The Status of "Brownfields" in Edmonton.
Recommendations:- That the brownfield pilot program strategy outlined in Attachment 1 of the June 10, 2003, Asset Management and Public Works Department report be approved in principle and not be implemented until Administration reports back to Transportation and Public Works Committee in early 2004 outlining a proposed funding strategy.
- That Administration pursue opportunities for use of federal and/or provincial partnership funding to address brownfield remediation based on the pilot program strategy.
Report Summary
This report presents the proposed Brownfield Grant Pilot Program in response to the motion made at the October 8, 2002, Transportation and Public Works Committee meeting.
Previous Council/Committee Action
See Attachment 2.
Report
Following are the specific responses to the Transportation and Public Works Committee motions.
- That recommendation 1 of the September 11, 2002, Asset Management and Public Works Department report be postponed to a Transportation and Public Works Committee meeting after the Federal Budget is brought down, to ascertain if federal funding is available to conduct a local inventory.
- There is some general federal funding identified for contaminated sites and brownfields issues in the last Federal Budget. However, it is not clear whether funding would be available for inventory work and the criteria to access this money has not been made available. Investigation into accessing this money continues.
- That Administration develop a “Pilot Brownfields Program” as described in the September 11, 2002, Asset Management and Public Works Department report for discussion at a Transportation and Public Works Committee meeting in March 2003.
- Attachment 1 provides an overall framework for a recommended pilot program which entails providing a one time grant to a program applicant following the clean-up and redevelopment of their contaminated site.
- The grant would be based upon the difference in current property tax (baseline) and a tax assessment done after a site clean-up and other improvements are made, multiplied by five (five-year multiplier). After this five-year period the grant is repaid and the increased tax revenue continues.
- The amount of each grant would be capped by this formula at $100,000 or the site clean-up cost, whichever is the least.
- The total pilot program amount for all grants would be capped at $500,000.
- Eligibility criteria would include privately owned contaminated properties within a serviced area of Edmonton.
- This program would comply with any current regulatory or planning requirements or processes.
- A detailed assessment of the program would be made before the third year of the pilot program and reported to the Transportation and Public Works Committee.
- The “Brownfield Grant Pilot Program” would run for a maximum of three years, from application to the issuing of all grants.
Budget/Financial Implications
- A one-time $500,000 resource requirement for the “Brownfield Grant Pilot Program” would be required. The City’s portion of this would be dependent on funding from the other orders of government. The City’s portion would require tax levy funding.
Legal Implications
- Regulatory responsibility, including liability (past, present and future) for any sites involved in an Edmonton “Brownfield Grant Pilot Program” is under the legislative authority of the Province.
- The appropriate regulatory agencies were consulted in the development of the “Brownfield Grant Pilot Program.” Additionally, representatives of some property owners were consulted.
Justification of Recommendation
- An Edmonton “Brownfield Grant Pilot Program” would identify the level of redevelopment opportunities within the City, bring higher tax generation uses to brownfield sites that participate in the pilot program, and enhance neighbourhoods in which they are located.
- The “Brownfield Grant Pilot Program” is sufficiently detailed to enable a reasoned approach to the other orders of government for support. In addition, this approach is in keeping with the efforts of the Federation of Canadian Municipalities to engage the Federal Government in supporting redevelopment of brownfield sites.
Background Information Attached
- Brownfield Grant Pilot Program Strategy
- Previous Council/Committee Action
Others Approving this Report
Senior Management Team
(Page 1 of 2)
Attachment 1
City of Edmonton Brownfield Grant Pilot Program Strategy
CITY OF EDMONTON
Brownfield Grant
Pilot Program Strategy
June 2003
TABLE OF CONTENTS
1Background and Introduction......
2Program Overview......
2.1Program Description......
2.2Goals and Objectives......
2.3Scope and Approach......
2.4Eligibility Criteria......
2.5Principles...... 9
2.6Proposed Incentives...... 9
3Assessment and Review......
3.1Staged Assessment......
3.2Measures of Success......
4Regulatory Environment......
4.1Key Stakeholders......
5Marketing and Communications......
5.1Target Audience......
5.2Proposed Strategies...... 5
Appendix A – Test Scenario A...... 17
Appendix A – Test Scenario B...... 19
APPENDIX ATEST SCENARIO EXAMPLES
1Background and Introduction
The City of Edmonton (the City) has identified the need to reduce land contamination as a strategic priority. Increased emphasis has been placed on the need to identify mechanisms to encourage redevelopment in several areas of focus, specifically a subset of contaminated lands labelled “brownfield sites”. Brownfield sites are properties that may contain contaminants that affect redevelopment due to potential costs, time and risk associated with remediation (i.e. reclamation).
