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From Rubble to Riches: Western Communities Capitalize on Cleanups

By Matthew Frank, 2-14-08

	Across the West, communities are using Brownfields as canvasses for urban revitalization. Here, at Missoula's former Champion Sawmill site, rubble will be replaced with a mixed-use development a stone's throw from downtown. Photo by Matthew Frank.

Missoula's affable Mayor John Engen calls it an unsavory part of town, a place that "deadens community energy" and enables vandalism and crime. Bad stuff happens to people there -- "That's where I first learned to drink Sterno," he quips.

The former Champion Sawmill site is maybe a minute's float down the Clark Fork River from vibrant downtown Missoula, a fenced in and desolate 46 acres. On a still December day the dregs of demolition remain, blanketed by snow. Broken concrete, twisted rebar, graffiti, rusted machines frozen in the ground and in time, artifacts of a once-thriving timber industry.

Today, nearly 100 years after the mill first opened for business and about 15 years since it was finally abandoned, a propitious recipe of rising land values, forward-thinking local government, community-minded developers, and some financial gymnastics mixed with grants from the Environmental Protection Agency is working to turn this symbol of the Old West into the New: the blight will give rise to a mixed-use development in the heart of town, called The Old Sawmill District.

Such redevelopment is happening in cities around the Rocky Mountain West, from Missoula to Boise to Denver -- cities still carrying the legacy of industrial booms of the past and now confronted with this question, as posed by Chris Behan of the Missoula Redevelopment Agency: "If we're not going to sprawl, where are we going to grow?"

Former industrial sites, or brownfields, are increasingly a viable answer. They're often located in town (if once on the fringe, many Western towns are growing around them), with the upswing of surrounding land values heightening development appeal. Some are close to waterways, historically desired by industry for utility but now considered a marketable amenity for water's aesthetic and recreational worth. And they're being replaced by compelling new developments that serve existing residents, businesses, and all manner of newcomers -- young and old -- drawn to transit-oriented, downtown living with easy access to the West's open expanses.

In Salt Lake City, the 650-acre Gateway District downtown, once a railyard crucial to the region's development that, when abandoned, became a hindrance to it, is now a bustling residential and commercial neighborhood. Caldwell, Idaho is working to resuscitate the downtown stretch of Indian Creek, which was buried in the 1930s by upstream meat packing plants because it created a horrible stench. It will be restored into a green belt that will spur hundreds of new housing units and office and retail space. In Colorado Springs, the old Golden Cycle Mill processed ore from nearby gold mines, left widespread heavy metal contamination and sat dormant for 50 years. It is becoming a 210-acre mix of housing, retail, dining, entertainment and office space called Gold Hill Mesa.

	Chris Behan of the Missoula Redvelopment Agency. Photo by Anne Medley

These redevelopments are emblematic of two larger trends changing the West: "New Urbanism," the shift toward high-density, mixed retail and commercial communities that are walkable and deliver lighter impacts to the environment; and the emergent "restoration economy," the economic activities stemming directly from restoring damaged resources, championed most loudly in the West by Montana Gov. Brian Schweitzer and former Congressman Pat Williams of the think tank Western Progress.

"Restoration will do more than just heal the earth," Williams says.

The West's examples of brownfield redevelopment, as a microcosm, prove it. Cleaning up these properties increases local tax bases, creates jobs, utilizes existing infrastructure and lessens development pressures on undeveloped land, as the EPA asserts.

But best thing is that "restoration requires alliances, agreements and partnerships," Williams says. "That's the beauty of our new restoration opportunity: they require us to come together, and that means both the public and private."

In Missoula, the Champion Sawmill site will be transformed thanks to a multi-faceted private-public partnership. The project is complicated, the process expensive and lengthy, and success is not yet assured. But if it works as envisioned, the Old Sawmill District could serve as a model of what can be built when Western communities think creatively and collaboratively about how and where to grow.



At the crux of Missoula's Champion Sawmill project is a basic symbiosis between public entities and private industry. As Chris Cerquone of Geomatrix, the city's environmental consultant, says, "The city and the developer recognize that they need each other." The City of Missoula, by leveraging EPA grant money and tax dollars, can steer the development of the site to best serve the community, while the developer needs the money to overcome the prohibitive clean up costs on what is otherwise a prime piece of real estate.

