The visionary action of current capitalists continues to tackle the problems created by the capitalism of the past, and we are reminded again that the solution is often within the problem.
Assets: Pay Dirt
Sacramento banker bets $500 million on brownfields
By Michael Bowker
Until recently, if you wanted to give your banker a good laugh, you asked him for a real-estate loan on contaminated property. It was the kind of knee-slapper that made the rounds at financial conventions. But at least one Sacramento banker with a national reputation for making things happen isn’t laughing anymore.
In fact, he’s got a half-billion dollars that says cleaning and redeveloping many of the estimated 5 million acres of so-called brownfields in the United States can be perfectly viable and profitable real-estate ventures.
“In the beginning, everyone thought I was crazy,” says Peter Hollingworth, president and CEO of the Sacramento-based Continental Environmental Redevelopment Financial fund (CERF), which this summer plans to offer debt loans of up to $100 million per project to redevelopers of contaminated areas. “Nobody did this before because they thought the risk wasn’t manageable, that it’s an inefficient market. We’re different from most lenders. We don’t try to avoid risk, we manage it.”
Supporters say that if Hollingworth is successful, CERF’s bold new debt-loan program could ignite re-development efforts that could reduce pollution, change the face of many of America’s cities and put an additional $2 trillion worth of prime, urban real estate on the market.
The Virtues of Dirty Dirt
The majority of the estimated one million sites in the United States contaminated with chemicals and industrial waste (officially labeled brownfields by the EPA) are in urban areas. Most are ugly warts on the cityscape, having been fenced and forgotten for decades. The Sacramento area has hundreds of such sites, ranging from empty neighborhood lots that once hosted gas stations, dry cleaners and the like, to the more high-profile brownfields such as the former Aerojet plant east of the city.
The EPA estimates that about 80 percent of the brownfields in the U.S. can be redeveloped for normal industrial, commercial or residential use. The other 20 percent are too badly polluted.