A-Brownfields-based-Solution-for-Los-Angeles-County’s-Housing-Crisis-2004-20fd0es

A Brownfields-based Solution for Los Angeles County’s Housing Crisis April, 2004 Presented to the Greenlining Institute by the University of Southern California Center for Economic Development School of Policy, Planning, and Development A Brownfields-based Solution for Los Angeles County’s Housing Crisis April, 2004 Principal researchers and authors: Tridib Banerjee, Ph.D Raphael Bostic, Ph.D Leonard Mitchell, Esq., Executive Director Deepak Bahl, Associate Director Dion Jackson, Associate Director Presented to the Greenlining Institute by the University of Southern California Center for Economic Development School of Policy, Planning, and Development UNIVERSITY OF SOUTHERN CALIFORNIA CENTER FOR ECONOMIC DEVELOPMENT SCHOOL OF POLICY, PLANNING, AND DEVELOPMENT A BROWNFIELDS-BASED SOLUTION FOR LOS ANGELES COUNTY’S HOUSING CRISIS Credits/Acknowledgements This project was funded by generous contributions from the following organizations: Countrywide Home Loans, Inc Fannie Mae First American Title Insurance Co Hawthorne Savings HSBC Bank USA Union Bank of California Wells Fargo Bank US Bancorp The researchers and authors of the report wish to thank the following University of Southern California students in the Masters of Planning and Masters of Real Estate Development programs in the School of Policy, Planning, and Development for their contributions to this work These include Parul Agarwala, Jung-A Ahm, Melissa Fertig, Brad Hill, Monika Jain, Jessica Kirchner, Milo Peinemann, Leslie Punelli, and Liang Wei UNIVERSITY OF SOUTHERN CALIFORNIA CENTER FOR ECONOMIC DEVELOPMENT SCHOOL OF POLICY, PLANNING, AND DEVELOPMENT A BROWNFIELDS-BASED SOLUTION FOR LOS ANGELES COUNTY’S HOUSING CRISIS Table of Contents Executive Summary I Introduction II Background III Task One: Identification of Brownfield Sites Suitable for Housing A Identifying Potentially Eligible Sites 10 B Determining the Number and Total Acreage of Brownfield Sites in Los Angeles County 17 IV V Task Two: Estimate the Potential Number of Housing Units 21 Task Three: The Market Impact 27 A The Estimated Market Impact – How Much of the Shortfall Is Filled? 28 B Estimating More Realistic Effects on Rent: Introducing Time Horizons 30 C Market Impact Using a Three-Year Time Horizon 32 VI Task Four: Identification of Housing Built on Brownfield Sites 35 A Background and Methodology 35 B Initial Findings 36 C Case Studies: Housing Developments on Brownfield Sites in California 40 VII Task Five: The Cost of Brownfield Development: Does it Make Sense? 47 A Remediation 48 VIII Topics of Future Research 50 IX Appendices 52 A Appendix I: Brownfield and Greyfield Survey 52 B Appendix II: Sampling of Photos of Potential Brownfield and Greyfield Sites 53 C Appendix III: Developer Survey 54 D Appendix IV: Developer Survey Results 55 UNIVERSITY OF SOUTHERN CALIFORNIA CENTER FOR ECONOMIC DEVELOPMENT SCHOOL OF POLICY, PLANNING, AND DEVELOPMENT A BROWNFIELDS-BASED SOLUTION FOR LOS ANGELES COUNTY’S HOUSING CRISIS Executive Summary This report assesses the extent to which the development of housing on Brownfield sites would alleviate the affordable housing crisis faced by many California communities The key factual findings are as follows: • Between 19,000 and 365,000 additional units (beyond current development volumes) could be produced on Brownfield sites deemed suitable for housing In terms of its human impact, construction of these units would house between about 58,000 to almost 1.1 million people • Under the most reasonable scenario involving moderate development densities, slightly more than 209,000 additional units can be produced This would provide housing for nearly 623,000 people • The additional supply of housing provided through Brownfield development would help improve the affordability of housing in Los Angeles County For example, if high density housing were produced, and the additional units were all rental and reached the market in three years, the last three years of rent increases would be erased and rents would stand at 2000 levels • Overall market impact depends critically on the density