Take a still-shaky real estate market. Add some politicians, community groups and profit-seeking business owners. Top it all off with a site harboring the mysterious remnants of decades of industrial contamination.

It's a recipe for brownfield deal-making that can make a greenfield real estate project look like a walk in the park.

"One of the principal hurdles in a brownfield deal is that you have different interests between the stakeholders. That's sometimes true with [other types of] deals, but they're particularly pointed with brownfield deals," says Todd Davis, chief executive officer of Bedford, Ohio-based Hemisphere Development, which specializes in brownfield redevelopment. "You can have past owners or operators of a property who are afraid of being sued [over contamination]. You can have regulators who want to see certain cleanup standards being achieved that may not be practical in the context of the transaction. The number of parties involved in a brownfield transaction is typically broader, and you need a larger orchestration of those parties to pull off the transaction."
 "When the public comes into the equation, that can be a knotty issue too. How well are they in tune with what the plan is about, and its benefits? And if they feel that they're not engaged... you can run into some kinds of problems that can cause significant delays." Gary Rozmus,
Vice President, Gannett Fleming
"The environmental issues play into how much the deal costs, how long it will take the developers to obtain funding," agrees Gary Rozmus, vice president of Gannett Fleming, an international engineering consulting firm in Woodbury, N.Y. "When the public comes into the equation, that can be a knotty issue too. How well are they in tune with what the plan is about, and its benefits? And if they feel that they're not engaged... you can run into some kinds of problems that can cause significant delays."

The most successful brownfield dealmakers have learned through experience how to mitigate the impact of unique challenges posed by developing contaminated land. By cultivating a deep understanding of brownfield issues, building consensus among stakeholders from Day 1, and relying on a stable of trusted team members, they know how to keep brownfield deals from getting derailed.

Doing your homework

Going into a deal with the facts on your side can be the best way to run interference with stakeholders who are at odds—and to head off disagreements as much as possible.
 "I can't overemphasize the need for face-to-face meetings. People develop ideas [about a brownfield] if they haven't seen the site. We like to get everybody out on the property together and meet with each other, where it's much easier to overcome presumed resistance." Stuart Miner,
President of Denver-based Brownfield Partners
"The reuse plan has to generate enough real estate value to cover the cost of the transaction and make a return for investors," says Stuart Miner, president of Denver-based Brownfield Partners, an urban in-fill developer and management consulting firm. "You need to demonstrate that [there will be] an effective cleanup, that it will be safe for the reuse intended. I've seen some brownfield projects where the reuse plan was so intense and so inconsistent with the community's former vision of the property as a contaminated mess that it has created community resistance."

Davis believes that doing your homework up front about what others need and want from the finished development is also vital: "You need to really understand the interests of all those stakeholders before you get in over your head in the transaction."

Davis cited a casino brownfield project that his firm is just finishing up near Columbus, Ohio [See "Gaming Goes Green," Brownfield Renewal, October 2010] as an example of how important it can be to research a deal early on. "One of the first principal issues we had was to make sure that our perspective of several of the regulatory hurdles was being viewed by the regulators the same way that we were viewing them as developers. We sat down as soon as we could with the regulatory authorities to compare notes and make sure everyone agreed on how to address the contamination," he says. "We collaborated through the entire process... and avoided wasting a lot of time, effort and expense."

Rules of engagement

Building consensus among the varied stakeholders in a brownfield project isn't always as daunting as it sounds. You can get everyone on the same page from the start, says Rozmus, if you take the time to encourage frequent communication, especially among community members.

"Take that early engagement step ... and look to build that consensus early on," he says. "See what the issues are, which parties are involved on the community side, and how to engage them in the process. You can also get involved with the people who are going to provide approvals [for a project]—municipal approvals, regulatory approvals."

Rozmus says he's a firm believer in the value of talking to people, even in this digital age. "[It's important to] do some calling and one-on-one engagements, and [meeting with] small groups also," he says. "The community is not just the residents, but the business and property owners too. After years of being involved in the brownfield [deal] process, we're seeing that it's important to be able to lead with these folks, to explain early on in the process what is involved, see what questions you can answer, find out what their thought process is and educate them about brownfields.

"People are certainly becoming more familiar with brownfields, but there's still a lot of education [to be done]," he adds.

"I can't overemphasize the need for face-to-face meetings," agrees Miner, who also encourages stakeholders to physically meet at the brownfield site. "My experience is that people develop ideas [about a brownfield] if they haven't seen the site. We like to get everybody out on the property together and meet with each other, where it's much easier to overcome presumed resistance."

Miner says that in 15 years of working with brownfield deals, "we've always had pretty strong support from all stakeholders. We really seek to build consensus among all the stakeholders—the community, regulators, ourselves and the seller."

