Revived fund will help brownfield development

Developers, government officials and industry professionals working to transform contaminated brownfields into new housing and commercial projects got an upbeat assessment on the future of state funding from key legislators this week in Minneapolis.

The mood at the "State of Brownfields" event, staged by the nonprofit group Minnesota Brownfields, was more positive after the Legislature moved in 2013 to restore the Environmental Response Fund (ERF), used by Hennepin and Ramsey counties to clean up sites via a tax on property transactions. The fund had been repealed in 2012.

Under its provisions, the two counties assess mortgage registry and deed fees at 0.01 percent of a property's assessed value to pay for environmental cleanup projects. The program, however, was opposed by the residential real estate industry, which argued that the fees were a burden to financially strapped home buyers at a time when the home market was struggling to recover.

Before its repeal, the ERF was subject to renewal every four years. But in the last session, not only was it brought back, but extended until 2028.

The two House legislators most responsible for brownfields remediation funding — Jobs & Economic Development Finance Committee Chairman Tim Mahoney, D-St. Paul, and ranking minority member Bob Gunther, R-Fairmont — each said the return on the state's investment for cleanup funding in general was substantial.

"Look at the statistics about brownfields redevelopment," Gunther, the House committee's former chairman, told the group. "Since 1995, we've spent almost $139 million on contaminated cleanup and created 19,077 new jobs and preserved 21,225 jobs.

"What I usually ask about economic development programs is how much does it cost per job? This isn't the cheapest, but it certainly isn't the most expensive at $3,445 per job. That's pretty reasonable. The most important part is how it leverages private investment — $4 billion in that time. It's 30 times what we've spent. So it truly is an investment that pays, and doesn't cost."

"We have a lot more to do," he said. "I asked during the last session what it would take to clean up all the brownfields just in the east metro area — somewhere north of $250 million. In my [St. Paul East Side] district alone, I can think of 300 to 350 acres that have not yet been touched.

"Bob [Gunther] and I get it. I just took over the chairmanship last session and fought hard to keep these numbers up. I know we need to clean up our inner cities, but how do we do it? We all have to put money in to do that. We can't always go back and find the insurer for the company that caused the pollution."

Mahoney said he saw "no reason why ERF couldn't be extended to other urban centers" such as Rochester and Duluth in the future, as long as the communities "are able to prove the need and that there is a real estate transaction 'churn' to fund it."

Another key legislator, Sen. Julie Rosen, R-Fairmont, also attended the brownfields event and sounded a more cautionary note. Rosen, a member of the Senate's capital investment and energy committees, said she opposed the long-term extension of the ERF.

"ERF is very important for Hennepin County," she said. "They reinstated it until 2028. That's a long time to have a tax in place with no accountability. I just feel like we should make sure these programs are tuned up and they're tuned up well. ERF was being reviewed every four years before. There's nothing wrong with bringing it back and reviewing it, and the programs it has funded, so we can see where the funds were used."

Don Jacobson is a freelance writer in St. Paul and former editor of the Minnesota Real Estate Journal.