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Model for Evaluating the Feasibility of Brownfields

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Title:
Model for Evaluating the Feasibility of Brownfields
Creator:
JUNG, JAE-MO
Copyright Date:
2008

Subjects

Subjects / Keywords:
Breakeven analysis ( jstor )
Brownfields ( jstor )
Business losses ( jstor )
Construction costs ( jstor )
Cost estimates ( jstor )
Environmental protection ( jstor )
Land development ( jstor )
Land use ( jstor )
Research and development costs ( jstor )
Zoning ( jstor )
City of Gainesville ( local )

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Source Institution:
University of Florida
Holding Location:
University of Florida
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Copyright Jae-Mo Jung. Permission granted to the University of Florida to digitize, archive and distribute this item for non-profit research and educational purposes. Any reuse of this item in excess of fair use or other copyright exemptions requires permission of the copyright holder.
Embargo Date:
8/31/2006
Resource Identifier:
495636476 ( OCLC )

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MODEL FOR EVALUATING THE FEASIBILITY OF BROWNFIELDS By JAE-MO JUNG A THESIS PRESENTED TO GRADUATE SCHOOL OF THE UNIVERSITY OF FLOR IDA IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DGREE OF MASTER OF SCIENCE UNIVERSITY OF FLORIDA 2005

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ACKNOWLEDGMENTS First of all, I would like to thank God for giving me an opportunity to study and earn the advanced degree. To my parents and parents in law, I want to express special gratitude for praying for health and encouragement to God. I am deeply indebted to Dr. Marc Smith, Dr. Raymond Issa and Dr. Ajay Shanker for help and suggestions in all the time of writing of this thesis. I would like to thank Mr. Steve Allen, owner of Steve Allen Construction and co-owner of Tallen Builders; Terre Talbot, co-owner of Tallen Builders; Mr. and Mrs. Ploss, and Joemer A. Ta-Ala for their help and interest. Moreover, I want to thank my sisters and brothers in law for supporting me. I owe a special thanks to Jae-Sung Lee for helping me to finalize the thesis. I would like to thank Chang-Keun Park. Especially, I would like to give my special thanks to my wife and daughter who give me a strength and belief. ii

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TABLE OF CONTENTS page ACKNOWLEDGMENTS ..................................................................................................ii LIST OF TABLES .............................................................................................................vi LIST OF FIGURES .........................................................................................................viii ABSTRACT .......................................................................................................................ix CHAPTER 1 INTRODUCTION........................................................................................................1 Background...................................................................................................................1 Statement of Problem...................................................................................................2 Research Objectives......................................................................................................2 Scope.............................................................................................................................3 Limitations....................................................................................................................3 Overview of the Research.............................................................................................4 2 LITERATURE REVIEW.............................................................................................5 Overview.......................................................................................................................5 Benefits from Brownfield Development......................................................................5 Obstacles of Brownfield Development.........................................................................6 Financial Programs.......................................................................................................7 Case Study....................................................................................................................9 Summary.....................................................................................................................11 3 METHODOLOGY.....................................................................................................12 Overview.....................................................................................................................12 Explanation of Case Study..........................................................................................13 4 BROWNFIELD DEVELOPMENT............................................................................14 Overview.....................................................................................................................14 Site Exploration..........................................................................................................14 Site Selection.......................................................................................................14 iii

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Land Zoning / Site Use........................................................................................14 Site Detail............................................................................................................14 Budget.........................................................................................................................15 Overview.............................................................................................................15 Site Use Calculation............................................................................................15 Construction Budget............................................................................................16 Land Acquisition.................................................................................................17 Other Costs..........................................................................................................17 ESA Budget of Best Case....................................................................................17 ESA Budget of Worst Case.................................................................................20 Duration......................................................................................................................22 Best Case.............................................................................................................22 Worst Case...........................................................................................................23 5 GREENFIELD DEVELOPMENT.............................................................................26 Overview.....................................................................................................................26 Site Exploration..........................................................................................................26 Site Selection.......................................................................................................26 Land Zoning / Site Use........................................................................................26 Budget.........................................................................................................................26 Overview.............................................................................................................26 Site Use Calculation............................................................................................26 Construction Cost................................................................................................27 Land Acquisition.................................................................................................27 Other Costs..........................................................................................................27 Worst Case...........................................................................................................27 6 VALUE-ENGINEERED COSTS...............................................................................30 Overview.....................................................................................................................30 Business Loss..............................................................................................................30 Brownfield Best and Worst Cases.......................................................................30 Greenfield Best and Worst Cases........................................................................30 Interest on Loan..........................................................................................................30 Brownfield Best Case..........................................................................................31 Brownfield Worst Case.......................................................................................31 Greenfield Best & Worst Case............................................................................31 7 ANALYSIS.................................................................................................................33 Overview.....................................................................................................................33 Analysis 1: Brownfield Best vs. Greenfield Best.......................................................33 Duration Difference.............................................................................................33 Budget Comparison.............................................................................................34 Break-even Day...................................................................................................34 Analysis 2: Brownfield Best vs. Greenfield Worst....................................................35 iv

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Duration Difference.............................................................................................35 Budget Comparison.............................................................................................35 Break-even Day...................................................................................................35 Analysis 3: Brownfield Worst vs. Greenfield Best....................................................36 Duration Difference.............................................................................................36 Budget Comparison.............................................................................................37 Break-even Day...................................................................................................37 Analysis 4: Brownfield Worst vs. Greenfield Worst..................................................37 Duration Difference.............................................................................................37 Budget Comparison.............................................................................................38 Break-even Day...................................................................................................38 Summary of Analysis.................................................................................................39 Recommendation to Make Brownfield Development Feasible..................................40 8 CONCLUSION AND RECOMMENDATIONS.......................................................42 Conclusion..................................................................................................................42 Recommendations for Future Research......................................................................42 REFERENCE LIST...........................................................................................................44 BIOGRAPHICAL SKETCH.............................................................................................47 v

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LIST OF TABLES Table page 1 – Financial Programs........................................................................................................8 2 – Insurance Coverage and Premium.................................................................................9 3 – Parking Space Requirement.........................................................................................16 4 – Brownfield Site Use.....................................................................................................16 5 – Brownfield Budget w/o ESA Budget...........................................................................20 6 – ESA Budget of Best Case............................................................................................21 7 – ESA Budget of Worst Case..........................................................................................22 8 – Greenfield Site Use......................................................................................................28 9 – Greenfield Construction Budget..................................................................................28 10 – Business Loss of Brownfield Best and Worst Cases.................................................31 11 – Business Loss Greenfield Best and Worst Cases.......................................................31 12 – Interest of Brownfield Best Case...............................................................................32 13 – Interest of Brownfield Worst Case............................................................................32 14 – Interest of Greenfield Best and Worst Cases.............................................................32 15 – Analysis 1...................................................................................................................33 16 – Break Even Day of Analysis 1...................................................................................34 17 – Analysis 2...................................................................................................................35 18 – Break Even Day of Analysis 2...................................................................................36 19 – Analysis 3...................................................................................................................36 20 – Break Even Day of Analysis 3...................................................................................37 vi

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21 – Analysis 4...................................................................................................................38 22 – Break Even Day of Analysis 4...................................................................................39 vii

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LIST OF FIGURES Figure page 1 – ESA Duration of Best Case..........................................................................................24 2 – ESA Duration of Worst Case.......................................................................................25 3 – Greenfield Duration of Best Case................................................................................29 4 – Additional Greenfield Duration of Worst Case...........................................................29 viii

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Abstract of Thesis Presented to the Graduate School of the University of Florida in Partial Fulfillment of the Requirements for the Degree of Master of Science in Building Construction MODEL FOR EVALUATING THE FEASIBILITY OF BROWNFIELDS By Jae-Mo Jung August 2005 Chair: Marc Smith Major Department: Building Construction Brownfields are sites that contain hazardous materials underneath resulting from past use. These materials can cause serious health problems, and limit development potential. The United States Environmental Protection Agency (USEPA) estimated over 425,000 existing brownfields whose total estimated size is over 5 million acres. Brownfields could be unused old buildings, contaminated vacant lots, or even abandoned railroads. They could be as big as several acres or as small as a gas station. Even though most people agree that brownfields must be cleaned and reused, it is hard to find someone who is willing to do that. The reasons are plenty. The main reason is the development cost of brownfields. It is hard to estimate the total brownfield development cost because of the uncertainties such as contamination level and cleanup ix

