Are We Running Out Of Land? Environmental Remediation Adds to Buildable Lot Inventory.
Large lots are almost non-existent, unless they are contaminated from prior industrial and other uses.
In the county where I live, development is sometimes said to run amok. Day camps, motels, schoolhouses, even bowling alleys sit on the market for a short time before being snapped up for redevelopment.
Large lots are almost non-existent, unless they are contaminated from prior industrial and other uses.
Now, even these lots have become hot commodities.
The shortage of buildable lots, remediation tax credits, the thirst for warehousing and self-storage, and a dearth of housing opportunities have opened up new possibilities for development where just a few short years ago, these parcels were untouchable (literally).
Let’s take a look at four distinct projects in my county where land previously thought of as off-limits have either been cleaned up, are about to be cleaned up, or have remediation plans as part of their development proposals.
Former Orangeburg Pipe Property
On a parcel just shy of six acres, next to a rail line, and behind a Lowes on a state road, approvals have been obtained for a 118,000 square foot warehouse project. The ground floor will have 64,000 square feet of distribution warehouse, The upper floor, about 50,000 square feet, set to become self-storage.
The site was originally the home of Orangeburg Pipe Company, which manufactured paper cylinders impregnated with coal tar pitch, asbestos and wollastonite. It ceased operations in 1973, and the facilities were demolished shortly after a fire destroyed the then-existing structures.
The front parcels were cleaned up some years ago and a Lowes and a Stop & Shop Supermarket were built. The rear of the former industrial site was never cleaned up and remains contaminated.
According to the New York State DEC, the remediation, just starting this month is expected to be completed within 15 months. And, according to the developer’s engineers, the estimated cost of the clean-up will be $2.015 million.
The cleanup includes excavation and off-site disposal of petroleum impacted soil/fill and the dewatering and off-site disposal of petroleum-impacted groundwater and non-aqueous phase liquid (NAPL). Then the developer will have to install of a site cover system consisting of a concrete building foundation, asphalt parking areas, or clean soil.
West Haverstraw Former Construction Debris Landfill
In the Village of West Haverstraw, a 34-acre former construction debris landfill listed on the on the NYSDEC’s Solid Waste Site Mitigation and Remediation Priority List and part of New York’s DEC Inactive Landfill Initiative (ILI) is being redeveloped as a 454,000 square foot 24/7 distribution center with 66 loading docks and 42 foot ceilings. But before anything happens there, the developer must craft a remediation plan with the NYSDEC to enable it to be redeveloped. The land served as a construction debris landfill from 1962 through 1986 and has been sitting idle and largely undisturbed since then with a vegetative cover.
Former Letchworth Village - Site Of New Planned Community
To fill an insatiable need for housing for seniors and millennials, a developer has proposed acquiring about 31 acres of the former Letchworth Village which served as a hospital/asylum for physically and mentally disabled children and adults. At its peak, it served 5000 clients and had 10,000 employees, but was shuttered in the 1990s. Its asbestos and lead paint laden stone buildings have been sitting in disrepair for more than 20 years. Most structures would likely collapse soon under their own weight, but given the need for housing and the lack of large parcels, a developer has proposed to purchase the property in Stony Point, NY and build a planned multi-generational community for millennials and 55-plusers, including an assisted living facility on site.
The developer will take on the remediation costs itself, estimated over eight structures to be between $5 million and $8 million dollars.
Across the street, another 167 acres with about 27 more stone structures (also contaminated with asbestos and lead paint) await development with several suitors vying for the opportunity to remediate and build.
Former Tidewater Oil Company Site on Nyack Waterfront
And, waterfront sites, contaminated with coal tar and petroleum byproducts from a former processing plant have also caught the attention of developers. A three-acre site, formerly owned by Orange & Rockland Utilities is slated to become 128 luxury waterfront condominiums in Nyack. The environmental cleanup complete, and the project approved, development of the site only awaits the right economic climate.
To facilitate the project, the local village government rewrote the waterfront zone code to accommodate development.
This site is the location of the Former Tidewater Oil Company, which stored and distributed petroleum products. Soils and groundwater at the site were contaminated by gasoline and petroleum products. The former Nyack Manufactured Gas Plant (MGP) was located immediately to the north and was the source of coal tar contamination adjacent to the site.
From this:
To this:
The plan includes a public walkway along the river connecting a stretch of riverfront from the Village-owned park to the south of the development to a boat club at its northern end.
The Economics of Brownfield Remediation
Save, the Letchworth project, each of these projects benefitted (or will benefit) from New York’s Brownfield Tax Credit program.
New York’s Brownfield Cleanup Program encourages the voluntary cleanup of contaminated properties known as “brownfields” so that they can be reused and redeveloped. A brownfield site is any real property where a contaminant is present at levels that exceed certain delineated environmental standards that vary based on the reasonably anticipated use of the property.
Developers are also eligible for “site preparation” credits against New York state income taxes of between 22% and 50% of eligible cleanup costs. Projects where I live are also eligible for tax credits of 10% to 24% of the value of the improvements constructed on the site, subject to a cap of $35 million or three times the site preparation costs, whichever is less.
And, the tax credits are refundable. To the extent that the credits exceed the applicant’s state income tax liability, they are treated as an overpayment, and the state will issue a refund.
With these incentives, and assuming the land can be cleaned up, fallow and contaminated properties are coming back to use.
Talk about having your cake, and eating it too.