and speed at which Brownfield sites were developed The higher the density and the faster the rate of development, the greater the impact will be • Brownfield development is likely to indirectly improve the affordability of forsale homes at the entry level However, even if Brownfield development were to occur at the highest density and most permissive definitions of housing-suitable, its effect would likely be to reduce the rate of home price appreciation rather than reduce the price of homes outright Many of the major impediments encountered by developers in the survey stem from the unpredictability and increased risk of developing housing on Brownfields Additional incentives or measures are still needed to tip the scales in favor of urban infill housing development Issues that have been raised by this report are as follows: • Brownfield development is more expensive than Greenfield development, although costs become more comparable the farther a suburban Greenfield project is from existing infrastructure • Brownfield development faces greater development risk, especially at the front UNIVERSITY OF SOUTHERN CALIFORNIA CENTER FOR ECONOMIC DEVELOPMENT SCHOOL OF POLICY, PLANNING, AND DEVELOPMENT A BROWNFIELDS-BASED SOLUTION FOR LOS ANGELES COUNTY’S HOUSING CRISIS end of the development process, due in large part to a lack of remediation standards and unpredictable costs, including those for Phase II assessments which have been known to range from $5,000 to $300,000 • Developers, in general, have not developed housing on Brownfields because of liability costs associated with Brownfields remediation, fear of adverse publicity, the threat of potential litigation, and, for non-profits, fear that additional complications could deter the awarding of public subsidies • The ability to assemble land for development and to maximize land value, always important in development, is especially critical for Brownfield developers, who tend to build large-scale multifamily developments in order to derive economies of scale • Analysis of Brownfield development in the context of housing is hampered by significant challenges Few cities track such sites, those that tend to not consider them suitable candidates for housing, and developers are reluctant to openly discuss their housing projects on Brownfield sites UNIVERSITY OF SOUTHERN CALIFORNIA CENTER FOR ECONOMIC DEVELOPMENT SCHOOL OF POLICY, PLANNING, AND DEVELOPMENT A BROWNFIELDS-BASED SOLUTION FOR LOS ANGELES COUNTY’S HOUSING CRISIS I Introduction In the spring of 2003, the Greenlining Institute, supported by a coalition of financial, insurance, and corporate institutions, solicited proposals for an analysis of the potential effects that a concerted initiative to develop housing on existing “Brownfield” sites might have on the affordable housing crisis facing many California communities The proposal called for the use of Los Angeles County as a case study The University of Southern California Center for Economic Development (CED) responded to the solicitation by designing a study comprised of five tasks: I Estimate the number and total acreage of Brownfields in LA County that exist within areas suitable for housing, including average size of each II Quantify the potential number of housing units that can be built on these sites through various housing types and densities (i.e Multifamily, single-family, low/medium/high-density) III Determine the effect of these additional housing units, for each scenario listed above, on: a Availability rates of homes and rentals within Los Angeles b Affordability indices of homes and rentals within Los Angeles c Median price of homes within Los Angeles d Homeownership rates of people living in Los Angeles IV Identify housing sites that have been built on such properties in L.A County and determine: a The number of housing units created b Remediation and infrastructure costs c Common contaminants encountered d Sources of funding for remediation e Ownership issues when obtaining land f Cost per unit built V Compare (and examine) the core costs of housing units built on Brownfield sites with housing constructed on “clean-suburban land” to determine the