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regulations. These uncertainties lead the private sectors such as bankers, realtors, and private developers to shy away from brownfield development. To promote more brownfield development, federal, state, and local governments have established several financial programs. This research develops a model to evaluate the feasibility of brownfield development. Development costs of a brownfield and a greenfield will be estimated for an example site. Obstacles such as strict cleanup regulations and delays of development process also will be value engineered. Once all costs are considered, the development costs of a brownfield and a greenfield can be compared. On the comparisons, additional cost, break-even point and duration difference will be addressed. x

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CHAPTER 1 INTRODUCTION Background Brownfields, areas that have been contaminated from past use, have been in existence throughout the United States for years causing problems in urban redevelopment. First, hazardous materials underneath the brownfields can cause health problems. Second, brownfields are ideal sites for serious crimes to take place since these places have been abandoned for years and not frequented especially by law enforcers. Third, brownfields are an absolute eyesore and they ruin the aesthetic value of the community. The United States Environmental Protection Agency (USEPA) estimated over 425,000 existing brownfields throughout the United States (USEPA, 2004). Admittedly, it is difficult to know exactly how many brownfields exist. Other estimates suggest that there are 5 million acres of abandoned industrial properties in urban areas. Brownfields includes unused old buildings, contaminated vacant lots, or even abandoned railroads. The size of brownfields varies. They could be as big as several acres or as small as a gas station. There is no range to show whether sites included into the brownfield category should be cleaned or not. If a subjected site contains controlled substances such as bio-waste materials or other hazardous materials such as petroleum or petroleum products, and if a contamination level of the subjected site is higher than brownfield cleanup criteria, the site must be cleaned. 1

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2 Statement of Problem Even though most people agree that brownfields must be cleaned and reused, it is hard to find someone who is willing to do that. The reasons are plenty. The one main reason is the development cost of brownfields. It is hard to estimate the total brownfield development cost because of the uncertainties that people will encounter during the developing or early phase. One of the uncertainties is that no one knows exactly how bad the brownfield site is contaminated. Even though the actual soil test shows some indication of contamination, the test results do not show the extent of the contamination much less the materials or contaminants that cause such kind of contamination. The site may be contaminated more than the test results suggest. Another uncertainty is the cleanup regulations. These regulations are so strict and arbitrary that they may increase the cleanup duration thereby increasing the costs as well. Since developers and investors cannot estimate how much time and money they will need for this kind of development project, they hesitate to invest in brownfield development programs. Research Objectives Most of the time, uncertainties as regards to delays, strict environmental regulations, and development costs lead the private sectors such as bankers, real estate sales people, and private developers to shy away from brownfield development. To promote brownfield reuse, federal, state, and local governments have established several support programs to make brownfield development feasible. For example, the federal government has reduced the liability of cleanup and has offered tax incentives. On their part, the state and local governments have provided programs to fund and support brownfield development. Furthermore, many insurance companies offer insurance policies that can cover over-the-budget cleanup. Additionally, brownfields present

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3 potential cost savings. Since most brownfields are located at either downtown or areas that are already developed, streets, water lines, sewage systems, parking lots and other infrastructure systems are already in place. This means savings on infrastructure costs for the developer. The objective of this research is to develop a model to evaluate the feasibility of brownfield development. Development costs of a brownfield and a greenfield will be estimated for a sample site. Obstacles such as strict cleanup regulations and delays of development process also will be value engineered. Once all costs are considered, the development costs of a brownfield and a greenfield can be compared. On the comparisons, additional cost, break-even point and duration difference will be addressed. Scope The following questions are used in developing the model used in this study. How much are the total development costs of brownfield and greenfield? What is the difference between brownfield and greenfield development durations? What are obstacles of brownfield development? How much are obstacles if they are value engineered? Limitations This research is conducted in order to develop a model to evaluate the feasibility of brownfield development. Since the costs involved in brownfield development vary, the limitations of the research must be mentioned. No two sites are the same. Actual costs construction costs and land remediation costs are absent, these costs will be estimated. The dollar amount of the any grant is unknown until approved; supporting funds are not considered. Costs of business-loss and interest on loan will be estimated based on time delay.

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4 Overview of the Research Chapter 2 presents a review of literature on financial supporting programs, liability and previous brownfield projects. The literature review details key elements in developing brownfields such as available funds from the federal level to local governments, environmental insurance and liability relief. Chapter 3 is a methodology that describes the way the research is conducted. Chapter 4 and 5 are budget developments and development durations for brownfield and greenfield. Chapter 6 is a value engineered cost. Chapter 7 is a result and analysis section. Chapter 8 is the last chapter of this study, and outlines the recommendations for future research.

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CHAPTER 2 LITERATURE REVIEW Overview The literature review is divided into three categories. The first section details the benefits of brownfield development. The second section discusses barriers that make brownfield development difficult. The third section reviews available financing programs from federal, state and local governments, and available insurance policies. Benefits from Brownfield Development The potential benefits of brownfield development are many. The benefits can be divided into three categories, economic, environmental, and social. For economic benefits, Brownfield development creates jobs around the community (Land of Sky Regional Council, 2004; VanLandingham and Meyer, 2002; McCarthy, 2001; National Governors Association, 2000; Louder, 1997). It increases the value of the brownfield property which means higher tax revenues can be generated (Brownfields Center, 2005; Land of Sky Regional Council, 2004; VanLandingham and Meyer, 2002; McCarthy, 2001; National Governors Association, 2000). Moreover, once one brownfield project succeeds, it attracts other business into the communities (Land of Sky Regional Council, 2004; VanLandingham and Meyer, 2002). Removing contamination product or curing contaminated land improves the quality of soil, air, and water (Brownfields Center, 2005; Land of Sky Regional Council, 2004; De Sousa, 2002; VanLandingham and Meyer, 2002; McCarthy, 2001; Louder, 1997). It improves public health by reducing exposure to hazardous materials (Land of Sky Regional Council, 2004; VanLandingham and Meyer, 5

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6 2002; McCarthy, 2001; National Governors Association, 2000). Furthermore, brownfield development prevents greenfields from being replaced with new buildings or re-appropriated for other purposes (Land of Sky Regional Council, 2004; McCarthy, 2001; National Governors Association, 2000; Louder, 1997). Moreover, turning abandoned and ugly sites into clean sites makes areas around a brownfield site look better (Brownfields Center, 2005; Land of Sky Regional Council, 2004; De Sousa, 2002). Furthermore, new jobs and businesses created by brownfield development cause people to come together again (McCarthy, 2001). Obstacles of Brownfield Development Even though many potential benefits may be generated from brownfield development, obstacles continue to threaten the success of brownfield development. Since all the participants in any brownfield development project are responsible for cleanup, the owners and developers do not want to sell or buy brownfields (Planning and Development Department of City of Hamilton, 2005). Environmental regulations are so strict that they cause developers to stay away from any brownfield project (Planning and Development Department of City of Niagara Falls, 2004; Bressler and Hannah, 2000). Complicated land remediation process takes more time than is expected (Planning and Development Department of City of Niagara Falls, 2004). Sometimes unknown pre-existing contamination is found during remediation or construction, and it delays development process (Bressler and Hannah, 2000). There are not enough funds available for environmental studies and cleanup (Planning and Development Department of City of Niagara Falls, 2004). In addition, the expensive cost of remediation due to strict environmental regulations is one of the barriers (VanLandingham and Meyer, 2002). In

