By {{Article.AuthorName}} | {{Article.PublicationDate.slice(6, -2) | date:'EEEE, MMMM d, y'}}
{{TotalFavorites}} Favorite{{TotalFavorites>1? 's' : ''}}

A flurry of favorable conditions is building up to an impending brownfield redevelopment renaissance in southwestern Pennsylvania. While some developers might be scared off by the risks associated with brownfield projects, those that are bold enough to make a move into the region could be met with a considerable long-term payoff.

Pennsylvania is home to hundreds of brownfield properties that represent a massive opportunity for manufacturers looking to expand production or move production to a new site. Given the current political and economic environment, there is a real possibility that southwestern Pennsylvania could become a major hub for industrial manufacturing in the years to come. In addition to benefitting corporations, this would also benefit the surrounding communities by bringing jobs and economic growth to municipalities likely still reeling from closures of plants that previously operated on existing brownfield sites.

Of course, brownfield redevelopment doesn’t come without its challenges, and there is a reason so many of these sites have sat idle for so long. They are surrounded by uncertainty that can scare off potential buyers and developers. By definition, brownfields contain an unknown degree of environmental contamination, and buyers are commonly hesitant to take on any liability for these costly exposures without knowing the true extent of the damage.

Notwithstanding these challenges, more than 6,000 sites have been cleaned up in Pennsylvania since the Pennsylvania brownfields law (Land Recycling and Environmental Remediation Standards Act, known as Act 2) was enacted in 1995. This successful and award-winning program has been a national model for states with a strong industrial legacy, such as Pennsylvania. Building on these successes, this experience can now be applied in addressing the larger, more complex and contaminated legacy sites.

Earlier this year, the Pennsylvania Department of Community and Economic Development released a 78-page playbook to facilitate the redevelopment of the Mitchell Power Station, an 856-acre brownfield site in the Pittsburgh region. Late last year, state officials broke ground on the redevelopment of a 48-acre brownfield site in Carlisle, Pa., and the redevelopers of a brownfield in East Whiteland, Pa., recently received a $4 million grant to begin construction.

These projects represent the beginning of a significant inflow of brownfield redevelopment in Pennsylvania. Here's what developers need to know before the brownfield redevelopment renaissance takes place.

Pennsylvania government is willing and ready for brownfield redevelopment

Brownfield sites often carry a certain stigma of being highly contaminated, undesirable properties. In reality, this isn’t always true. This stigma was reinforced by the Comprehensive Response Compensation and Liability Act of 1980, which imposed strict cleanup liability on the owner of the property, no matter who initially caused the contamination. Obviously, this law discouraged the purchase of brownfield sites over fears the buyers would be stuck cleaning up someone else’s mess.

In Pennsylvania, Act 2 was a huge step forward in removing this stigma. This law partially removed the purchaser’s liability when it came to cleaning up brownfields and reignited developers’ interest in the sites.

The federal government’s codifying of the EPA’s Brownfield Environmental and Economic Revitalization Initiative into the 2002 Brownfield Law, along with the EPA’s funding incentives and liability relief programs, was another huge step forward in removing this stigma. This new law protected developers purchasing and remediating brownfield sites and even provided economic incentive to do so. In the first decade since this law’s passing, the EPA awarded nearly 1,000 grants worth a total of $190 million to public and private sector organizations to clean up brownfield sites.

The Pennsylvania state government has also shown a willingness not only to accept brownfield redevelopment in the state but also to work with developers and manufacturers to facilitate a mutually beneficial deal. The Shell ethylene cracker plant under development just outside of Pittsburgh is one example of this.

Shell cracker facility as a lynchpin for brownfield redevelopment

The Shell Oil Company is in the process of redeveloping a former zinc smelting facility into an ethylene cracker plant. When Shell initially purchased the property, it struck a deal with the Pennsylvania state government requiring the oil company to invest $1 billion in the state and create at least 2,500 construction jobs to redevelop the site. In return, Shell received a 25-year tax incentive that could eventually save the company up to $1.6 billion.

The Shell ethylene cracker plant is relevant to the broader Pennsylvania brownfield redevelopment conversation for two primary reasons. First, once the Shell cracker facility begins production next year, it will be able to supply massive quantities of ethylene and other products that are essential to many manufacturing operations. Its proximity to other brownfield sites in need of redevelopment could also cut down on shipping and logistics costs necessary to acquire these materials for production. These cost savings will serve as a massive financial incentive for manufacturers looking to expand or relocate their current production facilities.

Second, the redevelopment of the cracker facility sets a roadmap for other developers and manufacturers that wish to take on similar projects in the area. It serves as an example as to how private companies can work with regulators, lawmakers and local government to stay complaint, reap tax advantages and ultimately produce an outcome that’s beneficial for the companies involved and the local community.

Access to cheap utilities and transportation

Many of the brownfield sites in Pennsylvania offer the infrastructure, proximity to railroads, waterways highways and, best of all, access to cheap natural gas that’s being extracted nearby. Pennsylvania is increasingly becoming known as a producer of natural gas thanks to the Marcellus Shale Formation, which is the home to a massive abundance of largely untapped natural gas.

As the drilling of natural gas in Pennsylvania continues to grow, manufacturers in the region are increasingly leaning on natural gas as opposed to coal, which has historically served as the power source for these plants. This proximity to inexpensive power sources, as well as access to pipelines to transport it, could provide manufacturers in the region with a significant cost advantage over their competitors across the country. When the goods are eventually produced, the railroads, waterways and highways nearby can also help cut down on shipping and logistics costs when transporting the finished products.

Clearing the Remaining Hurdles

Despite the potential promise that brownfield real estate in Pennsylvania potentially provides for developers, it is not completely without risks or challenges. No two brownfield sites will be identical. Some may have more environmental issues than others. The degree of cooperation from local governments may vary based on the specific municipality. To clear these remaining hurdles, developers will need to launch aggressive engagement efforts with local governments and regulators, manufacturers and existing site owners. They will need to rely on partners with a keen understanding of the local landscape and legal considerations.

However, these are hardly insurmountable issues. Considering the potential for cost savings for manufacturers, the increasing cooperation of regulators and local governments, and the opportunity to bring economic revitalization back to these rural areas, the case for brownfield redevelopment is clear. The industrial and manufacturing renaissance is already under way, and the tremendous business potential seems simply too significant to pass up.


 Comments ({{Comments.length}})

  • {{comment.Name}}


    {{comment.DateCreated.slice(6, -2) | date: 'MMM d, y h:mm:ss a'}}

Leave a comment

Required! Not valid email!