It's the proverbial win-win, and Mayor Engen would add a few more "wins": the development will be built with access to traditional infrastructure; it will improve the city's waterfront trail system; provide a 15-acre city park; and transform what's been an unsightly, costly and unhealthy "void" in the middle of the city.

Linda McCarthy, the head of the Missoula Downtown Association, shares in the enthusiasm. "It's going to be fantastic," she says. It will physically extend downtown in a new direction. "It's bringing that live-work-and-play-in-the-same-area concept to the city."

But sitting at a table in a downtown Missoula conference room with his laptop flipped open, developer Ed Wetherbee is more restrained, and it becomes clear that arriving at a "win-win" partnership has not come easily -- or quickly or inexpensively.

"Brownfield development," he knew at the get-go, "takes a lot longer and costs a lot more money than originally anticipated."

And even so, he says, after a pause and a smile, "This has taken a lot longer and cost a lot more" than he thought it would.

A long-time Rocky Mountain venture capitalist who has worked in the energy and agribusiness sectors and splits time between Boulder and Missoula, Wetherbee is one of two developers behind the Old Sawmill District. The other is Kevin Mytty, a Missoula native and president of Shelter West, one of Missoula's largest homebuilders. Together Wetherbee and Mytty form the Millsite Revitalization Project.

Wetherbee speaks of the project and its partners delicately. Having navigated the brownfield redevelopment morass for five years now, Wetherbee has found it a constant balancing act to make sure everyone involved is happy.

"With brownfield projects you're starting with pieces of property that are encumbered by a number of things you have to overcome," Wetherbee says. "You can't underestimate the role and the contribution -- the necessity -- of the public sector in making these work."

In this case the public sector includes a few different groups: the City of Missoula, the Missoula Redevelopment Agency, the Missoula Area Economic Development Corporation, and the Montana Department of Environmental Quality. Given the players involved, Wetherbee, when asked about that basic symbiosis between he and Mytty and the city, is reluctant to categorize it in such simple terms.

"It's a mutual effort" among all the parties, he says, and "we've created a mix of what's attractive for all the stakeholders."



Restoring the Champion Sawmill site was sparked by a simple realization, says Chris Behan of the MRA: "We have a blight in the middle of the city with unknown pollution sitting on our aquifer." So in the late 1990s the city applied for funds from the EPA's then nascent Brownfields Program.

In 2000 Missoula received the first of three grants, the biggie coming in 2004, a $1 million Brownfields Cleanup Revolving Loan Fund. MAEDC provided the required 20 percent match for the loan, upping it to $1.2 million, and just about all of that was awarded to Millsite Redevelopment Project.

The Revolving Loan Fund is crucial to making the project work, and it operates in conjunction with another financial tool that's long been a powerful lever: tax increment financing. TIF (regularly pronounced "tiff") allows the city to leverage a district's future tax revenue to pay for groundwork today. In this case, TIF money -- about $1.125 million worth -- will ultimately pay off the loan awarded to the Millsite Redevelopment Project. "Without TIF, there's no way we ever would have begun this effort," Wetherbee says.

Resources: EPA's Brownfields Program Tax Increment Financing Old Sawmill District Cherokee Denver Boise's Linen District Design Workshop Western Progress Other Western Brownfields Projects: Boulder County, Colorado Ouray County, Colorado Summit County, Colorado Great Falls, Montana Miles City, Montana Custer County, Idaho Spokane, Washington

The total cost of the cleanup is expected to be about $2.5 million, more than twice what the city is chipping in. Any other unforeseen costs are "all in the risk side of the equation" for the developers, Behan says.

There's certainly risk involved for the city, too. Mayor Engen says the city takes very seriously its "responsibility of being stewards of the federal and local assets," and "we expect tremendous dividends over the long haul."

In his Missoula office Behan leans over a laminated map of the plans for the Old Sawmill District. Red and green buildings are superimposed on an aerial map of the city like houses on a Monopoly board. It will be a community of some 950 residential units (mostly rentals, townhomes and condos) and more than 150,000 square feet of commercial space, with about 40 percent of the site left as open space, including a 15-acre city park along the river.

The first home sales are anticipated in 2009, and the build-out -- between $150 and $200 million worth -- is expected to happen over the next 10 years and more. The target market, Wetherbee says, includes everyone from off-campus student renters to "empty nesters" who want an active urban experience.

Behan is clearly pleased with the project, for the city to be helping the community build up and not out, to get "one more link in the riverfront trails and park system," and to revitalize this wasteland in the heart of town.

