[CPEO-BIF] Re: Re-Working the Thinking on Brownfields Subsidies

["Hoffman, Lee D." <LHoffman@PULLCOM.COM>]

One way to bridge the gap between Peter and Barry might be to
incrementalize the funding.  I've seen this done by various local
agencies here in Connecticut, and I think it could work more broadly in
that the subsidies can be tied to specific events.  In order for
developers to get on board with this, you have to make the specific
events as clear as possible and subject to no interpretation.  You
either hit the target or you don't.  However, once a developer hits a
given target, the incentive money automatically flows to the developer.

For example, in one transaction I was involved in, a series of
condominiums was going up at a former MGP site.  In that case, the
redevelopment agency gave some money up front, additional money when
certain cleanup targets were met, and then gave several payments when
various certificates of occupancy were issued by the municipality.  In
that way, as one portion was cleaned and deemed suitable for occupancy,
money flowed automatically to the developer who could use that funding
to begin the next stage of development.

Obviously, this is not a one-size-fits-all cure, but it certainly beats
the alternatives of having a developer "on the hook" to lose a portion
of funding after the money has already been spent in good faith.  That
is going to put a chill into the development community.

 
  Lee D. Hoffman 

   Pullman & Comley, LLC
   90 State House Square
   Hartford, CT  06103-3702
   Direct (860) 424-4315 | Fax (860) 424-4370 
   Mobile (860) 306-9843
   lhoffman@pullcom.com | www.pullcom.com  | Bio     
   
 

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-----Original Message-----
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Sent: Friday, October 27, 2006 10:31 AM
To: brownfields@list.cpeo.org
Subject: Brownfields Digest, Vol 26, Issue 27

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Today's Topics:

   1. Re: Subsidies (Peter B. Meyer)
   2. Re: Subsidies (Trilling, Barry)
   3. RE: Subsidies (Trilling, Barry)


----------------------------------------------------------------------

Message: 1
Date: Fri, 27 Oct 2006 02:20:12 -0400
From: "Peter B. Meyer" <pbmeyer@louisville.edu>
Subject: Re: [CPEO-BIF] Subsidies
To: 'Brownfields Internet Forum' <brownfields@list.cpeo.org>
Message-ID: <4541A51C.2090401@louisville.edu>
Content-Type: text/plain; charset=ISO-8859-1; format=flowed

Having worked in local economic development for some 30 years and
brownfields for over a decade, I have to agree fully with Barry Trilling
on the ideal for determining what subsidies are appropriate. But I still
disagree with him completely on the real possibility of the calculation
being seriously undertaken at the local level. Thus some sort of ex-post
monitoring, holding recipients responsible for what they promise, is
needed.

Sharon Barr accurately points out that, "... it is very hard to come up
with a perfect formula that also works in the dirty nitty-gritty world
of political influence and decisionmaking. One cannot underestimate the
role of politics in this arena ..."  This is the reality. Her
observations echo academic research and informal narratives about
economic development practice that have been around for decades. The
public sector generally has to rely on the applicants for financial
support for the data it needs to assess their applications ... and it is
not realistic to assume that there will be no distortion of the
information provided in order to increase the chance of getitng funding.

The political pressures on local officials are actually more acute in
the case of brownfields than in 'normal' economic development. Efforts
to influence decisions come not merely from developers interested in
potential profits from brownfields, but also from neighborhoods and
community based organizations concerned for pollution abate and human
and environmental health risk reduction.

The possibility of deriving a single allocation formula for brownfield
support is further confounded relative to the grant of support for
traditional economic development efforts due to multiple objectives  As
Sharon noted, traditional economic development has focused on jobs,
incomes, and property value increases, while brownfield redevelopment
efforts include additional objectives, including housing provision,
protection of human health, preservation of environmental conditions.
 
In light of these concerns, it is inappropriate for public policy to be
grounded wholly in a belief in the possibility of objectivity in subsidy
provision, or in calculations of public rates of return. Barry, and
others who have agrred with him, are correct that any retrospective look
back and imposition of accountability might discourage some developers
from engaging in some brownfield projects.

However, the increased efficiency and effectiveness of public spending
on brownfields that such accountability could generate must also be
considered. Any subsidy funds provided that are not needed to make a
project economically viable are funds not available for other possible
subsidies that could actually increase the number of brownfields
redeveloped. The issue is not one of "subsidize or not" but rather of
the allocation of public funds to maximize attainment of public
objectives through that spending.