variability that can be absorbed by remediation costs1 For the purpose of this study, “clean-suburban land” refers to any parcel that exists on urban edges or within suburbs, is ‘green’ land that has never been developed, other than for agriculture or grazing uses, UNIVERSITY OF SOUTHERN CALIFORNIA CENTER FOR ECONOMIC DEVELOPMENT SCHOOL OF POLICY, PLANNING, AND DEVELOPMENT A BROWNFIELDS-BASED SOLUTION FOR LOS ANGELES COUNTY’S HOUSING CRISIS Because of the legally restrictive definition of Brownfield sites, in subsequent discussions to further refine the scope of the problem and methodology, CED and the Greenlining consortium agreed to expand consideration of developable lands beyond Brownfields by including “Greyfield” sites and “potential Brownfield sites.” This report details the execution of CED’s study plan The report first establishes the definitions of “Brownfield” and “Greyfield” used by CED researchers Potential Brownfield sites were added through the inclusion of two databases containing underutilized industrial sites and through the visual field survey conducted in several cities The purpose was to include sites that were vacant, obsolete, blighted, or underutilized for which we had insufficient data to determine the presence or potential presence of contamination.2 This initial section also discusses the important concept of “housing suitability,” which when taken into account can have the effect of significantly reducing the acreage to be considered The ensuing section details how estimates were generated for the number of housing units that could be produced on Brownfield and Greyfield sites deemed suitable for housing, describes estimates generated for various density scenarios, and assesses the expected market impact of the addition of these units on the Los Angeles County rental housing market Case study descriptions of housing developments on sites that were previously Brownfields are provided in the next section of the report These case studies offer perspectives on the potential scale and quality of Brownfield housing developments Finally, the report offers an analysis of Brownfield development that explores the question of whether such developments make sense from a financial perspective and then offers suggestions for topics of future research that would contribute to the implementation of housing development on Brownfields and has no existing infrastructure Obsolete – used here to refer to functional obsolescence, meaning buildings no longer productive for their UNIVERSITY OF SOUTHERN CALIFORNIA CENTER FOR ECONOMIC DEVELOPMENT SCHOOL OF POLICY, PLANNING, AND DEVELOPMENT A BROWNFIELDS-BASED SOLUTION FOR LOS ANGELES COUNTY’S HOUSING CRISIS II Background This section reviews a brief history of Brownfields as a policy focus that highlights key data sources and definitions The Superfund program was the historical antecedent to what are now known as Brownfields Superfund sites were compiled by the Federal government via the Comprehensive Response, Compensation, and Liability Act Information System (CERCLIS) In 1995, as part of the Brownfields Action Agenda, which highlighted Brownfields as opportunities for economic redevelopment, U.S Environmental Protection Agency (U.S EPA) Administrator Carol Browner ordered the “archiving” of approximately 24,000 sites from a previous total of 40,000 sites originally in CERCLIS These archived sites had either been found to be clean by U.S EPA or were turned over to State cleanup programs The latter sites were among the first Brownfields, and the intent of the turnover was to encourage cleanup In California, the archived Superfund sites were the foundation of CalSites, a list managed by the California Environmental Protection Agency (CalEPA) that includes sites where hazardous substance releases have been confirmed This database was recently upgraded and expanded into the Site Mitigation and Brownfields Reuse Program (SMBRP) database In managing the SMBRP database, CalEPA has grouped sites into six categories: CalSites, Properties Needing Further Evaluation, Properties in the School Property Evaluation Program, No Further Action Program Properties, Voluntary Cleanup Program