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7 the case of upgrading or demolishing existing infrastructures, additional cost is needed (Planning and Development Department of City of Niagara Falls, 2004). Financial Programs Financial support programs are divided into various categories: federal and state government levels, and private level such as the insurance companies. There are several federal agencies offering financial support to brownfield development. Among the several financial programs, only the USEPA fund program is discussed. The USEPA is offering several financial and technical aids. As shown in Table 1, there are two types of funding programs, direct funds and indirect funds. Assessment grants, clean up grants, revolving loan fund, and clean water state revolving loan funds are examples of direct funds. On the other hand, job training grants, targeted site assessment grants, and the environmental enforcement education grant program are indirect funds. Direct Funds are generally used for activities related to brownfield sites. Assessment Grants are used to buy brownfield sites and for clean up planning and design. Clean up Grants are used to help meet the budget for cleaning brownfield sites. Revolving Loan Fund Grants are lowor no-interest loans. Like other funds, these are also used for cleanup. Clean Water State Revolving Loan Funds are used to address water quality problems involved in brownfield sites. Indirect Funds are used for activities other than the ones relating to brownfield. Job Training Grants are used to educate people involved in brownfield projects. Targeted Site Assessments are established to provide funding or technical assistance for environmental assessments. The Environmental Enforcement Education Grant Program is for the promotion of public awareness of the issues that affect the environment. Further, the federal government has passed two major regulations to promote private sector investment in brownfield development. These are the Asset Conservation,

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8 Lender Liability, and Deposit Insurance Protection Act, and the Small Business Liability Relief and Brownfields Revitalization Act. The Asset Conservation, Lender Liability and Deposit Insurance Protection Act protects lenders and certain other parties from the risks associated with participating in brownfield projects. The Small Business Liability Relief and Brownfields Revitalization Act promotes more private capital and decreases development costs by offering liability relief (McCandless, 2002). In addition, the federal government has also offered the Brownfields Tax Incentive. The latter allows taxpayers to immediately reduce their taxable income by the cost of their eligible cleanup expenses (USEPA, 2003). Table 1 – Financial Programs SourcePro g ram TitleGrant AmountActivit y Assessment GrantsUp to $200,000 per Jurisdiction / SitePre Cleanup Environmental ActivitiesCleanu p GrantsU p to $200,000 p er SiteSite Cleanu p Revolving Loan Fund GrantsUp to $1,000,000 per Reci p ient for 5 YearsCleanup SubgrantsClean Water State Revolvin g Loan FundsVariesCorrect / Prevent Water Qualit y Problems*Job Training GrantsUp to $200,000 per Reci p ien t Integrate Training Activities*Targeted Site AssessmentsFunding / Technical AssisstanceEnvironmental Assessments*Environmental Enforcement Education Grant Pro g ra m VariesEnhance Public's Awareness, Knowedge & SkillsEPA (Brownfield Federal Programs Guide, USEPA, 2004) For state financial programs, the Florida Department of Environmental Protection also offers several brownfield supporting programs. In 1997, the Florida Legislature approved $3,000,000 for eligible local governments. In 1998, the Legislature created a tax credit incentive limited to $250,000 per site per year. In addition, taxpayers are allowed to claim an additional 10 percent of the total cleanup costs, not to exceed $50,000, in the final year of cleanup (Florida Department of Environmental Protection,

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9 1998). For private financial programs, many insurance agencies are now offering Environmental Insurance. Among the many insurance policies, pollution legal liability and cleanup cost cap are the most common type. Pollution legal liability provides the insured protection when the developers are claimed body injury and property damage. Cleanup Cost Cap covers a clean up participant from budget overrun due to unidentified pollution, additional pollution and changed regulations. Table 2 – Insurance Coverage and Premium Polic y TitleCovera g ePeriodPremium3rd Party Claims for Cleanup, Bodil y In j ur y & Pro p ert y Dama g e1st Party Claims for Bodily Injury & Pro p ert y Dama g eDefense CostsDiscovery of Unidentified Pollutio n Additional Amounts of PollutionChanges in Regulatory Requirements Polution Legal Liability1 to 10 Years$5,000 & GreaterCleanup Cost CapCompletion of Project w/ No Further Action About 8% of the Estimated Cleanup Cost (Environmental Insurance Policy Coverage and Terms, USEPA, 2004) Case Study The first case study is Rainier Court which is located in Seattle, Washington. The site was used as a garbage dump as far back as the 1930s. The new Project consists of 4 construction phases. Phase 1 is the Courtland including 208 units of elderly housing in a five-story building with roof parking, 9,000 square feet of commercial/retail space, and neighborhood-oriented specialty shops or services such as banking, coffee shops, delis and professional services. Rainier Court Family Apartments is Phase 2 including 178 units of affordable, family housing. Phases 3 and 4 will include additional housing and possibly 4,000 square feet of additional commercial space. King County has provided free technical assistance. The USEPA has granted $ 25,500 to remove underground storage tanks as well as money for groundwater sampling. To make this brownfield project more economically feasible, soil removal was adopted for the clean up approach.

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10 Moreover, the buildings and pavement are being designed to cover, or cap, as much of the contaminated soil as possible. After completion, the worst drug-dealing area is turned into functional space for the people in the community (City of Seattle, 2005). The second case study is the Headquarters for Alliance Environmental Systems, Inc. It is located at West Chester, Pennsylvania. The site had been used for a brick clay quarry, pharmaceutical manufacturing operations, and a storage and distribution center. This project is for the new headquarters with a new, spacious building that could accommodate its projected growth. Pennsylvania helps Alliance to get the Industrial Sites Clean up Fund as part of the state's Land Recycling Program. This fund allows companies to receive 2% interest loans for up to 75% of the cost of completing an environmental study or clean up plan. Moreover, Alliance was certified to use the federal Brownfields Tax Incentive. Estimated new jobs will be as many as 100 to 200. Most of all, this brownfield project inspired other companies to invest in brownfield developments (USEPA, 2004). The third case study is the Headquarters for Kenwal Steel Products Company. The site is located at Dearborn, Michigan. The site had been abandoned since 1920. There was an automotive plant contaminated with polychlorinated biphenyls (PCBs), lead, and carcinogens left by assorted tenants. Kenwal Steel Products Company built its 140,000-square-foot world headquarters on this site. In 1995 Michigan adopted amendments to the state Natural Resources and Environmental Protection Act (Part 201). First, the new law removes liability for contamination that the new investor did not cause. Second, the city can provide funds to offset the costs of cleaning up the site. Kenwal received a $711,000 grant for site reclamation during the first phase of development. The company received

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11 business tax credits totaling $1 million by refinements and financial incentives that Michigan enacted. The USEPA and Michigan State agreed that polychlorinated biphenyls could be contained rather than removed from the site because of its future industrial use. Removing the contamination would not have been cost effective for Kenwal. The project increased city property values by $62 million and generated $470,000 in additional tax revenues in 2001 and $5.2 million over a 10-year period. Moreover, brownfield redevelopment created more than 10,000 jobs until the year 2000 (Department of Economic and Community Development of Michigan, 2005). Summary In the literature review, several common financial support programs and environmental insurance for the brownfield development were mentioned. Many private investors and developers hesitate to develop brownfields because of uncertain development costs and regulations. However, as seen in the literature review, there are many financial securities for investors and developers to protect themselves from uncertainties. Most of all, the federal, state, and local governments have been making efforts to encourage developers and investors to participate in brownfield developments.

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CHAPTER 3 METHODOLOGY Overview Brownfield and greenfield developments share similar general development processes. Both need market and financial studies, site selection, site analysis, permits for construction and inspection, and business. They differ in the detailed implementation of these processes. The site analysis of greenfield development begins from the initial analysis for site engineering and infrastructure study to detailed analysis of regulatory requirements such as environmental approval and permitting. In the case of the brownfield development, on the other hand, a site contamination analysis is involved. This analysis shows basic information about the site, the level and kinds of contamination. During the permitting phase, brownfield development may require more work and time than greenfield development due to environmental regulations. As regards the construction phase, greenfield development needs more substantial site engineering and infrastructure, while brownfield development may need minor infrastructure improvement because brownfields are generally located at fully developed areas in the community. Most important, brownfield development requires a major phase of development, the land remediation. The cost for a land remediation is usually a major part of the total brownfield development cost. Many believe that brownfield development involves more time, more effort and more money than greenfield development. To evaluate the feasibility of brownfield development, the research will build a model. The research will estimate the development costs of brownfield and greenfield developments. 12

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13 Once development costs of each site is estimated, feasibility will be evaluated by using a model. Explanation of Case Study In the Site Exploration section, the brief information such as site selection, site use and site history of a brownfield and a greenfield are discussed. In the budget section, the budgets of a brownfield development and a greenfield development are estimated. For a brownfield development, Environmental Site Assessment (ESA) costs are estimated for best case and worst case scenarios. The durations of both developments are estimated in the duration section. The research value-engineers obstacles that brownfield developers need to overcome. Among obstacles, business loss and interest on loan due to the development delay are estimated in the section of value-engineered cost. Once all development costs are estimated, brownfield development feasibility is evaluated in the analysis section, and based on information gained on the analysis section, recommendations are mentioned to increase the feasibility of brownfield development in the recommendation section.

