Brownfields Revolving Loan Fund (RLF) 101 Presentation

1. Brownfields Revolving Loan Fund (RLF) 101 Presentation EPA Regions 8, 9, and 10February 5, 2009

2. Overview • Setting up RLF Team Roles and Responsibilities • Marketing • RLF Financial Management • Site and Applicant Eligibility • Eligible Use of Funds • EPA Review and Approval Roles Site testing and sampling at the Las Vegas, NV Armory Site.

3. Overview, cont’d Cross-Cutting Requirements Record-Keeping and Reporting Program Income Tracking Amendments and RLF Policies Supplemental Funding Closeout

4. Topic 1: Setting up RLF TeamRoles and Responsibilities

5. Four Key Roles in RLF Program • EPA Project Officer • RLF Recipients (Grantee) • Borrowers • Sub-grantees Three-tiered process Setting up RLF Team Roles and Responsibilities

6. EPA's Role • Provide technical assistance • Assist in review of documents • Approve site and borrower eligibility • Monitor financial, environmental, and periodic progress reports • Monitor program and ensure compliance with cooperative agreement Setting up RLF Team Roles and Responsibilities

7. RLF Recipient (Grantee) • Administer RLF program - create RLF program manager/coordinator role • Ensure compliance with terms and conditions • Environmental cleanup • Financial management • Compliance with federal, state, local laws The Villa Italia Mall in Colorado. Setting up RLF Team Roles and Responsibilities

8. RLF Recipient (Grantee) • Fulfill two key roles • Fund Manager • Qualified Environmental Professional (QEP) Setting up RLF Team Roles and Responsibilities

9. RLF Two Key Roles • Fund Manager • Establish criteria for selecting borrowers and sub-grantees • Ensure prudent lending practices are used • Establish methods of payment and disbursement • Adhere to eligible cost requirements • Ensure cost share and program income requirements are met Setting up RLF Team Roles and Responsibilities

10. RLF Two Key Roles • Qualified Environmental Professional (QEP) • Coordinate, direct & oversee site-specific cleanups • QEP can be State agency, but does not have to be government employee; can be contractor • Determine whether cleanup is authorized • Review public comments • Ensure compliance with applicable laws and regulations Setting up RLF Team Roles and Responsibilities

11. Borrowers and Sub-grantees • Borrowers - contractually responsible to RLF recipient, not EPA • Can be public or private parties • Responsible for cleanup and documenting fund uses • Sub-grantees - cannot be private parties and applicant must own the site • Funds can only be used for eligible costs under the RLF program. Administrative costs not allowed Setting up RLF Team Roles and Responsibilities

12. Topic 2: Marketing

13. Marketing Recap • Marketing Plan as a grant deliverable. • Recap of the March 2008 RLF Best Practices Conference Call on Marketing: Marketing

14. Marketing Recap • It starts with identifying your target audience: Who in my community is a likely user of my loan product? • Making the connection with your target audience: What professional and/or information networks are these targets linked into? • Delivering the message: How do you make your message “stick” with your target audience? Marketing

15. Topic 3: RLF Financial Management

16. Financial Management RLF Fund Manager • Maintain accounting records • Develop internal budget controls for cash disbursement, revisions and record-keeping • Ensure source documentation (payroll, time card, loan award documents, etc.) • Develop/maintain payment schedule • Ensure advances of loan funds are in an interest bearing account RLF Financial Management

17. Cost-Share (20%) • Can be in the form of cash, labor, materials or services that are eligible costs under the RLF Program • Provide adequate documentation • Federal funds cannot be used as match, except HUD CDBG dollars • Pass 20% share onto borrowers & sub-grantees • Program income such as loan fees and interest payments are eligible RLF Financial Management

