achieve the most both a full range of costs and redevelopment (sparking of life, employment, etc. Cities focus and decide or tourism to private

results. Such an assessment direct economic opportunities improvements to quality

spin-off

on economic

development

for their conditions technologies, is provided

on the direction or health care.

their future can and should take, whether

this is export-based

driven by growth in such areas as manufacturing, In this way, public investors underlying In support funding for brownfield their economic to funding,

information redevelopment of brownfield competitiveness the American

and municipalities factors determining of this targeted Iannone,

for redevelopment approach notes: problem

sites only if the are first addressed. specialist in brownfield

redevelopment, Solutions urban

to the brownfield

should be sought in order to spark of brownfield reuse for of They are stuck in a with planning and the creation

revitalization

on a larger scale. Many proponents with the details of site conditions. analysis of larger real estate markets, development.3

are too concerned deal mentality. neighbourhoods, strategies

The search for deals needs to be balanced

for general economic

The New
Changes redevelopment moves beyond redevelopment. of rent, utilities Similarly, influence traditional

EconomyM and Brownfield Sites

trends may influence commercial the economics of brownfield in which business home-based business the cost to in urban areas. The effects of the new economy, core areas to support the demand

in economic

the traditional Corporations and overhead in Canada (suburban

and telecommuting,

will influence

and market for brownfield seeing the advantages of shifting out of their own homes. areas). Such changes will changes in our areas. strategy a an urban former industrial

are increasingly to employees or beyond

working suburban

and the United

States, there is a move for corporations

move to the exurbs

the market for brownfield view of downtown redevelopment. economic position

sites and may spark significant in Canada sites. in establishing

core and highly urbanized,

Such trends must be closely monitored for brownfield competitive for brownfield

The key will be to find niches that can support

Public Policy and Brownfield

Some provinces, regulations, example, expected the Ontario such as Ontario, of urban provincial intensification

Redevelopment
through urban policy and intensification as is areas for growth. For

actively encourage, promotes housing

areas and rural settlement income

policy statement

well as the provision

of low and moderate

types. New development

to have respect for this policy.

Such policy can influence consequently all proponents Proponents regulations encourage

the form and shape of urban redevelopment development to brownfield has an urban in urban

development

and may field for areas. lower

brownfield

by levelling

the playing

when considering may be more attracted

versus greenfield

sites when they know the planning first approach, with associated

or policy environment planning

cost for regulatory

approval.

The Players
The Canadian pillars or markets: populaires); mutual economy investor unique industries. respective funds). financial services sector has traditionally and securities been defined as having four and caisses banks; trust and loan companies companies; (including credit unions

insurance market:

dealers (investment intermediary

brokers and in their in the or

Each of these industries they receive monies

acts as a financial

from, and then lend or invest monies their depositors, policyholders industry and casualty insurance

on behalf of the providers clients. In addition, function as risk-takers

of funds -

the property

serves a

with respect to real property

risk for the other financial

/3anlcs
By any measure distribution markets. known network The banking as Schedule assets, revenue, banking industry numbers of customers or the size of its of the financial in relates to II of banks, commonly is by far the largest and most pervasive comprises two different categories

I and Schedule

II banks as a result of their identification

Schedule I and Schedule II of the federal Bank Act. The principal statutory difference between the two classes of institutions ownership: control Schedule I banks must be publicly owned (an individual Schedule owned (no individual more than 10 percent

may own or more than 10 percent Canadian

of the voting shares of the bank), whereas Schedule may own or control

banks may be privately Six representing, Imperial Toronto-Dominion 55 Schedule Canadian subsidiaries II banks subsidiaries

of the voting shares of the bank). in declining Bank of Commerce, (subject

I banks are often referred to as The Big The Bank of Nova Scotia, The There are approximately comprising the many with the banking companies. II banks is the distribution of and closings),

order by size, The Royal Bank of Canada, Bank of Montreal, to periodic mergers Bank of Canada.

Bank and National of the various difference

foreign banks together between Schedule and product a regional

and affiliates of several of the largest insurance Schedule essentially

The main commercial networks Schedule limited and are involved

I and Schedule markets institution

size and scope of their operations. the National Bank which remains

I banks have coast-to-coast

in all geographic

(with the exception rooted in Quebec). or product II which has Schedule to, real

II banks are niche banks, participating of Hongkong national coverage).Nearly financing.

only in selected geographic Bank of Canada among

areas (with the exception institutions) Changes certain

and Shanghai experience

all banks (with rare exceptions considerable

have accumulated in the financial

in, and lend exposure framework industry

estate development

services sectors legislative and realignments,

over the past decade but also across broker has increased

have caused major rationalizations financial -by considerably industries in size -

not only within

services markets. As a result, the banking acquiring many of the largest institutions

at the direct expense of the trust and investment

in both those markets.

N~kncl Round Table on the tnvianmentcnd Ihe Economy

TY Fiwmal Sewcer Sec:or and 3~o\~rri1elc RedevelopmentBackganaw

Trust cd

Loun Companies
125 trust companies operations, in Canada. A minority, are incorporated scale, incorporated the larger are to nation-wide federally and provincially and thus the

There are approximately firms with aspirations therefore relatively governed are governed by provincial

by the federal Trust and Loan Companies Act. The majority of local or regional statutes. has suffered a major decline and rationalization problems industry throughout

small institutions

The trust industry aggressive lending

past decade, partly as a result of credit risk management to the real estate development result of changes to the federal legislative acquire trust companies. based in Ontario) of the other national banks. The independent banking measured bank. Credit unions essentially and their Quebec counterparts, functions industry: by proprietary framework

arising from overly banks to Trust (both all by the

in the 198Os, and also as a Trust and National

which have permitted independent

As a result, apart from Canada trust companies is relatively trust company

which are the two largest remaining or major regional trust industry

trust companies, with the

have been acquired

small in comparison

the largest independent

is about the same size (as

assets) as the smallest trust companies

of the Big Six banks, and the combined are less than those of the single largest the caisses populaires, characteristic perform is

assets of all the independent

the same financial

intermediary

as do trust and loan companies, of a credit union ownership and an gains an automatic is both a creditor Credit unions have a unique

except on a smaller individual that it is a financial interest return historic Although owner. In contrast, co-operative a depositor

scale. The principal -

in which a depositor the depositor

as a result of being a depositor of the deposit the depositor

in a bank or a trust company is only a creditor. Caisses populaires for this industry, majority and governed

only has a right to the have a strong strength Credit are in

root in the Prairie Provinces. there is federal legislation incorporated

Quebec where, if considered

as a whole, they rival the market share of the largest banks. the Co-operative provincially. of credit unions and caisses populaires

Associations Act, the overwhelming small, local institutions,

insurance
different financier

Companies
industry comprises two distinct industry because sub-markets which fulfil quite to its comprise is by far the more important obligations

The insurance

roles. The life and health insurance of real estate development, require long-term 150 institutions investments.

its long-term

policyholders approximately

The life and health insurers

which, similar to the trust industry, the upper-tier

are clearly stratified governed

into a small upper tier of about

10 large firms and a much larger lower tier of about firms are generally are generally and casualty and for

140 smaller firms. As in the trust industry, subject to provincial insurers. short-term Inasmuch nature, governance. of the insurance substantially significant activities,

by the federal Insurance Companies Act, while the smaller companies The second segment industry comprises

the property

as their obligations they require their insurance do not provide

to their policyholders more liquidity financing

are much more of a in their investments a mechanism

correspondingly However, through

for real estate development.

this market provides

transferring financial

risk from other financial intermediaries including -

intermediaries,

thereby increasing

the overall credit

capacity and willingness unionslcaissespopulaires development,

of those other intermediaries banks, trust companies, are the dominant redevelopment. providers

to accept risk. Those other life and health insurers, of financing for real estate

brownfield

Securities Dealers
The securities development. so indirectly development contribution industry is not a direct provider financing of capital for real estate to the real estate industry, it does for the few largest real estate leverage inherent described above. in the To the extent that it provides by arranging is relatively firms which are publicly minor industry

equity and debt placements

owned. However, even in this role, its of financing for any given

since the degree of financial means that the majority intermediaries

real estate development project will be provided

by the other financial

Business Opportunities
Opportunities
By its very nature, commercial financing all financial environmental

and Challenges
risk is directly and inextricably and its financing. Commercial associated real estate activities of with

in Financing Real Estate Development

real estate, its development has been a significant institutions

and steadily growing and density

aspect of the lending

since the Second World War, driven 6y the tide of urbanization of land use which have been part of activities, financial institutions including which real estate projects, their lending proceed. financing may be provided either directly, through through real estate loans, or indirectly, and investing

and the changes in both the nature that phenomenon. brownfield commercial collateral Through have a direct and influential redevelopment, property mortgages mortgages: Commercial

role in determining

and commercial

Commercial generating income standard generated attention financing, obtainable

mortgage loans are directed commercial properties.

toward long-term

financing

of cashflow(that is, other to

This is stand alone financing are generally concern adequate not considered) debt servicing, traditionally is the sufficiency

or assets of the borrower guidelines. Of primary by the property usually provided companies.

made according with secondary has been

of rental cashflow value. This kind of

to provide

to equity in the property

based on its appraised

to real estate operators,

from a variety of sources: chartered

banks, trust and loan companies,

and insurance Commercial tinancings.

real estate loans are generally This category of financing to real estate developers, of completed

intended builders,

for stand alone, equity-based short- to medium-term companies build-out pending and and construction development, properties

usually provides

accommodation short-term financing.

related real estate operators warehousing The traditional

for the accumulation, commercial

permanent

source has been more or less limited

to the chartered

banks, since these development-related lending equipped Collateral provided relationship to provide. involving

financings

generally

require

a broader are not

other financial

services which non-banks

mortgage loans are part of general-purpose mainly by banks to commercial assets including borrowers, real property. by GlobalRisk

financing

arrangements

secured by charges against all

the borrowers

Market research undertaken indicating numbers financing the distribution of transactions) activities among

Management

Corporation

in 1994 by

of commercial

real estate financing institutions does not include

risk (as measured the commercial

the major financial

is shown in Exhibit real estate

3.1. It should be noted that this distribution of the venture which comprise extensive this sector are not regulated, essentially in the financial

capital sector, since the private sources of capital do not report their activities impossible to quantify venture without services sector strongly to any further

central agency and are therefore research. Experience

suggests, transactions is size of real -

however, that the relative lack of liquidity would limit their overall involvement approximately considered their industry estate financing, 2 percent within market to be representative

in the Canadian

capital market

to no more than several thousand the overall distribution

share. Accordingly, of the marketplace.

In line with the dominant

the financial

services sector, the banks portion credit risk associated segments. of commercial

of commercial

and of the environmental the huge volume

with it, is nearly twice which

that of each of the other three affected market Notwithstanding occur each year, it is important function brownfield marketplace: financial manage of the demand sites. Lending to remember

real estate financings

that the commercial for financing, provide financing of commercial

real estate market is

driven not by the supply of but by the demand for redevelopment institutions cannot requests

the latter being a direct for properties that no

real estate including reactive in the evaluate the to be is considered

one wants to redevelop.

As a result, the role of lenders is essentially for financing; and, if a proposed redevelopment

to receive borrowers repository

to objectively

merits of each situation; the on-going to redevelop with the site.

a safe and sound institutions to borrow involved

of depositors

and shareholders

funds, to prudently viable entity wants

credit risk arising from the loan. At the most basic level, lending not to properties. Unless a financially a brownfield site, there is no business reason for a lender to be

lend to borrowers,

Distribution of Commercicd Environmental Risk

Red

Estate Financing

and

Source: GlobalRisk

Management,

1994.