We can all agree that we want to see the limited brownfield funds
available have the greatest possible impact on the rate of site
mitigation and redevelopment. We may all also agree that we would prefer
to see more public funds available. To the extent that additional
appropriations depend on demonstrated effectiveness in utilization of
current funds, increased accountability can lead directly to future
expansion of public funding for the reclamation of contaminated lands,

Peter Meyer



------------------------------

Message: 2
Date: Fri, 27 Oct 2006 08:03:25 -0400
From: "Trilling, Barry" <BTrilling@wiggin.com>
Subject: Re: [CPEO-BIF] Subsidies
To: <pbmeyer@louisville.edu>, <brownfields@list.cpeo.org>
Message-ID:
	<8785D27486771F43B6970B8EA12709E2036C19DD@sfexch01.wiggin.com>
Content-Type: text/plain; charset="utf-8"

Peter Meyer and  I actually agree more than we disagree except with
regard to the efficiency and wisdom of claw  backs.  I object to a
non-market oriented approach that has no upside and that is subject to
post-hoc second guessing that may result in discouraging optimum
participation in the brownfield develoment process.  Rather than
clawbacks, why not borrow a page from the private sector and use a "risk
sharing" approach to inventivize goal attainment, followed bt program
evaluation and adjustment?  For example, the public entity could award
an amount to the developer for an amount  with a clearly articulated and
quantifiable negotiated goal which, if not met, requires some refund,
and if exceeded, requires some bonus to the developer.  That would be a
rational arms length process that would encourage participation and
disincentivise poor performance.  Barry 

-----Original Message-----
From: brownfields-bounces@list.cpeo.org
<brownfields-bounces@list.cpeo.org>
To: 'Brownfields Internet Forum' <brownfields@list.cpeo.org>
Sent: Fri Oct 27 02:20:12 2006
Subject: Re: [CPEO-BIF] Subsidies

Having worked in local economic development for some 30 years and
brownfields for over a decade, I have to agree fully with Barry Trilling
on the ideal for determining what subsidies are appropriate. But I still
disagree with him completely on the real possibility of the calculation
being seriously undertaken at the local level. Thus some sort of ex-post
monitoring, holding recipients responsible for what they promise, is
needed.

Sharon Barr accurately points out that, "... it is very hard to come up
with a perfect formula that also works in the dirty nitty-gritty world
of political influence and decisionmaking. One cannot underestimate the
role of politics in this arena ..."  This is the reality. Her
observations echo academic research and informal narratives about
economic development practice that have been around for decades. The
public sector generally has to rely on the applicants for financial
support for the data it needs to assess their applications ... and it is
not realistic to assume that there will be no distortion of the
information provided in order to increase the chance of getitng funding.

The political pressures on local officials are actually more acute in
the case of brownfields than in 'normal' economic development. Efforts
to influence decisions come not merely from developers interested in
potential profits from brownfields, but also from neighborhoods and
community based organizations concerned for pollution abate and human
and environmental health risk reduction.

The possibility of deriving a single allocation formula for brownfield
support is further confounded relative to the grant of support for
traditional economic development efforts due to multiple objectives  As
Sharon noted, traditional economic development has focused on jobs,
incomes, and property value increases, while brownfield redevelopment
efforts include additional objectives, including housing provision,
protection of human health, preservation of environmental conditions.
 
In light of these concerns, it is inappropriate for public policy to be
grounded wholly in a belief in the possibility of objectivity in subsidy
provision, or in calculations of public rates of return. Barry, and
others who have agrred with him, are correct that any retrospective look
back and imposition of accountability might discourage some developers
from engaging in some brownfield projects.

However, the increased efficiency and effectiveness of public spending
on brownfields that such accountability could generate must also be
considered. Any subsidy funds provided that are not needed to make a
project economically viable are funds not available for other possible
subsidies that could actually increase the number of brownfields
redeveloped. The issue is not one of "subsidize or not" but rather of
the allocation of public funds to maximize attainment of public
objectives through that spending.

We can all agree that we want to see the limited brownfield funds
available have the greatest possible impact on the rate of site
mitigation and redevelopment. We may all also agree that we would prefer
to see more public funds available. To the extent that additional
appropriations depend on demonstrated effectiveness in utilization of
current funds, increased accountability can lead directly to future
expansion of public funding for the reclamation of contaminated lands,

Peter Meyer

_______________________________________________
Brownfields mailing list
Brownfields@list.cpeo.org
http://www.cpeo.org/mailman/listinfo/brownfields



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Message: 3
Date: Fri, 27 Oct 2006 08:29:42 -0400
From: "Trilling, Barry" <BTrilling@wiggin.com>
Subject: RE: [CPEO-BIF] Subsidies
To: "Trilling, Barry" <BTrilling@wiggin.com>,
	<pbmeyer@louisville.edu>, 	<brownfields@list.cpeo.org>
Message-ID:
	<8785D27486771F43B6970B8EA12709E2036C19DE@sfexch01.wiggin.com>
Content-Type: text/plain; charset="us-ascii"

Apologies for the spelling typo's:  I wrote that last message on my
Blackberry while on a train, but I think the meaning nonetheless came
through.  BJT