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CHAPTER 4 BROWNFIELD DEVELOPMENT Overview The brownfield development consists of site exploration, budget and duration. Under site exploration are site selection, land zoning / land use and site detail. The budget includes construction cost, land acquisition, other costs and environmental site assessment (ESA) cost. ESA costs and development durations are estimated for the best and worst cases. Site Exploration Site Selection For this study, the preferred size of a brownfield site is smaller than 2 acres. In downtown Gainesville, the brownfield that is smaller than 2 acres in size is the City Parking Lot #10. Thus, this brownfield is selected for this research. Land Zoning / Site Use According to the zoning ordinance of City of Gainesville, the land use of the selected brownfield is commercial. Since the site is located in the middle of downtown, the site use can not be changed to residential or industrial. For this reason, the business type is limited to Retail / Business based on land zoning regulations of the City of Gainesville. Site Detail The site is bounded to the North by SW 1st Avenue, to the East by SW 1st Street, to the South by SW 2nd Avenue and to the West by SW 2nd Street. The site has been 14

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15 used as a public parking lot and is fully paved with asphalt. The size of the site is around 0.92 acres. Infrastructure such as underground telephone, cable TV, electric and water lines, and sanitary and storm sewers are fully functional. The Market Street Pub is located on SW 1st Avenue. In addition Rice Hardware and a night club are located on SW 1st Street. According to the Health and Safety Guidance for construction of the Downtown Quadrant Parking Garage Facility, the NE corner of the site was a part of a dry cleaning facility from 1918 to 1922 (Ellis Environmental Group, 2002). Budget Overview The budget of brownfield development consists of the construction cost, land acquisition, other costs and ESA cost. The construction cost is divided into building cost, site development cost, infrastructure cost and legal and other fees. The cost of the site is acquired from the Alachua County Tax Appraiser. The ESA cost consists of best and worst cases. Based on the gained information, ESA cost and insurance premiums are estimated. Site Use Calculation Prior to estimating the development costs, the gross building area and other areas must be calculated. According to the Gainesville Land Development Code Sec. 30-332 (e), the reduction of required parking spaces is allowed if a site is located at the Central City district and if there is an alternative means to access the site. However, if a site is located at a Traditional City Area, the parking exemption of Central City District is not applicable. Unfortunately, the selected site is located at a Traditional City area, which means the site must follow Gainesville Land Development Code Sec. 30-332 (b). The

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16 minimum number of motor vehicles and bike parking spaces is calculated based on Code30-332 (b) (Table 3). Table 3 – Parking Space Requirement Business TypeMoto VehicleBicycleRetail stores & Personal Services not listed elsewhere 1 per 250 square feet of floor area 10 percent of required number of vehicle parking (Gainesville Land Development Code Sec. 30-332 (b)) Tree island areas and loading areas are also calculated. However, because the site is located at the downtown area, and because the City of Gainesville just started the City Park with storm -water retention near the downtown area, storm-water retention is not calculated. Table 4 shows the required spaces for each purpose and gross building area. Table 4 – Brownfield Site Use Total Site40,000SFDetailSF Building EfficiencyLeasable AreaParking Ratio (SF / Space)Min. Sapces RequiredAvg. SF / SpaceParking AreaRetail19,0000.9171002506825017100Loading Area100002500950Bike Parking71282Tree Island74002736Parking & Other SF20868Building SF19000Gross Site Covera g e39868Delta132 Construction Budget Building cost is for the building itself. The research uses the median-high cost of $70 per square foot for retail stores (RS Means 2004). Site development cost includes site demolition, permanent landscaping, parking lot and on-site infrastructure. The area of site development is 21,000 square foot (total area less gross building area). To estimate the site development cost, the research used the median high $31.50 per square foot.

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17 However, since the site is located at an already developed area, removing the vegetation, clearing the land and grading the land surface are not necessary. For this reason, the research uses $23.50 per square foot for the site development cost. Infrastructure cost is for improving off-site infrastructure. Even though the site is located at a fully developed area, some of the infrastructure may be damaged during the ESA or obsolete, so they may need to be replaced or fixed. The research uses 30 percent of the site development cost for infrastructure cost. Fees and legal cost includes one time fees such as the one due to the architect, and civil, construction management and consultant fees, permits, inspections, etc. The research uses 6 percent of building cost. Land Acquisition For the land acquisition cost, the research uses the land price from Alachua County Tax Appraiser. According to the Alachua County Tax Appraiser, the current value of the site is $169,100. Other Costs This cost is estimated for unknown miscellaneous expenses during the course of development. Five percent of construction cost is calculated. ESA Budget of Best Case The phase I site assessment report includes the physical and historical information of the site, the results of physical reconnaissance of the site, development of clean up levels in accordance with federal, state, or local regulations, development of corrective action alternatives and detailed evaluations of each alternative, and the presentation of preferred remediation alternatives. The cost range of Phase1 by qualified engineers is from $2,000 to $5,000 (Lorenz and Mignery; E. P. Systems Group, Inc., 1997). The research uses the minimum cost of $2,000.

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18 In the Phase 2 site investigation report, information such as site maps indicating concerned areas, locations of samplings, lab analysis result of samples, rationale for sampling locations and analytical parameters, and the description of sampling protocol and analytical methods is provided. In July 2002, the City of Gainesville hired Water & Air Research, Inc. to conduct a Limited Contamination Assessment (LCA). The Florida Environmental Protection Department requires that an LCA be conducted prior to the ESA Phase 2 if the brownfield site is suspected to be contaminated by Petroleum compounds. This type of report contains similar information that the ESA Phase 2 report does. The difference between the ESA Phase 2 report and the LCA report is the level of assessment. The LCA report is less intensive than the ESA Phase 2 report. Since the research could not obtain the total cost of the LCA cost from Air & Water Research, Inc., the cost is estimated based on the LCA report. According to the report, to collect samples, hand auger equipment was used. A total of 31 soil samples were collected (approximately 4” long via a sampling tube down to 14= below land surface). To test the collected samples, an organic vapor meter (OVM) was used to screen volatile organic compounds. Three drilling crews on July 15 and 2 drilling crews on July 16 were used. For the report preparation cost, 10% of site investigation cost is used. The Phase 3 report contains actual cleanup activities and contamination level after cleanup activates. Under the best case scenario, the Interim Source Removal replaced the whole land remediation phase. According to the LCA report, groundwater laboratory test results show that samples from near the former dry cleaning operation indicates that Perchloroethylene (PCE) exceeded the groundwater guidance, but Trichloroethene (TCE) does not exceed the groundwater guidance. However, these samples are only samples

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19 showing PCE and TCE. Soil screening and laboratory test results show no evidence of soil contamination. Even though the ground water test result shows that the subjective site is contaminated, it is not serious. In the best case scenario, it is assumed that there are not any obstacles that would up the cost more and slow down a remediation phase. The land remediation cost is estimated based on the LCA and the Brownfields Technology Primer 2001 by the USEPA. Among the several remediation technologies, the Air Sparging method is adopted to clean up the ground water. Since the test result shows that the level of contamination is not serious and the samples from near the former dry cleaner show a not-so-serious water contamination, the remediation size is 10,000 square foot which is one quarter of total lot size. Since the test results do not show soil contamination evidence, the cost of soil remediation is not figured. According to the Brownfields Technology Primer 2001, the price range of Air Sparging is $150,000 $350,000 per acre. Since the contamination level is not serious, the research uses the lowest cost. For the report preparation cost, 10% of the remediation cost is used. Environmental insurance premiums generally range from $5,000 to $1,000,000. The insurance premium in the research is estimated based on premiums stated at Chapter 2. In the case of this research, the contamination level is not serious, and the land remediation could be done within 1 year. It is assumed that $5,000 for the premium of the pollution legal liability, and 8% of total remediation cost is used for the cleanup cost cap. Since the estimated costs are based on cost of 1997 and 2001, the research adds inflation.