The Challenges Fragmented Financial Services legislative Framework

The legislative and evaluating institutions. and regulatory concerning framework is the cornerstone both for determining reflects of financial this framework which each of financial their has its the behaviour of the financial though, services sector. This framework role and activities perspective,

the societal consensus not only establishes, financial institution The legislative institutions in nature, business institutions institutions provides influences dictating in a certain should

the appropriate

More importantly

from a commercial

but also defines the limits and value of the franchise commercially exploits. and regulatory that financial manner, or should framework institutions not undertake can determine the behaviour As a direct determinant,

either directly or indirectly.

it may be prescriptive that financial of financial

shall or shall not conduct suggesting certain activities. in the marketplace, adaptation and regulatory

or it may be non-prescriptive, direct and explicit guidance and facilitates the legislative

Each approach

merits. The former provides and therefore for increased

to the managers to changing framework

reduces uncertainty

whereas the latter circumstances. .heavily with respect the behaviour

flexibility

As an indirect

determinant,

the expectations of financial

of shareholders,

depositors

and policyholders role in guiding

to the safety of their invested of consumers financial services sector -

funds and plays a significant

services. To the extent that competitive more so in the insurance markets

forces exist in our

and less so in the banking

and trust industries approaches

those consumption financial and managing

patterns institutions,

in turn determine including

the relative real with

success or failure of individual to accepting estate financing. The Canadian legislative markets

their respective

environmental framework

credit risk in commercial is relatively fragmented

and regulatory within

respect to the various

the financial

services sector. For example, banking hence there is one and there is On the other hand, trust and which seeks to regulate these regulated. in makes -

is the only market which is an exclusively insurance therefore markets. Securities mutual companies legislation Similarly, may be incorporated credit unions

federal responsibility,

federal statute, the Bank Act, which governs this market. at both levels and across all provinces and caisses populaires

either federally or provincially, are provincially legislation

dealers (investment separately.

brokers and the relatively young but rapidly growing and regulations framework statutory

fund industry) to generalize

are also the subject of securities about the Canadian financial

each province, it difficult purposes

This lack of a cohesive, consistent

services sector, and for analytical market banking

it is often instructive

to focus on the largest individual

as a benchmark.

Lack of Financial Regulatory Guidance on Environmental Risk

All of the applicable Co-operative measures federal laws, the Bank Act, Trust and Loan Companies Act, Companies institution Act, stipulate is required similar to establish of a financial Credit Associations Act and Insurance institution is required

that the Board of Directors and procedures

and the financial policies, standards

to adhere to, viz: investment and prudent and loans to avoid undue of prudence,

and lending

that a reasonable

person would apply risk of loss. in the

in respect of a portfolio However, beyond framework financial reference is noticeably to environmental

of investments

this generic standard

the federal statutory risk management is there any for depositCDIC is the

silent with respect to environmental nowhere credit risk or its management. guidance Deposit

services sector. For example,

in any of these statutes

The next level of statutory taking institutions, federal insurer companies. Corporation standards the Canada for approximately

derives from the federal insurer Insurance Corporation (CDIC).

130 federally incorporated legislation, is to be instrumental practices its member

banks, trust and loan in the promotion institutions institutions in those with it out of of sound of and

Under its own governing of sound business

the Canada Deposit Insurance for its member to maintain

Act, one of CDICs objectives and financial institutions a members established

CDIC is empowered

to make by-laws governing

matters. All CDIC member CDIC. CDIC may terminate business, business if, in the opinion and financial

are required

deposit insurance

deposit insurance, under

effectively putting

of CDIC, a member

does not follow the standards CDICs by-laws.

practice

In August set of standards Standards). environmental applicable

1993, CDIC published of sound business

eight by-laws which established practices activities also provide little guidance of its member

a comprehensive (the CDIC institutions. that may be with respect to

and financial in the lending

for its members

However, the CDIC Standards risk management

The Credit Risk Management to managing

Standard contains

only one generic statement

environmental

credit risk in the context

of real estate, such as

brownfield resulting borrowers property

redevelopment: from .. . a relaxation risks. Similarly, development as lenders

member

institutions

[may be exposed to] undue including comments that:

risks of in

in credit quality standards, . .. may pose a significant is that all appraisal respecting

the assumption

the Real Estate Appraisals Standard

projects

risk to CDIC members approaches must provide institution and financial used use.

their capacity environmental [should]

or investors, but its only guidance circumstances

with respect to potential

risk management

valuation

reflect accurately on whether

the land or property examiners business

The CDIC Act requires their opinion conducted established in accordance

that federal regulatory or not the operations

CDIC with practices

of a member

are being is the Office of person in their is

with the standards Institutions

of sound (OSFI).

under the CDIC by-laws. The applicable of Financial 1993, OSFI published a guideline

federal regulator

the Superintendent In January approach regulatory companies, generically correspond institutions limits unions enunciated

incorporating institutions -

the prudent

in each of the federal Acts noted above and applicable of all federal financial companies and co-operatives. However, the guideline to environmental

examinations insurance

banks, trust and loan credit risk, to

worded, without

any specific reference

to the CDIC Credit Risk Management should set limits on investments on exposures generally regulators

Standard and the only guidance is that financial to their quality regions. credit companies, and

which would apply to environmental should be established and caisses populaires

credit risk management to industries

and loans according insurance

and geographic

Provincial counterparts.

of trust and loan companies,

follow the path established statutory

by their federal provide to the throughout for due or little

In general, therefore, effective guidance managers diligence. property undue all the applicable of financial

the federal and provincial The prudent establishes

frameworks espoused

on the issue of environmental institutions. federal legislation

credit risk management person approach a relatively high threshold

That threshold development

is heightened

by references minor

in the CDIC Standards that institutions commentary to significant on risk identification

credits may expose financial provide

risk. The OSFI Guidelines

with respect to establishing quality or risk rating systems, but there is effectively no guidance with respect to environmental credit risk mitigation or management. By heightening institution management. sensitivity managers to, but not providing to act from a position mitigating mechanisms for, environmental causes financial credit risk, the negative bias of the legislative and regulatory of risk aversion framework

rather than risk

lender liability and legislative Inconsistencies

Lender liability covering machinery arises when a lending site (for example, institution a mortgage realizes upon loan security on land or a security potentially interest in in involved a contaminated or inventory

stored on the site), thereby becoming of the site or the control of the business

the chain of ownership liability

which operates

on the

site. As an earlier NRTEE study in this area concluded, is too vague, too varied and not comprehensive.4

the law on environmental

This problem Environmental United American regulations approach financial decision control

was recognized

from the earliest days of the Comprehensive and Liability Act (CERCLA) legislation CERCLA to provide some protection business subject to environmental but who were Although this exemptive in the American by redefining to have Protection a in the for

Response, Compensation evolved under institutions

States. Exemptions financial

which were potentially purposes. a working

in the everyday conduct

of their lending/investment

not responsible

parties for environmental

was far from perfect, it provided in 1990, which significantly of a contaminated

level of comfort

services sector until the United States of America v. Fleet Factors Corporation broadened business. the net of responsibility might be considered exemption for The U.S. Environmental under which a financial borrowers attempted institution

the circumstances

Agency has subsequently lenders/investors; considerable In Canada in brownfield lender/investor investment following

to codify a regulatory

however, it has suffered legal challenges in the American there have been initiatives for lenders/investors, The approach redevelopments. at the provincial has generally

also and there remains level to create limited

level of uncertainty

marketplace. their participation a

degrees of protection

which would encourage

been to provide

with the opportunity conducted thereon

to attempt

to recover value from loan and does not take control first involvement. of the property for any contamination In British Columbia Bill 26 and Sites effort between the Standard

security

as long as the lender/investor

or of the business

and is not responsible in new legislation,

the time of the lenders or investors

and Alberta, the issue was addressed Albertas Environmental Provision). regulatory presently In Ontario, authorities has legislation

British Columbias a co-operative

Protection and Enhancement and financial institutions, Investigations. -

Act (Contaminated

the matter was dealt with through

from which emerged

Agreement Respecting Environmental and Insolvency Act, the Companies which is perceived environmental Traditionally, institutions entangled operation in the financial the Canadian credit risk.

However, the federal government

before Parliament

Bill C-5: An Act to Amend the Bankruptcy increasing provided or financial

Creditors Agreement Act and the Income Tax Act services sector as substantially to environmental (as a mortgagee)

approach

liability

with a due diligence in the web of property of a defaulting principal

defence under the common ownership business

law if they became or in control the recovery of

borrowers of its loan

(while trying to maximize institution

value from loan security). of the complete

Accordingly,

while a financial

if the

might suffer the loss was so severe that it from regulatory with a

degree of contamination defence to insulate regulatory

the value of the site, and thus the loan security, was reduced services sector always relied on the due diligence claims to further remediation property. subsidize the cost of remediation. provides environmental Bill C-5 now essentially budget Section

to zero, the financial

authorities

equal to the post-remediation

value of a bankrupt

debtors

15(7) of Bill C-5 states:

Any claim against the debtor in a bankruptcy, costs of remedying any environmental affecting real property of the debtor

proposal

or receivership

for

condition or environmental

damage

is secured by a charge on the real property condition or

and on any other real property of the debtor that is contiguous thereto and that is related to the activity that caused the environmental environmental If the proposed automatic automatic the activity diminished the bankrupt inventory devaluation devaluation any environmental damage . .. [emphasis added]. law, a lender/investor will face the

policy in Bill C-5 becomes condition . .. affecting

of its loan security in an amount real property

equal to the cost of remedying of the debtor plus the property portion (such as Section 15(8) of for or proposal damage the regulatory related to of its

of security which it may hold on contiguous condition. ability to recoup a meaningful as an unsecured creditor institutions

causing the environmental a financial security or accounts value by claiming receivable)

In addition,

against other assets of

debtor that are not related to the contaminated may also be significantly condition provides

property impaired.

Bill C-5 further affecting authority creditors, provincial, establishes provisions added).

that a claim against a debtor in a bankruptcy any environmental or environmental

the costs of remedying real property

of the debtor shall be a provable

claim. This means that, to the debtor which ranks

extent that the cost of remediation equally with, and therefore including financial

exceeds the value of the real property,

retains a claim against the other assets of the bankrupt will dilute, the recoverable institutions. takes priority -

value of the claims of other federal and

This new federal legislation environmental

over all other legislation Section regulatory authority

and financial

across the country.

15(T) of BiZl C-5 any other

that the claim of the environmental of this Act or anything

shall rank above law (emphasis after second

any other cluirn, right or charge against the property,

notwithstanding

in any other federal or provincial

If Bill C-5 becomes reading, legislative because and regulatory of its primacy in Canada

law in the form in which it proceeded what degree of protection, might continue different measures to provide,

to hearings

it will render unclear

if any, the existing provincial and what may be done approaches. with some the various in the mediumamongst However,

to co-ordinate modifications, jurisdictions to long-term.

these substantially has the potential

federal and provincial the federal legislation, to harmonization

over other legislation, to contribute and to encourage

greater clarity and certainty

Difficulty in Quantifying Environmental Credit Risk

One of the greatest difficulties all the constituencies to date in formulating a coherent discussion among which have some interest in brownfield redevelopment including has been focus. The health and action

that the sectors tend to discuss the issue in terms familiar public sector speaks to issues of general concern

to their particular

to the population

risk, natural resource impacts, restored tax revenues, creation of social programs environmental justice. The environmental industry talks of risk-based corrective methodologies, pathways and hazardous constituents. The legal community

seeks to

define the brownfield date, the financial profitability to quantify

issue in terms of legal precedents As a result, lending terms.

and legislative

liability

relief. To

services sectors focus has remained

on the safety of capital and require that they be able bound by the criterion defined

of the transaction.

institutions

any and all risk in monetary of the loan cannot

Loans secured solely by commercial that the amount in legislation or regulatory environmental inadequately essentially development as lenders appropriately this Standard necessary

real estate are generally percentage threshold

exceed a stipulated

of the appraised is specifically services legislative only

value of the real estate. In some cases, this loan-to-value or regulations. framework is weak in providing guidance

However, in many respects the financial

on how to quantify Standard provides or of collateral,

credit risk. The CDIC Credit Risk Management that most credit problems principles, person of the prudent cautions assessing basic lending including approach.

the general comment a reiteration projects or investors.

stem from disregarding .. . the adequacy

The Real Estate Appraisals [and] property in their capacity However, of such

Standard specifically

that undeveloped

land or property

. .. may pose a significant in any appraisal any further appraisal

risk to CDIC members

For this reason, the impact direction

of such risk must be reflected, and such transactions. that the impact or guidance with respect to the

disclosed,

report supporting for ensuring disclosed. industry, quantify of Canada,

fails to provide

or desirable

methodologies

risk is adequately

reflected and appropriately practitioners The Appraisal association environmental the difficulties to identify, Institute inherent

The issue then devolves to the appraisal of their professional environmental appraisal recognized formally embodies valuation. recognized all relevant

specifically

resting on the ability measures of in arriving at an has

and integrate the dominant

risk with all the other factors which are involved professional of commercial

and most widely in Canada, which

real estate appraisers an appraisal

in constructing

factors in their Uniform Standards

of Professional

Appraisal Practice. Guide Note 5, The Consideration Appraisal Process, states: The consideration governmental presence of environmental substances

of Hazardous Substances in the

forces, along with social, economic to the appraisal on a property of real estate .. . The can significantly

and

forces is fundamental

of hazardous

impact value. cost

In some cases the property

may have a negative

value as the clean-up

could be greater than the property The typical appraiser detect the presence such material. typically

value after clean-up. or experience required to of

does not have the knowledge of hazardous substances

or to measure

the quantities

The appraiser,

like the buyers and sellers in the open market, that require special expertise. real estate appraisers who of

relies on the advice of others in matters

The message is clear: there are few qualified also hold professional the technical nature This situation technical credentials. of environmental is exacerbated states: conditions

commercial is limited.