18. Prudent Lending Practices • What are prudent lending practices? • Refer to the procedures the grant recipient establishes to ensure sound financial management of the RLF • Include establishing interest rates, repayment terms, fee structure, and collateral requirements • Grantees often partner with financial organizations to assist with lending Golden Urban Renewal Authority (GURA) cleanup and redevelopment. Golden, Colorado RLF Financial Management

19. Prudent Lending Practices • Collateral • EPA requirements • Assuming risk • Creative ways to secure collateral • Interest rates • Public vs. private borrowers • Repayment Terms • Meeting the needs of the borrower and your RLF program Cleanup underway in Missoula, Montana. RLF Financial Management

20. Topic 4: Site and Applicant Eligibility

21. Eligible Sites • The site must meet the brownfield definition, which is: • “...real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant.” • Abandoned, idled, or underused industrial or commercial properties • Reuse/redevelopment is complicated by real or perceived environmental contamination Site and Applicant Eligibility

22. Eligible Sites Sites with the following contaminants can be eligible for RLF loans and sub-grants: • Hazardous substances • Petroleum contamination • Asbestos & lead based paint • Controlled substances (e.g., meth labs) • Mine-scarred lands • Among other contaminants Site and Applicant Eligibility

23. Petroleum Sites • Relative low risk • No viable responsible party • Applicant not responsible party • No RCRA order State review based on statutory requirements to determine whether the site is: Site and Applicant Eligibility

24. Properties not considered Brownfields by EPA • Listed sites or sites proposed for listing on the National Priorities List (NPL); • Sites subject to CERCLA orders or consent decrees; or, • Federal properties (except land held in trust for an Indian tribe) Site and Applicant Eligibility

25. Eligible Borrowers Any public or private entity with control or access of the brownfields site Eligible Sub-grantees States Local governments Tribes Non-profit organizations Redevelopment agencies Land clearance authorities Other quasi-governmental entities created by state or local governments Eligible Borrowers and Sub-grantees Gold Hill Mesa Redevelopment, Colorado Springs, Colorado Site and Applicant Eligibility Site and Applicant Eligibility

26. Sub-grantee Eligibility Restrictions • Cannot sub-grant to yourself • Sub-grantee must own the land • For profit organizations are not eligible for sub-grants • Max of $200,000 sub-granted per site, and up to 40% of your grant • Cannot pair two sub-grants from separate RLFs for work on one site. • It is ok to pair a $200k cleanup grant and a $200k RLF sub-grant Site and Applicant Eligibility

27. Eligible Borrower/Sub-grantee The borrower/sub-grantee cannot be a potentially liable party under CERCLA 107: • Past owner or operator during release of contamination • Cause or contributor to contamination • Generator or transporter of contamination Site and Applicant Eligibility

28. All Appropriate Inquiries (AAI) • AAI is the process of evaluating a property for: • Potential environmental contamination • Potential liability for environmental contamination • Requires Phase I environmental site assessment within in one year prior to voluntary acquisition. • Also known as: “Environmental due diligence” and “Environmental site assessment standards” • ASTM Standard E1527 - 05 • AAI Rule available at: www.epa.gov/brownfields.regneg.htm Idalia Court RLF Cleanup, Aurora Colorado Site and Applicant Eligibility

29. Topic 5: Eligible Use of Funds

30. Removing, mitigating a or preventing a release Capping contamination Excavation, consolidation or removal of contaminated soils Site assessment activities that are necessary to the cleanup process Site monitoring including sampling and analysis Installation of drainage controls Installation of fences and signs Among other cleanup activities Expenses for site cleanup activities Financial management expenses Costs for monitoring groundwater or soil for contamination VCP or State cleanup program fees Expenses for travel, training, equipment and contractual support Purchasing environmental insurance Eligible Activities and Costs Activities Costs Eligible Use of Funds

31. Pre-cleanup assessment, identification and characterization Construction, demolition and development activities that are not cleanup actions Public or private drinking water supplies that have deteriorated through ordinary use Among other activities not related to the cleanup A penalty or a fine A federal cost share requirement Costs of complying with federal laws other than those of the applicable cleanup Administrative costs Ineligible Activities and Costs Activities Costs Eligible Use of Funds