	-----Original Message-----
	From: brownfields-bounces@list.cpeo.org
[mailto:brownfields-bounces@list.cpeo.org] On Behalf Of Trilling, Barry
	Sent: Friday, October 27, 2006 8:03 AM
	To: pbmeyer@louisville.edu; brownfields@list.cpeo.org
	Subject: Re: [CPEO-BIF] Subsidies
	
	

	Peter Meyer and  I actually agree more than we disagree except
with regard to the efficiency and wisdom of claw  backs.  I object to a
non-market oriented approach that has no upside and that is subject to
post-hoc second guessing that may result in discouraging optimum
participation in the brownfield develoment process.  Rather than
clawbacks, why not borrow a page from the private sector and use a "risk
sharing" approach to inventivize goal attainment, followed bt program
evaluation and adjustment?  For example, the public entity could award
an amount to the developer for an amount  with a clearly articulated and
quantifiable negotiated goal which, if not met, requires some refund,
and if exceeded, requires some bonus to the developer.  That would be a
rational arms length process that would encourage participation and
disincentivise poor performance.  Barry
	
	-----Original Message-----
	From: brownfields-bounces@list.cpeo.org
<brownfields-bounces@list.cpeo.org>
	To: 'Brownfields Internet Forum' <brownfields@list.cpeo.org>
	Sent: Fri Oct 27 02:20:12 2006
	Subject: Re: [CPEO-BIF] Subsidies
	
	Having worked in local economic development for some 30 years
and
	brownfields for over a decade, I have to agree fully with Barry
Trilling
	on the ideal for determining what subsidies are appropriate. But
I still
	disagree with him completely on the real possibility of the
calculation
	being seriously undertaken at the local level. Thus some sort of
ex-post
	monitoring, holding recipients responsible for what they
promise, is needed.
	
	Sharon Barr accurately points out that, "... it is very hard to
come up
	with a perfect formula that also works in the dirty nitty-gritty
world
	of political influence and decisionmaking. One cannot
underestimate the
	role of politics in this arena ..."  This is the reality. Her
	observations echo academic research and informal narratives
about
	economic development practice that have been around for decades.
The
	public sector generally has to rely on the applicants for
financial
	support for the data it needs to assess their applications ...
and it is
	not realistic to assume that there will be no distortion of the
	information provided in order to increase the chance of getitng
funding.
	
	The political pressures on local officials are actually more
acute in
	the case of brownfields than in 'normal' economic development.
Efforts
	to influence decisions come not merely from developers
interested in
	potential profits from brownfields, but also from neighborhoods
and
	community based organizations concerned for pollution abate and
human
	and environmental health risk reduction.
	
	The possibility of deriving a single allocation formula for
brownfield
	support is further confounded relative to the grant of support
for
	traditional economic development efforts due to multiple
objectives  As
	Sharon noted, traditional economic development has focused on
jobs,
	incomes, and property value increases, while brownfield
redevelopment
	efforts include additional objectives, including housing
provision,
	protection of human health, preservation of environmental
conditions.
	
	In light of these concerns, it is inappropriate for public
policy to be
	grounded wholly in a belief in the possibility of objectivity in
subsidy
	provision, or in calculations of public rates of return. Barry,
and
	others who have agrred with him, are correct that any
retrospective look
	back and imposition of accountability might discourage some
developers
	from engaging in some brownfield projects.
	
	However, the increased efficiency and effectiveness of public
spending
	on brownfields that such accountability could generate must also
be
	considered. Any subsidy funds provided that are not needed to
make a
	project economically viable are funds not available for other
possible
	subsidies that could actually increase the number of brownfields
	redeveloped. The issue is not one of "subsidize or not" but
rather of
	the allocation of public funds to maximize attainment of public
	objectives through that spending.
	
	We can all agree that we want to see the limited brownfield
funds
	available have the greatest possible impact on the rate of site
	mitigation and redevelopment. We may all also agree that we
would prefer
	to see more public funds available. To the extent that
additional
	appropriations depend on demonstrated effectiveness in
utilization of
	current funds, increased accountability can lead directly to
future
	expansion of public funding for the reclamation of contaminated
lands,
	
	Peter Meyer
	
	_______________________________________________
	Brownfields mailing list
	Brownfields@list.cpeo.org
	http://www.cpeo.org/mailman/listinfo/brownfields
	

	
	
	
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may constitute a confidential attorney-client communication. If it is
not clear that you are the intended recipient, you are hereby notified
that you have received this transmittal in error; any review, copying or
distribution or dissemination is strictly prohibited. If you suspect
that you have received this transmittal in error, please notify Wiggin
and Dana immediately at 203-498-4400, or by email, reply to the sender
and delete the transmittal and any attachments.
	Neither this message nor the documents attached to this message
are encrypted.
	
**********************************************************************
	



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