Canadian Urban Institute – Brownfields Conference
Overview
I recently participated in a panel of developers on the challenges facing commercial and residential developers of Brownfields sites, both within the GTA and outside the GTA. Alan Vihant, Vice-President of condominium development at Great Gulf presented 2 success stories relating to the East Bay Front mixed use residential project that is going to market shortly with the residential component being known as the Monde as well as the massive redevelopment of the Toronto Sun building on Front and Sherbourne involving both commercial and residential towers and substantial retail on the ground floors. Mitch Fasken from Kimshaw Holdings addressed the difficulties in implementing current Brownfields standards in non-urban and industrial such commercial sites, as opposed to urban high-rise sites in the GTA and elsewhere. Suggestions were made that the MOE consider revamping its very stringent standards, which are the highest in the world in terms of safety requirements, to address the different type of developments involved. i.e. urban, rural, greenfield, etc. as opposed to limiting the standards to strictly the type of use, i.e. residential, commercial, industrial, parkland.
I had the opportunity to speak on the availability of both conventional and mezzanine lending financing with respect to the cost of cleanup and also financing risk assessed sites that had already gone through a cleanup. I also addressed the availability of various municipal incentives for developers remediating Brownfields sites.
The good news from a financing point is that both banks and mezzanine lenders are now prepared to finance the cost of remediation for appropriate developments and solid, recognized developers with good covenants. Up to 5 years ago, lenders would not lend on any type of contaminated site and required full cleanups before providing financing for further development. This is no longer the case.
Banks are financing full and partial cleanups in accordance with approved plans and even on a risk assessed basis. Sites such as Market Wharf, the residential development in the Distillery District and the old American Standard/GE Plant are examples of modified and substantial cleanups that Schedule 1 banks have been financing.
On the municipal incentive fronts, the availability of actual up front funding has been less than stellar from municipalities, most likely because of the lack of funding available from these municipalities. The panel encouraged municipalities to look at other forms of funding such as a waiver or reductions of development charges, municipal permit fees and other charges that would assist in the cash flow up front. Mitch Fasken indicated that although financing was now becoming more available for high-rises in the GTA, funding for Brownfields sites outside of the GTA or smaller sites and Greenfield low-rise situations, was still very difficult and assistance from municipalities was critical.
The liberal government to date has created 2 competing forces that are inconsistent with each other. On the one hand they are pushing for intensification within built up areas which means of necessity, development of Brownfields sites as those are the remaining sites available for development. On the other hand, the Ministry of Environment has increasingly stepped up the minimum standards for cleanup, which standards exceed those in both North America and Europe. Balancing health and safety issues and development requirements is a tricky issue. Hopefully, our new minority government will take a more realistic approach to Brownfields remediation and find ways to come up with standards that both meet reasonable health and safety requirements and allow for redevelopment at a reasonable cost.