As a result, the level of understanding methodologies depreciation.

by the still-evolving

for determining In this regard,

the value of a property Guide Note 5 further

which is subject to environmental

The loss of value attributable using the same methods cannot clean-up, impacted deducting possibility

to hazardous

substances

is generally

measurable depreciation

and techniques

that are used to measure the appropriate

from other causes. However, in some cases even environmental agree on the level of clean-up or the cost. The appraiser by environmental the apparent required, is cautioned

professionals method simply by of that

that the value of a property

hazards may not be measurable

costs or losses from the total value, as if clean. The should be considered. issue, the appraisal that the impact industry is and will continue risk is credit and, as a result, issues also to

of other changes affecting value, such as a change in highest and

best use or even the marketability, As is typical with any emerging grapple with methodologies adequately the ability of the financial risk, will remain remain unresolved. reflected and appropriately

for ensuring

of environmental standards

disclosed. Appraisal

services sector to identify

and quantify technical

environmental

in flux as long as many substantive

remediation

Hisforical Experience in Real Esfafe Financing

The dismal experience development development liquidity, unkind loan portfolio aggressively 1993 period induced insurance the dubious indebted industry, financial capacity of every surviving industry. of all financial institution institutions in financing real estate and over the past decade has detrimentally to provide The crash of commercial affected the willingness financing to the real estate in both value and devastated the recession,

real estate markets

which began in 1990 concurrent quality of all segments to finance to the banking,

with the economic industries

of the financial

services sector but was especially which had competed in the 1980s. loan losses in the 199 1by real estate-

trust and life insurance

the largest real estate developments unprecedented Trust -

Every one of the Big Six banks reported trust companies orchestrated Royal Trust and Central

arising directly from real estate lending.

The capital bases of two major were so damaged

loan losses that those companies by CDIC to protect companies distinction Les Coop&ants

were taken over by banks in rescues Similar fates befell leading life Life the latter having in North America. and Confederation

their depositors.

of being the largest failure of a life insurer as it subsidized

And the impact

was equally severe at governmental pilloried

levels: CDIC became seriously the collapse of the trust police the in the early

for the first time in its history and OSFI was publicly system.

for having failed to adequately financing

As a result, real estate development 1990s. One Big Six bank calculated financing in the previous

was effectively terminated

in 1992 that its real estate financing purposes

losses were so

large that they exceeded all of the profit which that bank had made in its real estate decade, and that for practical Commercial for business units. the bank might as well units in all into and were turned never have engaged in real estate financing. of the Big Six banks lost their mandate de facto loan workout and collection real estate lending

development

As the financial non-productive to managing entrenched

institutions

suffered not only massive monetary frustrating diversion of financial of valuable institutions real estate financing It has been codified exposures.

losses but also the resources a deeply acquired

and immensely

management

high risk real estate loan portfolios, stigma among institution redevelopment the managers to overcome.

and their regulators. at almost every designed to risk. with respect in its cycles

That stigma will be very difficult major financial control to brownfield commercial experience spanning markets more stringently

in new or revised lending real estate financing because of the perceived

policies specifically It is exacerbated additional

environmental as a result of its economic

The last time that the financial real estate financing

services sector was equally traumatized was in the mid-1970s lending conditions Trusts. It took two complete to return

activities

with Real Estate Investment more than a decade for normal

to real estate

in the 1980s.

The Red
to a relatively

Drivers
philosophies industries.

of Financial
and practices

Institution Munagemenf
at the major financial institutions respond across the banking,

Management trust and insurance

small group of motivating

forces which are common

Compliance with the legislative/Regulatory Framework

Depending on the nature of the financial institution, and/or it may be governed by as value of for the The many as three different legislative/regulatory the franchise termination pieces of legislation regulatory policies. Since this

framework

not only establishes commercially is paramount

the scope and economic adherence institution to the

which the institution of the franchise tendency and/or framework

exploits, but also provides for financial

in the event of non-compliance, to operate in accordance of risk aversion

legislative/regulatory result is a natural of the legislation managers

managers.

with conservative

interpretations institution

regulations

which, as noted above, cause financial

to operate

from a position

rather than risk management.

Profitability and Return to Shareholders/Policyholders

The legislative/regulatory their respective liabilities. long-term institution commonly normal To attract additional viability framework requires that financial institutions maintain capital bases at certain of the institution, specified levels in relation operations to their assets and/or the growth and so that the or

capital that may be needed to support must be profitable rate of return

is capable of paying a competitive associated with brownfield managers

to its shareholders

policyholders.

To the extent that the risk factors, both economic redevelopment (and therefore conducive

and environmental, to be greater than

are perceived

real estate development institution

to greater loan/investment

losses), financial redevelopment.

will be less likely to engage in brownfield

Sensitivity to Societal Expectationswith Respectto the Safety of Invested Funds

Major financial higher standard overwhelming to its depositors, constantly to minimize, brownfield institutions have been allocated a special role and are held to a means that the but are managers because they are the repository majority of funds loaned of the life savings of most people. belong not to the institution institution again causing a natural

The high degree of financial shareholders

leverage in banks and trust companies or invested and policyholders. responsibility, Financial

reminded

of this fiduciary

tendency

rather than manage, redevelopment

risk. Since environmental

issues would cause

to be considered be pursued.

a high risk form of real estate financing,

they would not normally

lack of TechnicalExpertise in and Appreciation of Environmental Issues

Among administered house technical the majority (four) of the Big Six banks, environmental basis by credit or in-house environmental financing advisors, for mining although issues are Only two of they all have into be a profit, not a on a part-time specialists legal personnel.

the Big Six banks have in-house

which is considered

cost, centre. One Big Six bank declined a specific recommendation of an internal environmental task force to establish a full-time environmental affairs executive on the grounds that another cost centre was not an appropriate allocation of resources.

Self-Interest of Financial Institution Managers

Compensation volume environmental or investment advancement. and career advancement of new business. into the performance programs are typically based on the or profitability matters None of the Big Six banks incorporate and compensation by environmental review process. Loan problems such as often and career

losses, which are exacerbated redevelopments,

exist in brownfield

are detrimental

factors in compensation

The Need for Incentives

Real estate development, regardless of the brownfield issues and whether economic determinant the of the players are in the private or public sector, must make sound be viable over the long term. Therefore, success or failure of a brownfield and the real estate market then brownfield demand estate markets, be less attractive brownfield attractive selection ultimately needs. The most attractive inexpensive to location, remediation community brownfield sites may be little different requiring from normal straightforward, advantages related It is force availability. sites, in that they may suffer relatively light contamination while having the benefit safety, municipal reflecting is generally redevelopments then brownfield in particular. the most fundamental is the economic conditions conditions If economic redevelopment sense if it is to

climate in general, in general are weak, are robust, non-brownfield so that real

will lag. If economic

strong and creates shortages economic

in established

projects will increase in number. climate, some brownfield location, sites will inevitably surrounding land

However, even in a positive use or contamination,

than others for reasons such as geographic and availability of municipal as part of a spectrum Developers or explicitly)

services. Each individual of sites, ranging will undertake from more a natural

site should be considered to less attractive process, ranking choosing (implicitly

for redevelopment.

the features offered by each site and

from this spectrum

the site which is best suited to their particular

of other external

services, and labour

likely that such sites would be acquired non-brownfield sufficient identify properties, cost of remediation information and some premium is available

for prices close to the market norm a combination of the discount to permit incentive for other positive domain

for similar

for the projected to readily

features of the site. If developers (that is, non-market requiring advantages, complex will by

in the public

such sites, they will require little if any external sites involving

or public sector) for their redevelopment. However, those brownfield and expensive remediation, their very nature extremes heavy contamination, of other external redevelopment. norm. and lacking the benefit for potential

be the least attractive

Such sites, if they Between the two degrees of and of their process impact advantages

can be sold at all, will sell at deep discounts of this spectrum contamination disadvantages. environmental and projected leading many factors. Strategies to encourage investment contamination characterized and differing combinations

to the market

will exist a range of sites with increasing of externally-derived

Their market values will reflect the combined and non-environmental cost of remediation. of a particular The prospective developers

economic

features, not just their level of contamination decision-making site will similarly in brownfield to determine take into account address the a site

to the selection

sites must therefore

wide variety of factors which combine which suffers only modest situated in a neighbourhood transportation, sector incentives

market value. For example,

with a low remediation more attractive

cost, but which is public do a

by low levels of public safety and poor by conventional These monetary initatives Instead,

will not be made significantly

such as grants, loans or tax incentives.

not address the characteristics

of the site which cause it to be unattractive.

municipal appropriate remediation

program response.

incorporating Conversely,

improved

policing

and transportation

would be the with high would

a site which is heavily contaminated economic external value because

cost may have a negative

of its environmental effect of the

characteristics require contamination, Strategies nature,

but may also have positive incentive

features. Such a property

a public sector monetary

to offset the monetary responses

while other kinds of municipal for encouraging investment

would not greatly improve sites may be organized monetary loans and/or reforms, into in loan state

the sites attractiveness. in brownfield two basic categories: guarantees, at reducing voluntary direct and indirect. Direct strategies are generally and may include

aim at improving

investors rate of return,

fees, tax incentives clean-up programs,

and equity participation financial and liability investors

schemes. Indirect strategies aim regulatory assurances, employed and strategic planning in the United States to in the increased to In for

some of the risks for investors services that help potential in Canada.

and may include

or information

to better assess risks. not only the tenbegan to

It is important fold larger economy historical flourish pattern a century

to note that the range of strategies and population before its Canadian of urban in the United counterpart,

date exceeds those employed

The reasons for this include American

States, but also differences industry which has substantially

of development

in the two countries. old industrial

the inventory addition, industrial

of potentially

contaminated, provides

sites. This has contributed sites in urban America. in the United in capital pools available

the much larger,problem revitalization. markets

decay and brownfield for greater liquidity

the larger economy

Finally, the strength for redevelopment are explored the United further strategies

of the economy in the following

States and the

the potential

do not mirror

those in Canada. chapter which describes in Canada redevelopment. and other

These differences jurisdictions, Examples primarily

range of direct and indirect of the application

that have been undertaken browntield

States, to encourage

of the strategy are included.