He believes this type of development will become the norm, and that it fits well the ideals of a rising generation, one that is "more community and neighborhood minded," and up for "trading high-density living for open space."

"Missoula would like to get out front and be a model," he says.



Walking the grounds, the history of this lumberyard is almost palpable. Around 1910 Polley Lumber Co. first opened for business. In the 1930s, when it was about to go bankrupt, local businessman Morris Silver bought it and leased it to a series of operators. The leases and subleases were sold and sold again before the site finally went dormant in 1992.

Today, collections of blankets, newspaper, bottles, socks and scraps litter the abandoned buildings and other cavernous spaces.

In the end, the long-term lease with its right to purchase the site was in the hands of Idaho Timber Co., while the deed belonged to the Silver Foundation. Wetherbee and Mytty essentially had to buy the piece of property twice, which is fairly common with such long-neglected brownfields, Behan says. However, the two developers don't technically own the land yet -- the buy-sell agreement is contingent on the DEQ approving the cleanup.

So what was there to clean up? According to DEQ project manager Kate Fry, petroleum hydrocarbons were present in the soil where fueling stations had been and in the groundwater. Iron and to a greater extent manganese were found in the groundwater, too. And there remains a significant amount of buried wood waste, which can break down and create methane.

All in all, the contamination can be readily addressed, Fry says. The DEQ approved the Voluntary Cleanup Plan in the summer of 2007, but it hasn't yet put its stamp of approval on the results.

Wetherbee classifies these complications -- costly environmental cleanup and ownership convolutions -- as "having to undo a lot of things that happened before you came onto the scene." Between 30 and 50 percent of the project's total costs before construction are paying to undo the past.

Mayor Engen says Wetherbee and Mytty should still "turn a tidy buck," but maybe not as much as one might expect.

"These guys might hit 20 percent return in 30 years," Behan says. "It's not a short-term investment and certainly not a lucrative one."

Chris Cerquone of Geomatrix and others see an element of altruism. "They're going to make less money on a brownfield redevelopment … but they get the warm and fuzzies," he says.

"Because it's a big project, and because of where it is and our feelings about Missoula," Wetherbee says, "you do get more emotionally connected, and you want it to be something you're proud of. But there's got to be enough reward in it to keep the people interested and motivated to make it all work."



All of this is being done for the first time in the state of Montana," says Kisha Schlegel, Missoula's brownfields coordinator.

And she tactfully acknowledges there's room for improvement.

Schlegel's criticism is directed at the DEQ. She says it hasn't kept apace with the project's other partners. The department has limited staff and dollars and, more fundamentally, lacks a process for managing projects with a complicated economic component.

With all the delays, "developers get scared and think about walking away," she says. Moreover, she insists that the DEQ, with its substantial fees (they've charged the developers about $100,000 so far), actually compromises innovation, diverting money that might otherwise go toward greener design, open space or affordable housing -- things that the DEQ should be promoting instead of impeding.

"This is a good thing that can make them look really good," Schlegel says.

Dick King, the director of the Missoula Area Economic Development Corp., says the DEQ charges the developers as if it was an engineering firm, and it's putting the developers in a difficult position. "There are sites like this all over the place" ripe for redevelopment, he says, "and we want to find ways to improve the process."

DEQ Director Richard Opper says his agency may be labeled as slow, but "we have to make sure (the job) is done properly. The delays are not because of a lack of enthusiasm."

The agency has been flexible, from its perspective, giving Wetherbee and Mytty closure on certain sections of the land incrementally instead of waiting for the whole site to be OK'd all at once, says the DEQ's Kate Fry, but it was a concession that has been time consuming. "We might not allow this approach again."

Wetherbee stays above the fray. "There's plenty of room for criticism, but there's plenty of room to give them credit for what they do at the end of the day," he says. "If there's a way to be flexible without compromising (the DEQ's) integrity, it will make more projects like this happen successfully."



Over early-morning eggs and toast in an otherwise empty Denver diner, Todd Wenskoski of Design Workshop submits that stylistically, the West is still challenged, "and dedicated to preservation and historicism."

	Denver's Gates Plant joins downtown. Photo courtesy of Cherokee.

After Rotterdam was bombed in World War II, the old town could have been rebuilt, but instead the town was reborn, he says. "It was a fascinating combination of the old and the new, and I think that's what these places" -- the communities being built in the New West -- "should strive for."

