Posts

City of Brantford gets loan for completed brownfield project

As reported by Susan Gamble in the Brantford Expositor, The City of Brantford, Ontario is securing a $4.6 million load to cover the expenses related to the remediation of the Sydenham Pearl Brownfield Site.

The site has already been remediated. City Councillors recently voted in favour of the $4.6 million debenture from the Ontario Infrastructure and Lands Corporation with a 20-year interest rate of 3.4 per cent. The agreement will mean the city repays the loan at a rate of $322,878 a year.

The debenture was approved, along with the project, in 2012 and the remediation at the site is complete, but the money has to be returned to the city’s capital project fund, which has been fronting the money.

Joelle Daniels, the city’s director of finance, explained to the Brantford Expositor that the city had been able to finance the costs of the project over the last six years from working capital since the cash flow was available.

“Typically we have an interim balance and that allows us to not issue the debenture until we know the final cost of the project. We wouldn’t have wanted to borrow the money up front and then carry the interest longer.”

The city has about a dozen outstanding debentures, most of them with the Ontario Infrastructure Lands Corporation but others through the Federation of Canadian Municipalities or regular lending institutions.

The Sydenham-Pearl Brownfield Site is a 6 acre property that had most recently owned by two industrial companies, namely Domtar and Crown Electric, which is surrounded by residential properties, a public playground, a vacant school property, and a rail line.

Crown Electric Manufacturing 17 Sydenham Street
Image Source: (City of Brantford Records Department)

Prior to remediation, soil testing and groundwater testing had shown high levels of industrial chemicals, including but not limited to trichloroethylene and its breakdown products, ethylbenzene and vinyl chloride. 

As is the case with many brownfields, the Sydenham-Pearl Brownfield site has its history rooted in industrial purposes.  The properties have changed hands many times over the course of several decades, and have survived many changes in environmental policies.  Policies including the disposal of hazardous waste and even what chemicals are considered to be hazardous in the first place.

The remediation took 8 weeks to complete and included: the removal of underground storage tanks; excavation and offsite disposal of petroleum hydrocarbons in soil; and in situ soil mixing to break down volatile organic compounds in soil and groundwater.

With remediation activities complete, Phase 3 soil capping and berm construction began. Installation of the soil cap was a requirement of the Ontario Environment Ministry in accordance with the Risk Assessment completed for these properties. Milestone Environmental Contracting completed soil capping and berm construction.

Work at the Sydenham Pearl Brownfield Remediation project was completed in 2017 with required certificates received from the province last spring. The city is currently finishing off sampling and monitoring of the site as required by the Ministry of Environment Conservation and Parks.

The project, which took in 17 and 22 Sydenham, involved removing more than 3,000 cubic metres of contaminated soil to a provincial landfill.

Formerly the site of Crown Electric and Domtar, which made roofing materials, the site was an eyesore, inhabited by squatters and an invitation for fires.

Large fires in 2001 and 2004 meant the city spent hundreds of thousands of dollars to level buildings and clear the area. The properties were seized for tax sales and a remediation plan was created.

Milestone Environmental Contracting spent $2.4 million of the budget on the remediation and another $2.2 million was set aside for the greening process and contingency funding.

Financing Soil Remediation: Exploring the use of financing instruments to blend public and private capital

The International Institute for Sustainable Development (IISD) recently released a report entitled Financing Soil Remediation: Exploring the use of financing instruments to blend public and private capital.

The report makes the statement that governments around the world are looking at opportunities to attract private capital participation in both land remediation and its productive use and redevelopment thereafter. The business case is intrinsically the value capture in the increase in retail price of land and related business opportunities once the remediation is complete. However, where land value capture is lower and related revenue streams remain uncertain, the case for private capital participation is much less compelling. Governments, in this case, have to fund the remediation through public budgets and thereafter seek opportunities to partner with private counter-parties to use the land as “fit for purpose.”

The IISD report presents 17 case studies on a variety of financing instruments that blend public and private capital. Each case study includes a short discussion on the extent to which each instrument could be used to finance the remediation of contaminated soil. The case studies in thereport demonstrate a variety of financing strategies, from index-linked bonds to savings accounts and from peer-to-peer lending platforms to debt-for-nature swaps. Find out more about Loanpad by reading this review, if peer-to-peer lending is something you have been considering to do for your business.

This report is a part of a series of outputs of a four-year project, Financing Models for Soil Remediation. The overall objective of the project is to harness the full range of green finance approaches and vehicles to manage the associated risk and fund the remediation of contaminated soils.

The series of reports focuses on the financial vehicles available to attract investment to environmental rehabilitation of degraded land and the financial reforms needed to make these vehicles a viable and desirable means of investing in land rehabilitation. The IISD draws on best practices worldwide in funding environmental rehabilitation, with a special focus on the design and use of financial mechanisms to attract private investors, share the risk and offer a clear benefit for the rehabilitated land. If you would like to make some investments, with regards to personal investment then you may want to check out some mutual funds.

Several lessons emerge from these case studies described in the report in the context of financing the remediation of contaminated land, including the following:

  1. As with all financial arrangements, the risk appetite of different investors has to match the risk profile of
    the investment. It is difficult to crowd in private and institutional investors when projects remain below
    investment grade.
  2. Money follows a good deal. When legal, technological, revenue and other risks are understood and are
    transparent, feasible ways to reduce these uncertainties can be planned and financing strategies can be
    worked upon.
  3. When there is reasonable certainty that the value of the land will increase after remediation and will
    subsequently generate stable and predictable revenues, there is a strong case for blending public and
    private financing.
  4. When, on the other hand, projects have less attractive revenue potential, governments have to step in to
    finance the remediation, or at least a larger part of it.

About the IISD

The International Institute for Sustainable Development (IISD), headquartered in Winnipeg, Manitoba, is an independent think tank championing sustainable solutions to 21st–century problems. The mission of the IISD is to promote human development and environmental sustainability. IISD focuses on research, analysis, and knowledge products that support sound policy making.