Brownfield or Redfield: What’s in a Real Estate Name?
Roses are red, violets are blue… but if 2 flowers shared 1 name, how could anyone talk about which was which or who was who?
When Congress defined the term “brownfield,” it identified a large segment of real estate with uninvestigated and unknown conditions, or “properties with questions” that “may or may not be contaminated.” In doing so, it carved out another important category of properties without questions and known contamination. In this class of real estate it is not questions, stigma, or feasibility doubts holding reuse back, as in a brownfield, rather real contamination. Before the property can be reused and occupied, this contamination must be appropriately overcome—above and beyond any other redevelopment obstacles, such as obsolete infrastructure or unusable structures.
With or without a name, the risks to potential occupants or the environment posed by these contaminated properties is the same. On BrownfieldListings.com we call this type of property a “redfield.”
Major congressional redevelopment victory opened the door to state experimentation.
Congress excluded redfields from its definition of “brownfields” for legal and practical reasons. By carving brownfields out of the Superfund law, it was creating statutory liability shields for brownfield purchasers that would encourage redevelopment and cleanup. These liability protections would not have been appropriate (or arguably even legally possible to grant) for a property that, for example, was already the subject of a cleanup order issued by EPA or a federal judge, as in a redfield. So Congress had specific reason for carving out the narrower definition within the context of existing environmental laws and regulations—and it was wildly successful, triggering a wave of redevelopment and spawning one of the most successful economic development programs in government.
The EPA Brownfield Grant Program produces enormous returns, leveraging an average of $17.79 private sector capital for every $1 public monies spent through the program over its first 18 years. Because of this success, the high need, and the more obvious public sector role to encourage the reuse of real estate neglected, abandoned, contaminated or otherwise failed by the private market, brownfields have enjoyed remarkable bipartisan support at all levels of government, including a 99-0 vote on the brownfield bill passed in 2001 (SB 350).
But with a subjective definition for brownfield and no name for objectively definable and contaminated non-brownfields, Congress unintentionally planted the seed of an etymological split in the redevelopment subdomain of the real estate world. The definition of “brownfield” began to evolve independently in different areas of the country and among different classes of real estate professionals, as discussed in a Brownfield Listings’ article this spring “What is a Brownfield Anymore?,” and now has opposite meanings in some jurisdictions.
The exception swallows the rule. Now we’ve got two kinds of real estate “dogs” named “Brownfield.”
In fact, since that article was posted the exceptions have now swallowed Congress’ rule in New York. The contaminated, non-brownfield properties Congress carved out of the brownfield law (i.e., redfields) are now defined as “brownfields” in the Empire State. As for Congressional-defined brownfields in New York (i.e., properties that may or may not be contaminated because no investigation has been performed), it seems they are now a real estate class without a name—although the problem persists because, whatever their name, the “brownfield” questions are the same. Any property with reuse doubts, suffering stigma or even simply abandoned will present many of the same questions before it can be redeveloped.
At Brownfield Listings we gave each type of property a name to reduce this term conflict, to set brownfields and redfields clearly apart, and to make a home for the entire universe of property conditions that may or may not fit in regular real estate channels. With a complete spectrum of labels our users can readily identify important property conditions and quickly search or segment by each class of real estate. Using simple and easily understood terminology is fundamental to healthy communication in any space because language gaps create confusion and doubt. And clear signals are sorely needed in the redevelopment space—a real estate segment where risk is high, transparency is low and negotiation is notoriously difficult.
Every market needs clear signals, and every ecosystem needs a taxonomy.
That’s why on BrownfieldListings.com users can tag their property with a complete Taxonomy of tags to identify primary and secondary conditions of their property. The Taxonomy tags act as market signals, communicating to the redevelopment marketplace that certain conditions exist or are relevant to reuse. Often the information exists in the due diligence, buried in an old Phase I or Phase II Environmental Site Assessment. Tags work to abstract essential facts from dense reports, which speeds up segmenting, searching and communication on the platform.
Without a redfield tag, users would have no means to segment the subsection of real estate universe that was known to be contaminated or ‘red-flagged’ by a legal authority to investigate and clean up contamination. Sellers and redevelopers could not raise their own red flag to signal to remediation specialists and redevelopment firms. Nor could high-risk developers, repositioners or risk transfer companies easily search for properties that had been red-flagged—which present the highest challenges, but potentially also the greatest return and widest impact on the surrounding community and ecosystem.
With the redfield tag, real estate redevelopers can spend less time searching for redevelopment opportunities. A redeveloper’s job is hard enough, but finding the right opportunity and connecting to its decision-maker can take robust research and be the most unpredictable element of their business. Searching by the redfield tag shortens the discovery process.
With the redfield tag, property sellers looking for buyers or project managers looking for vendors can self-identify their need for action for their property or project. Raising a virtual red flag on BrownfieldListings.com sends signals to the real estate specialists that remediation or corrective action is desired, or possibly required.
The Taxonomy also works with market and use tags to communicate their unique status and conditions wherever they are in the redevelopment lifecycle. The tags complement each other to build a multi-variant shorthand that gives a thumbnail summary of the unique combination of conditions at each property. If unsure about the necessities for remediation, users can select “Brownfield” or another Taxonomy tag; even an “Undetermined” status for early-stage redevelopments.
Redfields can be serious business for capable, credentialed professionals
A redfield tag is reserved for the dirtiest real estate redevelopments. Aside from being literally dirty, redfield redevelopment is definitely a “Dirty Job,” sometimes dangerous, which requires several high caliber professionals from multiple disciplines to be successful. The first generation of redevelopment pioneers were all risk takers, and we can thank their high risk-tolerance and stiff upper lips for paving the way for an entire redevelopment industry to blossom in their wake. The technical challenges, high costs, regulatory compliance, and legal risks all presented substantial hurdles to blazing the redevelopment trail. The higher risk/reward in these reuse opportunities drove them to innovation and success, and redfields continue to be very attractive, particularly in today's low interest rate environment.
Redfield work has a higher degree of difficulty and often comes with higher scrutiny and high visibility, but can be more rewarding and make a huge impact. Many redfields are leftover from large or intense industrial use and have outsized effects on the area around them. This often implicates a proportionately large number of stakeholders with some direct or indirect interest in the future redevelopment of the property. Everyone has a stake in real estate revitalization, whether personally or professionally, so the cast of redevelopment stakeholders can grow quite large.
Redfields are not appropriate for every real estate buyer or developer to pursue–even those for whom a small brownfield is a routine and profitable investment. But for the subsection of specialized developers and vendors who acquire or work on redfields, who have the expertise and experience to navigate the regulatory obstacle course and transform redfields into useful and productive properties, they now have a dedicated channel to search, sort and save redfield opportunities.
Raising a virtual real estate flag with the redfield tag
Like sellers adding a redfield tag to their property, by adding the redfield tag to their Premium Profile redfield buyers, vendors and professionals can distinguish themselves in the redevelopment space—and be sought out by property owners, sellers and project managers searching for qualified service providers.
Whether you are a buyer, seller, vendor or individual, raising a virtual red flag with a redfield tag signals to the redevelopment universe that you are ready for action, you have remediation wants or needs and you seek to connect to ready redfield resources.