Properties, and Unconfirmed Property Referrals In October 2003, there were 5,660 sites in the Site Mitigation and Brownfields Reuse Program Database, of which 686 were on the CalSites list, 2,904 were properties with unconfirmed releases, 553 were undergoing cleanup in the Voluntary Cleanup Program, 1128 were existing or proposed school sites under evaluation, and 389 had been determined to pose no problem to the environment or the public Despite this longer history, a “Brownfield site” was codified into law only on January 11, intended use Gause, Jo Allen (1996) Washington, D.C.: ULI-the Urban land Institute p.5 UNIVERSITY OF SOUTHERN CALIFORNIA CENTER FOR ECONOMIC DEVELOPMENT SCHOOL OF POLICY, PLANNING, AND DEVELOPMENT A BROWNFIELDS-BASED SOLUTION FOR LOS ANGELES COUNTY’S HOUSING CRISIS 2002 in Public Law 107-118 (H.R 2869) - "Small Business Liability Relief and Brownfields Revitalization Act": “With certain legal exclusions and additions, the term “Brownfield site” means real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant.” The current research relies on this definition Greyfields are another important term for this study First coined by the Congress for New Urbanism in the 1990s, the term “Greyfield” as applied to developed parcels refers to sites that are “old, obsolete, and unprofitable retail and commercial sites.” Greyfield sites are, in many ways, quite similar to Brownfield sites in that they are non-residential, often involve remediation, and typically have structures on them that may require demolition or considerable renovation In this sense, then, they are a natural candidate for consideration in the context of the task called for by the Greenlining consortium For simplicity, Brownfield sites, potential Brownfield sites, and Greyfield sites are collectively called Brownfields for the remainder of the report III Task One: Identification of Brownfield Sites Suitable for Housing While CalEPA estimates that there are 90,000 sites idle or underutilized because of real or perceived environmental contamination, no one has identified and inventoried the majority of these sites Thus, the first task was to identify those Brownfield sites suitable for housing in Los Angeles County This involved two steps: (a) identifying potentially eligible sites; and (b) determining the number and total acreage of Brownfield sites in areas suitable for housing http://www.epa.gov/swerosps/bf/glossary.htm#brow UNIVERSITY OF SOUTHERN CALIFORNIA CENTER FOR ECONOMIC DEVELOPMENT SCHOOL OF POLICY, PLANNING, AND DEVELOPMENT CARSON Site Address WILMINGTON AVE & LOMITA BLVD Please add as much information as you have about each site, especially if it is suitable for housing Site Name Contamination* SOIL MANAGEMENT METHOD, INC POTENTIAL/CONFIRMED CONTEMINATION* A: Acid Solution Ak:Alkaline Solution Aq: Aqueous Solution C: Chromium (VI) Ca: Cadmiumn CS: Contaminated Soil FCC: FCC Waste H: Household Waste L: Lead LW: Laboratory Waste Ol: Organic Liquid P: Polymeric Resin Waste PW: Pesticide Wastes S: Solvent Status as of** Suitable for Housing? Current Condition s.f bldgs/ # Acres Zoning Plans for Redevelopment? DREFOA(05/01/ 94), NFA for DTSC(10/27/94 ), G STATUS** A: CalSites Properties from CalSites Database AWP: Annual Workplan-Active Site C: Voluntary Cleanup Program Properties from CalSites Database BKLG: Backlog-Potential AWP Site D:Unconfirmed Properties Referred to Another Local or State Agency from CalSites Database DTSC: Department of Toxic Substances Control G : Archived Superfund Site NFA: No Further Action REFOA: Property/Site Referred to Another Agency RCRA: Listed on the Resource Conservation and Recovery Act Information (RCRAInfo) database REFRW: Property/Site Referred to Regional Water Quality Control Board (RWQCB) SWRCB:Active Regulated Facility by State Water Resources Control Board VCP: Voluntary Cleanup Program VTERM: Voluntary Cleanup Agreement Complete Unproductive Industrial and Commercial Sites Site Address Site Name Current Condition s.f bldgs/ # Acres Plans for Zoning Current Use If Grey-field - Historic Use Redevelopment? % occupied? A BROWNFIELDS-BASED SOLUTION FOR LOS ANGELES COUNTY’S HOUSING CRISIS B