It’s early January and it’s cold in Chicago (if I find Al Gore, I’ll invite him here to experience it himself) as we kick off another new year of the magazine. In early December, I attended the annual Brownfield News Editorial Board meeting along with other contributors of the written word and BFN staffers to plan and discuss ideas for 2008.

One of the ideas that bubbled up from the lively conversations around magazine names and topics was the opportunity to work with “Community Department” editor Kelly Novak on some of the corporate ownership challenges that surround lower-value corporate brownfield properties.

As Kelly points out on the previous page, they are in abundance, they are not always easily detectable, but the potential to identify them and put them back into productive use is growing.

As manager of real estate reuse for BP/Atlantic Richfield Co., I can attest to the fact that one of the main issues with rural brownfields is that they fly in the face of conventional real estate wisdom. In this case, the cry is “No location, no location, no location.” That means the value of the land is low and any hope of an advancing wave of redevelopment that could drive higher values is nowhere in sight. Because the land is contaminated, it requires cleanup funding, money for demolition or dismantlement and holding costs necessary to weather the market cycle. This gives you but a glimpse of where rural sites sit, many just barely straddling the economic fence.

Low-value brownfields are present in most corporate surplus property portfolios and more likely represent a larger portion of that portfolio than more positive economic real estate holdings. Rural surplus industrial lands clearly represent a big challenge, not only for divestment but for identifying sustainable new uses and ways to level out the economics.

Some considerations when determining best use for those challenging rural properties include:

Investigate local brownfield incentives.
Incentives for corporate property holders continue to be rare or non-existent. However, economic injections in the way of low-interest loans, brownfield grants and tax abatements are available for communities and third-party developers. These are especially important on rural brownfield sites where delivering an economically viable project is a challenge.

A tax dollar saved is equal to a dollar earned.
On low-value corporate surplus lands, a property donation may be a good consideration to encourage reuse by a third party. A charitable contribution to a registered 501(c)(3) is tax deductible based on the corporation’s tax rate, but certain requirements apply to the appraisal. Consult the IRS 8283 form tax counsel.

Evaluate conservation or other green credits.
A traditional appraisal done on BP lands that were once part of a former refinery complex found that 80 percent of the lands were considered wetlands and, therefore, had no development value for appraisal purposes. However, the same area was identified in the eco-regional planning process as a critical area for preserving biological diversity and protection of water quality. Understanding wetland or endangered species mitigation credits or the emerging area of carbon credits provides the potential to tap nontraditional sources of value. Additionally, conservation and charitable contribution can be combined, as many nature conservancies are nonprofit organizations.

Consider alternative energy opportunities.
Wind energy, solar farms and gas-fired power generation can easily coexist on brownfield sites. Overlaying the geographic distribution of surplus holdings with published wind speed maps could help determine alternative uses for rural sites. Similarly, rural brownfields in states that have attractive alternative energy incentives and/or green energy mandates for utilities may have additional opportunities open to them.

One of the largest solar farms on the East Coast was built on the site of a former BP terminal. The project took land that served its purpose for heavy industry in the 20th century and provided an adaptive reuse with 21st century technology to generate clean electricity.

The bottom line for rural brownfields is that remediation expenditures, holding costs and demolition/dismantlement expenses tend to pull these properties below the net zero economic line quite easily. From a traditional real estate standpoint, properties with low value require more creative approaches to identify viable regeneration possibilities.

Consideration of available incentives, alternative green energy options, passive conservation uses, or tax deductible donations may successfully help reduce corporate surplus property portfolios and put rural brownfields back into productive use.

Chris Olson is manager of real estate reuse for BP/Atlantic Richfield Co.