Direct Monetary
hdemnities
Indemnities another although are a means

Incentives
of transferring risk through contractual arrangements in

which one party undertakes the nature

to accept responsibilities assumed between

which would normally

accrue to

party for specified future events or risks. In effect, they are a form of guarantee, of the obligations risk, sometimes jurisdictions by the indemnifier Indemnities are usually defined are an effective amounts.

in terms of events rather than in monetary means of transferring and in other instances Some American redevelopment to encourage

parties in private sector transactions to encourage the purchase and or arising

from the private sector to the public sector. have used indemnities the risk attached to the site. For example, liabilities in order

of a site by reducing the purchase a purchaser

and redevelopment

of a brownfield

site, a municipality

state may indemnify from the application on the site.

of the site against future remediation future legislation to pre-existing

of more stringent

contamination

In the private sector, vendors the costs of additional remediation indemnities conducted that has already been remediated, from developers

of brownfield

sites may indemnify

purchasers

against

future remediation by the vendor.

for a pre-existing

environmental

condition require

i.e., against failure or shortcomings Similarly, lending of its involvement institutions expenses

in the original regularly

against future remediation the acceptability

or other liability to a financial if and the will be

which may accrue to the lender because redevelopment. institution the developers unable In the latter instance, financial strength will depend

in the brownfield

of the indemnity

on the non-brownfield impaired

assets or cashflow of the developer: redevelopment

is tied up in the brownfield

value of the site is unexpectedly to honour the indemnity.

in the future, then the developer

Escrow Accounts
Escrow is an American as in a legal trust account. purchase of a brownfield legal term for which the Canadian counterpart is trust, would the It or Escrow accounts may come into play in the sale and of the purchase of the purchase as a condition proceeds between of the property. Such an arrangement

site, at which time a portion

be held in escrow, to be used for remediation could be negotiated vendor and purchaser the transfer condition if remediation of ownership.

as part of the terms and conditions work is incomplete authority by a state or municipal

at the time of the purchase. of approving

might also be imposed registering Alternatively, environmental remedial operates immediate to negotiate program remediation program clean-up

escrow arrangements of a brownfield the present is beyond -

may be used in situations site dictates remediation, financial capabilities regulatory

in which the but the cost of a which or authority is to insist on

of the business

on the site. The choice facing the applicable in which case the business with the business of time, perhaps by placing an agreement obligation

will likely go into bankruptcy a phased remediation

to undertake

over a period

several years. The business

would secure its including

a specified portion employment

of its profits or cashflow in to this approach, between for all levels of the Ontario area of Triangle

escrow to fund the remediation. the maintenance government. Ministry Toronto, An arrangement

There are several benefits of this type was recently

of viable business,

and tax revenues reported in the Junction

of Environment an old industrial

and Energy and a business and rail transportation

corridor

in the west end of the city.

insurance Private Sector

Notwithstanding insurers their significant environmental during losses under old general liability policies and their resultant have re-entered kinds of environmental absence from the marketplace for many years, certain

the marketplace coverages.

the past several years with various

Private sector insurance Property Third-party transfer liability

products

in the United

States include:

insurance. or property damage occurring

liability

coverage for bodily injury

on- or off-site. Clean-up of clean-up Landowner contractors hazardous cost cap or stop loss insurance beyond insurance substances. of insurance serve as risk-transfer by shifting mechanisms to reduce or a pre-agreed cap. acts or omissions of remediation and disposal of which provides insurance for costs

coverage for on-site

and consultants

and for off-site transportation

All of these varieties

remove risk from lending redevelopment The clean-up attached transfer term financial

institutions

it to insurers. transfer insurance.

The two most significant cap insurance

types of coverage with respect to brownfield cap coverage and the property removes or at least significantly of a brownfield unidentified and regulatory insurance and thereby considerably financial decreases the uncertainty reduces the level of shortsite. The property exist contamination requirements or to the to preThird-party

are the clean-up

to the cost of remediation coverage mitigates

risk arising from the acquisition the longer-term of previously legislative Property

risk which would otherwise

with respect to the future discovery future application existing liability concerns of more stringent conditions. environmental

transfer

has, in some instances,

been accepted by lenders

as a substitute

for an indemnity restrictive

from a developer.

coverage has not gained wide use in the American over its price and sometimes environmental insurance between insurance has traditionally property

market due to reported been less readily available. with two complicated companies have transfer and third-party of the two in the United than in

terms of coverage. an effort in conjunction

In Canada,

However, in 1992, the five largest banks initiated major international liability countries. introduced marketplace, the United by the differences brokers to import coverages from the United

States. That exercise was considerably legal liability structures insurance

the environmental

However, in the past year, two major international a range of coverages in Canada insurance although States. the breadth is now available

similar to those available

States. As a result, environmental

in the Canadian

and availability

of coverage is more limited

Public Sector
In addition initiated provide to private sector environmental insurance insurance, some American states have similar proper state-administered insurance, indicates pools. Although such programs ostensibly

the fact that private sector insurers that there are not enough and the pricing method

are not willing to provide pools of sites to provide sound. viable, these

coverage generally risk sharing government initiatives

and diversification, insurance

is not actuarially be commercially

Because this public-

which would not normally

are really only a different for risk-transfer,

of delivering

more conventional, or indemnities.

sector mechanisms

such as guarantees

Shared
project -

Financing
involves cooperative among the landowner funding for a brownfield redevelopment agencies. typically and one or more governmental

Shared financing For example:

The City of Wyandotte, Michigan, and BASF Corporation, project was a three-way Through monitoring partnership among business, remediation and $2 million Resources through the 1980s an agreement and installation for its redevelopment hydrogeology of Natural Department

a chemical

producer:

This

local and state governments. systems on BASFs 84-acre park and golf course. BASF of the redevelopment $2 million Tax Increment cost, in state grants Financing.

was reached with the state to allow clean-up, into a waterfront

of on-going

site to provide the Michigan

paid for all preliminary

provided

and the City raised the remaining

$4.5 million

Golf course fees will allow the project, including Meadville, Pennsylvania: government-funded Meadville undertook

the park, to be self-supporting. a cooperative plant. the money owner-funded and

program

for a manufacturing

Minnesota: When $100,000 was awarded from two private foundations was used to establish organization Examples and environmental a grant fund for non-profit consultants organizations. receives a grant, the money of successful is then matched this program

Once an

by a local corporation to work pro bono. exist in the United States.

and lawyers are arranged

small projects under

Federal

and State Funding

programs described exist in the United in the examples States at the federal and state Brownfields Action Agenda include and nonSeveral brownfield redevelopment. The Superfund and Tennessee, be unable

A variety of funding level to support Michigan, responsible remediation. have acquired is a key federal initiative Minnesota,

below. State examples

New Jersey, Oregon

which have trust funds from remediation.

which they draw to share the costs of remedial parties who would otherwise They include abandoned Missouri, former states offer grants to local governments viable responsible grants to innocent parties, Oregon.

actions with both responsible to provide

for site investigation New Jersey, Pennsylvania,

and grants, or loans for and, at sites without that

Missouri industrial

limits its grants to local governments or commercial clean-up New Jersey, Oregon, actions. and Pennsylvania

sites. New Jersey also offers

private parties. Missouri,

extend loans or loan guarantees For example: Superfund Superfund on targeted potential) communities Bridgeport,

to help finance

Brownfields Action Agenda: This program sites by providing sites (those with high poverty have been identified. Connecticut; Funding

attempts

to destigmatize or industrial Fifty Ohio;

the

$200,000 grants for pilot or demonstration and high commercial to become commenced involved.

projects

to act as a catalyst for other interests

for three projects in 1993 Cleveland,

and will conclude

by the end of 1996. Projects have included and Richmond, Virginia.

Province Montreal approach treatment,

ofQuebec

and City of Montreal: The Quebec government sites. A risk-analysis are encouraged.

and the City of a new and soil of to

created a pilot project with a value of $6 million to dealing with contaminated rather than confinement, funding orphan program

to encourage perspective

In addition,

a $35 million

federal-provincial large contaminated

was created to deal with the rehabilitation the City of Montreal sites. of state-funded or political environmental Districts.

sites. This has encouraged brownfield number

actively acquire and redevelop In the United are financed Increment formula period

States, a considerable District

projects A Tax-

by way of the establishment Financing property

of Tax-Increment

Financing

is a specified geographic taxes is increased tax revenues arrangements

area in which the amount for a specified to fund predefined

for calculating generally

by a specified Canadian

of time to raise additional use similar financing in brownfield

which are dedicated nature.

public projects, sometimes participation but the practice For example:

of a developmental

municipalities remediation or

to fund public works, such as sewers, environmental

does not generally

involve financing

redevelopment.

Akron, Ohio: Akron raised $4.5 million to help pay environmental Minnesota: increment Minnesota financing clean-up

through

a Tax-Increment

Financing

District

costs at a redevelopment financing of a railyard.

project. of remedial actions. in tax-

is a leader in tax-increment Development to help fund the clean-up

The Minnesota

Community

Association

used $2.5 million

Tax kentives Federal

United specifically States President targeted investors Clinton has announced a proposed tax incentive plan to existing and future brownfield pilot sites. Through the proposed

plan, brownfield

will be able to deduct their clean-up in the short term.j

expenses immediately

and thereby reduce costs significantly

State
Some states have initiated redevelopment. For example: Ohio has authorized state and local exemptions state and local income tax credit. from property taxes. tax incentive programs to encourage brownfield

Missouri has authorized Delaware provides

tax credits and exemptions.

for a state income

Municipal Taxes and levies

Municipalities development may encourage redevelopment properties. by reducing municipal taxes or charges for brownfield

For example: The City of Windsor, Ontario: properties program for some properties In order to encourage to cancel that portion clean-up reuse of abandoned industrial

that have realty taxes in arrears, the City has adopted exceeding

a tax incentive value of

of the realty tax arrears that the appraised

results in a total cost of environmental the property.

Indirect Incentives
Many American voluntary remediation for owners, developers implemented range of strategies up standards, states have put into place new provisions of contaminated and the financial properties by reducing designed to encourage have I3 and the risk and uncertainty most provinces sites. The flexible cleanagreements, not to in Appendix

services sector. In Canada, the clean-up and state as described

some strategies adopted

to encourage document.

of contaminated includes

varies by province

in the 1996 CMHCIDelcan clean-ups policies on site clean-up, sue (purchaser/tenant of proposed mode. One key advantage developers environmental

The range of provisions of certainty by a regulatory embodied

tied to restrictions and the promise remediation agreements).

on future use, lender liability

in covenants

These programs

allow for the review and oversight agency in non-enforcement

of this approach

is the shift in risk away from owners and

and the financial

services sector: liability is shifted from

The key advantage for the clean-up, Consequently, redevelopment Examples discussed

is that the risk of environmental else to neighbours

the owner or lender to someone

to the public if a public agency pays if a full clean-up can be postponed.

if the site does not have to be cleaned up as have been successful in encouraging

much as before, or to a future developer such programs in many US states.6

of specific measures

implemented

to encourage

voluntary

clean-up

are

below.

Site Clean-Up
the United

Guidelines
guidelines or regulatory standards exists across Canada and

A range of clean-up

States. Three basic models exist: to background conditions with the definition of background varying

Clean-up

among jurisdictions. Clean-up assumptions Site-specific, to generic standards in which the government to the proposed establishes site use. risk

which may vary according risk-based standards

which usually are also based on the proposed

land use for the site. Many jurisdictions have selected a combination of these approaches.

The move to allow clean-up permanent provides liability remediation less long-term However, while this approach

to vary with the sites future use defers the sites use is not the highest use, residential). savings to the developer, it and

(if the intended certainty

often offers a short-term unresolved.

to lenders who may perceive that the clean-up guidelines

issues are left at least partially to clean-up of the site assessment

The approaches the acceptability

also vary in the process that is used to assess of the proposed authority clean-up sign off to

and in the approval

process and results. Some jurisdictions site owners or their consultants. is greater assurance conditions professional undertaking site and that the regulatory standards

require that the regulatory

that the site has been cleaned up to acceptable Obviously,

levels. Others leave this responsibility

where an official sign-off

takes place, there

that future actions will not be taken by public bodies against the agency will accept so&e responsibility requirements and accreditation programs for the site for also vary in their expectations for practitioners

in the future. Clean-up of practice site remediation.

