November 9, 2006
BROWNFIELD REDEVELOPMENT A case history in the making
photo: Vicksburg, Mississippi
WHEN THE GAME IS A GAMBLE Dealing with Contamination IN THE SPIRIT OF WINNING AGAINST SEEMINGLY INSURMOUNTABLE ODDS, FORCES UNITED TO TRANSFORM THIS ONCE-FORSAKEN LIABILITY INTO A VALUABLE ASSET TEEMING WITH RESTORATION, REDEVELOPMENT, AND REVENUE.
ARTICLE BY TRACEE GINGRICH Tracee Gingrich, former freelance writer and editor whose work has appeared in numerous magazines, journals, books, and web pages, writes for ARCADIS in their Corporate Communications department. She can be reached at tgingrich@arcadis-us.com.
November 9, 2006 • Revitalization e-Digest
I
n Vicksburg, Miss., on a bluff overlooking the mighty Mississippi River, acres of untamed growth partially obscure from view an abandoned chemical manufacturing plant. For more than three decades, residue from fertilizer, pesticide, and herbicide processing slowly percolated soil and groundwater, rendering the acreage contaminated and unfit for redevelopment. Following years of legal entanglements, bankruptcy, and funding shortfalls, 540 acres of once-pristine delta land lay idle. In the spirit of winning against seemingly insurmountable odds, forces united to transform this once-forsaken liability into a valuable asset teeming with restoration, redevelopment, and revenue. Today, Silvertip Project Partners’ Mississippi Bluffs Development Project has initiated development of a destination resort complete with casino and 18-hole, championship golf course; high-end residential development; commercial real estate; and a boutique shopping mall. In less than three years — propelled by vision, ingenuity, and fortitude — public and private entities collaborated to accomplish what could easily have taken 30 years under traditional federal cleanup programs.
bankruptcy. Once a formerly profitable fertilizer manufacturing company, the nation's economic downturn had claimed another victim. VCC sought to abandon the property, but the state of Mississippi intervened, and in an unexpected turn of events, a New York bankruptcy court bestowed property guardianship upon the Mississippi Department of Environmental Quality (MDEQ). Suddenly, Mississippi found itself in an unenviable position of having to liquidate, remediate, or maintain a brownfield site. Unknown contamination limited potential buyer interest and lack of funding eliminated state financing of the cleanup. It appeared the only alternative was to turn the site over to the U.S. Environmental Protection Agency (EPA), where it would eventually be designated a Superfund site, being prioritized with other sites vying for remediation funding in its Region 4.
SHUFFLING THE CARDS
"The state did not have the funds to remediate this property. If the EPA was brought in, it would take decades, and they would seek to recover costs from the state … I went looking for an answer and I found ARCADIS," said Trudy Fisher, former general counsel for MDEQ and current environmental practice attorney for Brunini, Grantham, Grower & Hewes, a century-old law firm headquartered in Jackson, Miss.
Events began to unfurl in 2002 when Vicksburg Chemical Company (VCC) shut down plant operations and filed for
ARCADIS, a global engineering, consulting, and project management company
headquartered in the Netherlands, offers a wide range of brownfield remediation products and packages, patented technologies, and perfected techniques. Innovative and trend-setting, the ARCADIS GRiP® Remediation Program offers total and complete remediation for one price. Through ARCADIS' supporting RECLAIMSM program, an extensive redevelopment evaluation is conducted to assess and fulfill each project requirement. "RECLAIMSM is an enabling process," said Paul Newman, director of the Commercial Guaranteed Remediation Program at ARCADIS' U.S. corporate office in Highlands Ranch, Colo. "We ascertain, from a needs standpoint, how to make the financing, remediation, and development work. We partner each component with a solution and deliver a tailor-made program," he added.
DEALING THE DECK ARCADIS introduced the Vicksburg project to Paul Bunge, owner of Silvertip Project Partners, LLC. Bunge, an industrial and commercial developer with three decades of experience, has in recent years concentrated efforts on brownfield redevelopment. "The industry [of brownfield redevelopment] is only about 12 years old. It's far from being mature, but it's starting to be understood. When I go and look for brownfield funding, they know what I'm talking about," Bunge said. The Vicksburg property offered enticing development opportunities with its strategic location to Interstate 20, bisecting the cities of Jackson and Shreveport; one-half mile of river frontage; scenic views; existing industrial facilities with railroad access; and 480 prime, uncontaminated acres. Current housing demand in Warren County had years ago outstripped available land and the city of Vicksburg lacked — in its estimation — the missing link for increased tourism: a championship, 18-hole golf course. Silvertip Project Partners and ARCADIS responded in earnest following MDEQ's Request for Proposals, presenting themselves as viable partners in
revitalization. However, Pandora's Box remained: What was the extent of the contamination and how much would it cost to remediate? Careful available data analysis coupled with ARCADIS' extensive remediation experience culminated in an $8 million tally to remediate the contaminated soil and groundwater. Silvertip Project Partners, through its newly formed Mississippi Silvertip Development, LLC, deposited $8 million in an escrow account, with MDEQ retaining oversight of the approval and issuance of remediation payments to ARCADIS. With the master developer piece firmly in place and ARCADIS on board to facilitate remediation, the remaining issue was to secure financing for a development project of this magnitude. "We knew from the city they could fund TIF [tax incentive financing], but with a small community there wasn't enough to make this project financially feasible. We decided, let's bootstrap ourselves into this thing by putting together legislation to give us a tax rebate from anyone we can bring onto the site," Bunge said. TIF, originally used in California in the early 1970s, provides financing for public and private improvements through the sale of municipal bonds and tax abatement. In the end, $6 million in TIF bonds were issued by the city of Vicksburg as inducement to include a golf course in the development. Springboarding off Mississippi's previous tourism incentive package, Fisher crafted House Bill (HB) 1294, the Mississippi Economic Redevelopment Act, with the Vicksburg Chemical property redevelopment quandary specifically in mind. This legislation offers a state-tax rebate for a period of 10 years, capped at two and one-half times the cost of remediation, to the developer of environmentally impacted property that meets specific guidelines. As stated in Section 2 of HB 1294, "to achieve the combined purposes of encouraging economic development on and around environmentally contaminated sites, it is necessary to assist and encourage such economic development by providing
PROJECT TEAM
ARCADIS, an international company headquartered in the Netherlands, is an industry leader in the fields of infrastructure, environment, and facilities. The U.S. headquarters, in Highlands Ranch, Colo., oversee operations for more than 100 offices. With 10,000 employees and more than $1 billion in gross revenue, ARCADIS is dedicated to enhancing the world’s mobility, sustainability, and quality of life. Visit www.arcadis-us.com for additional information. Paul Bunge, an industrial and commercial developer with more than three decades of experience in environmental remediation, has in recent years concentrated efforts on brownfield redevelopment. Working closely with federal, state, and local entities and stakeholders, Bunge capitalizes on his vast expertise to accommodate comprehensive project objectives. For more information, visit www.silvertipprojects.com. Paul Newman, vice president and director of Commercial Guaranteed Remediation Program at ARCADIS' U.S. corporate office in Highlands Ranch, Colo., is an environmental attorney specializing in regulatory and guaranteed price remediation strategies. Contact him at pnewman@arcadis-us.com. Trey Hess,
Brownfield Program Coordinator for MDEQ, is
a Registered Professional Engineer and has served as the environmental due diligence/cleanup leader for a number of projects in Mississippi, most notably the 2008 Region 4 Phoenix Award winning project, Tupelo Fairpark. Contact him at Trey_Hess@deq.state.ms.us.
Trudy D. Fisher, is a highly respected attorney in the field of environmental law and maintains a litigation and regulatory practice. Her clients include industry and regulated entities on whose behalf she liaises with the federal Environmental Protection Agency and the Mississippi Department of Environmental Quality. Ms. Fisher's representation involves numerous issues, including brownfield redevelopment, environmental compliance and litigation matters. She is continually ranked in the prestigious Best Lawyers in America directory for environmental law, and was selected by the Mississippi Business Journal as one of "Mississippi's Leading Business Women."
temporary tax incentives within certain counties and municipalities to certain business enterprises." A Redevelopment Project Incentive Fund was created — administered by the Mississippi Development Authority — to receive deposits of state taxes, including sales, income, use, and franchise fees, collected from business enterprises located and operating within the redevelopment project area. "This is the first time in the history of our state that we've had an economic redevelopment incentive package for a developer of a brownfield site. It's groundbreaking," Fisher said. In effect, the legislation induces a selfpropelled incentive, wherein the master developer identifies and encourages businesses to locate on the property, keeping development momentum a priority. Receiving bi-partisan support, a delegation of county and city officials, state legislators, Mississippi's Governor, Lieutenant Governor, and Secretary of State lent support to the passage of the bill. In unprecedented fashion, the bill was passed in the first session it was introduced. "Everyone was focused on what was in the best interest of the state," Fisher added.
WIN-WIN FOR EVERYONE White-elephant status erased, the reality of sustainable development was fast coming into focus. On land where Union and Confederate soldiers clashed and where, in historical hindsight, the outcome of the American Civil War was ensured when General Ulysses S. Grant crossed the Mississippi River and subsequently laid siege to the city of Vicksburg — leading to its eventual surrender — history was once again being made. "We are pleased that this unique project has been able to move forward. I am proud of the creative solutions we were able to find to deal with a difficult situation. We believe this effort successfully incorporated the principles of environmental protection, land reuse, and economic development. However, the most positive aspect is that for years to come the local community will receive the benefit of property placed back into productive use," said Charles Chisolm, executive director of MDEQ. Ever keen to leverage progress, the property was retitled into two separate parcels, contaminated and uncontaminated, allowing Mississippi Silvertip Development to proceed with development concurrent with remediation.
As of press time, Hale Irwin Golf Design is at work on a championship, 18-hole golf course, taking strategic advantage of native wetlands in its tees and greens design, enhancing the course with bayou ambiance; the industrial complex on site is being demolished and equipment liquidated by Harcros Chemicals; ARCADIS is on the ground implementing an expeditious and thorough remediation; and gaming license in hand, Bunge is currently soliciting proposals from casino operators and resort developers. While tourists enjoy the amenities of a fivestar resort and families gather for backyard barbeques, the once dormant and contaminated condition of the property on which they play will become a backdrop for bragging rights. And in a city made famous for a decisive Civil War battle, the birth of CocaCola bottling, and an 81-year-long boycott of Independence Day celebrations, HB 1294 and the subsequent revitalization of valuable land will add another vibrant chapter to the story of Vicksburg, Miss.
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November 9, 2006 • Revitalization e-Digest