A Potential for Renaissance

By Chris Olson

The City of Rochester should be immensely proud of their brownfield efforts over the past 10 years. The city’s ability to tap into significant state and federal grants to revitalize 285 acres of brownfields shows what can be done when revitalization efforts become a priority.

Rochester’s inability to grow outward through traditional “development creep” is a double-edged sword. On one hand, inability to annex additional surrounding lands puts a handicap on Rochester compared to other cities that have the luxury to sprawl, but on the flip side, that same limitation forces a constant reassessment of opportunities to revitalize the core of the city. This helps eliminate the plague of other cities where greenfield sprawl has resulted in deterioration of the older city core.

The Orchard-Whitney site presents an interesting challenge given the fact that the properties are “underwater” in terms of assessed value vs. back taxes, have substantial contamination, limited fixed assets, and are located in a challenging area. My views come from the corporate property owner perspective and therefore will quite likely be very different from those of a developer or financial lender. 

Prediction Is Difficult ... Especially About the Future!

Hindsight is 20/20, but indications of an upswing are apparent. Construction of the new soccer stadium and a recent uptick in real estate speculation in the area are good signs. The city has already successfully tapped into a number of brownfield grants, providing resources to support acquiring the property through foreclosure.

The Phase I information collected indicates that there will be a challenge ahead in terms of remediation, but absent a change of heart from the current owners, the city already owns most of the risk, so it might as well have the property too. 

Prior to any acquisition, the city should get agreement from U.S. EPA that the past cost claim will not be held against the city if they take ownership — after all, U.S. EPA is supporting the city through its brownfield program and the drums were clearly related to past operations. If the city takes title to the property, it will be in a better position to control the future development and ensure it is consistent with overall plans for the area. In addition, the city will also will be able to control the pace of environmental work on the site.

I would suggest using some of the existing grant money to perform a proper assessment of soil and groundwater issues so that a good set of current data is established. Understanding the actual issues that need to be addressed will eliminate the risk of the unknown.

In my opinion, the city should avoid getting into the actual remediation of the property. Redevelopment of the site needs to be carefully integrated with remedial actions so that cost efficiencies can be derived through risk-based cleanup and use of engineered controls such as building slabs, parking lots, etc.

On the other hand, there may be a few things the city can do in the interim to help reduce future site costs. For example, a city ordinance requiring use of city water and prohibiting the use of groundwater could help the site reach risk-based endpoints for groundwater contamination faster.

The Present Is a Key to the Past

Don’t overlook the fact that investigation of the site might reveal some issues related to owners that were on the site prior to the current “deadbeat dads.”  While the utility company ownership period was short, there was a long period of GM ownership.

 If the city decides to approach past owners, it should do so on a voluntary basis, perhaps as a request to contribute toward remediation costs. The litigation route should be avoided at all cost, since it is time-consuming, expensive and not likely to yield positive results (except for the law firms involved).   

It may also be worth determining if any insurance policy might have been in place for the building fire on 354 Whitney Street that could help offset some of the expensive fire-related demolition work performed by the city.

All Developers Are Not Created Equal

It is possible that the developers that have looked at the site to date may not really be brownfield developers. My experience is that traditional developers sometimes indicate that they have brownfield experience, but that could mean they pulled an underground tank at a site in the past as part of an overall greenfield development. Given the smorgasbord of constituents at the site, the city will want to offer the site to developers that are true brownfield experts, accustomed to dealing with this type of challenge.  

Finally, many brownfield developers today are very focused on urban infill projects that provide re-entitlement opportunities to take the site to a higher use, thereby achieving a higher value on the vertical build-out. To the extent that there is potential for this former manufacturing area to be part of an overall renaissance associated with the new soccer stadium, there could be retail/commercial opportunities that will generate interest from the development community. Putting together a market offering that highlights the attributes of the site and market trends may yield some interesting results. BFN

Chris Olson is manager of real estate reuse at Atlantic Richfield, a BP company.

Read Rochester’s Poster Child, the case study this article is based on, and other expert advice on the Orchard-Whitney site from the varying perspectives of the Brownfield News editorial board:
DEVELOPER’S DEPARTMENT Can you find a good apple in this orchard?
TECHNICAL DEPARTMENT What a personality!
INSURANCE DEPARTMENT Perfume and lipstick to help developers see past flaws
ACCOUNTING DEPARTMENT Financial reporting considerations not a deterrent
COMMUNITY DEPARTMENT A good place for all of us to live in
OWNER’S DEPARTMENT A potential for renaissance
U.S. EPA DEPARTMENT The classic brownfield story line

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