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20 Table 5 – Brownfield Budget w/o ESA Budget DescriptionDetail$ AmountBuilding Cost1,330,000.00$ Building ItselfSite Developing Cost493,500.00$ Site Demolition Permanent Landscaping Parking Lot On-Site InfrastructureInfrastructure Cost148,050.00$ Off-Site Infrastructure ImprovementFees & Legal79,800.00$ Architect Civil Engineering Construction Management Planning & AdministrationSubtotal2,051,350.00$ Land Acquisition169,100.00$ Other CostsMiscellaneous102,567.50$ Budget w/o ESA Cost2,323,017.50$ Building Cost70.00$ Site Developing Cost23.50$ SF of Gross Building Area19000SF of Other Areas21000Construction Cost$ / SF Retail Store (Median) ESA Budget of Worst Case For Phase 1 and 2, the research uses the same ESA cost as the best case. For Phase 3, in the worst case scenario, the Interim Source Removal Action fails to meet the remediation target criteria. A responsible party must remediate the site until a test result meets the target criteria. The research assumes a responsible party cleans the entire site by using the same method as for the best case. According to Chapter 62-785, after Active Remedial Action, a responsible party must conduct a Post Active Remediation Monitor until the test result meets the criteria. For this Post Active Remediation Monitor, the research uses 10 percent of the total remediation cost. For the Remedial Action report and additional report preparation costs, 10 percent of the total remediation cost is used. For the insurance premium, a responsible party purchases the

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21 insurance policy when an insurance company reviews the documents provided and agrees to provide the policy. For this reason, a responsible party pays the same insurance premium as in the best case. If an insurance company agrees to provide the policy and agrees to pay the over-run clean up cap, the over-run must be taken out from the total remediation cost. As in the best case, the research adds inflation on ESA cost. Table 6 – ESA Budget of Best Case DescriptionDetail$ / UnitUnit$ AmountPhase 1. Site Assessment Lump Sum2,000.00$ Collecting Samples1,688.00$ Labor Associate Engineer446.40$ 1446.40$ Technician297.60$ 2595.20$ Technician Aide223.20$ 2446.40$ Equipment Direct Push Sampler100.00$ 2200.00$ Lab Test of Samples6,252.00$ Labor Senior Engineer706.80$ 53,534.00$ Engineer II483.60$ 52,418.00$ Equipment Organic Vapor Analyzer60.00$ 5300.00$ Subtotal7,940.00$ Report Preparation794.00$ Subtotal8,734.00$ Land Remediation Labor Senior Engineer706.80$ 107,068.00$ Technician297.60$ 257,440.00$ Technician Aide223.20$ 255,580.00$ Technology Air Sparging3.45$ 1000034,500.00$ Subtotal54,588.00$ Report Preparation5,458.80$ Subtotal60,046.80$ Pollution Legal Liability5,000.00$ Cleanup Cost Cap4,803.74$ Subtotal9,803.74$ Subtotal80,584.54$ Infaltion14,381.94$ Total94,966.48$ Phase 2. Site InvestigationInsurance PremiumPhase 3. Land Remediation

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22 Table 7 – ESA Budget of Worst Case DescriptionDetail$ / UnitUnit$ AmountPhase 1. Site Assessment Lump Sum2,390.00$ Collecting Samples1,688.00$ Labor Associate Engineer446.40$ 1446.40$ Technician297.60$ 2595.20$ Technician Aide223.20$ 2446.40$ Equipment Direct Push Sampler100.00$ 2200.00$ Lab Test of Samples6,252.00$ Labor Senior Engineer706.80$ 53,534.00$ Engineer II483.60$ 52,418.00$ Equipment Organic Vapor Analyzer60.00$ 5300.00$ Subtotal7,940.00$ Report Preparation794.00$ Subtotal8,734.00$ Land Remediation Labor Senior Engineer706.80$ 4028,272.00$ Technician297.60$ 10029,760.00$ Technician Aide223.20$ 10022,320.00$ Technology Air Sparging3.45$ 40000138,000.00$ Subtotal218,352.00$ Report Preparation21,835.20$ Subtotal240,187.20$ Pollution Legal Liability5,000.00$ Cleanup Cost Cap4,803.74$ Subtotal9,803.74$ Subtotal261,114.94$ Over-run paid by Insurance(163,764.00)$ Subtotal97,350.94$ Infaltion17,374.23$ Total114,725.17$ Phase 2. Site InvestigationPhase 3. Land RemediationInsurance Premium Duration Best Case The research creates a land remediation process flowchart with time frame by using Chapter 62-785 of the Brownfields Cleanup Criteria. The conducting time of Phase 1 usually takes 1 to 3 weeks depending on the history of the site (Lorenz and Mignery; E. P.

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23 Systems Group, Inc., 1997). The research uses 5 days to conduct Phase 1 because the lot size is less than 1 acre. For Phase 2, according to the LCA report, collecting the samples took only 2 days. For testing the samples, the research allots 5 days because the number of samples collected is only 31. The research allows 3 days to prepare the report. Total duration of Phase 2 is 10 days. For Phase 3, according to Chapter 62-785 (2) (c), a person responsible for brownfield site remediation needs to submit an Interim Source Removal Proposal (5 days) if new methods are adopted for the interim source removal. After reviewing the proposal, the department or delegated local programs need to provide or notify approval or notification of correction (30 days). For the Interim Source Removal action, Chapter 62-785 (3) (a) (4) specifies that the ground water remediation does not exceed 30 days. The research uses 25 days for remediation. Once the result shows the level of ground water contamination under the remediation target criteria, the remediation phase 3 is finished. To get approval, a responsible party needs to prepare and submit an Interim Source Removal Report with No Further Action Proposal (10 days). The Department or delegated local programs, then, need to provide or notify approval or notification of correction (60 days). The total duration for Phase 3 is 125 days. Worst Case For Phase 1 and 2, the research uses the same ESA duration as the best case for Phase 1 and 2. For Phase 3, if the Interim Source Removal Activity fails, a responsible party needs to submit a Remedial Action Plan (10 days). After reviewing the proposal, the department or delegated local programs need to provide or notify approval or notification of correction (60 days). The research uses 25 days for 3 acre remediation for the best case. In the worst case, 75 additional days of remediation duration is used. After remediation, a responsible party submits a Remedial Action Report (10 days). After

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24 reviewing the proposal, the department or delegated local programs need to provide or notify approval or notification of correction (60 days). After receiving an approval, a responsible party submits a Post Active Remediation Monitoring Plan (10 days). After reviewing the proposal, the department or delegated local programs need to provide or notify approval or notification of correction (60 days). The purpose of the Post Active Monitoring is to check whether the level of contamination meets the criteria (30 days). When the level of contamination meets the criteria, a responsible party submits a Site Rehabilitation Report & No Further Action Proposal (10 days). After reviewing the proposal, the department or delegated local programs provide an Approval of Site Assessment and Site Rehabilitation Completion Order (60 days). The Additional remediation duration is 385 days. 30Days25Days10Days60Days125TotalDepartment / DelegatedLocal program ReviewInterim SourceRemoval ActivitiesInterim Source RemovalReport & No FurtherAction Proposal w/o or w/Institutional ControlsDepartment / DelegatedLocal program ReviewApproval of Site Assessment& Site RehabilitationCompletion Order (Brownfields Redevelopment Program Guidance Manual and Chapter 62-785 Brownfields Cleanup Criteria) Figure 1 – ESA Duration of Best Case

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25 10Days60Days75Days10Days60Days10Days60Days30Days10Days60Days385TotalPrep & SubmitRemedial Action PlanDepartment / DelegatedLocal program ReviewActive Remedial ActionRemedial Action ReportDepartment / DelegatedLocal program ReviewPost Active RemediationMonitoring PlanDepartment / DelegatedLocal program ReviewPost Active RemediationMonitoringSite RehabilitationCompletion Report& No Further Action ProposalCompletion OrderDepartment / DelegatedLocal program ReviewApproval of Site Assessment& Site Rehabilitation (Brownfields Redevelopment Program Guidance Manual and Chapter 62-785 Brownfields Cleanup Criteria) Figure 2 – ESA Duration of Worst Case

