Returns to Brownfields Investments by Norman Walzer Gisele F. Hamm Illinois Institute for Rural Affairs Western Illinois University Macomb, IL 61455 This report was prepared by the Illinois Institute for Rural Affairs (IIRA), under contract with the Illinois Environmental Protection Agency. The Illinois Municipal League assisted with the surveys. Published by: Illinois Institute for Rural Affairs Stipes Hall 518 Western Illinois University 1 University Circle Macomb, IL 61455-1390 [email protected] www.IIRA.org This publication is available from IIRA in print and on the IIRA web page (www.IIRA.org) with links enabled. Quoting from these materials for non commercial purposes is permitted provided proper credit is given. First Printing: May 2005 Table of Contents Preface .......................................................................................................................i Executive Summary ............................................................................................... iii Goals of Brownfield Redevelopment ................................................................. iii Obstacles Faced in Brownfields .........................................................................iv Factors Associated with Redevelopment Successes ...........................................iv Impact Measures ..................................................................................................v Common Factors in Redevelopment Successes ..................................................vi Case Studies .......................................................................................................vii Brownfields Investments and Outcomes ..................................................................1 Overview of Report ..................................................................................................2 Reasons and Obstacles for Redeveloping Brownfields ............................................3 Factors Associated with Redevelopment Successes ............................................7 Literature Review ...............................................................................................10 Measuring Results from Brownfield Redevelopment ............................................12 Issues Involved in Tracking Results ..................................................................12 Performance Measures ......................................................................................13 Quantifying Outcomes of Public Investments ...................................................14 Returns from Redevelopment ................................................................................18 Investment per Job Created or Retained ............................................................20 Multiplier Effects ...............................................................................................22 General Observations .........................................................................................22 Factors Affecting Success ......................................................................................23 Application to Cities in the Current Study ........................................................26 Summary ............................................................................................................29 Brownfields Case Studies ......................................................................................29 Industrial Redevelopment ..................................................................................30 Alton, Illinois .................................................................................................30 Sterling, Illinois .............................................................................................37 Mendota, Illinois ............................................................................................42 Harrisburg, Illinois .........................................................................................47 Recreation-Riverfront Development ..................................................................51 East Peoria, Illinois ........................................................................................51 Elgin, Illinois .................................................................................................55 Downtown Revitalization ...................................................................................60 Rock Island, Illinois .......................................................................................60 LaGrange, Illinois ..........................................................................................65 Palatine, Illinois .............................................................................................68 Franklin Park, Illinois ....................................................................................72 Calumet City, Illinois .....................................................................................75 References ..............................................................................................................81 Appendix A: Brownfield Outcomes – General Survey ..........................................85 Appendix B: Brownfield Outcomes – Parcel Specific Survey ...............................92 Preface Brownfields are becoming recognized as potential assets for local economic development by more and more practitioners struggling with balanced growth issues and a shortage of land for development in cities. The attitude toward brownfields has shifted markedly from just removing contamination to identifying economic development opportunities for prime space in high traffic locations. Strategically, efforts have focused on finding ways to make development of brownfields more cost-competitive with greenfields. This report builds on two previous studies of brownfield redevelopment in Illinois conducted by the Illinois Institute for Rural Affairs in partnership with the Illinois Environmental Protection Agency (IEPA), the Illinois Municipal League, and the Western Illinois Regional Council to identify obstacles, redevelopment goals, and successful projects. The current project focuses on outcomes of brownfield redevelopment by public and private agencies, with detailed case studies of how com- munities undertook the redevelopment process. Information on returns to investment at this level of analysis can add significantly to an understanding of the brownfield redevelopment process. Many persons contributed to the completion of this project. The IEPA, through the Western Illinois Regional Council, provided funding for the data collection, analyses, and case studies. Ms. Heather NiFong was project manager. The authors thank the U.S. Economic Development Administration for supporting a portion of the senior author’s time on this project. Many local elected officials and city administrators collected detailed information on projects, and having this accurate and detailed information was crucial to the success of the project. Lori Sutton and Karen Poncin, IIRA, assisted with the data tabulation and report preparation. As usual, the authors accept full responsibility for any errors in analysis or interpretation. Brownfields Investments and Outcomes i ii Brownfields Investments and Outcomes Executive Summary Brownfields represent more than a potential contamination problem in cities; they also represent potential assets in the development process. As communities struggle to find available land for development or wrestle with balanced growth issues, they are using innovative ways to redevelop brownfield properties. Many of these sites are in strategic downtown locations and have not been redeveloped in the past due to a fear of potential liability or because of relatively high remediation costs. In recent years, with the growing need for developable land in high traffic areas as part of city redevelopment plans, brownfields have received a second look. In addition, state agencies and the federal government have paid more attention to the economic development potential of these sites. The result has been that brownfields have been converted from eyesores and wastelands to highly useful and profitable properties. This report focuses on the investment outcomes private and public agencies have experienced in various brownfield redevelopment projects in Illinois cities. The returns to investment are measured in several ways using generally accepted practices. Case studies involving local public officials and city administrators provide additional insights into the local decisionmaking process, including arrangements used to attract private investment. The uniqueness of brownfield projects makes gen- eralizations from these interviews difficult, but commonalities in terms of approaches and strategies were found among the cities studied. The findings will be useful in planning future projects. Documenting returns from brownfield redevelopment is complicated by the unique nature of many projects and a lack of detailed information. Documentation is often made more difficult by personnel turnover in cities and businesses, plus the fact that several years can elapse from the start to comple- tion of a project. In some instances, data had to be estimated. Goals of Brownfield Redevelopment Brownfield redevelopment efforts are started for many reasons. Based on a 2000 statewide survey of Illinois municipalities (Walzer, Duncan, and Sutton 2001), the most important consideration is that local public officials want to remove