Appendix II: Sampling of Photos of Potential Brownfield and Greyfield Sites UNIVERSITY OF SOUTHERN CALIFORNIA CENTER FOR ECONOMIC DEVELOPMENT SCHOOL OF POLICY, PLANNING, AND DEVELOPMENT 53 Vacant Site La Puente Vacant Site Azusa i Industrial Site Monrovia Industrial Site Burbank ii Commercial Site Whittier Commercial Torrance iii Industrial Cluster Site Azusa Industrial Cluster Site Huntington Park iv Commercial Corridor Norwalk Commercial Corridor Los Angeles v A BROWNFIELDS-BASED SOLUTION FOR LOS ANGELES COUNTY’S HOUSING CRISIS C Appendix III: Developer Survey UNIVERSITY OF SOUTHERN CALIFORNIA CENTER FOR ECONOMIC DEVELOPMENT SCHOOL OF POLICY, PLANNING, AND DEVELOPMENT 54 H O U S I N G D E V E L O P M E N T O N B R O W N F I E L D S D E V E L O P E R S U R V E Y Name: _ Company: _ Address: _ City, State, Zip: _ Tel.: _ Fax: _ Name of Project/Development: _ _ Type of Development (check all applicable) Single Family [Average unit size (sq ft.)]: Affordable Housing _ Multi-Family [Average unit size (sq ft.)]: _ Reuse/Conversion Land Assembly/Subdivision/Site Preparation [Acreage]: Mixed Use (briefly describe composition): Other (please describe): Number of Housing Units: Number of Lots: Other Uses (if applicable): List common contaminants encountered: _ Nature of remediation involved (please attach an additional sheet if necessary): _ Total project remediation costs: $ _ Infrastructure costs Onsite per unit built: $ _ Offsite per unit built: $ _ Onsite per lot developed: $ _ Offsite per lot developed: $ _ Total time spent (in months) from project initiation to the issuance of “Declaration of No Further Action”: _ Remediation funding source(s) and amount(s) Public: $ _ Private: $ _ Other (please describe): 10 Describe any ownership issues encountered while obtaining land Phase I costs: $ _ Costs to the buyer: $ _ Phase II costs: $ _ Costs to the seller: $ _ Other (please describe): 11 Please list Acquisition cost per unit built: $ Remediation cost per unit built: $ _ Sales price per unit built: $ Acquisition cost per lot developed: $ Remediation cost per lot developed: $ _ Sale prices per lot developed: $ 12 Identify major impediments encountered in developing housing on brownfields (please attach an additional sheet if necessary) 13 We would appreciate it very much if would also send us any marketing literature or brochure that provides additional information on the project/housing development Thank you for completing the survey Please return the completed survey by FAX 213.740.0373 or E-mail to bahl@usc.edu or Mail to: Deepak Bahl, VKC 385, School of Policy, Planning, and Development, USC, Los Angeles, CA 90089-0041 A BROWNFIELDS-BASED SOLUTION FOR LOS ANGELES COUNTY’S HOUSING CRISIS D Appendix IV: Developer Survey Results UNIVERSITY OF SOUTHERN CALIFORNIA CENTER FOR ECONOMIC DEVELOPMENT SCHOOL OF POLICY, PLANNING, AND DEVELOPMENT 55 A BROWNFIELDS-BASED SOLUTION FOR LOS ANGELES COUNTY’S HOUSING CRISIS Survey Results Developer Westar Associates Project Name Location Santa Maria Project Type Mixed-use No of Housing Units 150 No of Lots JT Development Plaza Almeria 301 Main Street, Huntington Beach Mixed-use 42 Acres 150 total; 30 singlefamily 1.84 Renova Partners Curtis Park Village Sacramento 15% Affordable housing/ mixed-use 568 65 AMCAL Portofino Villas 121 West Philips Blvd., Pomona Affordable housing 174 4.7 AMCAL* Ave 26 330 North Avenue 26, Los Angeles Mixed-use Catellus Bridge Court Apartments Emeryville Low income housing 121 family, 102 senior, 150 for sale 200 New Urban West Bayshore Place Long Beach Single family 51 homes Hydrocarbon (UST) 500 gallons of leaking gasoline on top of ground water Lead, arsenic, TCE, PAH's Remediation Type Cap well; use contaminated soil for road base Aeration (1 year) Source (public or private) Private (oil co and developer) $300,000 Public (in terms of DDA) Excavation of soil, groundwater treatment on site $9 million 100% private Heavy metals (cadmium, arsenic, lead) Haul and dispose $220,000 100% private 6.6 TCE, PCE, DCE, heavy metals, TPN, VOCs Off site disposal or onsite with cap $750k-1 million* 100% private VOC, Petroleum Soil removal, capping, and treatment $1 million 