The National Brownfield Association’s Tri-State Best Practices in Brownfield Redevelopment Conference was held last week at The Graduate Center at City University of New York in New York City.

It wasn’t long ago that real estate developers would have run the other way at the thought of remediating and building on an environmentally contaminated site, which can be expensive and extraordinarily time-consuming. But as the cost of real estate in places like Fairfield County has risen sharply, rehabilitating brownfields – sites that were used for businesses such as manufacturers that may have contaminated the property – has become worth the trouble.

But getting hold of those sites isn’t always easy, a group of experts told a crowd of real estate developers and environmental and finance professionals last week at the National Brownfield Association’s Tri-State Best Practices in Brownfield Redevelopment Conference in New York City.

“Brownfields – in terms of community development – is where the action is,” said Barry Hersch, an associate professor of real estate and urban planning at The Graduate Center at City University of New York, where the conference was held.

A lack of finality in the process of selling and redeveloping of contaminated, or potentially contaminated, sites haunts their owners – many of whom are big corporations. The robust real estate market means the companies or individuals who own brownfields can easily divest themselves of property that is often useless to them. But it’s not as easy to divest themselves of the possibility of future claims that contamination on the property was not completely remediated. Those claims – often in the form of lawsuits – can arise years down the road. Even though a site may originally be used for a commercial purpose, another developer down the road could build homes or apartments. Even if the property is cleaned to residential standards, it can leave the party originally responsible for the contamination open to lawsuits.

“Certainty and finality are incredibly important to property owners,” said Sheryl Telford, a business team manager in DuPont’s Corporate Remediation Group with responsibility for the managing of environmental cleanup programs in New Jersey and Connecticut. DuPont owns a number of brownfield properties.

So property owners are often reluctant to sell brownfields, fearing future potential liability. Although the owners would usually like to sell the unproductive property, legal issues can slow down or stop the process.

“We take a very long-term view [of future uses of the property],” said Kathleen McFadden of United Technologies Corp. in Hartford, which owns many brownfield properties. “At the same time, we’re not in the business of holding real estate that’s not productive.”

‘Deep Pockets’

In many situations, it’s a matter of the bigger the company, the bigger the issue, according to Mark Javello, chief financial officer of Georgetown Land Development Co. in Georgetown. Javello has worked on a number of brownfield projects. Companies with more money often face a greater risk of being sued, he said.

“They’re viewed as deep pockets,” Javello said. “They don’t want an issue to boomerang back.”

Developers also should do their own due diligence, Javello said. Although property owners provide information on each property before a sale, it is not always complete.

Potential solutions to the issue of finality often do not go far enough. There are insurance policies available for such situations, but they usually are extended for only a few years, while property owners are looking far into the future.

There are instances, however, when property owners’ issues can be addressed and the process of selling a property – which often takes at least a year – can be completed in a timely manner.

Steve Ancona, the founder and president of Flatiron Investments in New York City told the crowd of a Meridan property – the Meridan Enterprise Center – that his company learned of in August 2004. He and his company worked with the seller to satiate any of his concerns, and bought the property by the end of that year.

“That’s usually the beginning of a very long courtship, but in this case we had a shotgun wedding,” Ancona said.

The relationship with the seller is ongoing, as well. The investment company did its own investigation into how much it would cost to clean up the property before the sale. But the ongoing relationship with the investment company may be beneficial to the seller in the end. If the company saves money in the cleanup, some of that savings will be passed along to the seller.

Despite the headache of selling a site with potential environmental contamination, large- and small-property owners continue to sell them, Telford said. Until some of the issues facing property owners are addressed, however, it will continue to be a cumbersome process. Companies like DuPont often try to solve the problem by leasing the land instead of selling it so it remains under the company’s insurance policies.

But bigger solutions are necessary. New legislation addressing property owners’ problems could help ease the process, Telford said.