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CHAPTER 5 GREENFIELD DEVELOPMENT Overview The greenfield development also consists of site exploration, budget and duration. Under site exploration are the following: site selection, land zoning / land use and site detail. The budget category covers construction cost, land acquisition, other costs. Site Exploration Site Selection The research does not choose any actual site. Land Zoning / Site Use In the case of the best case, the research assumes that a site has the appropriate zoning for project. Budget Overview The budget consists of the construction cost, land acquisition, and other costs. The construction cost is divided into building cost, site development cost, infrastructure cost and legal and fees. The budgets of best and worst cases are same. Site Use Calculation The gross building area and other spaces are calculated based on Gainesville Land Development Code Sec. 30-332 (b). 26

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27 Construction Cost Building cost is for the building itself. The research uses a median high cost of $70 per square foot for retail stores (RS Means 2004). Site development cost includes removing vegetation, clearing the land, grading the land surface, permanent landscaping, parking lot construction and on-site infrastructure. The area of site being developed is 22,000 square foot (total area less gross building area). To estimate the site development cost, the research uses a median high cost of $31.50 per square foot. Infrastructure Cost is for off-site infrastructure such as the installation of utilities, septic and sewer systems, storm-water retention and building access roads and driveways. Since the research assumes that a site is located at a rural area, most infrastructure need to be constructed. For the infrastructure cost, the research uses 30 percent of the site development cost. Fees and legal cost includes one time fees such as the one due to the architect, and civil engineer, construction management and consultant fees, permits, inspections, etc. The research uses 6 percent of building cost. Land Acquisition Since an actual site is not used, the land acquisition cost remains same as brownfield land acquisition. Other Costs This cost is estimated for the unknown miscellaneous expenses in the course of the project. This category remains same. Worst Case In the worst case, rezoning is necessary. The rezoning process may take months or years.

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28 Table 8 – Greenfield Site Use Total Site40,000SFDetailSF Building EfficiencyLeasable AreaParking Ratio (SF / Space)Min. Sapces RequiredAvg. SF / SpaceParking AreaRetail18,0000.9162002506525016200Loading Area100002500900Bike Parking61278Tree Island64002592Storm Water Retention10%18,0001800Parking & Other SF21570Building SF18000Gross Site Coverage39570Delta430 Table 9 – Greenfield Construction Budget DescriptionDetail$ AmountBuilding Cost1,260,000.00$ Building ItselfSite Developing Cost693,000.00$ Removing Vegetation Clearing Land Grading Land Surface Permanent Landscaping Parking Lot On-Site InfrastructureInfrastructure Cost207,900.00$ Installing Utilities Installing Septic / Sewer Systems Storm-water Retention Bulding Access Roads & DrivewaysFees & Legal75,600.00$ Architect Civil Engineering Construction Management Planning & AdministrationSubtotal2,236,500.00$ Land Acquisition169,100.00$ Other CostsMiscellaneous102,567.50$ Budget2,508,167.50$ Building Cost70.00$ Site Developing Cost31.50$ SF of Gross Building Area18000SF of Other Areas22000Construction Cost$ / SF Retail Store (Median)

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29 30Days30Days60TotalEvaluate Concepts(Feasibility Study& Site Analysis)Ready for Site PlanSelect SiteSite Assessment(To Understand SiteCharateristics) (The Process of Land Development, Dewberry, 2002) Figure 3 – Greenfield Duration of Best Case yes15Days15Days30Days30Days60Days150TotalPublic Hearing & RecommendsAction to Governing BodyGovernning Body ReviewsApprovedGovernment Body StaffSurrounding Land Owners& Civic AssociationPlanning Board ConductsNotify Surrounding Land Ownersof Filing Request& Public Hearing ScheduleCoordinate with LocalIs Rezoning Required?Prepare & File AppropriateApplication & Drawings for Reviewby Approving Authority (The Process of Land Development, Dewberry, 2002) Figure 4 – Additional Greenfield Duration of Worst Case

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CHAPTER 6 VALUE-ENGINEERED COSTS Overview To show additional cost or lost cost due to longer development duration, the research value engineered obstacles. Among obstacles, the research value engineered business loss and interest on loan. The value engineered costs are estimated based on the difference of durations of both site developments. Business Loss The business loss is a burdened cost when a developer may loss a business opportunity due to longer development duration. The research assumes that a developer leases a retail store. The research uses $18.50 per square foot per year for the rental rate of a retail store in Gainesville. For vacant ratio, 0.9 is used. Finally, $5.50 per square foot per year is used for operating expense. The business losses of each case are the same for brownfield development. For the greenfield, the business losses of each case are same. Brownfield Best and Worst Cases Table 10 shows the business losses of brownfield best and worst cases. Greenfield Best and Worst Cases Table 11 shows the business losses of greenfield best and worst cases. Interest on Loan The interest on a loan is an expense developers may pay when a development is delayed (a lender may not make a loan until brownfield problems are solved, but the loan terms provide an indication of the potential loss due to time delays). The research 30

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31 assumes developers borrow 80 percent of the total budget including ESA cost from a bank with 7 percent annual interest. Since the ESA cost is different for each case, interest expense is also different for each brownfield development scenario. For greenfield development, the interest expense of the best case and worst cases are same. Brownfield Best Case Table 12 shows the interest of brownfield best case. Brownfield Worst Case Table 13 shows the interest of brownfield worst case. Greenfield Best & Worst Case Table 14 shows the interest of greenfield best and worst cases. Table 10 – Business Loss of Brownfield Best and Worst Cases Current Market Rental 18.50$ / SF/Yearx Gross Leaseable Area17,100SFx Vacant Ratio0.9Potential Gross Income284,715.00$ /YearOperating Expenses5.50$ / SF/YearTotal Operating Expenses94,050.00$ Net Operating Income190,665.00$ / YearBusiness Loss / Day635.55$ Estimated Business Loss Table 11 – Business Loss Greenfield Best and Worst Cases Current Market Rental 18.50$ / SF/Yearx Gross Leaseable Area16,200SFx Vacant Ratio0.9Potential Gross Income269,730.00$ /YearOperating Expenses5.50$ / SF/YearTotal Operating Expenses89,100.00$ Net Operating Income180,630.00$ / YearBusiness Loss / Day602.10$ Estimated Business Loss

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32 Table 12 – Interest of Brownfield Best Case Construction Cost2,323,017.50$ ESA Cost94,966.48$ Total Budget2,417,983.98$ Borrowing Portion80%Borrowed Money1,934,387.19$ Interest / Year7%Interest / Year135,407.10$ Days / Year365Interest / Day370.98$ Estimated Interest Table 13 – Interest of Brownfield Worst Case Construction Cost2,323,017.50$ ESA Cost97,350.94$ Total Developing Cost2,420,368.44$ Borrowing Portion80%Borrowed Money1,936,294.75$ Interest / Year7%Interest / Year135,540.63$ Days / Year365Interest / Day371.34$ Estimated Interest Table 14 – Interest of Greenfield Best and Worst Cases Construction Cost2,508,167.50$ Total Budget2,508,167.50$ Borrowing Portion80%Borrowed Money2,006,534.00$ Interest / Year7%Interest / Year140,457.38$ Days / Year365Interest / Day384.81$ Estimated Interest

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CHAPTER 7 ANALYSIS Overview In this chapter, the research analyzes cost break-even day, duration difference and additional cost per day for each case. Based on this information, the potential of brownfield development is evaluated. Further, recommendations to improve the potential of brownfield development are discussed. Analysis 1: Brownfield Best vs. Greenfield Best Duration Difference As shown at Table15, the brownfield development takes 65 days longer than the greenfield development. Table 15 – Analysis 1 DetailBrownfieldGreenfieldESA / Site Ready Duration12560Duration Difference65Construction Budget2,323,017.50$ 2,508,167.50$ ESA Budget94,966.48$ -$ Interest / Day370.98$ -$ Business Loss / Day635.55$ -$ Construction & ESA Budgets2,417,983.98$ 2,508,167.50$ Interest & Business Loss65,424.34$ -$ Total Budget2,483,408.33$ 2,508,167.50$ Budget Difference(24,759.17)$ Additional Cost / Day(380.91)$ 33