100% private Oil wells Abandoned, removal of underground tanks, relocated, compacted and graded soil $2.5 million Private, Redevelopment agency helped assemble parcels with eminent domain UNIVERSITY OF SOUTHERN CALIFORNIA CENTER FOR ECONOMIC DEVELOPMENT SCHOOL OF POLICY, PLANNING, AND DEVELOPMENT Contaminants Oil well Remediation Cost $2-3 million 56 A BROWNFIELDS-BASED SOLUTION FOR LOS ANGELES COUNTY’S HOUSING CRISIS Survey Results (continued) Developer TSA Housing Project Name Avalon Courtyard Location Carson Project Type Multifamily, affordable, senior No of Housing Units 92 Redev Agency, City of San Diego (from Opper & Varco) 101 Market Street San Diego Multifamily/ mixed-use 151 EPA/City of Oakland Habitat site 2662 Fruitvale Ave Oakland Single family AMCAL MultiHousing, Inc Las Brisas Apartments 8760 Main Street, Los Angeles, CA Multifamily, affordable 66 Inclusive Homes, Inc Villa Los Robles 473 North Los Robles Ave, Pasadena Multifamily No of Lots Acres 0.69 1.36 Contaminants Gasoline, drums oily surface material, old septic tank Remediation Type Aeration Petroleum, diesel, lead Mostly excavation, disposal, vapor barrier installed onsite $1.5 Million Removal of USTs Source (public or private) Mix between the city, the California Community Reinvestment Corp., and So Cal Edison Mix - public $400,000; private $2 million; costs put up by Center City Dev Corp but were recovered from petroleum companies (the responsible parties) Mix - of public funding (EPA, City) 1.12 ACM/LBP, PCBs Hazardous disposal of ACM/LBP contaminated building structures $175,000 Funded as project cost 0.3 None Former gas station site $0 Public: $250,000 UNIVERSITY OF SOUTHERN CALIFORNIA CENTER FOR ECONOMIC DEVELOPMENT SCHOOL OF POLICY, PLANNING, AND DEVELOPMENT Remediatio n Cost $300,000 57 A BROWNFIELDS-BASED SOLUTION FOR LOS ANGELES COUNTY’S HOUSING CRISIS Survey Results (continued) Project Developer Name Casa Heiwa Location 231 East Third Street, Los Angeles A Community of Friends Willow Apartments W.O.R.K.S Court Street Apartments 1916 E 126th Street and 12612 S Wilmingto n Ave, Los Angeles 1301 Court Street, Los Angeles Inclusive Homes, Inc No of No Source Project Housing of Type Multifamily, day care centers, and services office Affordable Housing Units 100 Lots Acres 2.78 Contaminants Petroleum naturally occurring 24 0.73 Affordable Housing 24 0.43 UNIVERSITY OF SOUTHERN CALIFORNIA CENTER FOR ECONOMIC DEVELOPMENT SCHOOL OF POLICY, PLANNING, AND DEVELOPMENT Remediation (public or Remediation Type Removal Cost $300,000 private) Gasoline TPH-g, Benzene, EthylBenzene Toluene Soil vapor extraction $500,000 $320,000 public with the request of an additional $150,000 from LA County CDC Methane gas, one previously undetected oil well (more could be detected during grading currently underway) Methane barrier (Liquid Boot); passive ventilation system (vent pipes, gravel); mechanical ventilation system in subterranean garage and community room;, dewatering system so that vent pipes under building not become filled with water or silt; proper abandonment of at least one previously undetected oil well $190,000 $1.4 M residual receipts loan from Los Angeles Housing Department; $25K grant from the California Center for Land Recycling; $118K grant from AHP; and the balance comes from equity raised from Low Income Housing Tax Credits and conventional financing 58 A BROWNFIELDS-BASED SOLUTION FOR LOS ANGELES COUNTY’S HOUSING CRISIS Survey Results (continued) Developer Cherokee Project Name Campus Bay Cherokee Mission Bay Cherokee Ascon Cherokee WhitakerBermite Brookfield Land Company Coyote Hills Imperial Golf Course Birch Hills Rose Drive Location 1200 S 47th Street and 1415 S 47th Street, Richmond 1400 7th Street, San Francisco 21641 Magnolia Street, Huntington Beach 22116 Soledad Canynon Road, Saugus Project Type Mixed-use No of Housing Units 1,300 No of Lots Mixed-use and multifamily High/low density single family 400 502 38 High/low density single family 3,000 1,000 Acres UNIVERSITY OF SOUTHERN CALIFORNIA CENTER FOR ECONOMIC DEVELOPMENT SCHOOL OF POLICY, PLANNING, AND DEVELOPMENT Contaminants Remediation Type Remediation Cost Source (public or private) 59