Leveraging Brownfields to Drive Climate Smart Growth

Issac Evans – Research and Policy Intern:

Each April we celebrate both Earth Day and Arbor Day, two holidays focused on improving our relationship to the planet. In other words, it’s the ideal time of year to highlight the role that brownfield redevelopment can play in advancing climate friendly development here in Minnesota.

But why brownfield redevelopment over other flashier topics?

Brownfield sites have a legacy of industrial or commercial use and may contain contaminants or hazardous substances. Ironically, these sites are in a unique position to promote climate friendly development. Concentrated within the most highly developed areas of our state, brownfields are at the heart of current municipal redevelopment trends. The unique character of brownfields can and should be leveraged to mitigate current and future climate impacts into our built environment. The built environment is a primary contributor to greenhouse gas emissions, as well as a site where climate adaptation can occur. It influences how much energy we consume, our mode of transportation, and where we live. Like a blank canvas, a brownfield site in the heart of a city provides the potential to recreate the built environment.

Brownfield redevelopment also shares many similarities with the tenets of smart growth. Though definitions vary, smart growth means focusing on conservation strategies that help protect our health, natural environment, and make our communities more attractive and economically stronger. Due to their location in the oldest and most densely developed areas of our communities, brownfields offer strategic opportunities for municipalities to generate new sources of revenue, revitalize unproductive land, more efficiently deliver services, promote economic development, while restoring the environment.

Four broad generalized smart growth strategies connect explicitly to brownfield redevelopment: energy efficiency; renewable energy; storm water management; and sustainable remediation. The next section briefly highlights how these aspects of smart growth are not only good for the environment, but increasingly make business sense.

Energy Efficiency

Energy efficiency is a least-cost strategy to meet air pollution, emissions, and other policy objectives. It is also easier to incorporate at the beginning of a development rather than through a retrofit, meaning that brownfield redevelopment is an integral part of advancing energy efficiency goals.

However, much of energy efficiency’s benefits go unrealized. There are relatively high upfront costs to build with energy efficiency in mind, but the costs produce substantial future savings on electricity and heating. What this presents in the context of brownfield redevelopment is a split incentive between developers and future owners and occupiers. Developers may think they must incur the costs of using the most energy efficient and green building techniques while forgoing the future cost savings. Owners and tenants are increasingly demanding energy efficiency and want to realize the cost savings. However, developers may actually benefit from taking steps to incorporate energy efficiency and green building practices into a project.

Reduced utilities, environmental sustainability, and better quality workspaces are often attractive to tenants, and they may pay a premium for it. In fact, an article from the Journal of Real Estate Finance and Economics showed that rental market performance is reflected in significant premiums for the selling price of Energy Star-labeled and LEED-certified properties. Another study from Pivo and Fisher found “Responsible Office Properties” had net operating incomes, market values, price appreciation, and total returns higher or the same as conventional properties. In 2013, McGraw Hill Construction’s Green Retail and Hospitality Smart Market report found asset values increased 7% for retail, 11% for hotels, and 12% for restaurants, with similar increases in building return on investment. These findings were further bolstered in a collaborative study by the Institute for Market Transformation and the Appraisal institute in 2014. Locally, the St. Paul Port Authority’s Trillion BTU program helps incorporate energy efficient techniques into local redevelopment projects, producing energy expense savings for property owners while substantially reducing electric and gas consumption.

Renewable Energy

Renewable energy supports transitioning our electric grid away from reliance on fossil fuels and reducing our greenhouse gas emissions. Renewable options for brownfield redevelopment can include wind, solar, geothermal, and more. However, solar energy is one of the most common technologies adopted and is manifested in the brownfield context in two forms; as (1) brightfields or as (2) onsite renewable energy.

A brightfield is a brownfield, like a closed landfill, that oftentimes takes advantage of innovative techniques to install solar without penetrating the ground. Minnesota Brownfields recently wrote about the promise of capped landfills as solar sites. To summarize, solar development requires land with quality exposure to the sun, and capped landfills are often ideally suited due to their relative flatness and lack of tree cover. Brightfields are preferred in areas where no near-term form of higher or better use is planned or possible. They are one of the limited number of reuse options to bring these sites back into productive use.

Unlike a brightfield, onsite renewable generation is merged into the final design plans of a building. Though this may seem an expensive addition to a project, it can actually be a worthwhile investment for developers and benefit future owners and tenants. For tenants and owners, solar energy will offset some of their energy use. Depending on the arrangement, both larger and smaller tenants can benefit from electric bill reductions, or even generate revenue from their solar panels. In addition, larger electricity customers are attracted by the possibility of saving money on their peak demand charges. Many large companies even look to locate in places that can offer them such renewable energy and reputational benefits according to the Environmental and Energy Study Institute.