For example: Most Canadian based clean-ups Saskatchewan, provinces include some provision for both risk- and standards-

in their guidelines. Ontario, British Columbia, risk-based New Brunswick, approaches lengths Nova Scotia and Prince of contaminated of time (as recently

Edward Island have adopted sites. These guidelines

to clean-up

have been in place for varying

as early 1996 for Nova Scotia). Newfoundland environmental modelled and Labrador legislation is beginning remediation to review and consolidate guidelines. Standards Act (1995) allows three to background standards. levels, a and Site-specific standards that treat its

and is in the process of developing

new guidelines

after the Manitoba

Pennsylvanias approaches statewide standards engineering

Land Recycling and Environmental to site remediation, including clean-up controls health standard, and site-specific

human

must also include controls.

institutional

such as deed restrictions

These regulations

allow more practical as an individual long-term application

each site and its level of contamination lenders perspective, changing contamination

case. However, from a certainty due to the risk of future of more stringent

the Act does not provide

uses for the site or the retroactive regulations.7

Standard
would provide

Agreements
arrangements for the regulatory

for Lender
are different institution, institution authority

liability
from indemnities. An indemnity on lender on lender will not certain

These contractual would otherwise liability liability initiate limited

to assume some risk and expense which whereas an agreement of risk. An agreement that the regulatory institution acts within

accrue to the financial

does not provide enforcement parameters.

for any such assumption

also only assures the financial

authority

action as long as the financial

The financial to obtain Canada

services sectors in both the United from lender liability

States and Canada judgment

have struggled States since

exemptions

for many years published

in the United its position

the United States of America v. Fleet Factors Corporation since the Canadian Bankers Association Sustainable

in 1990 and in paper Toward Protection overturned by the between

Capital in 1991. In the early 199Os, the U.S. Environmental such an exemption, and financial which was subsequently has been to use contractual institutions confusion and lengthy

Agency (EPA) codified regulatory negotiating Association Ontario authorities

courts. The more recent approach In order to avoid the inevitable these arrangements and the Canadian

arrangements

that seek to limit their exposure.* delays arising from Bankers over the basis, both the American

on a case-by-case Bankers Association blanket

have been actively involved

past several years in negotiating Ministry of Environment For example: Ontario: Following Ministry formulated December,

arrangements

with the U.S. EPA and with the

and Energy in Canada.

two-and-a-half

years of extensive

negotiations,

the Ontario in as long They

of Environment

and Energy and the Canadian

Bankers Association Investigations thereon.

a Standard Agreement

Concerning Environmental

1995. Lenders may attempt for any contamination

to recover value from loan security conducted following the time of their first

as they do not take control are not responsible involvement. Saskatchewan: associated Saskatchewan

of the site or of the business

is also in the process of clarifying of brownfield sites.

the liability

with the contamination

Prospective
Prospective brownfield regulatory since 1989. For example:

Purchaser/Tenant
purchaser/tenant agreements

Agreements
attempt to facilitate sales involving existing at the States with a promise from the applicable in the United

sites by providing

buyers or tenants

agency not to sue the purchaser or lease. Such agreements

or lessee for contamination have been available

time of purchase

The 1989 EPA policy was revised in 1995 in the hopes that it would entice more developers flexibility to take a chance on brownfield in deciding whether restorations. It allows the EPA more but it is viewed as not and it does nothing to offer such agreements,

going far enough

to resolve buyers and lenders uncertainties, costs for such transfers9

to decrease the transaction

Guidance
Guidance groundwater

Documents
documents contamination, exist on topics such as presumptive remedies, soil screening, (for example, and the role of land use in remedy selection

the U.S. EPA).l

For example: Final Policy Toward Owners of Property Containing EPA): This policy document uncontaminated contaminated contamination operated Guidance properties outlines situated enforcement Contaminated Aquifers (U.S.

policy for owners of systems that have been

above groundwater properties

by sources on other properties. or made the contamination

The EPA will not take action against if the owner has not caused the worse by the way the owner has

the owner of such uncontaminated the property.ll

on Land Use in the Comprehensive

Environmental

Response, reasonable assumptions be used

Compensation regarding

and Liability Act (CERCLA) Remedy Selection Process (U.S. EPA, was to assist in developing future land uses at Superfund on the assumption resulting in an expensive, sites. Too often, the EPA would overprotective remedy. The

1995): The goal of this directive anticipated base its clean-up for residential directive process.12 requires decisions

that a site might someday

purposes,

agency staff to talk with local governments land use information

about the likely future

land use of a site and to consider

in its remedy selection

Comprehensive
Many American redevelopment For example: Indiana: Indianas certificate voluntary applicants participation, Minnesota: financial liability clean-up measures.

Voluntary

Programs
of voluntary browntield

states employ a combination

voluntary program.

remediation The program

program

provides

for the issuance

of a in a which

of completion

and a covenant

not to sue to successful participants sets out a series of steps through agreements, work plans, public

must pass, including clean-up Minnesotas incentives

applications,

and certification Voluntary

of completion.13 and Clean-Up Program provides working types of to the

Investigation

(for example, grants are offered to cities or counties to approve a clean-up plan) and also offers 10 different or certificates in the form of letters, agreements parties. The program and lenders

with the program protection

tailored

needs of the voluntary which insures state. Connecticut:

has 23 staff members

and about 700 action by the

sites. To date, about 3,500 acres of property the developers

have been signed off by the program, against any administrative

Connecticuts

Urban

Sites Remedial

Action Program

has a pool of potential. not only

bond funds for assessment State regulations to prioritize reviews. A Geographic

and remediation

of sites with high economic is being implemented

have been changed Information

to make rehabilitation System database

easier and to expedite but also to be used as a

sites with respect to levels of contamination,

marketing

tool that scores each property (a positive

based on service advantages for clean-up).14

and level of a negative value

contamination

score will attract private redevelopment,

will require public funds as an incentive Detroit: Detroits Redevelopment representatives coordination and state environmental between

of Urban

Sites Team (REUS) is comprised with an interest in property REUS has provided

of

of major city departments and commerce

management

representatives.

agencies to foster redevelopment.15 wanted to resolve its liability at three major sites in the negotiated cleaning a global up these and

Michigan: In 1994, Chrysler Detroit consent metropolitan decree covering

area and sell them with finality. Chrysler these three sites in return for voluntarily

properties.

Under this decree, Chrysler to residential

will not be liable if a future owner wants to

convert the property one is sold.16 Quebec: The Quebec document economic entitled incentives Contaminated to a voluntary responsibility; restoration development program, redevelopment

use. Work on the three sites is in progress

Ministry

of the Environment

produced

a preliminary

Project of a Policy for the Protection and Rehabilitation six proposals sites for the redevelopment They include: responsibilities under of contaminated of a program certain financial of orphan means;

of

Sites in March 1996. This report presents program. limiting creation

to provide which amount of a

for voluntary creation of a This creation

conditions;

system to support

owners who have limited redevelopment on brownfield

fund; favouring of infrastructure if adopted,

sites and favouring strategy for brownfield States.

sites rather than greenfields.

would provide

a comprehensive seen in the United

similar to examples

Wide-Area
multiple addresses industrial clean-up approach

Designafions
and cross-boundary

and Sfrafegic

Plans
of such areas as various old

These plans can be implemented properties the extent of contamination sites with an interrelated options are investigated to provide

to deal with contamination over a geographic hydrogeologic/geologic

water system effects. The strategic plan area covering environment. Preliminary This

and reviewed with authorities, greater certainty by other Ontario to prospective Regeneration jurisdictions.

and a plan or approval purchasers. Trust for the Toronto

strategy is negotiated

is being undertaken

by the Waterfront

Port Area and is being considered

Comprehensive
In the United attempted. development advantage

Approach
and Enterprise

fo Regeneration
approach to regeneration has been for new and Councils have combined to regeneration normal planning the funding projects

Kingdom,

a comprehensive with funding

Local Training

and infrastructure programs. of streamlining

for job training,

skills development, controls.17

other community

Funds are dedicated approvals that suspend

and have the

Chicago Brownfields
This was an extensive redevelopment, professionals community culminating

Forum
policy options the expertise generated banking, for brownfield of 40 which solicited planning,

research process to establish in a Forum

in the fields of environmental development for eliminating obstacles

real estate, law, 56 specific sites. of brownfield

and public policy. The Forum

recommendations

to redevelopment

Firms Specializhg
In the United including financial Such firms undertake environmental

in Brownfield

Redevelopment
redevelopment approvals, have emerged. lega! and risk to brownfield financing, site redevelopment,

States, firms specializing a full service approach engineering,

in brownfield

arranging

advice, communications, and public relations.

construction,

real estate assessment,

management

Evaluating is complicated Canada Canadian identified, fruition

the successes and relative merits of the strategies by three factors. First, the range of strategies

outlined

in Chapter

employed

to date in have first hand

is not as great as in the United experience and strategies

States and we do not therefore within

in some areas. Second, many of the options created or implemented, the American regulatory, lags from the enactment experience judicial

have only been until they come to in some areas and some strategies to States. to of the for by a Third, because of from the American institutions

the last two or three years. of strategies limited

Since there are (often lengthy) in the marketplace, in legislative, it is difficult the differences the Canadian Moreover, environmental Canadian Canada. excluding

remains

to draw clear patterns financing)

with respect to some strategies. and other practices, may not be readily transferable they have been successful of Canadian different to remember

(such as tax increment

agenda, even though when evaluating incentives,

in the United

the reactions

financial

it is important experience

that the structure

financial

services sector is considerably difference

from that of the United benchmark services marketplace, that is, dominated market. By contrast, to The

States. As a result, the American The most important the insurance financial industry,

may not be a relevant oligopolistic;

is that our financial

is essentially in a relatively

small number the American in all markets. Canadian

of large institutions This distinction

non-competitive

services sector is distinguished is important

by a high degree of competition in the marketplace. and in reacting

because, in general, the willingness considered

accept risk is a direct function financial

of the degree of competition its own strategies

services sector is generally

to be more risk averse, and it to public-

will likely be slower both in generating sector incentives. We must also be cautious redevelopment reports indicate as necessarily sector. For example, direct involvement

in interpreting being indicative

public reports of participation

of successful brownfield by the financial services of project, the public

in the BASF Corporation/City by a financial institution.

of Wyandotte

only shared financing

by the City and BASF: there is no indication

Responses to the Strategies

In the United States, the response to public sector strategies that have been in place for several years or more has been significant. Minnesota and Oregon have administered clean-ups voluntary programs program for more than five had achieved cleanAs of the same date, and 22 more were

years. As of June 30, 1995, participants ups at 75 sites and 210 additional participants in progress. Connecticut, has committed estimates Michigan in Oregons program

in Minnesotas

were in progress. 34 clean-ups,

had completed

and New Jersey have established of commercial/industrial liability and remedial the clean-up

substantial at

state assistance Connecticut

funds to facilitate

the reclamation

properties.

$22 million

action is in progress

34 sites, the state assuming that its investment manufacturing,

at nine of them. Connecticut at least 5,000 new jobs in the sectors and at least

will help generate

service, retail, research and entertainment

$6 million committed investment

in new annual
$15 million

tax revenue

for local governments.

Michigan

has that private

about $22 million of approximately

to its state assistance $273 million.

fund and estimates grants will stimulate

approximately

of its site reclamation

Massachusetts been completed. California

has seen the number

of sites remediated

rise almost

100 per year to actions have

over 500 sites per year. Since October,

1993, more than 3,200 remedial

and New York have achieved initiated without legislative have resulted of 4,700 housing

significant

results through

voluntary

clean-

up programs The programs increase construction

changes in their hazardous annually;

waste laws.

in remediation

of more than 1,300 acres; caused an allowed the space. which has been revised sites for more than 12 million

in property

tax revenues

by $350 million recreational

units; and provided

square feet of office, commercial, Among newer initiatives, buyer/seller program

and industrial

Pennsylvanias agreements

Land Recycling voluntary requirements.

