On the left: A former car dealership in Clearwater, FL became a designated brownfield after the dealership closed. On the right: Today the site is home to the Harbor Oaks shopping center, complete with a new grocery store for the community.
You might be familiar with the concept of brownfields—vacant sites that are known or suspected to be contaminated and which must be remediated before they can be reused. A related, but less well-known concept is healthfields, which turn former brownfields into community health facilities. Healthfields are gaining wide support within regulatory and policy circles, and their popularity opens up new opportunities for real estate developers in these fields.
In many markets today brownfields are unfortunately common enough that land-use-related companies have evolved to specialize in brownfields redevelopment. These companies—including real estate developers, law firms and engineering firms, among others—have learned to navigate the complex regime of rules, procedures and standards that govern the redevelopment of brownfield sites. These companies have also become experts in the web of federal, state and local programs available for brownfields redevelopment, which are often what make brownfield site redevelopment financially feasible.
Now, healthfields’ rising prominence in policy and regulatory communities is creating a new opportunity for specialization—and profit—for companies involved in land development. Though there are currently no programs directed specifically towards healthfields, separate programs exist at all levels of government aimed at encouraging both brownfields redevelopment and improving public health. Developers involved in creating healthfields can benefit from both sets of programs, creating a new opportunity for synergy within the regulatory structure.
At the federal level, brownfield remediation is predominantly funded through the Environmental Protection Agency (EPA) Brownfields Program. The vast majority of the program’s funding is devoted to assessment and cleanup grants, which help fund remediation activities. The agency also offers Area-Wide Planning grants that provide funding and assistance for adopting a larger vision for brownfields redevelopment and promoting regional revitalization. A detailed roster of federal programs related to brownfields, both within the EPA and in other agencies, can be found here (PDF). In most cases, eligibility is limited to governments or government-sponsored entities, such as a redevelopment authority, so a private developer would need to partner with one of these bodies to pursue funding. Many of these programs also want to know how the proposed brownfield remediation will impact the needs of the community, and will award higher priority to those projects that will provide a community benefit, particularly in the area of public health.
The landscape of programs for brownfields at the state level is predictably varied, but follows a construction similar to the federal level. Most programs are administered by the state equivalent of the EPA, and provide funding for planning and remediation through the public sector.
Programs aimed at promoting public health cover a diverse set of issues, approaches and communities, a reflection of the breadth and complexity of the public health field. At the federal level, the Department of Health and Human Services’ Office of Community Services offers two programs that can be used when pursuing healthfields. The Community Economic Development Program provides grants aimed at eliminating food deserts in underserved communities, and can be used to help finance the construction of grocery stores. The Office of Community Services also runs the Community Services Block Grant Program, which is aimed at supporting economic self-sufficiency. Funding decisions are made by individual states, which have broad discretion in deciding how to use the funds. The new Affordable Care Act also offers funding aimed at promoting the creation of new health care facilities in disadvantaged neighborhoods. Finally, developers can also take advantage New Markets Tax Credits, which offers favorable financing terms for real estate projects in qualifying low-income areas, many of which also lack access to fresh food and health facilities.
Healthfields can also provide developers broader competitive advantages. Developing the expertise necessary to develop healthfields can allow developers to take advantage of attractive but complicated sites that might dissuade competitors. As Shannon Morgan, Vice President of HRS Green, a developer that specializes in complicated sites in established communities, put it: “The most challenging sites are our best opportunities. We’ve seen other developers walk away from extremely attractive sites because of the complexity involved. For us, we’re attracted to those sites, because the bigger the challenge, the more reward.” Additionally, because of their beneficial nature, developing healthcare facilities as an end-use on a former brownfield site can help counterbalance the stigma that can sometimes be associated with brownfields redevelopment.
Just as the network of programs and incentives related to brownfields has helped create new opportunities for companies, the rising importance of healthfields within the bureaucracy presents an opportunity for developers looking for a fresh angle in the marketplace. At present, the concept of healthfields is still taking shape, and there are relatively few programs and policies focused specifically on encouraging their development. As the emphasis on healthfields grows however, the programs and incentives related to them are likely to grow, making now an opportune time for developers to become familiar and develop expertise in this concept.