In Cleveland, Ohio, a 22-acre industrial property—the former home to a steel plant—was not a site for the faint of heart. And, it was definitely not a sight for sore eyes.

It was far from it. Midland Steel, which for decades had owned and operated the plant, had vacated the property in 2004 after filing for bankruptcy. What Midland Steel left in its wake were a host of environmental issues accumulated over the years: Thousands of tons of soil and concrete contaminated with hazardous materials or impacted by petroleum; numerous open pits filled with millions of gallons of PCB contaminated waters and oils; and an abandoned building with asbestos containing bio-hazardous materials.

When the calendar flipped to 2005, the city of Cleveland acquired the property for eventual re-development. But anyone with an accurate crystal ball could have safely predicted that it might take eight to 10 years—or longer—to see results at this former steel plant, located at west 110th and Berea in the far west end of the city, comprising Cleveland’s industrial corridor.

Cleveland officials had another more aggressive timetable. In Cleveland, when it comes to redeveloping industrial properties the attitude is, “why wait.” Capitalizing on an ambitious industrial landbank program, Cleveland targeted the Midland Steel property as its pilot project.

At the Midland Steel site, underground storage tanks were found in areas previously thought to be free and clear. Thirty-foot pits, when emptied of their liquid contents, revealed years of accumulated debris at the bottom that would have to be treated as “PCB Contaminated.”

“In order to compete for developers, we really had to start thinking outside of the box. The industrial landbank program allowed us to take full advantage of available federal funds, clean up our contaminated sites, attract industry and jobs to our city, and get these properties back on our tax rolls,” said city of Cleveland economic development director Tracey Nichols. “We are in a unique position to take the risk out of the equation for potential developers, and give the city a much-needed advantage over other municipalities.”

The theory is working well as the former Midland Steel plant—thanks to its project partners—is putting the finishing touches on a massive cleanup effort. The City, URS Corp. and Titan Wrecking and Environmental collectively assembled a top-rate oversight team consisting of brownfield managers, geologists, engineers, project managers and demolition experts. The next step following cleanup is to identify a developer to take the property and convert it into a light industrial park in 2010 and beyond.

Unique opportunity
“There is no other landbank in the U.S. that supports industrial/commercial property rehabilitation, as most municipal landbanks support only residential redevelopment,” explained Brooke Furio, program analyst, MBA U.S. Environmental Protection Agency, Region 5 Cleveland Office, who was “on loan” to the city for three years in the cleanup phase. Furio said that Cleveland’s industrial landbank program carries a powerful distinction because the program enables the city to take full advantage of available federal funds to clean up contaminated sites, attract industry and jobs.

“The goal is to put properties back on the market quickly,” added Furio. “In many municipalities, they acquire properties through foreclosure, invest in them and get them back up and running—however they do it in a much longer time frame. The rationale is to acquire properties and hold them until the (real estate) market comes back.”

The Midland Steel cleanup initiative didn’t come without some unfortunate surprises regarding the breadth and depth of the cleanup effort—“surprises” that were deftly mitigated by the fact the city had done its homework up front and was prepared for an additional level of cleanup.

According to Anthony Bodami, managing partner, Titan Wrecking and Environmental, based in Kenmore, N.Y., concrete footers and foundations from buildings long since removed had to be unearthed across the entire site, and underground storage tanks were found in areas previously thought to be free and clear. Thirty-foot pits, when emptied of their liquid contents, revealed years of accumulated debris at the bottom that would have to be treated as “PCB Contaminated.”

“This project really could’ve gone the other way,” said Furio. “The site was complicated. We all had to get on board to make this work effectively. We were fortunate to have a contractor who cared about the success of the project, and the future of projects like it. Collectively, we were able to keep things moving, and complete the project within budget.”

Process traced to ‘04
The advent of the Midland Steel effort all began in 2004 when the steel maker filed for bankruptcy. The city of Cleveland began negotiations to acquire the property—and at a reasonable price. “The purchase agreement was very creatively carried out,” said Furio. “We negotiated the price, performed due diligence and built in conservative estimates for what our own future cleanup costs would be.”

Furio said that the team had to make sure they were fully indemnified from any trap doors, and equipped to withstand major complications that might arise. “Before we went out to bid (in 2005), we had to line up a solid grant package, worked with consultants who were flexible, took advantage of all the tools at our disposal and shopped for an environmental insurance program (eventually secured from AIG, now AIU Holdings) that would fit our needs. The insurance package was very comprehensive.”

That’s not always a smooth undertaking. With insurance, Furio said that “some cities tend to think of themselves as being self-insured, which they are not.” This can lead to significant exposure to risk.

Access to the industrial landbank program, obviously, was crucial. The estimated cost to the city was in the $4-million range. This translates to $250,000 cost per acre, including acquisition cost, site assessment, cleanup and demolition.

Coincidentally, the city had a funding opportunity right in its backyard. According to Furio, the national industrial landbank program is overseen and sponsored by Cleveland State University, which obtains funds from the U.S. EPA and in turn distributes grant monies within its role as the U.S. Great Lakes Finance Center administrator. Cleveland State did not have to look far to identify a viable grant candidate in close proximity: The former Midland Steel plant.

Solid team assembled
With the front-end pieces in place, the city went out for bid and eventually hired Chicago-based URS Corp. as the engineering firm and Titan Wrecking and Environmental, based in Kenmore, N.Y. “During site assessment, you never know what you are going to find,” said Furio. “We went into this with eyes wide open on what the degree of contamination might have been, and as it turned out the remediation necessary was more substantive than originally thought.”

Furio said he had unfortunately seen projects where the work might “look done” but often they are not. “Undoubtedly, the success and future of the program hinged on being able to complete the Midland Steel remediation within budgetary constraints, and be able to produce a marketable, desirable, prime industrial property in the process. If not for the flexibility and creativity of the city, URS and Titan Wrecking this project could not have been completed for the budgeted dollars,” concluded Furio.