Program,

in place for one year, is a comprehensive standards, funding program. and new notification

program

that includes a significant

on clean-up

responsibilities,

In the one-year

period, under the to clean up has have

35 sites have been cleaned up to meet one or more of the standards A total of 100 sites have submitted majority of Community formal notices of intent and Economic to 19 projects and an overwhelming provided $2.4 million of the clean-ups assistance

are being done at private sector Development under the program.

expense. The Department As well, millions been awarded. As the states regulatory primary jurisdiction parties have shown increasing capital pools have formed of service providers and marketing the amalgam firms -have

in financial

of dollars in direct grants are available

and over $2 million

regimes have changed interest

and the EPA has recognized American are emerging. to offer one-stop transactions to brownfield engineering, institutional these properties. environmental

states

over lesser contaminated

properties,

private sector New venture Various alliances consultants shopping involving for

in redeveloping

and new sources of financing formed and are forming

including

lawyers, casualty insurers, to accomplish commercial

of services needed

contaminated properties. This full-service approach undertakes land acquisition, arranges environmental financing, generally institutional brownfield institutional mistakes, participating redevelopment legal services, governmental Admittedly, pools of private lenders financiers and ultimately in browntield in Canada. approvals, public relations. these are not traditional

redevelopment and co-ordinates construction financiers: associated and they are greater than with for

risk management,

capital whose risk profile is innately Nonetheless, their activities

substantially

and who seek the potentially to be encouraged redevelopment.

greater returns

site redevelopment.

provide

opportunities

by their successes, to learn from their approaches toward, and criteria for, brownfield

to adopt more progressive

There does not appear to be comprehensive

data describing

Namnal Rowe 6x a- the Eni~ronmen:and the Iconomy

The F nilncio' Services Semr o-o Brownfield ?ederecFnentBxkgro.nder

Lessons Learned
Direct Monefory
The key difference their beneficiaries, lateral arrangements and incorporated Conversely, nature, financial positive indirect

Incentives
between direct and indirect institutions, in monetary generally and benefits incentives from the perspective are typically easily understood in of biis that direct incentives terms and therefore

the financial quantifiable

into cost-benefit incentives managers from financial

analyses, risk assessments involve multiple

or similar practices. by the

parties, are non-monetary to influence. and sustaining In the context States. of specified, provide other of risk of their

and their application institution reactions direct incentives

are thus often not clearly understood they are intended in generating incentives. financial

whose behaviour institutions

Accordingly,

should be more successful than indirect in the Canadian in Canada

of

the greater propensity differentiation Monetary quantifiable mechanisms incentives inherent return Direct incentives incentives obligations

for risk aversion may be generally (for example,

services sector, this

should be more evident

than in the United of money

classified as monetary taxes). Non-monetary

and non-monetary. incentives

involve the direct payment

or forgiveness

to reduce uncertainty, should generate

usually through

the contractual impact

transfer because

from the private sector to the public sector. Economic qualities: they are readily quantifiable, or reducing a financiers not dependent arrangements

theory indicates

that monetary a developers of third

the larger and most measurable their impact

in improving

on investment

risk is straightforward, legislative/regulatory sector financial

and they are framework.

direct contractual

for their success on the actions

parties or the interpretation direct incentives attracts involving generally

of an often inconsistent confirm that direct public and generates

To the extent that we have them, reports private sector participants direct payment

of the usage and relative success of various involvement Strategies successful redevelopment.

of funds include: sector financing of remediation costs (in at least five states). (in at least one state) or to

Shared public/private Grants for remediation lower-level Grants governments

costs to private sector parties (in at least four states). for the redevelopment Brownfields

of seed money

of targeted,

high potential

sites

(50 projects

under the Superfund

Action Agenda).

Loans or loan guarantees clean-up actions

by states to assist private sector parties in financing

(in at least four states). public authorities have chosen to forego future tax include: to permit accelerated write-off of

In other circumstances, revenues

or to forgive existing tax arrears. Examples States federal income tax proposal sites.

The United remediation Municipal

expenses for brownfield property

tax arrears forgiveness

(City of Windsor,

Ontario).

Nowol icund ible on the Enl,cme~,and *he EconomV

The immccl Ser,mces Secto- and Erov/n',e~d Recevelq,men, ~ Backgrounds

If enacted significant long periods Conversely, exceeding negotiation successfully transferring property

into law, the United of time could generate

States federal income

tax incentive income

may generate be amortized over tax deduction. cost

results, since remediation Windsors the appraised between

expenses which must presently a single, large, immediate impact

scheme may not have a significant value of the property -

because it is designed portion of the total

to forgive only the portion value of the property

of the tax arrears that results in the total clean-up usually a minor

and one which, in any case, has always been the subject of redevelopers and municipalities. a number of jurisdictions have or though still direct mechanisms for reducing

Where public funds are not directly available, used non-monetary in Minnesota,

risk from the private to the public sector. The largest and most visible of has to date successfully Other jurisdictions, agreements contamination. dealt with 3,500 acres of of grants notably the EPA and some have and has attracted an active inventory of 700 sites using a mixture

these programs,

and situation-specific

indemnities.

states, now use purchaser/tenant actions with respect to pre-existing not yet become common

to shield these parties from future legal However, these mechanisms

in Canada.

Indirect Incentives
One of the main initiatives contaminated and consultants up standards requirement redevelopment. risk managers provide upfront financier. For example, and therefore in fact be deferred expensive authorities, application liability standards financial standards if the projected and may remain additional use of a site is not its highest use (that is, residential) remediation, pending then many clean-up a potential sign-off issues may and thus by unresolved future change in use on remediation regulatory risk that the does not require maximum remediation properties. in many jurisdictions, both Canadian of remediation and American, standards for of cleanby by both regulators over the past several years has been the liberalization This approach on the grounds that it generally background

has been widely supported provides

for the application

which are site-specific to remediate to pristine

and usually less onerous

than the traditional sign-off of authorities of may reduce

levels. It also permits

private sector consultants

and is, therefore,

less costly for the proponent

However, one of the issues most frequently in the financial of certainty activities by formally acknowledging

raised by environmental the acceptability

services sector is their desire that regulatory Thus, while this initiative

a modicum remediation

upon their completion. costs for the developer,

it does not also reduce risk for the

to a higher status requiring private sector consultants

remediation

(possibly although

to more exacting

at that future time). Similarly, may avoid lengthy

delays from environmental in bringing the ongoing

the absence of governmental of more stringent, and processes institutions

involvement

the remediation

process to closure, and accepting and/or

its result, may increase initiatives to introduce

future regulatory

will cause incremental into remediation

expense. Thus, initiatives to provide

flexibility

may be counterproductive

with respect to encouraging redevelopment.

capital for brownfield

Other indirect brownfield municipalities governmental bases, dedicated co-ordination training appealing, evidence difficult potential impact,

programs

that seek to construct include

a supportive

context initiatives

around by GIS data

redevelopment programs,

a variety of administrative and provide expedited

and states to better co-ordinate providing teams of redevelopment of related funding programs.

enhanced

access to Kingdom,

review and approval

procedures,

professionals Although

and, in the United these initiatives

sources for social infrastructure recent in their development generally represent

such as employment are intuitively are of the it site. The collectively of the and there is little

and other community

they are also generally to quantity economic

from which to draw conclusions and, if quantifiable, risk which otherwise of these initiatives,

about their success. Their benefits exists relative to the contaminated would likely be limited, although

only a small portion

individually,

may be more significant. Worthwhile ground authority limited ongoing maximize concern existing provincial override a positive uncertainty and in Ontario progress (through has been made in Canada a co-operative initiative toward a better definition (through the provincial institution rules of lender liability, principally and the financial protection operation remains in British Columbia between legislation) regulatory provide only steps to initiates or the method considerable the taking of for

services sector). However, these approaches contamination Consequently,

from the point in time at which a financial of a business among lenders or control by a receiver-manager institution). about what actions of property

to realize on loan security, and do not apply to pre-existing the recovery value to the financial

(often the preferred could constitute

charge, management environmental strategies

so as to expose the lender to liability between these existing the uncertainty would

contamination mitigated.

of the property. The inconsistencies the proposed initiatives. a hitherto

As a result, risk and uncertainty in

have been only partially

and the new federal Bill C-5 have exacerbated legislative/regulatory environmental Nonetheless, unknown

this area at least in the short term, because the provincial impact, because it would establish in the long-term.

federal legislation

Bill C-5 may have

degree of uniformity

across the federal and provincial

landscape,

thereby reducing

Synfhesis
although

of Key Sfrufegies
undertake a combination of both direct and indirect legislative strategies, and policy the main thrust of activity has been through

Most jurisdictions in Canada development documented economic attracting initiatives. program.

with little direct financing to date. The limited

as a catalyst for redevelopment. available

The response tested or incentives in

to these initiatives incentives

and their level of success has not been thoroughly evidence are more potent successful hybrid than indirect, combining legislative/regulatory

suggests that, in general, direct, redevelopment direct incentives grant/indemnity

and sustaining In particular,

private sector brownfields as evidenced

programs

carefully targeted by the Minnesota

appear to have considerable

potential,

It is clear that some level of public-sector initiative is necessary to provide the incentive for brownfield redevelopment in most jurisdictions. The depth of publicsector intervention required is dependent on a number of factors but hinges on the

economic

market forces at work where the brownfield will be less than where markets

site is located. In strong markets, are poorer and the shadow of redevelopment

the level of intervention The strategies

the losses in the real estate market from the 1980s still lingers. that have been successful intervention, support in encouraging spectrum as summarized through various brownfield ranging below: funding mechanisms such may be viewed in a risk-transfer/risk-mitigation to a lesser level of government Provision funding Provision protection uncertainty planning market Provision from a greater level

of direct government

as grants, loans and loan guarantees and major project funding. of indirect government

for shared financing,

trust funds, pilot project

support

through

such mechanisms

as: liability from of

which protects involved support

developers

and the financial acceptable clean-up

services industry

future uncertainty;

strategic planning in establishing and approval,

for larger browntield

areas to reduce the of the sites. and

levels; and acquisition for economic

and assessment

of the marketability

A key component return

of the latter is to prioritize

the opportunity

for the sites. through terms. with brownfield sites cannot be transferred the traditional insurance industry on commercially

of insurance

viable and acceptable Physical clean-up. through through ongoing Integral standard risk through

If the risks associated Clean-up a portion

the above mechanisms, physical clean-up. a negotiated

then the remaining

approach

is to deal with the to operate on an

can take place either in a single phase or that allows the business of its profit to site clean-up. risk by creating This option to a

phased approach

basis while devoting to this approach of practice

reduces the exposure

for both the financing and an accreditation

agency and the site owner/operator. and adhering program for professionals undertaking

is the need to control

site clean-ups.

