Colorado Project Funding Sets Precedent

Brownfields Capital, a specialty lending and investment management firm, recently announced the closing and funding of its first project, Gold Hill Mesa in Colorado Springs, Colorado. Brownfields Capital is a financial intermediary that aggregates investment capital, underwrites the ownership entity (borrower) and project, and provides complete project financing.

The patented Brownfields Capital platform is a transaction process coupled with a financial instrument called a Brownfields Value Contract (BVC), designed to enable institutional and private capital to be deployed while actively shielding investors, owners, future owners and communities from current and future risks associated with environmental impairment. 

“The brownfields real estate market is enormous and has been estimated by industry observers at approximately $2 trillion. But to date, less than $3 billion of capital has been raised to target investments in environmentally impaired properties because of the real or perceived risks,” said Cheryl Hoffman, the founder and CEO of Brownfields Capital.

The Brownfields Capital process aligns all parties needed to characterize, remediate, insure, entitle, land-plan and redevelop polluted sites in a single set of interdependent agreements before significant capital is invested. The process recognizes that brownfield redevelopment differs from traditional real estate development, thus the capital structure must be different, too.  The process creates a special purpose vehicle (SPV), which is an entity formed with the expertise to own and redevelop the property, and finances that entity through its BVC.

The SPV is created when the owner of the contaminated site contributes or sells the property and all of its rights to the SPV and takes back marketable equity ownership in the SPV. The fully capitalized SPV owns and controls the site and assumes responsibility for remediation and redevelopment, allowing the site owner to remove any contingent or actual liabilities associated with the site from its financial statement. The establishment of the SPV, and its supporting business plan, creates a way to finance cleanup and development away from the owner’s balance sheet and protects its shareholders from losses and risks.

Gold Hill Mesa Development
Gold Hill Mesa is a 210-acre former gold mill site located in the heart of Colorado Springs that has remained idle for 50 years due to environmental concerns. The mill closed in 1949, leaving behind a mesa containing 14 million tons of gold tailing-infused soil.  Over the past three decades, attempts to reprocess the tailings to recover remaining metals or redevelop the site have failed.

In March 2006, Brownfields Capital provided Gold Hill Mesa Partners a $19 million Brownfields Value Contract with an expected term of 3.25 years. The BVC provides revolving debt financing for the complete remediation and development of the site. Gold Hill Mesa Partners, LLC has started cleanup and development of the site. The plan envisions a mixed-use development, drawing on the influences of New Urbanism. The development is currently under way with revenues expected to begin in the summer of 2006. BFN