Teamwork pays off

Because brownfield deals can involve specialized expertise and knowledge, working with people who already know how to make things happen in this arena can help eliminate potential roadblocks.
 "We tend to focus on areas where we have a lot of experience and have developed what I call ‘deal infrastructure." Bill Lynott,
founding principal and CEO of Viridian Partners
"We tend to focus on areas where we have a lot of experience and have developed what I call ‘deal infrastructure,'" says Bill Lynott, founding principal and CEO of Viridian Partners, a brownfield development company based in Highlands Ranch, Colo. "For example, historically we have been very busy in Southern California and currently in metro New Jersey. In those two locations, we've got a well-proven set of strategic partners who help us with various elements of the deal—law firms, A&E companies, accountants, public relations and other consultants needed to handle the various local and environmental matters."

For a brownfield project in New Jersey, for example, Lynott says one of the company's first meetings is always with the state Department of Environmental Protection.

"We vet issues relating to the contamination, let them know how we would like to expedite and streamline to see if they're on board with us," he says. "We also meet early with the local redevelopment authorities, because we would like them to go with us to the first meeting with the DEP. If you don't get those types of key players on board early, you don't do the transaction."

Enlisting locally influential stakeholders who can be valuable members of your team is a great tactic to help pave the way for a smooth deal, says Lynott. For instance, Viridian is currently working on a project for a 53,000-square-foot,133-door freight terminal in Woodbridge, N.J., on the former site of a chemical manufacturing plant.

"Early on, we met with [Woodridge] mayor John McCormac and his redevelopment staff to talk to them about our proposed redevelopment of the property," says Lynott. "They now have become very strong partners in working with the agencies within whose jurisdiction [the site is], to push our project along. Getting a champion [like this] is a very powerful feature of the deal for us."

In the end, says Davis, what's crucial to successful brownfield deals is bringing all the players together early and often, and keeping them well-informed about what's happening during the development process—the good and the bad.

"When people aren't operating this way, that's when deals go astray," adds Davis.

Building consensus: Schlage Lock site, Visitacion Valley in San Francisco

The Schlage Lock Co.'s decision to close its Visitacion Valley factory in San Francisco 12 years ago was the end of an era. But it was also the beginning of a new community initiative to define how the site would be cleaned up and put to use as a residential, retail and commercial development. Keeping the community connected to the remediation and redevelopment effort has been key to the project's progress, says Stuart Miner, president of Brownfield Partners, Denver, which is working with developer Universal Paragon Corp. and the San Francisco Redevelopment Agency on the site's redevelopment.

"We've really gone to a great extent to build community support for the project," says Miner. "We've had several different community events out there."

The community was a major player in the deal long before developers came along, however. Shortly after Schlage closed the plant doors, the Home Depot Co. came calling, and residents and local business owners worked to prevent any big-box development on the site. From 2001 to 2002, the city planning department and the non-profit Urban Ecology collaborated intensively with the community to create a 52-page concept plan calling for a transit- and pedestrian-friendly development with residential, retail and commercial buildings, in addition to open space and parks.

The Schlage Lock site and some surrounding areas, including former Southern Pacific Railyard land, were put under the jurisdiction of the Redevelopment Agency in 2005, and the mayor later established the Visitacion Valley Citizens Advisory Committee. The citizens committee, the Redevelopment Agency and the city planning department then launched a series of five workshops from August 2006 to August 2007 to help finalize the site design for redevelopment.

In May 2008, Universal Paragon became the new owner of the Schlage Lock property. And by April 2009, the San Francisco Board of Supervisors had approved and adopted a final Visitacion Valley Redevelopment Plan; construction is tentatively scheduled to begin in 2012.

As remediation of contaminated soil and groundwater proceeds, with environmental regulators' approval on the first half of the site expected this spring, community events have helped keep everyone in the loop and focused on the end goal, says Miner.

"We had a commemoration event before the demolition [in 2009], and a site tour before that," he says. "We also had a community safety day [in 2010] that we sponsored to celebrate the accident-free success of the project as well as to provide outreach to the community with respect to fire and household safety issues."

In addition, Brownfield Partners helped host environmental field technician training, which culminated in a job resource fair and a graduation ceremony at the site.

Perhaps the ultimate example of building a sense of community among the stakeholders involved documenting the demolished buildings, for which San Francisco fine arts photographer Henrik Kam was hired, says Miner.

"We had some fairly architecturally significant features on [a building] that sat right on top of a contaminated mass," says Miner. "There was no way to redevelop the site with that building there. We agreed to undertake documenting the building architecturally in pictures, using a photographer who specializes in documenting the waning industrial history of the United States. He took some great pictures—we have a couple of them up in our office and will probably put some in the [new] buildings built on the site."