Like energy efficiency, studies have shown that developers can profit off selling or leasing their property for a premium. The Lawrence Berkley National Laboratory found that the presence of solar energy increases the value of homes in California by about $6,000/kW and results in them selling 20% faster. There are similar market premiums associated with incorporating renewable energy into commercial and retail properties as highlighted in the energy efficiency section. Given the steady decline in price of solar, these benefits are likely even higher today, albeit with differences from property to property and state to state.  Overall, the trend in solar and other renewable technologies warrants continued reevaluation by developers as the economics are quickly changing. There are even options available to defray some of the upfront costs through investment tax credits, or Property Assessed Clean Energy Financing (PACE).

Low Impact Development and Storm Water

Storm water management is another component of the relationship between brownfield redevelopment and climate smart growth. There is an inherent tension between the imperative to increase infiltration on brownfield sites given the potential threat of contaminants migrating into ground or surface water.

Storm water may also threaten the integrity of previously remediated sites if they are not built with the changing climate in mind. This may create a public health issue, and/or necessitate reopening closed sites for further remediation activity. As the climate continues to warm, Minnesota’s total annual rainfall is predicted to increase, fall more heavily, and come more intermittently.

Best practices in storm water management typically call for Green Infrastructure, or Low-Impact Development, both of which, according to the Environmental Protection Agency (EPA), refer to systems and practices that take advantage of or imitate natural process to “infiltrate, evapotranspirate or reuse storm water or runoff on the site where it is generated”. To accomplish this, soil and vegetation are used instead of, or in conjunction with, traditional drains, gutters, pipes and centralized treatment areas.

Just like with energy efficiency, low-impact development is easier when paired with new construction as opposed to retrofitting. Thus brownfield redevelopment’s unique position once again can lower costs of green infrastructure overall, and facilitate better storm water management practices. In fact, a 2015 report completed by CH2M Water Resources Consultants demonstrated that integrating Low-Impact Development into planned projects resulted in cost savings ranging from 30-60%.

Green and Sustainable Remediation

The remediation process offers another opportunity to promote cleaner, more environmentally friendly redevelopments. Green and sustainable remediation offers site-specific best practices, technologies, and processes to reduce the carbon and environmental footprint of a cleanup while mitigating contaminant risk. It seeks to balance community goals, economic development, and environmental impacts. The Minnesota Pollution Control Agency encourages sustainable remediation best practices in its Petroleum Remediation Program.

The crux of green and sustainable remediation tracks the five core objectives of EPA’s Greener Cleanups. These include minimizing energy, water and raw material consumption, waste generation, impacts to surrounding ecosystems, and emissions of air pollutants and greenhouse gases. Achieving these goals can be as simple as implementing no idling policies onsite and reusing deconstructed materials. It can also mean more innovative approaches like solar powered pump-and-treat systems, replacing energy drawn from the grid with renewable generation, low-impact development to manage water, or even phytoremediation.

Having such a breadth of possible strategies that fall under the umbrella of green and sustainable remediation can be both a blessing and a curse. On the one hand, it gives developers significant amounts of leeway to reducing carbon and environmental footprints. Developers can therefore tailor strategies in a way that works best for them. On the other hand, it makes generalization about the benefits of using green and sustainable remediation much more difficult to quantify relative to the strategies of smart growth already discussed.

Significant user benefits do exist. First, the use of these practices can improve stakeholder relations, reputation with a community, and offer a competitive advantage over other companies as green and sustainable remediation becomes the norm. A report by the Horinko Group notes that green and sustainable remediation often leads to cost and time savings for the site owner through greater efficiencies, but vary on a case-by-case basis. Like energy efficiency and renewable energy, costs often occur earlier in a project, but result in long-term net savings over the project life.

Taking Advantage of Brownfields

Brownfields have extremely high potential to become the focal point of building a cleaner, and more environmentally-friendly Minnesota. Leveraging these unique sites in such a way also does not necessarily mean incurring higher costs relative to the status quo. In fact, using energy efficiency, renewable energy, low-impact development, and green and sustainable remediation can lead to higher property values, higher rents, quicker sell times, competitive advantage, and project savings relative to the economics traditional sprawl development.

Granted, successful brownfield redevelopment inherently involves regulatory, funding, and technological challenges. However, the technologies in the sectors described above are evolving rapidly, and what once made no economic sense can rapidly become feasible. Staying current and adapting to changing incentives, regulations and market dynamics pose a challenge to would-be developers. Minnesota Brownfields strives to bridge the academic, public, and private sectors to keep the redevelopment community current with the latest policies and innovations, and to eliminate barriers to efficient redevelopment.

Interested in continuing this conversation? Minnesota Brownfields is developing educational programming on the intersection of smart growth and brownfield redevelopment in early 2019. Contact info@mnbrownfields.org to learn more.