Design Workshop is an award-winning international design firm with a particularly strong presence in the West, where its work includes transforming several industrial sites into transit-oriented, mixed-use communities. Design Workshop is re-envisioning the Old Sawmill District and Denver's Gates Rubber redevelopment. The firm's design philosophy is rooted in four things: environment, community, economics and art. "Merging all four elements creates places that lift the spirit and leave a legacy for future generations," Wenskoski says.

Beyond simply incorporating traditional Western designs into their work, he and his colleagues are pursing a new Western aesthetic, informed by "light and air and outdoor activities." This aesthetic, he explains, is still rooted in the spirit of the West -- the frontier, entrepreneurship, autonomy -- but translated in new ways. Even each state's mythology is incorporated, he says. People think of Montana as "a place to seek open space."

But Wenskoski refuses to call these projects examples of New Urbanism.

"No, this is old urbanism," he says. The things that make up New Urbanism -- a transit-oriented and high-density mix of residences and commerce -- are "things that are pretty common sense." He just calls it "urbanism," which he defines as "bringing people together and creating a sustainable place of beauty, significance and quality with which a city will be identified."

The Gates Rubber Company factory has long been a part of Denver's identity, though not necessarily as a place of beauty. The factory, built around 1920, was once among the world's top rubber producers with more than 5,000 employees. It's part of what made Denver the industrial hub of the Mountain West. It closed its doors in 1995 and attained a new identity -- that of a blocks-long eyesore of broken windows and blight, sitting uncomfortably close to a reinvigorated downtown.

While the Gates factory redevelopment has much in common with Missoula's Old Sawmill District -- public-private partnerships, tax increment financing, and EPA Brownfield funds, among other things -- the scale of the project sets it apart.

The key financial backers are not enlightened local builders, but rather a Raleigh, North Carolina-based private equity firm called the Cherokee Fund that has some $1.2 billion in capital. More than 2,000 residential units and 1.75 million square feet of office and retail space are envisioned, and it will be Denver's first transit-oriented development, taking advantage of its position along the city's new light rail line.

The Cherokee Fund specializes in brownfield redevelopment. As Kenneth Ho puts it: "Environmental contamination is what we understand and know how to deal with." The 50-acre site and nearby groundwater was polluted with the industrial solvent trichloroethylene, among other things.

Cherokee has spearheaded what Ho calls an "intensely complex" private-public partnership. But however complex it is, Dan Heffernan, the EPA's Region 8 brownfields coordinator, says it's "less upside down than most projects: there's a profit to be made there."

While Denver did receive EPA grant money for the project, it's peanuts compared with the funds from tax increment financing. The city and the Denver Urban Renewal Authority are paying out about $85 million in TIF money to help dampen what would otherwise be a prohibitive cleanup bill and to chip in on public infrastructure improvement. Ho calls the TIF "absolutely important and critical."

How did they arrive at $85 million? Basically, as Tracy Huggins of the Denver Renewal Authority explains, "The developer has to demonstrate that without public investment the project wouldn't be possible," and that's weighed against what the developers want to earn.

Putting that much public money on the line allowed Denver to guide the development in certain ways. In this case, as Heffernan says, the city negotiated upfront a certain amount of affordable housing and local hiring and living-wage policies.

"Frequently you're going to see it does require a cobbling of financial partners to make projects viable," Huggins says, and the Gates project is a case in point. Beyond Cherokee, the partners include the city and county of Denver, the Renewal Authority, the Metropolitan District, the developer Joseph Freed & Associates, the Colorado Department of Public Health and Environment and a handful of others.

"Any developer that thinks it's a slam dunk, they're in for a rude awakening," Huggins says.



If the Gates site is similar to many an Eastern and Midwestern brownfield, and the Missoula Sawmill District represents a classic Western cleanup involving a legacy industry, Boise's Linen District represents a third model: taking an old downtown industrial area and using some of the same financing tools to create a new kind of neighborhood.

The Capital City Development Corporation, Boise's redevelopment agency, boasts that Boise has been transformed from a city Harper's magazine in 1974 said resembled the aftermath of a "bombing raid," to one Forbes magazine in 2005 named the nation's best place to start businesses and careers. The ongoing revitalization efforts have, in recent years, led to the pursuit of EPA grants to bring some of the city's more blighted areas into the fray.

	No more dirty laundry: Boise's Linen District is on the rise. Courtesy photo.