A Foundation Redevelopment
Although

for Successful

Future

Brownfield
with the agenda

it is beyond

the scope of this report to deal exhaustively

that might successfully encourage more proactive and economically significant involvement by the financial services sector in brownfield redevelopment, there are some issues which form a common isdictions. Legislative reform with respect to the determination provide a cohesive and consistent national framework: related issues: The statutory undertaken Environmental legislation framework across Canada Standards identified is highly fragmented: Associations Technical a 1993 survey Committee on pieces of among of environmental liability to This covers two separate but thread among successful experiences in other

for the Canadian Site Assessment

more than 240 individual implications

which were considered

to have environmental

the provinces, philosophical even between inconsistency

territories approaches

and the federal government. differ considerably adjacent

Moreover,

the to another, laws and The present

from one jurisdiction Such fragmentation risk aversion. liability

those which are geographically exacerbates uncertainty

and whose differing

may apply to the same environmental

condition.

and encourages proportionate

scheme of strict, joint and several liability does not conform to the polluter-pays, Council accepted by the Canadian The statutory and/or currently framework

which prevails in many jurisdictions philosophy of the Environment. fails to address the issue legislative There needs to be a clear

of the Ministers

across the country liability incurred

generally

of future environmental regulatory applicable and reliable benchmark

as a result of changing

requirements

applied retroactively. the nature

for defining

and extent of liability, based on practices. holding expenses corporate income

law and best environmental Those levels of government investigate write-off of clean-up

Ta3cincentive programs: taxing authority programs, expenditure, private-sector

should seriously involvement.

and experiment

with tax incentive as a catalyst for

such as accelerated but brings

This approach

does not involve a pubIic tax

forward,

in time, tax effects which would occur in any

case at a later date. If the former constructively cornerstones were put in place, the private sector may react ways: services sector to look beyond the traditional as a forward-thinking financial environmental need to

in the following

A philosophical profit-based program important heighten functions; departments

shi$ by the financial describes

behaviourial

model and actively embrace an issue of public concern: its approach willingness to wade into public issues that are institutions risk management risk management

The Bank of America

based on a considerable to the interests the visibility

of the Bank. Canadian

and profile of their environmental executive.

only two of the Big Six banks have environmental and none have an environmental

An initiative by the financial environmental of the financial both inversely environmental understanding accepted

services sector to become better educated concerning and risk aversion, A sector-wide the two dominant program characteristics are risk at present, to actively recruit the level of through

risk: Uncertainty

services sector with respect to environmental related to knowledge. expertise both of technical would have immediate techniques. benefits

in enhancing

issues and the means for their mitigation

risk management

An initiative by the insurance industry to be more innovative in the creation of new forms of environmental dialogue pragmatic characteristics coverage, and to engage in a more proactive insurance and sustained with the users of environmental of both new and existing needs of the marketplace. to ensure that the

coverages more clearly relate to the

An initiative by lenders to use available sector risk transfer mechanisms: ready to provide these new options and lending at reasonable

insurance more broadly and other private industry has demonstrated over the of it is once again However, use of the insurance on a sufficiently sustainable

The insurance

last several years that, after a long absence from the marketplace, coverages which endeavour is not widespread. is necessary site owners/operators industries and lenders in brownfield to encourage redevelopment. their introduction sound

to address many of the concerns effort between

A co-ordinated

wide basis so as to ensure that they are actuarially cost over the longer term.

and therefore

Indiana

Department

of Environmental

Management, 1995.

Office of Environmental

Response,

Remediation

and Reuse, Vol. 2, No. 1, December Sparking Investment

Donald T. Iannone, Ibid.

in Brownfield

Sites, Urban Land, June 1996.

Ernst and Young, Lender Liability for Contaminated (November, Brownfield Indiana 1992). Incentives

Sites: Issues for Lenders and Investors

Aired, Engineering News Record, March 18, 1996, p. 12. of Environmental Management, 1996. Office of Environmental Response,

Department

Remediation

and Reuse, Vol. 2, No. 2, February and social pressures,

Driven by economic

states and cities.... Civil Engineering, May 1996. to the Browntields

Linda Larson, Impact of the Brownfields Program. Presentation Development Ibid. Ibid., and in Federal Register, Vol. 60, 1995. Ibid. Ibid., and United States Environmental Emergency Response, No. 9355.7-04, Washington Indiana Department DC, 1995. Management, 1995. Protection Institute (San Francisco, California,

April 19, 1996).

Agency, Office of Solid Waste and

Land Use in the CERCLA Remedy Selection Process, OSWER Directive

of Environmental

Office of Environmental

Response,

Remediation

and Reuse, Vol. 1, No. 2, December

Civil Engineering. Larson, April 1996. Ibid. Greater Toronto Area Task Force, Report of the GTA Tusk Force, January Clement Dinsmore, State Initiatives on Brownfields, 1996.

Urban Land, June 1996.

Bibliography
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J. EPA and Cities See Green in Cleanup 6, 1995,3 1-32.

Engineering News Record, November Arulanantham, Brownfields: Ravi and Stephen

Morse, Ignacio

Dayrit, Lester Feldman.

Redeveloping

The Emeryville, California

Model. June 23, 1995. Past. Commentary, Winter 1996, 14-22. of BASF

Bartsch, Charles. Paying for Our Industrial BASF Corporation.

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the Dedication

Waterfront Park. Wyandotte, Beuche, Antoinette. Presented

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Return.

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CA. April 19, 1996.

Board of Trade, City of Toronto. Environmental to the Ontario Ministry

Priorities for Achieving a Good Balance Between Position Paper Presented and Energy. April 18, 1996. Program on Superfund. Presentation CA, April 19,1996. Reporter, Vol. 26, No. 24, October to the

Quality and Economic Growth. Environmental of Environment

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November

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Coler, Barbara. A Blueprint for Regulatory Brownfields Brownfields Development Institute. San Francisco,

CA. April 19, 1996. into Assets. Presentation CA, April 18-19, 1996. Mortgage Banking, July 1996. Urban Lund, June 1996, 37-42. to the

Cox, James D. Turning Your Real Estate Liabilities Brownfields Diamond, Dinsmore, Development Institute. San Francisco,

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in Brownfields.

State Initiatives

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hcr~anal Round Table on 1-e Ewrsmeo, md -he Ecanom~

The F~nancin, Sewes Sector .nd Emw-i,eld Redevel~a~ew - Bnckarnunde

Environmental

Liability Acquisitions,

Inc. Rem.ediation/Property Brownfields: Environmental

Management.

1996.

Foxen, Robert and Keith Knauerhase. Opportunity. Greater Toronto Iannone, 43-45,64. Indiana Response. Department Remediation of Environmental Donald

and Economic

Engineering News Record, April 1996. Area Task Force. Report ofthe T. Sparking Investment GTA Task Force, January 1996.

in Brownfield

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&Reuse, Vol. 1, No. 1, November e+ Reuse, Vol. 1, No. 2, December Q Reuse, Vol. 1, No. 3, February

. Remediation -* Remediation . Remediation . Remediation -0 Remediation

& Reuse, Vol. 1, No. 4, March 1995. & Reuse, Vol. 2, No. 1, December & Reuse, Vol. 2, No. 2, February 1995. 1996. to the Brownfields

Larson, Linda. Impact of the Brownfields Development Institute. San Francisco, Group.

Program. Presentation CA, April 19, 1996.

Lender Liability Working Paper for Assistant Deputy & Energy, March 17,199s. Marr, Lisa. Habitat

Clarifying the Liability of Secured Creditors. Discussion Policy Division, Ontario Ministry of Environment

Minister,

Ready to Start Building:

First Hamilton

Home Will Go to the East

End. The Spectator, April 18, 1996. Martin, through Kathleen M. Siting on Contaminated Cooperation. Property: Development and Cleanup

Public/Private

NR&E, Winter

1993,20-24. Urban

Meyer, Peter B. Pennsylvania Brownfields International Congress.

Copes with its Past: One States Efforts to Redevelop Lands. Presented to ACSP-AESOP Joint July 28, 1996.

and Clean up Contaminated Toronto,

Miner, Stuart L. The Evolution of Brownfields Development: Presentation Molinari, Leadership, Morrison, to the Brownfields Ted. Balancing Teamwork. Development Institute.

What Does the Future Hold? CA, April 18,1996.

San Francisco,

Act in Oregon:

Sustainability

Issues Advance With

Site Selection, April 1996, 330-332, 365. Redevelopment: Opportunity or False Hope? Land

Richard. Brownfields

Use & Environment National Round

Forum, Fall 1995,222-224. and the Economy (NRTEE). Lender Liability

Table on the Environment by Ernst &Young.

for Contaminated

Sites: Issues for Lenders and Investors, Working Paper No. 3. Ottawa,

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and Canadian Issues in Canada:

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Contaminated

Sites

Backgrounder.

1997. Corporation (CMHC). Removing 1997.

and the Canada Mortgage Barriers: Redeveloping and Statistics Condition Newlon, Francisco, Contaminated Canada.

and Housing

Sites for Housing: Backgrounder.

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Zmproving Site-Specific Data on the Environmental Ottawa, 1997. Marrying Industrial Cleanup to Development Institute. San

of Land: Backgrounder.

Thomas.

Znnovative Programs and Approaches: Presentation to The Brownfields

Property Redevelopment.

CA, April 19, 1995. Property. Presentation CA, April 19,1966 Baltimore Gridlock. Sun, March 13, 1995. Environmental to the Brownfields

Padley, Susan E. Evaluating Brownfields Development Institute. San Francisco,

Peirce, Neal R. Cleaning Rapaport,

Up the Urban Brownfields?

Diane. Port of Seattle Breaks the Brownfield 1995,24-27.

Solutions, November

Ryman, Stuart A. The Movement Presentation Underwood, to the Brownfields Greg. Brownfield Seminar

Towards Risk Based and End Use Cleanup Standards. Development Developments: Institute. San Francisco, CA, April 19, 1996. to Contaminated

Innovative Approaches Ontario, 1996.

Site Redevelopment. United

Slides. London, Protection

States Environmental Brownfields

Agency, Office of Solid Waste and Emergency

Response. United

Pilots. July 1995. Protection Agency, Office of Solid Waste and Emergency

States Environmental

Response.

Land Use in the CERCLA Remedy Selection Process, OSWER Directive No. DC, 1995.

9355.7-04. Washington,

Wright, Andrew G. Wichita Works It Out. Engineering News Record, July 15, 1996,36-37.

(The following items are alphabetized by title.)

Browntield Incentives Aired. Engineering News Record, March and social pressures, 18, 1996, 12.

Driven by economic 1996,37-40. Focus on Environment: Notices. Announcement Containing 34790-34798.

states and cities ... Civil Engineering, May

Superfund.

Engineering News Record, November of Final Policy Toward Owners

6, 1995. of Property

and Publication

Contaminated

Aquifers. Federal Register, Vol. 60, No. 127, July 3,1995,

. CERCLA Enforcement Acquire Property 63517-63519. Involuntarily.

Against Lenders and Government

Entities

That 11, 1995,

Federal Register, Vol. 60, No. 237, December

hol~anal Round Table on the Emr~mer,, md the Ecar,orry

ihe F,nanc,ol Services S?c,or and 3rovrni elc Rede&pmenl ~ 6oc<gwder

Results from Business Plus CD ROM on Brownfields. May 1996. Voluntary Investigation and Cleanup: State Assurances

Engineering News Record,

Turn Minnesotas

Brownfields

into Industrial

Parks. Developments,

June 15, 1995, 1,4-5,6.

answer redevelopment has been encouraged elopment community, as the Gus could be significant. nitiatives, the financial services :reated its own set of policies specific to lment. These policies include a recess of providing loans to the ,,,VV1,field sites. streamlining the review process ,ffective strategy aiding in brownaddition, the use of site.d to decreased costs of aking brownfield redevelopment -sasible.
Contacts: Doug Roberts, City of Vancouver, (604) 873-7567 (604) 356-8386

Roger Ord, British Columbia

Environment,

Question Brownfields Base: Information

Answer

a) Where are the brownfield sites located generally in the province? j

a) Within Alberta, the brownfield sites are located most frequently in the vicinity of the medium- and largersized urban areas, such as Calgary, Edmonton, Red Deer, Leduc, Sherwood Park, Fort Saskatchewan and Lloydminster. b) The numbers pertaining to these sites are unknown. The main types of sites are the closed-down service stations, wood preserving facilities, and oil and gas facilities. c) No documents were reported to be available specifically on brownfield sites in Alberta. It was suggested that Phase I and Phase II site assessments have been performed on some of the sites, but a database for these is unavailable. d) Any Phase I and Phase II reports in existence would be in the posskssion of either the banks, the owners, or prospective buyers of the brownfield property, and consequently are not easily accessible.

b) What are the numbers and types pertaining to these sites?

c) What information is currently available on these sites?

d) What are the sources of this available information?