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34 Budget Comparison In the Analysis 1, the total greenfield budget is higher than the total brownfield budget even though developers spend extra money on ESA, pay more interest on loan and suffer a business loss. The first reason is the site development and infrastructure costs. These two categories take over 30 percent of the total greenfield budget. This indicates that a developer may save on site development and infrastructure costs when developing a brownfield. This is one of advantages in developing a brownfield. The second reason is that the ESA cost is only $95,000. When developers remediate a low level contaminated site, the ESA cost may not be a major cost category. Break-even Day Table16 shows that if developers keep the remediation process under 150 days, the brownfield development of Analysis 1 has a better chance to be feasible. On other words, developers have 24 extra days. Table 16 – Break Even Day of Analysis 1 DetailBrownfieldGreenfieldESA / Site Ready Duration14960Duration Difference89Construction Budget2,323,017.50$ 2,508,167.50$ ESA Budget94,966.48$ -$ Interest / Day370.98$ -$ Business Loss / Day635.55$ -$ Construction & ESA Budgets2,417,983.98$ 2,508,167.50$ Interest & Business Loss89,581.02$ -$ Total Budget2,507,565.01$ 2,508,167.50$ Budget Difference(602.49)$ Additional Cost / Day(6.77)$

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35 Analysis 2: Brownfield Best vs. Greenfield Worst Duration Difference Table17 shows that the duration of the greenfield development is 85 days longer than that of the brownfield development. Table 17 – Analysis 2 DetailBrownfieldGreenfieldESA / Site Ready Duration125210Duration Difference85Construction Budget2,323,017.50$ 2,508,167.50$ ESA Budget94,966.48$ -$ Interest / Day-$ 384.81$ Business Loss / Day-$ 602.10$ Construction & ESA Budgets2,417,983.98$ 2,508,167.50$ Interest & Business Loss-$ 83,887.75$ Total Budget2,417,983.98$ 2,592,055.25$ Budget Difference(174,071.27)$ Additional Cost / Day(2,047.90)$ Budget Comparison The total greenfield budget is higher than the total brownfield budget. In the Analysis 2, developers pay interest and lose business opportunity because of the longer greenfield development duration. Break-even Day Brownfield developers may have 174 extra days. Analysis 2 shows longer extra days than Analysis 1.

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36 Analysis 3: Brownfield Worst vs. Greenfield Best Duration Difference According to Table19, the duration difference is 450 days. One of the reasons of the longer duration is the high cleanup level. Another is the department review duration. The total review duration of Analysis 3 is 330 days, 65% of the total ESA duration. Table 18 – Break Even Day of Analysis 2 DetailBrownfieldGreenfieldESA / Site Ready Duration299210Duration Difference89Construction Budget2,323,017.50$ 2,508,167.50$ ESA Budget94,966.48$ -$ Interest / Day370.98$ -$ Business Loss / Day635.55$ -$ Construction & ESA Budgets2,417,983.98$ 2,508,167.50$ Interest & Business Loss89,581.02$ -$ Total Budget2,507,565.01$ 2,508,167.50$ Budget Difference(602.49)$ Additional Cost / Day(6.77)$ Table 19 – Analysis 3 DetailBrownfieldGreenfieldESA / Site Ready Duration51060Duration Difference450Construction Budget2,323,017.50$ 2,508,167.50$ ESA Budget114,725.17$ -$ Interest / Day371.34$ -$ Business Loss / Day635.55$ -$ Construction & ESA Budgets2,437,742.67$ 2,508,167.50$ Interest & Business Loss453,102.39$ -$ Total Budget2,890,845.06$ 2,508,167.50$ Budget Difference382,677.56$ Additional Cost / Day850.39$

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37 Budget Comparison The brownfield budget shows higher budget amount than the greenfield budget. The 450 day duration difference makes developers pay higher interest and business loss than Analysis 1 and 2. Break-even Day Table20 shows that after 129 days, brownfield developers may lose $850 per day. The developers need to reduce 380 days of the ESA duration to make the brownfield development feasible. Table 20 – Break Even Day of Analysis 3 DetailBrownfieldGreenfieldESA / Site Ready Duration12960Duration Difference69Construction Budget2,323,017.50$ 2,508,167.50$ ESA Budget114,725.17$ -$ Interest / Day371.34$ -$ Business Loss / Day635.55$ -$ Construction & ESA Budgets2,437,742.67$ 2,508,167.50$ Interest & Business Loss69,475.70$ -$ Total Budget2,507,218.37$ 2,508,167.50$ Budget Difference(949.13)$ Additional Cost / Day(13.76)$ Analysis 4: Brownfield Worst vs. Greenfield Worst Duration Difference The duration difference of Analysis 4 is 300 days. The duration difference is reduced 150 days from Case 3.

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38 Budget Comparison The budget difference between the brownfield development and greenfield development is reduced. Even though the budget gap is decreased, it is not enough to make the Analysis 4 feasible. Break-even Day Table26 shows that 279th day from the beginning of ESA is the break-even day. Developers may lose $772 per day from 280th day. Table 21 – Analysis 4 DetailBrownfieldGreenfieldESA / Site Ready Duration510210Duration Difference300Construction Budget2,323,017.50$ 2,508,167.50$ ESA Budget114,725.17$ -$ Interest / Day371.34$ -$ Business Loss / Day635.55$ -$ Construction & ESA Budgets2,437,742.67$ 2,508,167.50$ Interest & Business Loss302,068.26$ -$ Total Budget2,739,810.93$ 2,508,167.50$ Budget Difference231,643.43$ Additional Cost / Day772.14$

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39 Table 22 – Break Even Day of Analysis 4 DetailBrownfieldGreenfieldESA / Site Ready Duration279210Duration Difference69Construction Budget2,323,017.50$ 2,508,167.50$ ESA Budget114,725.17$ -$ Interest / Day371.34$ -$ Business Loss / Day635.55$ -$ Construction & ESA Budgets2,437,742.67$ 2,508,167.50$ Interest & Business Loss69,475.70$ -$ Total Budget2,507,218.37$ 2,508,167.50$ Budget Difference(949.13)$ Additional Cost / Day(13.76)$ Summary of Analysis The range of duration difference between the brownfield development and greenfield development is from negative 65 days to positive 450 days. The one and a half year gap makes the evaluation process of the brownfield feasibility difficult. This gap makes developers hesitate to invest on brownfield development. Furthermore, the negative $2,000 to positive $850 additional cost per day range also keeps away developers from the brownfield development. The first two cases show the brownfield feasibility increases if brownfields contains a low level of contamination or if the ESA meets the cleanup level in the initial stage of the project. However, if the brownfield project faces obstacles such as strict regulations, unknown contamination or high targeted cleanup level, the feasibility of brownfield development decreases. Analysis 3 and 4 shows that to make the brownfield development feasible, developers need to overcome 230 days to 380 days. The research value engineered only

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40 two obstacles, business loss and interest. If more obstacles are involved and value engineered, the chance of the brownfield development will decrease. Recommendation to Make Brownfield Development Feasible When people develop greenfields, the risks they face are reduced gradually. However, brownfield development shows a different pattern. The risks of brownfield development are not reduced until most development phases are finished because of contaminated sites. When people decide to develop brownfields, they expect higher returns or supporting programs to compensate the risks they take. Since the market is already shaped around the brownfield site, if the developer chooses the right business, higher returns may be had. The question is about the supporting programs. To get supporting programs from the federal, state and local governments, developers must meet the requirements these agencies ask for. This research does not use any supporting programs because the developers cannot rely on these supporting programs until they get them. Besides supporting programs, what else can make a brownfield development project feasible and attractive to developers? According to the four comparisons above, one of the major reasons making brownfield development unfeasible is the total ESA duration. If the ESA duration can be reduced, the brownfield development may have a better chance to succeed. Another reason is the method of the ESA. The city of Gainesville planned to build a new parking lot with elevator. To have an elevator, an elevator shaft must be buried deep into 55 ft below grade where contaminated ground water exists. That is the reason why the City of Gainesville conducted the LCA. If the proposed business has shallow independent foundations that do not disturb contaminated ground water, and the entire site is paved, ESA may not be an issue.

