City brownfields fund unused
More than half a million is ready, but unwanted
The City of Worcester has more than half a million dollars in low- and no-interest loans, but so far it hasn't loaned a single dollar in five years.
The money - $564,000 to be exact - is part of the city's EPA-sponsored Brownfields Cleanup Revolving Loan Fund (BCRLF). The idea of the program is to give developers an incentive to clean up brownfields sites, which are labeled as such due to significant environmental pollution.
Logic says a developer would be banging down the economic development office's door for those loans to help defray costs.
But the reality is, no one's knocking.
Competition cleans up
The problem is, according to Heather Kamyck, the city's brownfields coordinator, that the city's loan and grant pool is not competitive with other funding options for developers in both the public and private sectors.
Randal Webber, senior lender at Flagship Bank in Worcester, said that while his bank's underwriting procedures for development projects with environmental risks haven't changed in recent years, depending on the nature of the environmental contamination and its known costs for remediation, the bank is willing to consider loans for brownfields projects.
Additionally, the city program's self-imposed restrictions also limit the number of potential loan applicants. The funds can only be used for site remediation, or the actual cleanup and waste removal process, and not site assessment, Kamyck said.
Furthermore, the funds can only be used by third-party developers, and not by original site owners who may have had a leaky storage tank, but now want to clean it up before selling the property.
Other programs, such as those offered by Massachusetts Development Finance Agency, a quasi-public state agency dedicated to helping finance economic development projects, offer more comprehensive, complete project financing, said Stephen Crane, special projects coordinator for the city. In addition, the number of projects that fit the BCRLF critieria is small, according to Crane.
"The simple fact is that there's not a lot of opportunity to use this kind of funding, period," he said.
Numbers game
In 2002, the city applied for and received a $1 million grant from the EPA to establish the BCRLF fund, a pool of money that allows for zero- to low-interest loans and grants to eligible entities to aid in the remediation of a brownfield site. The city received supplemental funding - $300,000 in 2005 and a further $100,000 in July. The total in the fund now stands at $1.4 million, according to Kamyck, though it has yet to be determined how the city will spend the newest $100,000.
Of the original $1.3 million, 70 percent was earmarked for loans and grants, or roughly $940,000, Kamyck said. The remaining 30 percent is tagged for implementation costs.
Due to EPA restrictions, only $376,000 of that nearly $1 million pool is available in grant form. And that money went quickly, in two separate disbursements of $200,000 to Gateway Park and $170,000 for site cleanup at 48 Mason St., Kamyck said.
That left $564,000 in the fund available for low or no interest loans.
Last line of defense
The fact that the money isn't being used is not all bad for the city's brownfields development team. There are still projects going on, Crane and Kamyck said, and if they found better means of financing, more power to them, as long as the work continues.
Kamyck said there are two or three potential borrowers who have expressed interest in the fund, and the city is working with the mayor's brownfields roundtable to get the word out to developers.
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