Running a Successful Brownfields Revolving Loan Fund Program

1. Running a Successful Brownfields Revolving Loan Fund Program December 2004

2. Introduction Welcome By Judy Sheahan, The U.S. Conference of Mayors and MWMA Why we are here • Purpose/Need for Call • Overview of Presentation Introductions

3. Background on the USEPA Brownfields Cleanup Revolving Loan Program Pilot Program • Established as a pilot in 1997 under CERCLA 104(d) • Grant provided to state and local government agencies to capitalize revolving loan fund to make loans for cleanups Grant Program • Initial grant $350,000 – now up to $1 million per entity • 143 grants awarded under 104(d) to capitalize revolving loan funds (1997-2002) • Brownfields law passed in 2002 continued some elements of old RLF grant program and added new features; after new law - CERCLA 104(k)

4. Background on the USEPA Brownfields Cleanup Revolving Loan Program Pilot Program 1997-2002 -allowed for coalitions -increased award amount from $350,000.00 to $1 million -allowed the BCRLF to be used to purchase environmental insurance -Pilot could provide Direct Financial Assistance Grant Program under the new Legislation 2003 – Current -provides both loans and cleanup subgrants, No more than 40% of the funds awarded may be used for cleanup subgrants -20% cost share -prohibited from using grant funding for administrative costs -Easier to apply provisions of the National Oil and Hazardous Substances Contingency Plan (NCP) ("relevant and appropriate to the program")-Can address Petroleum, mine-scarred land, ‘drug labs’ and some asbestos/lead paint sites on a case-by-case basis.

5. Brownfields Cleanup Revolving Loan Grants Up to $1M Grant • Grants to eligible entities to capitalize a Revolving Loan Fund • Applicants must provide a 20% match! (E.g., $1million + $200,000 cost share = $1.2 million to start RLF) • RLF can provide low interest loans to eligible entities for cleanup • RLF can provide subgrants to eligible entities and nonprofits for cleanup of sites they own Eligible Cleanup Activities: • Removal of contaminated soils (dig and haul) • Engineering barrier over contaminated soils • Treatment of soil and\or groundwater • Environmental Insurance • All other costs necessary to cleanup the property

6. Brownfields Cleanup Revolving Loan Grants-cont Eligible Entities to receive a BCRLF loan/subgrant: • Local Governments • Tribes • States • Redevelopment Agencies • Non Profits • Private Developers/Property Owners (only eligible to receive loans not subgrants) *Loans/grants cannot be provided to party that caused Contamination *Old BCRLF Pilots can Transition to the New BCRLF Grant Program *Non competitive Supplemental Funding is still available

7. Facts and Figures on the BCRLF Program • As of November 1, 2004, 67 loans & 3 subgrants made; over $28 million 2 loans – 1999 12 loans– 2002 4 loans – 2000 19 loans– 2003 8 loans – 2001 26 loans– 2004 • Loans range from $50,000 to $1.95 million; average $460,000 • Loan interest rates 0-6% variable; 1.7% avg • Loan repayment – 1 month to 20 years; avg 6.7 years

8. Elements of a Successful BCRLF Program 4 Common Elements • A good understanding of the Product • A well defined and simple Cleanup Context/Process • An actual well thought out and defined Market • Assigned dedicated Staff/ Capacity to manage the Program

9. Your Product The grantees must understand what the BCRLF Product is • The BCRLF is a low-interest loan program, essentially it is gap-financing • Grantees must and have the freedom to design their particular BCRLF program so that it best assists your customer as defined by your marketing plan • Generally BCRLF programs provide direct loans that cover the gap between the financial institution and the owner's equity

10. Your Cleanup Context • The grantees must comply with all Applicable Federal and State Laws and ensure that the cleanup protects human health and the environment. • A successful program provides a clear context for the Cleanup • This is absolutely essential so that potential borrowers (often developers) have a clear understanding of the time lines and cost that they will be subject to when they borrower USEPA BCRLF funds.

11. State of Minnesota’s VIC • Very mature program and well known and used by developers throughout the State. It is the norm • MOA with USEPA, Region 5 • Entails a process that, for the purposes of USEPA’s BCRLF program, is capable of assuring cleanups in substantial accordance (adequate) with the requirements of the T&Cs of the grant. • Region 5 agreement with the MPCA that outlines and documents the above bullet. This agreement is used by all BCRLF Grantees in Minnesota. • The VIC helps potential Borrowers calculate the cost of cleanup and provides the kind of information needed to make sensible financial decisions about developing the property.

12. The Market Your market is who you want to reach. Your customer. -Who is your average customer? -What is your estimate of total market size? -What territory do you intend to serve? -Will you offer a variety of products or services? -Will you offer complimentary products and services?

13. The Market • Typically the BCRLF Market is a combination of a geographic area, a type of borrower (developer, nonprofit, or the city itself), a type of redevelopment/end-use • The more specific you are, the better definition of your customer (what their characteristics are), the easier it will be to more clearly define your market • How you define your market will also make a difference on how and what you use to reach that market. Will you direct mail, cold call, do walk ins, use the web, employ radio/television and/or print advertising? • Are you making a real effort to market your product?

14. Example of a Market Plan/Initiative Hennepin County • Target market is private developers and/or nonprofit organizations that have or will receive MDEED Grants • MDEED manages a mature and very successful Contamination Cleanup Grants Program that requires a 25% local match • Hennepin County’s BCRLF program helps MDEED Grantees meet the 25% local match

15. Grantee’s Capacity • Organizational Commitment • What Department has been assigned to run the project? • Do they have the financial support and political support to run it? • What is Organization’s long term goal for the BCRLF (1 loan vs. multiple loans) • Staff Expertise (Familiarity with ED is critical to understanding the financial structures and public/private elements to deals; environmental expertise valuable but can be secured) • Economic Development • Finance • Marketing • Local political issues • Communication skills • Staffing Levels • 2 days/week minimum • Authority to make decisions

16. Grantee’s Capacity Hennepin County • Hired a local person with State Government Management Experience and Private Environmental Consulting experience • Works a minimum of two days a week and essentially has no competing responsibilities • The ESD runs the program and has authority to make decisions about each loan. No real political concerns • Hennepin County ESD offers a full compliment of financial incentives for brownfields projects via their ERF fund (the commitment and resources exist)

17. Summary Question and Answer Session Open Discussion/Feedback • Other areas that impede RLF grant success? Potential Opportunities for Follow up?

18. USEPA Regional Contacts or Brownfields Coordinators List: Region 1 Carol Tucker 617-918-1221 Region 2 Larry D’Andrea 212-637-4314 Region 3 Tom Stolle 215-814-3129 Region 4 Wanda Jennings 404-562-8682 Region 5 Deborah Orr 312-886-7576 Region 6 Stan Hitt 214-665-6736 Region 7 Susan Klein 913-551-7786 Region 8 Kathie Atencio 303-312-6803 Region 9 Jim Hanson 415-972-3188 Region 10 Tim Brincefield 206-553-2100 HQs 202-566-2777 www.epa.gov/brownfields