How Financial Incentives Help Bring Brownfields Back To Life

An estimated 450,000 brownfield sites sit abandoned across the U.S. due to environmental contamination that threatens human health and local economic growth. 

Despite the costs and risks involved in redeveloping these sites, some commercial real estate professionals are able to look past the challenges and see opportunities. The tax incentives and credits offered to those who transform these sites help make redevelopment economically feasible.

Roux, an environmental consulting and management company, provides a variety of advisory, regulatory and field services to help clients create plans to redevelop brownfield sites. Roux Vice President Frank Cherena said that transforming these sites is an essential part of improving local communities and can provide much-needed affordable and sustainable housing, which can also benefit from the financial incentives available to brownfield sites. 

“Redeveloping brownfield sites is crucial because it revitalizes neglected or contaminated sites, especially in markets where affordable land is scarce,” he said. “Additionally, the rise in rents for industrial buildings over the past decade has created opportunities to transform heavily contaminated properties abandoned by former industrial operators into revitalized housing, offices, medical, or new logistics and light industrial facilities.” 

Roux helped transform the former Spofford Juvenile Detention Facility in the South Bronx, New York, into the Peninsula, a vibrant, mixed-use campus for startups and growing manufacturing businesses.  

Before the Peninsula became a thriving community, the project went through the New York State Department of Environmental Conservation’s Brownfield Cleanup Program, or NYSDEC BCP, to help remove historic landfills and leaking underground storage tanks. 

Cherena said the project brought more publicly accessible open space to this section of the South Bronx, something the Hunts Point community had lacked for a long time. 

“We were able to step in the project and provide site investigation, air monitoring and asbestos abatement support to help start the redevelopment of this brownfield space cost-effectively,” Cherena said. “With additional support from NYSDEC BCP, we were able to turn this into a live, work and play environment for the local community.”

The 913K SF mixed-use community, when completed, will feature a fresh-food grocery store, a health and wellness center and 740 units of affordable housing. The development also created new permanent jobs for local residents. 

Despite their benefits, Cherena said brownfield redevelopments are a challenge to navigate because, without proper planning, they can lead to unknown environmental costs, long cleanup times and other concerns.

He recommends developers work with an environmental consultant early in the process to iron out the details and avoid these negative outcomes.

“The projects require effective consultants that know how to navigate regulatory requirements of brownfield programs, using pragmatic best management practices to make sure that the remedial activity helps protect future site occupants,” Cherena said. “If done correctly, most remediation can be integrated into construction, helping control costs, and coordinated with the project schedule so that approvals are received well in advance of project start date milestones.” 

Cherena said incentives are critical to the success of brownfield projects. With the correct guidance, these incentive programs can become part of the capital stack in future deals. While some projects may receive government loans and grants, others may need specific brownfield tax credits to help get the project up to speed. Incentives are based on the different available programs, he said.

Roux helped secure brownfield tax credits for Powerhouse Arts, a nonprofit organization that was looking to create a 170K SF facility for local artists on the Gowanus Canal in Brooklyn.

The building was originally the Brooklyn Rapid Transit Power Station, constructed in 1903. Years later, it was abandoned, suffered structural damage and was overrun by squatters, Cherena said.

Powerhouse acquired the site in 2012 with plans to redevelop it into an industrial arts center. Roux took over the remediation of the site in 2015 and helped it receive a certification of completion before a BCP-mandated deadline in December 2017.

“We provided supplemental sitewide soil investigation, polychlorinated biphenyls hot spot remediation, regrading and soil disposal, followed by site capping and investigation of several historical structures associated with former operations,” Cherena said.  

Roux helped Powerhouse navigate the NYSDEC BCP and contributed to restoring the site’s turbine hall and boiler house. The redevelopment featured an exhibition space and facilities for fabrication in wood, metal, ceramics, textiles and printmaking. 

Powerhouse opened in 2023 and hosts classes, workshops and community events. 

Cherena said brownfield sites present an excellent opportunity for savvy investors to turn vacant, blighted infill properties into something valuable for the community and the environment while making a profit.

Roux wants to educate more developers on using incentivized cleanup programs to limit liability and help offset site operation costs. 

“We will continue to lobby for regulatory agencies to continue to subsidize brownfield cleanup and redevelopment and encourage developer-friendly policies and practical solutions,” Cherena said. “We will also be interested in hearing developers' and builders' challenges and concerns so that we can continue to develop solutions that remove pain points and unlock the potential of these properties.” 

This article was produced in collaboration between Roux and Studio B. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.