When it comes to real estate transactions for environmentally contaminated properties, the leading brownfield practitioners understand it's essential to have the right team of professionals on board to manage risks and create win-win solutions for all parties involved.
For the former Harman-Becker Automotive site in Martinsville, Ind., brownfield developer Ecolonomic Realty Group (ERG) assembled a core group of legal and environmental professionals that had the power to transform a contaminated property into a valuable asset for the community in a short period of time.
Harman International, a Fortune 500 company, purchased an industrial facility located on 24 acres in the small town of Martinsville in 1981. Prior to Harman's acquisition, this property was home to a number of different manufacturing operations. Over the years Harman expanded the facility and, presently, the facility consists of 225,000 square feet of office and manufacturing space. During their operations, Harman discovered that the site was contaminated with chlorinated solvents, and began to take the necessary steps to investigate the problem.
Groundwater contamination was found both on- and off-site, also affecting surrounding property. In 2008, Harman-Becker ceased operations in Martinsville and closed their manufacturing facility. Although some remediation work had been completed, it was clear that additional investigation and remediation activities would need to be conducted prior to a new user occupying this facility.
In late 2009, ERG, a national brownfield development and environmental risk transfer company, acquired the site from Harman-Becker. ERG was interested in the property because the site was a large industrial property with outstanding market potential if the environmental challenges could be resolved. Jerry Corbier, Managing Director of ERG, stated that "our focus for any property is to make sure that we understand the environmental issues and costs associated with the property, and also feel that the property will have value once the site is remediated and closure is obtained. The Harman site fit that criterion."
Working closely with the city of Martinsville, Morgan County EDC, the Indiana Department of Environmental Management (IDEM) and a team of legal and environmental professionals, including the SESCO Group and Barnes & Thornburg, ERG was able to overcome significant environmental concerns in an efficient manner, transforming a potential community liability into a highly valued asset.
This facility is now home to a manufacturing business with more than 150 jobs. Local city and county officials anticipate the project to act as a catalyst for new development in the area. It should also be noted that extensive investigation, engineering, and innovative institutional controls have been used to ensure the safety of on-site workers as well as residents living near the facility as a result of ERG's redevelopment efforts.
Preparing the site
In early 2010, ERG hired the SESCO Group to perform a comprehensive environmental investigation at the property and assist ERG in developing a comprehensive strategy to address all environmental and regulatory concerns. Utilizing mobile labs and real time field equipment to analyze groundwater, soil and vapor samples, SESCO Group was able to quickly lead the team in the proper direction.
Through their investigations, SESCO Group discovered that the extent of contamination was much larger than consultants had previously determined. Indoor air samples taken from within the manufacturing facility revealed the need for a vapor mitigation system. SESCO Group's professionals worked closely with IDEM officials to plan and construct a system that would ensure worker safety.
Ongoing monitoring and system maintenance requirements ensure that this system will continue to successfully address indoor air quality needs throughout the life of the facility. The total estimated cost to resolve the environmental concerns at this property is $3.2 million. Making sure that the facility was safe for occupancy cleared the way for new business to begin operations at this site.
Finding a buyer
During the environmental remediation process, ERG, the city of Martinsville and the Morgan County Economic Development Corp. aggressively marketed the property to prospective businesses that would be an asset to the community by creating jobs and investing in Morgan County.
In September of 2011, For Bare Feet's sock manufacturing plant in Helmsburg, Ind., was destroyed by a fire. Needing to relocate quickly, the company discovered that the former Harman-Becker site could not only house its operation but it was in a convenient location for most of their existing workers. The city of Martinsville was able to provide For Bare Feet with tax incentives to help offset some of the costs associated with the transition. For Bare Feet has made a sizeable investment in the city of Martinsville and has relocated over 150 jobs to the city.
Overall win
By assembling an outstanding environmental and legal team and working cooperatively with city, county and state officials, ERG was able to successfully lead the redevelopment of a property that might have otherwise deteriorated to the point where it was no longer valuable. If not for its redevelopment, this property ultimately would have cost tax payers millions to demolish and remediate. More importantly, the community would have lost out on the direct and indirect economic benefits generated by this project.
The direct economic impact created by For Bare Feet relocating to this facility is estimated to be $32 million per year for the city of Martinsville and Morgan County. The redevelopment of this site is also acting as a catalyst for infrastructure upgrades and additional private development in the area. Although the complete story of transformation is still unfolding, it is clear that ERG's efforts will have a substantial positive economic and environmental impact on the community for decades to come.
Through aggressive and innovative strategies, ERG and the SESCO Group have been able to investigate and remediate the former Harman-Becker property and nearby residential properties in a short period of time. Their overall efforts have involved state of the art investigative techniques and innovative engineering and regulatory solutions. Although there are ongoing monitoring activities that remain, the full implementation of the remedial and vapor mitigation strategy was completed in only a year and a half.
As for the facility's new owner, For Bare Feet has been able to transition into the building and expand their production. This facility is ideal for their current operations and provides ample room for future expansion. In addition, the new owners and operators of the facility have been protected by ERG from environmental liability associated with the property.
ERG and Barnes and Thornburg, ERG's environmental counsel, worked with the buyer to structure an agreement which ensures site closure on the property. Their agreement also protects the new owners and operators from past and present liabilities. ERG will retain the responsibility for any remaining remediation and closure activities, so that For Bare Feet can focus fully on their business.
Ecolonomic Realty Group is a national brownfield and environmental risk transfer company. For more information on how ERG can reduce the burden of owning environmentally-impaired property, call 717-638-8732 or email Steve Alves, Principal, at s.alves@ecolonomicrealty.com.
The SESCO Group is an Indiana environmental engineering and remediation firm. They have won several awards for their innovation and contribution to the brownfield industry. For more information contact Chad Pigg, Director of Business Development, at 888-872-1307 or by email at cpigg@sescogroup.com.
