Sidestepping the Pitfalls of Brownfield Development
- May 25, 2018
As multifamily demand continues to remain high—underscored by this spring’s rent growth across most major metro areas—a number of investors are taking on brownfield development as an alternative way to increase supply. These projects have taken many forms, from adaptive reuse to ground-up construction in previous industrial areas.
Particularly in the case of industrial conversions, site contamination can create a complex landscape to navigate. Trinity Financial has a history of transforming older buildings into multifamily properties, primarily in the Northeast. Many of its communities—like Boston East, a ground-up development which opened in April—include an affordable housing component.
Trinity plans to break ground on its latest project, located at the Van Brodie Mill in Lawrence, Mass., in June. The company recently landed $17.1 million in financing for the fully affordable community. The total cost of investment is estimated at $46 million. Multi-Housing News spoke with Dan Drazen, Trinity’s project manager overseeing the mill’s conversion, to discuss the challenges and opportunities of brownfield developments.
What is unique about the site Trinity has chosen for the Van Brodie Mill project?
Drazen: The Van Brodie Mill was originally part of a much larger, 75-acre complex of approximately 23 historic mills called the Arlington Mills. While a few of the original buildings have been demolished, the district is still largely intact, which is unique. It has been fascinating to learn about how the buildings that Trinity Financial is redeveloping used to fit into the historic operation of Arlington Mills.
For example, there is a separate 4,000-square-foot building that we are renovating into two apartments as part of the Van Brodie Mill project that used to be the incinerator for the entire complex. Also, our historical research indicated that the company which owned the Van Brodie Mill in the 1950s produced toy prizes for cereal boxes.
Given the site’s history as a textile mill, what are some unique challenges you have encountered as part of the project? How did you overcome them?
Drazen: Van Brodie Mill was constructed in 1919 when most people did not have cars, so parking was not a consideration in the original site design. Thankfully, the City of Lawrence has established a smart growth overlay district within the Arlington Mills complex that requires fewer parking spaces and we were able to secure parking rights via easement on land owned by some of the adjacent property owners.
How has government been involved in the site’s remediation processes?
Drazen: The Massachusetts Department of Environment Protection (DEP) was involved prior to the start of construction to approve our plan for remediating the site’s environmental contamination. Massachusetts DEP will also be involved during construction to confirm that the remediation complies with the state’s standards for residential development.
What aspects of a site need to be considered before investing in a brownfield development?
Drazen: When investing in a brownfield development, it’s important to research the historical use of the site to understand the type of activity that may have contributed to the contamination. Topography and site location are also important elements to consider. We tend to be leery of brownfield sites that are uphill from adjacent properties or near sensitive environmental areas like groundwater drinking districts.
How does the timeline for a brownfield development differ from a standard multifamily project?
Drazen: Brownfield projects introduce another layer of complexity to the development process, which can translate into a protracted development timeline. However, with some planning, these delays can be mitigated. During predevelopment, securing the necessary approvals for a proposed remediation treatment plan can take time because the state environmental agencies typically have a minimum of 30 days to respond to any submissions.
During construction, the environmental remediation scope of work can generally be performed in parallel with other construction activities, but coordination with the general contractor is critical because some treatment programs can take several months to achieve their goal.
What impact can the history of a brownfield site have on leasing and property operations?
Drazen: After a brownfield site has been remediated, there is a deed restriction limiting certain uses on the property, which we ask tenants to acknowledge in a rider to the lease agreement. Also, there is usually a requirement from the state environmental agency to perform annual soil or indoor air quality testing after the building has received its certificate of occupancy, but this is a nominal cost to the project’s operating budget.
How can the history of the site impact the total cost of development?
Drazen: Environmental remediation can add a premium to the overall cost of a project, so it’s helpful to assume a certain baseline level of remediation work will be necessary with any brownfield site. However, there are a host of programs available through the United States Environmental Protection Agency and state agencies to offset the added cost of environmental remediation work. Here in Massachusetts, there is also a Brownfield Tax Credit program.
Tell us about a brownfield development you have been involved with in the past.
Drazen: Before the Van Brodie Mill, I served as project manager for Trinity’s 60 King development in Providence, R.I. The 60 King project is the adaptive reuse of a historic mill, which was originally built in 1923, into 60 units of mixed-income housing. The 60 King building was home to a wool production facility from its opening in the 1920s until the 1950s, and then pocket knife and cutlery production from the 1950s until the late 1980s.
With roughly 65 years of industrial use on the site, we were not surprised when we encountered chlorinated solvents, which were historically used to clean or degrease heavy machinery. Working closely with the Rhode Island Department of Environmental Management and our environmental consultant, we developed a remediation plan for work both outside and inside of the building. Outside of the building, we placed clean soil across the site. Inside the building, we installed a vapor mitigation system, which works like a radon system you would find in a single-family home, to improve the air quality within the building and make it safe for residents.
Image courtesy of Trinity Financial