Re: investment funds for brownfield reclamation -Reply

[Emery Graham <"egraham"@ci.wilmington.de.us>]

Charles,
I'm so pleased to read this short, to the point, insight about the core
technology of doing a brownfieds deal; if there's not, or not sufficient,
cashflow, the deal won't work. Brownfield considerations all boil down to the
cost side of doing a development project that must ultimately survive, rise or
fall, on the realistic cashflow of the deal.

Thanks,
Emery Grahm

CHARLES PATRIZIA wrote:

> 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.