Contact: Walter Ceroici, Alberta Environment, (403) 427-6182

Gf&%m:

Question Brownfields Base: Informat-. .inn _

Answer

a) Where are the brownfield sites located generally in the province?

a) The brownfield sites located in Saskatchewan are exclusively urbanized, thus the majority exist in the vicinity of the largest communities in the province ,(Kegma, Saskatoon, Prince Albert, Moose Jaw, Lloydmitister, North Battleford, Yorkton, Swift Current, X.7 vveyburn, Estevan and Melfort). b) The Contaminated Sites List produced by Saskatchewan Environment hasidentified 44 sites (excluding sites related to petroleum industries). 4puroximatelv e&&t of these sites have been classified iis low priority. As a result, there are 36 sites which are considered to be brownfield sites. These sites are I>redominantly a result of abandoned industries, including the following: - refineries * landfills herbicide plants . transformer facilities . -.WLlL~ II Ic-ILII,IcIIL~ ]Uh,&&nm ,;l TV-V&~P&PLscrap metal ouerations Departmc :nt of National Defence sites (old radar installations, air defence operations).
L I Y

b) What are the numbers and types pertaining to these sites?

c) *hat information is currently available ou these sites?

c) Informal ion currently available on these sites includes pa eliminary soil and groundwater sampling reports, pre liminary reports documenting the nature and extent of contamination at the sites, and a backgrounc 1 information document listing the sites. d) All of th e above mentioned information pertaining to the brownfield sites I is available from Saskatchewan Environme nt (contact: Scott Robinson, Coordinator of the Cont aminated Sites Program, (306) 787-6138). e:) The information gaps include hydrogeological details of th e sites, and consistent information on treatment protocols. In addition, the exclusion of petroleum industry related sites could potentially be viewed as a geographic/information type gap. The key factors which have created brownfields in s;askatchewan include demographic changes (the movement crf the population towards the larger urban centres), dec:reased railroad operations (a loss of service to some oft he smaller urban areas), and economies of scale.

d) What are the sources of this available information?

e) What are the geographic/ information type gaps?

What factors have created brownfields by province?

~~~~,_,_-,,~~L~~~~~~~~=~~~~~~~~~~~~~~~~~~~~~~~~~.~~~~~~~~~~~~~~~~.~~~~~~~~~~~~-~~~ -.;.:;;,I.iJ>-i; .-*ii.;. .,_= ii.. / i/Ill_j ? 3 ..j . . . . la ._.I._ ..i.I..,,... /, ., ;. *. .r

QUeStiOn What are the business opportunities and challenges regarding brownfields by province?

Answer The challenges regarding brownfield site redevelopment in Saskatchewan are predominantly financial, originating from the fact that criteria-based cleanups lead to extremely high remediation costs. The main dpportunity surrounding brownfield site redevelopment inSaska$chewan includes the existence of efficient tramp&tat& infrastructures serving the sites. In many cases this asset makes the sites prime, commercial property.

What-.has been done to enconragebrownfield redevelopment? : I I

The movement&wards a risk-based ap&%ach for the re&diation of brownfield sites &I Saskatchewan is underway. This change co& potentially be the key to making brownfieklredevelopment financially feasible, as remedi+m costs would, insome cases, be -drasticahy decreased: In addition, darifjiing the liability &&ciated with the contamination of brownfield sites vile encourage their redevelopment. Saskatchewan Environment is presently in the process~of clarifying this liability issue. The financial services sector showed a very positive reaction to these initiatives.: ^ Two main suggestions/strategiesw&e dffered as methods to gain support from the fmancial services sector with respect to brownfield redevelopment: The use.of risk-based c&n-u& and the recognition of the natural attenuation-of coritaminants (especially light organics] will make the rem&&&ion of brown&Id sites more financially feasible.
l

What was the reaction of the financ.ial services sector to these initiatives? What snggested~solutionsl strategies would you offer, _ particularly for the financial services sector? .. ,

*-The clarihcati& of liab%ty-(most importantly, who is NOT liable) will aid in br5v%reId redeve!opment, as the party leading the develop-m&t wih then be clear of responsibility pertaining to hjstorical contamination of the site.

Contact: Contact:
Scott Robinson, Saskatchewan Scott Robinson, Saskatchewan Environment, (306) 787-6138

a) Where are the brownfield sites located generally in the province?

a) Within Manitoba, brownfield sites are generally located in industrialized areas. A minority occur in rural areas, as a result of the abandonment of service stations. b) Approxir nately 50 brownfield sites are known throughout Manitoba. These sites range from abandc med fuel service sites, to sites of previous industrial activity. c) The infor consultants reports and Ination regarding these sites consists of Ireports, Manitoba Environment inspection imy associated laboratory test data.

b) What are the numbers and types pertaining to these sites?

c) What information is currently available on these sites? d) What are the sources of this available information?

are primarily with 4 The sources of this information the site own ers, in addition to the inspection reports which are ir r the possession of Manitoba Environment. e) Many get kgraphic/information type gaps exist, as all information is submitted on a volunteer basis only, The factors which have created brownfield sites in Manitoba have predominantly been due to either historical routine operations olr environmental accidents, ar id the associated high costs of clean-up. In most cases, 1 :hese clean-up costs have outweighed any potential cccmomic gains related to the development of .1 1 1 me iana. The business opportunities regarding brownfield sites include the recognition of the land as potentially holding goof d value in the real estate market. Brownfield sites in Manitoba are often priced below market value, in ord er to ensure a quicksell. The incentiv es used to encourage brownfield redevelopment in Manif :oba include lowered scale prices set by the owner. In acEdition, rural municipalities and local government districts have cleaned up sites which come into th .eir possession, with the assistance of Manitoba Environment. Within the 6 !nancial services sector, 85 percent are satisfied with the use of a site if Manitoba Environment is satisfied with the clean-up and management of the site. The remaining 15 percent of the financial services sector are more conservative, and do not want to place financial investment in anything less than a contaminant-free site.

e)W%at are the geographic/ information type gaps? What factors have created brownfields by province?

What are the business opportunities and challe: nges regarding brownfields by Province?

What has been done to encourage brownfield redevelop-ment?

What was the reaction of the financial iervices sector t 0 these initiatives?

Question What suggested strategies would particukly for services sector?. sblutionsl you offer, the financial. 1

answer

..

It was sugg&led that for t&x& not &iten~&th the Nanitotia &lvironment tr@i&nt of bruw&eld sites, the intanal hiiingot: te&&call~ comjktknt people within the financial i&tit&.ksma~ assist them in raising-their comfort l&l with rcsp+ to this issue.

Ontario has surveyed the province for coal gas plants and for other plants using or producing coal tar. There plants and auuroximatelv 50 other

inistry of the Environment and Energy veyed waste disposal sites as of 1988 _- _________ Jmost 1,400 active sites and over 2,400 closed sites. The majority of the closed sites are old and, while largely municipal sites, the control of waste disposal in the era of operation does not preclude any osed materials. Most of these sites are om urban development except ti grown significantly in the embrace areas that used to be in the neighbouring countryside. I invcmtorv , inontario is the PCB waste lry. By definition, we are excluding this that represents a brownfields inventory. 4oEE files are open for public either through a request for )r at times an appointment YI.yVI.y- y view the MoEE data on any

tinn tvrw mm?

ormation has not been organized on the basis of , consciously developing a brownfield database. As indicated above, local issues have driven the documentation but rarely, if at all, has anything reached the level of a consistent database. The industrialization of Southern Ontario in the late nineteenth and early twentieth centuries produced industrial districts that received impacts from industry environmental sensitivity was high enough to reiy. Included in this category currence of coal gas plants. ) the former population centres, these now notorious in Southern

Question What was the reaction of the financial services sector to these i:nitiatives?

Answer It is a little too early to judge the reaction. There are some issues around the certification of site cleanliness that the technical/engineering community have not full y accepted and the final form of the documentation of clean-up work is not yet in place. No response elicited. Most of the Ontario data arises from personal knowledge and experience of the authors of this paper and suggestions are imbedded in the concepts developed in the paper.

What suggested solutions/ strategies would you offer, particularly for the financial services sector?
Contacts: Personal knowledge and contacts

in Toronto,

Hamilton-Wentworth

and Windsor

City of Toronto, Ministry

Kyle Benham,

(416) 392-1004 Policy and Planning,

(416) 323-4658

of Environment

and Energy, Karen Campbell,

Question Brownfields Information Base: a) Where are the brownfield sites located generally in the province?

Answer

a) Most of the brownfield sites are located in Montreal and, to a smaller extent, in industrial cities such as Trois-Rivieres, Sore&Tracy, Shawinigan, etc. On the Island of Montreal, these sites are in general former abandoned industrial sites situated mostly along the Lachine Canal and in the East of Montreal. b) On the island of Montreal alone there are several hundred of these sites on an approximate area of about 4,000 hectares. In Quebec, over 1,400 possibly contaminated sites have been identitied. The typical contamin ation for sites on the Island of Montreal is 1sixed (organic-inorganic) or organic in the refineries area. c) The information is rather sketchy and is not uniform 1 all sites. Their location, their owners, the general site for history and the type of contaminants are generally known when char2 tcterization studies are available. For the City of MontreaI, it is estimated that only about 2 percent of the brownfield sites are characterized. d) The 01lebec Ministry of the Environment _ -_ _ produced two inventories of contaminated sites. One was initiated in 1983 (GERLED program) and its role was the inventory (followed by specific remediation initiatives) of all sites containing hazardous waste. The other inventory (GERSOL) includes all sites for which

b) What are the number S these and types pertaining to 1 sites?

. c) What information is currently avaiIable on these sites?

d) What are the sources nf this available informatic In?

I

Question for site rehabilitation (accept the concept of risk analys ;is). Financial institutions should also facilitate the financing in these cases. What has been. done to encourage brownfield redevelopment? The Quebec Ciovernment and the City of Montreal created a pilot Project of a value of $6 million in order I I, to encourage a new avvroach when dealing with AI contaminated sites, i.e., favour a risk analysis perspective an .d encourage soil treatmentrather than confinement. The federal-provincial program crea ted to deal with the rehabilitation ated orphan sites. The City of real is active in the acquisition and promotion of ifield sit&. :development of sites should be done by carrying storation based on risk analysis in order to better ie efforts where the needs are major, by ve treatment techniques and by accepting environmental clean-up guidelines. mtives should be created along the lines ifi above.

nent of Environmental Resources maintains .aminated sites based on reports of contan&ration such as a spill, environmental assessment, underaround storage and tank removal. This list size of site, rural or urban. This list would information on sites where no report has been made. Few brownfield sites, by definition, are t in PEI, due to the nature and type of --. ---r------ t historically in that province. Nova Scotia Department of the Environment (NSDOE) does have a list of sites based on reporting of contamination to NSDOE. This list is not exhaustive nor specific to Brownfield type sites. New Brunswick Department of the Environment (NBDOE) has a list of registry of contaminated sites. According to Benoit Ouellette the list is not available to the public in its entirety; however, information about specific sites can be released if requested. Again the list is based primarily on reports of contamination.

Contacts: PEI: Danny McGuiness, Field Supervisor, Environmental Environmental Resources @EIDER), (902) 368-5035 Nova Scotia: Clive Oldrieve, Director of Regional Environment (NSDOE), (902) 424-2548 New Brunswick: Cheryl Heathwood, Manager Environment (NBDOE), (506) 457-4848 Benoit Ouellette, (506) 444-4667 Orphan Sites Program, Protection Division, PEI Department of the of the of

Offices, Nova Scotia Department New Brunswick

of Operations,

Department

New Brunswick

Department

of the Environment, Management, Division, Newfoundland Environmental

Newfoundland and Labrador: Ken Domeny, Director of Environmental Department of Environment and Labour (NDEL), (709) 729-5782 Federal: Maria Dober, Waste Treatment Coordinator, Pollution Reduction Protection Branch, Environment Canada Atlantic Region, (902) 426-6144

The Fi~Qnciai Services Sector and ~~wnf~~~$

Canada
el : (013:1932~7189 l

Bu lclng,

314 Slats St&

l

Fax. (613) 992-7385

Suite 200. Otawa, Ontc-io Cm-da Kl R N3 CCI l Web: hitp /;wvw/ E-m3,l ndq n~nr~ew,ee

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