32. Topic 6: EPA Review and Approval Roles

33. EPA Review and Approval Roles • The process will vary by Region, state program, and project • A more detailed checklist is available • Project Activities/Items: X X X X X X X X X X EPA Review and Approval Roles

34. Topic 7: Federal Cross-Cutting Requirements

35. Federal Cross-Cutting Requirements • What are they? • Requirements of other federal laws and Executive Orders that apply to federal financial assistance and activities • Who is responsible? • EPA retains ultimate responsibility but often the grantee is doing the on-the-ground work • In sum, we’re in this together Federal Cross-Cutting Requirements

36. Federal Cross-Cutting Requirements • What are the main requirements to look out for? • Endangered Species Act • National Historic Preservation Act • Occupational Safety and Health Act • Davis-Bacon Prevailing Wage Rates • MBE/WBE • AND there are others… Federal Cross-Cutting Requirements

37. Topic 8: Record Keeping and Reporting

38. Record Keeping • Quarterly Reports • Due 30 days after the quarter ends • Document progress of outputs/outcomes and project milestones • Budget recap including approved budget vs. costs incurred for quarter and remaining funds • Complete Property Profile Forms (PPF) and update as information obtained • i.e. types of contaminants removed, institutional controls, funds leveraged, jobs created, etc. Record Keeping and Reporting

39. Record Maintenance Maintain records for at least three years after submitting last report Obtain EPA approval prior to destroying records Additional record keeping may be necessary if RLF continues to operate after closeout RLF grants records are not subject to the Federal Freedom of Information Act Record Keeping and Reporting

40. Auditing Grantees are required to secure an outside auditor to conduct periodic program audits Costs incurred for securing the services of an outside auditor to conduct audits is an “ineligible” direct cost Must ensure sub-grantee and borrower compliance with RLF terms & conditions Record Keeping and Reporting

41. Topic 9: Program Income Tracking

42. Program Income What is program income? • The amount of money earned during the period of the award • It refers to the funds that have come back to the RLF after you have made your loans and sub-grants • It is the grantee’s responsibility to track program income Belmar Redevelopment - Lakewood, Colorado Program Income Tracking

43. Program Income Program income includes: • Principal repayments • Interest earned on outstanding loan principal • Loan fees • Closing fees • Other income generated from RLF operations Program Income Tracking

44. A Few ThingsAbout Program Income • Grantee needs to loan/sub-grant program income before using grant funds • Does not affect the 40% sub-grant limit • i.e., a grantee could sub-grant 100% of its program income budget if desired. • Program income still subject to $200,000 per site limit on sub-grants • Program income no longer needs to follow the original petroleum/hazardous substance budget Program Income Tracking

45. Topic 10: Amendments and RLF Policies

46. Policies That Affect RLF Grantees • Amendments • Program Waiver allows for maximum project period of fifteen years • Extensions are linked to supplemental funding awards Amendments and RLF Policies

47. Policies That Affect RLF Grantees Closeout Accrued Program Income Funds that return to you following closeout Closeout agreement may include a reporting plan How CERCLA and Federal requirements will apply to activities after closeout Amendments and RLF Policies

48. Policies That Affect RLF Grantees • Discounted Loans • Eligibility treated same as sub-grants (no private entities) • Amount of principal forgiveness is limited to 30% or $200K • Amount of principal forgiveness plus sub-grants cannot exceed 40% of award Amendments and RLF Policies

49. Topic 11: Supplemental Funding

50. Supplemental Funding • National competitive request for proposals • Available to new rules RLF grantees* • Requests must be made in writing via a letter addressing the stated considerations • Letters must be postmarked by: February 11, 2009 • Awards are expected late Spring 2009 *if Considerations on next slide are met Supplemental Funding