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41 The risk of developing a brownfield is greater than a greenfield. Some risks can be avoided, and a brownfield can be potentially lucrative. To have a better chance for a brownfield development to be a success, possible risk-reduction measures must be found and used to make the development feasible even without supporting programs.

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CHAPTER 8 CONCLUSION AND RECOMMENDATIONS Conclusion To assess whether a brownfield development has potential, the research developed a model to compare the cost differential between brownfield and greenfield sites. The total budget of brownfield and green-field developments was compared. Additionally, business loss and interest debt on construction loans were also value engineered based on the lost days for each scenario. In the example presented the first two comparisons show the brownfield project as feasible. The last two comparisons, however, show the brownfield projects as more expensive than greenfield. The main reason is the longer development duration. A developer may save on site engineering and infrastructure costs, but lose on business opportunity and pay more interest due to project delays. To make brownfield projects more feasible, reducing the ESA duration itself and finding alternative ways to reduce ESA duration were recommended. If the developers spend more time to analysis the brownfield prior to the actual development phase, the risks can be reduced and the chance of a profitable project can be greater Recommendations for Future Research The research used estimated cost and duration. To have more accurate results, additional research must be conducted. ESA Costs & Duration: Obtain actual ESA costs & durations from previous brownfield projects. Financial Programs: Obtain actually granted amount, if any. Find what kind of supporting programs besides the grant may aid the brownfield project. 42

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43 Alternative Methods of ESA: Find alternative ways to remediate contaminated land in order to show a variety of feasibility analyses. Greenfield Projects: Obtain actual greenfield projects costs.

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REFERENCE LIST Bressler, Anlan J, and Hannah, John A., 2000, Brownfield Redevelopment: A Risk versus Reward Proposition, International Risk Management Institute, http://www.irmi.com/Expert/Articles/2000/Hannah12.aspx , July 2005 Brownfields Center, 2005, Brownfields Basics, Brownfields Center at Environmental Law Institute, http://www.brownfieldscenter.org/big/bfbasics.shtml , July 2005 City of Gainesville, Gainesville Land Development Code Sec. 30-332 City of Seattle, 2005, Rainier Court Fact Sheet, City of Seattle, http://www.ci.seattle.wa.us/mayor/RainierCourtFactSheet.htm , July 2005 Department of Economic and Community Development of Michigan, 2005, Michigan Returns Brownfields to Productivity, HUD User, http://www.huduser.org/periodicals/fieldworks/1001/fworks2.html , July 2005 De Sousa, Christopher A., 2002, Turning Brownfields into Green Space in the City of Toronto, Landscaping and Urban Planning at University of Wisconsin at Milwaukee, http://www.uwm.edu/MilwaukeeIdea/CEO/brownfields/pdf/lup_624_2003.pdf , July 2005 Ellis Environmental Group, 2002, LC, Health and Safety Guidance for Construction of the Downtown Quadrant Parking Garage Facility, Gainesville, Florida Dewberry, Sidney O. and Champagne, Philip C., 2002, Land Development Handbook – Planning, Engineering, and Surveying 2 nd Edition Florida Department of Environmental Protection, 1998, Frequently Asked Questions Regarding the Florida Brownfields Program, Florida Department of Environmental Protection http://www.dep.state.fl.us/waste/quick_topics/publications/wc/brownfields/geninfo/faq_9806.pdf , July 2005 Florida Department of Environmental Protection, 2005, Brownfields Redevelopment Program Guidance Manual, Florida Department of Environmental Protection, http://www.dep.state.fl.us/waste/quick_topics/ publications/wc/brownfields/geninfo/guidance_20050701.doc , July 2005 44

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45 Florida Department of Environmental Protection, Chapter 62-785 Brownfields Cleanup Criteria, Florida Department of Environmental Protection, http://www.dep.state.fl.us/waste/quick_topics/rules/documents/CH62-785_4-17-05.pdf , July 2005 Land of Sky Regional Council, 2004, Regional Brownfields Initiative, Land of Sky Regional Council, http://www.landofsky.org/planning/p_brownfields.html#benefits , July 2005 Lorenz, Joe and Mignery, Tom, 2001, Brownfield remediation, Environmental Center, http://www.environmental-center.com/articles/article1009/article1009.htm , July 2005 Louder, Lorrie, 1997, Testimony on Local Government Perspectives on Federal Incentives for Brownfields Cleanup and Redevelopment, United States Senate Committee on Environment and Public Works, http://epw.senate.gov/105th/louder.htm , July 2005 McCandless, Mary Ellen, 2002, Building on Brownfields; New programs to encourage redevelopment of these abandoned industrial sites are transforming brownfield sites from intimidating to inviting, Facility City, http://www.facilitycity.com/busfac/bf_02_05_cover.asp , July 2005 McCarthy, Linda, 2001, Brownfield Redevelopment: A Resource Guide for Toledo and Other Ohio Governments, Developers, and Communities, Urban Affairs Center at University of Toledo, http://uac.utoledo.edu/Publications/brownfield-redevelopment.pdf , July 2005 National Governors Association, 2000, New Mission for Brownfields Attacking Sprawl by Revitalizing Older Communities, National Governors Association, http://preview.nga.org/Files/pdf/REPORT200010BROWNFIELDS.pdf , July 2005 Planning and Development Department of City of Hamilton, 2005, Brownfield Redevelopment vs. Greenfield Development, Planning and Development of City of Hamilton, http://www.vision2020.hamilton.ca/downloads/POINTS-TO-PONDER-Brownfield-vs-Greenfield-Development.pdf , July 2005 Planning and Development Department of City of Niagara Falls, 2004, Niagara Falls Brownfields Redevelopment, Planning and Development of City of Niagara Falls, http://www.city.niagarafalls.on.ca/whatsnew/webstylebrochure.pdf , July 2005 RS Means, Building Construction Cost Data 2004 62nd Annual Edition, 2004 United States Environmental Protection Agency, 2004, About Brownfields, United States Environmental Protection Agency, http://www.epa.gov/swerosps/bf/about.htm , July 2005

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46 United States Environmental Protection Agency, 2004, Brownfields Federal Programs Guide, United States Environmental Protection Agency, http://www.epa.gov/brownfields/partners/federal_programs_guide.pdf , July 2005 United States Environmental Protection Agency, 2003, Brownfields Tax Incentive, United States Environmental Protection Agency, http://www.epa.gov/brownfields/facts/taxincentive_03.pdf , July 2005 United States Environmental Protection Agency, 2004, Brownfields Tax Incentive Case Study, United States Environmental Protection Agency, http://www.epa.gov/brownfields/html-doc/btpacase.htm , July 2005 United States Environmental Protection Agency, 2001,Brownfields Technology Primer; Requesting and Evaluating Proposals that Encourage Innovative Technologies for Investigation and Cleanup United States Environmental Protection Agency, Environmental Insurance Policy Coverage and Terms, United States Environmental Protection Agency, http://www.epa.gov/brownfields/insurance/ei_insurance_coverage_012405.pdf , July 2005 VanLandingham, H. Wade and Meyer, Peter B., 2002, Public Strategies for Cost-Effective Community Brownfield Redevelopment, Center for Environmental Policy and Management at University of Louisville, http://cepm.louisville.edu/Pubs_WPapers/practiceguides/PG1.pdf , July 2005 Water & Air Research Inc, 2002, Limited Contamination Assessment of City Parking Lot #10, Gainesville, Florida Water & Air Research Inc., List of Equipment Rental Costs for Use by W&AR Field Teams, Water & Air Research Inc., http://www.waterandair.com/gsa/Default.htm#List%20of%20Equipment%20Rental%20Costs%20for%20Use%20by%20W&AR%20Field%20Teams , July 2005

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BIOGRAPHICAL SKETCH I was born December 25 th 1973. I graduated from Muyng-Suk high school in 1992. I received bachelor’s degree in architectural engineering from Han-Nam University in 2000. I started a graduate program at University of Florida in 2002 and graduated with Master of Science in Building Construction in 2005. 47