Based on successful models implemented in communities across Canada, the City has initiated a process to develop a framework for a pilot program related to re-development of brownfield sites. Subsequent to a preliminary review of benchmark communities and background information, members of the Contaminated Sites Committee held a series of planning sessions to:
Reach agreement on the key elements of the pilot program including purpose, scope, objectives, site selection criteria and measures of success;
Identify and discuss potential incentive mechanisms to encourage brownfield site re-development;
Understand the implications of the regulatory environment (i.e. legislation and policy) and identify stakeholders who will interface with the program during implementation;
Discuss and develop strategies to communicate and market the program; and,
Identify and reach consensus on the preliminary steps to implement the program.
The approach taken to the sessions involved facilitated discussion and sharing of ideas relative to individual session objectives.
Session participants included:
Mark Brostrom, Office of the Environment, Asset Management and Public Works;
Scott Sembaluk, Office of the Environment, Asset Management and Public Works;
Marta Sherk, Law Branch, Corporate Services;
Ingrid Johnson, Law Branch, Corporate Services;
Tim Vandenbrink, Fire Rescue Operations, Emergency Response Department;
Garth Clyburn, Planning and Policy Services, Planning and Development;
Jim Bergland, Assessment and Taxation, Planning and Development;
Dwayne Gilham, Land & Buildings, Asset Management and Public Works;
Lyndon Gyurek, Drainage Services, Asset Management and Public Works;
Bret Dykstra, Assessment and Taxation, Planning and Development; and,
Kari Moody, Streets Engineering, Transportation and Streets.
Subsequent to the sessions, an external review of the program framework was conducted with regulating agencies and potential applicants with the objective of testing the framework and determining the feasibility of the program.
External review participants included:
Regulators
Habib Dhalla, Safety Codes Council;
Dave Lapp, Alberta Environment;
Mike Zemanek, Alberta Environment; and
Elson Zazulak, Capital Health Authority.
Potential Applicants
Don Roy, Earth Tech;
Gordon Woollett, Earth Tech; and
Don Hussey, Urban Revision (i.e. on behalf of the Urban Development Institute).
Key themes emerging from the discussions are summarized in this report under the appropriate headings.
2Program Overview
2.1Program Description
The “Brownfield Site Redevelopment Program” provides an incentive-based framework that seeks to increase remediation (i.e. site cleanup) and redevelopment of sites located in Edmonton. Using the “Redevelopment” program in Hamilton as the foundation, the program provides an incentive by removing a portion of the financial burden that results from the tax increase (i.e. as a result of a change in zoning or structural improvements, etc.). The property owner would receive a grant in the form of a percentage reduction of the increase in the municipal portion of property taxes over a specified number of years, not exceeding the actual costs of redevelopment (i.e. site clean-up).
The following example illustrates the key elements of the program, as follows.
A landowner wants to redevelop a brownfield site, however, the cost of remediation makes redevelopment unattractive.
The landowner applies and is accepted into the program. The site is remediated, redeveloped and the tax increase (i.e. resulting from remediation and redevelopment) is paid to the applicant in the form of a grant. The grant offsets some of the costs associated with remediation.
Once redevelopment is complete, the properties have been developed to greater value as opposed to unexploited value. The cost to the City is 100% of the difference in property tax between the unexploited and full potential value up to a maximum of $100,000 based on a five-year multiplier and not to exceed the difference in assessed values.
2.2Goals and Objectives
The goals and objectives of the program are as follows:
Enhance community value (i.e. social, economic and aesthetic value, etc.) through enhancing the physical and visual quality of an area and improving environmental health and safety;
Reduce the stigma associated with contaminated sites in residential, commercial and industrial areas; and
Increase the property tax revenues by providing incentives to redevelop land resulting in a higher land use. The incentive mechanism embedded in the program would encourage landowners to progress along the spectrum of redevelopment from basic reclamation to adding improvements to the property (i.e. buildings, etc.).
2.3Scope and Approach
To achieve the goals and objectives of the program, the approach is to develop a pilot project that tests key elements prior to permanent implementation. The purpose of a pilot is as follows:
Test and evaluate the incentive mechanism related to remediation and redevelopment to ensure the goals and objectives of the program can be achieved;
Determine if the scope of the program is appropriate and provide insight into the types of properties most suitable for this initiative;
Assess the market for an incentive-based framework to support remediation and redevelopment of brownfield sites and identify what barriers exist from the perspective of the landowner;
Increase awareness of the program and the incentive availability to landowners, prior to permanent implementation; and
The pilot includes a one-month application phase, follows by a three-year remediation/construction phase. The grant will be issued once remediation and/or redevelopment is complete and the funds (i.e. the total value of the difference in property tax multiplied by five years) are paid in full to the applicant. Prior to pilot initiation, a execution assessment of all category types will be conducted to establish an estimate of the funds required to support the grant program. The grant funds must be available (i.e. rollover) for three years to ensure more complex re-development projects can be completed.
The total duration of the pilot project will be approximately three years, at which point a formal evaluation of the pilot will occur. The approach and timeframe is illustrated in Exhibit 1.
Exhibit 1
Pilot Project Approach and Timeframe
The key elements of the pilot are as follows:
Applications will be accepted for a one-month window during the first year of the pilot (i.e. March 2004). Applicants will have until December 31st, 2006 to complete remediation and redevelopment. The application form will indicate the extent to which the applicant is considering redevelopment (i.e. Statement of Intent).