David Hale's airy office sits on the second floor of what used to be the American Linen building, a former dry cleaning business on Boise's Westside. Put up for sale, it languished with no takers for about 15 years. Hale had the building gutted and spruced up, and it's the bright, linen-white centerpiece of an emergent six-block neighborhood dubbed the Linen District. In November the Linen District received an Idaho Smart Growth Award.

When Hale first expressed interest in the property, the CCDC landed a Targeted Brownfield Assessment grant from the Idaho Department of Environmental Quality on Hale's behalf to test for contamination. They found perchloroethylene, or perc, a cleaning solvent and a central nervous system depressant, but it was in low enough levels (evidently originating off-site) that the agency expeditiously gave a notice of "no further action." This, as Hale tells it, allowed for "the doors of the previous owners to close and the doors for this project to open." It became the first brownfield redevelopment project in downtown Boise.

Since Hale made the initial investment in the area -- he owns an equivalent of about two blocks in the six block district -- a number of new businesses have set up shop, including the Big City Coffee, Donnie Mac's Trailer Park Cuisine, a recycled building materials center, an art gallery and others, together creating Hale's sought-after eclectic mix: a neighborhood where you can live, work and play. About $4.5 million has been reinvested so far.

He wants it to include the old and the new -- "to add identity to the area," he says. People want to "work out of a cool, creative space that isn't brand new." It would have been cheaper to raze the building, but he says, "you can not put a price tag on history."

Phase Two, set to start, includes refurbishing the buildings he gestures to across the street from the Linen Building and stacking residential spaces right on top. The lofts will go for about $199,000, geared toward younger folks who want to live downtown, "people like my bartender," he says.

Scot Oliver, who heads the Capital City Development Corporation's brownfields program, says its $400,000 in EPA brownfield grant money "triggers a new way of looking at property" and is "tied into the core mission of redeveloping downtown Boise."

Boise's primary tool for giving brownfield redevelopers a jumpstart is tax increment financing (though there they call it "revenue allocation"). The CCDC so far has chipped in about $38,000 in TIF money for the Linen District for infrastructure improvements, a relatively small amount compared to what was leveraged to spark the city's other top brownfields projects, CitySide Lofts and the LEED Platinum-certified Banner Bank building, which received assistance valued at $1.3 million and $466,000 respectively. CitySide Lofts, the first large downtown condominium project in decades, also earned an Idaho Smart Growth award this year.

There has been some backlash to it all: "Why are we giving public money to already rich developers?" Oliver asks. The money is indeed contributing to the common good, he says, but "the public use" -- like the new sidewalks around the Linen District or the utility relocations at CitySide Lofts -- "is not always obvious."

Idaho is pursuing brownfield cleanup funds aggressively. It has a $3 million statewide EPA Revolving Loan Fund. The state legislature appropriated $1.5 million for the Community Reinvestment Pilot initiative. The IDEQ makes available about $900,000 for brownfields. And Idaho has received a few other assessment grants.

Eric Traynor, the brownfields specialist with the IDEQ, says a primary mission of its program is to "eliminate those development barriers and getting these properties back on the tax rolls."

"The brownfield program is an economic development program," Traynor says. "If you don't have an economic development component, you're dead in the water."

The economic aspect of rehabilitating brownfields goes beyond attracting new residents and retailers to building new downtown neighborhoods. It's part of what some see as a major new industry in the West: the restoration economy.

As defined by a report co-authored by Pat Williams' Western Progress, the restoration economy "highlights the ability of environmental conservation and restoration to create good jobs and increased revenue, thereby bringing together two interests, jobs and the environment, sometimes portrayed as being at odds."

Former Montana Congressman Williams says that most think of environmental restoration as removing the Milltown Dam (a Superfund site just east of Missoula) or taking out old logging roads. "But it's also brownfields…and the benefits of it will come clear relatively quickly, whereas the benefit of taking out timber roads take much longer."

With brownfields, "it's close, you see it right away, you recognize it and walk on it," he says.

Dick King of Missoula Area Economic Development Corp. says, "There's all this discussion about the restoration economy, and I think there's a lot of excitement. If you have a piece of property that's been used before, that's in the existing infrastructure, it makes a lot of sense to develop there."

"The boom in recovering, reclaiming and restoring brownfields is right around the corner," Williams says. It's only a matter "of understanding our new opportunities."

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This story first appeared in the preview issue of The New West magazine. For more information on the magazine, or to subscribe, go to www.newwest.net/magazine.

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