RE: investment funds for brownfield reclamation -Reply

[CHARLES PATRIZIA <CAPATRIZIA@phjw.com>]

Bruce Klafter of course is right about financings being done.  I have done
two brownfields in New York, and in each instance, we were able to
use a combination of development bonds, some junior debt and equity to
make the whole arrangement work.  It is true that banks are not generally
the first source for such funds, and if they do lend, it will be on a
cashflow basis and not based on taking a security interest in the
property.  

What makes a deal doable is what the proposed use is, and how the
money is going to be repaid, not what the condition of the property was
or whether it needs remediation or only use limitations.  Certainly
remediation can make the arrangements more costly -- somebody is
going to pay for those activities, but ultimately the deal can only carry
so much debt and be able to service it.  Local communities can help by
using industrial development bonds, and industry can help by putting in
some equity or junior debt.  But if the project won't have cash flow, none
it can work.  There has to be something which will generate sufficient
revenue or the development process will never happen.