Applications that meet the eligibility criteria will be accepted, based upon available funding.
When the application is approved, the current base year property assessment will be adjusted to reflect the fee simple value as contaminated (i.e. if consideration has not already been taken into account). This assessment will be recorded and used as a baseline in the determination of the grant allocation.
When proof of remediation is provided to the City, the property assessment will be revised to reflect an uncontaminated site in the year the baseline assessment was completed for grant purposes. Evidence of clean-up costs (i.e. invoices, etc.) will be reviewed to ensure accurate costs have been submitted.
The calculation of the assessment for grant money on potential redevelopment sites will be based upon 100% completion of the developed site using the baseline assessment year as the valuation indicator, and the appropriate mill rate the redeveloped site would normally be assigned in the baseline year. When calculating the grant, the following principles will apply:
- The grant will not exceed the total value of the clean-up costs and cannot exceed $100,000or the difference in the base and new assessed values;
- The grant will not be adjusted if the landowner receives an off-set as a result of an appeal or complaint; and
- The one time grant will be calculated as the difference between the remediated site value or a redeveloped improved value and the baseline value. The appropriate mill class that would normally be assigned to the improved property shall be applied to the difference.
Appendix A contains an example of the pilot project as applied to several test scenarios.
2.4Eligibility Criteria
Brownfield sites considered under the pilot are commercial, industrial or residential properties of all zones (i.e. including holding zones) that exhibit the following conditions and characteristics:
Within the municipal borders of Edmonton;
Has services that are readily available (i.e. property that is serviced by the City);
Contaminated (i.e. soil and/or groundwater);
Vacant, derelict or under-utilized and is not in tax arrears;
Are not municipal, provincial or federal lands; and
Have not previously participated in a provincial or federal program related to brownfields remediation.
To be eligible under the program, the following criteria will apply:
Any individual, corporation or other organization that holds title to a parcel of property that meets the characteristics of a brownfield site is eligible to apply under the pilot, or their agents.
An internal review committee will take applications on a “first-come, first-serve” basis over a one-month window and subject to an evaluation, considering available funding.
A statement of intent regarding proposed redevelopment must be submitted with the application.
The site must be clearly contaminated, as identified in “Phase I and II” environmental reports submitted at the time of application. The reports must be prepared in accordance with, the Canadian Standards Association Guides, the satisfaction of the City of Edmonton, and indicate:
- The level of contamination exceeds the criteria for existing or proposed zoning; and
- The site has soil and/or groundwater contamination. For the purposes of the pilot, hazardous building materials are out of scope.
2.5Principles
The following principles will apply during all phases of the program:
Clean-up costs accrued prior to the application phase (i.e. costs as a result of previous remediations) will not be eligible for re-payment under the program. All costs associated with remediation (i.e. investigation and remediation) that occur after the application window for successful applicants are eligible under the program up to a maximum of $100,000 or up to the difference in the assessed values.
Acceptance into the program does not influence decisions related to internal (i.e. development approvals, zoning approvals, subdivision approvals, building permits, etc.) and external agency regulatory processes.
On-going remediation costs associated with site monitoring are not eligible for repayment under the program.
Information submitted during all phases of the program will be public.
2.6Proposed Incentives
The direction given by City Council’s motion on developing this incentive was to base it on a combination of remediation costs (i.e. site clean-up costs) and property tax increase. After examining various methods of implementing this type of incentive, it was determined that the proposed incentive would the following key attributes:
Encourage remediation and redevelopment of a site as an incentive for landowners to move beyond cleaning up the site to redeveloping the land parcel with potential structural improvements.
Ensure the costs of the program do not exceed the financial benefit derived from the increase in the property assessment base.
Capping the amount provided to the landowner on the basis of site clean-up costs to ensure the grant does not exceed the remediation costs;
Restricting the total amount of grant funding available as follows:
- Capping the total amount available per applicant type to 50% of the total grant funds. The two applicant types have been identified as Multiple Fuel Site Vendors and all others;
- Capping the maximum amount of total grant funding available per project to $100,000 and does not exceed the difference in the assessed value;
- Ensuring the grant is paid to the applicant, in order to limit additional administration that may result if land is transferred; and
- Reviewing invoices submitted by the landowner related to remediation to ensure costs are accurately reported.
The results of test scenarios indicate the funding requirement to support the grant program is expected to be $500,000.
3Assessment and Review
3.1Staged Assessment
The pilot program will be assessed each year to provide insight into the success of the application, remediation and construction phases. The assessment will contain an evaluation of the measures of success to determine if the objectives of the pilot are being achieved. At the end of the pilot program, a recommendation will be made as to whether or not to implement a permanent program.
Exhibit 2 illustrates the staged assessment approach over the duration of the program.
Exhibit 2
Staged Assessment
3.2Measures of Success
The following preliminary measures of success have been identified for the pilot: