Sprawling suburban development reflects North Carolina's robust economy and a new way of life for many North Carolinians who grew up in rural areas or near bustling downtowns (large or small) which were the center of the community. The focus on new development has sometimes caused the economic and community benefits of redevelopment and rehabilitation to be overlooked. Recent legislation, however, provides significant incentives to developers and local governments for the adaptive reuse of older properties. Not usually considered together, historic preservation and brownfields programs promote the same goals: the reuse and recycling of valuable resources, utilization of existing infrastructure, revitalization of lagging areas, and the slowing of suburban sprawl. In contrast to many land use and environmental regulations which restrict or prevent development, recent historic preservation and brownfields initiatives reach out and provide targeted incentives to rebuild and go where developers have gone before: profiting from existing and unique properties which retain not only economic value, but character and attributes which can help rebuild neighborhood and community identity.

A "brownfields property" is broadly defined as "abandoned, idled or under used property" where expansion or redevelopment is hindered by actual or potential environmental contamination. If brownfields can be made productive, they create jobs and tax revenues by attracting economic activity back into areas where the infrastructure of roads, utilities and other public services is already well established. Developers have been justifiably reluctant to consider such properties because of potential environmental liabilities, which extend not simply to those who may have caused the contamination but to property owners and many others who may come under the broad definition of "responsible party." North Carolina's Brownfields Property Reuse Act of 1997 is not nearly as strong as brownfields legislation in other states but is a good start toward assisting prospective developers and tainted properties. The Act provides prospective developers the opportunity to negotiate reduced cleanup levels and receive liability protection from government prosecution for the identified contamination. This protection extends to future owners, lessees, developers and remediation contractors, lenders, and successors and assigns. Reduced cleanup levels significantly change the economics of remediation, as typically 50% of the cost of remediation is incurred to remove the last 5% of the contaminants.

At the same time as the Brownfields Property Reuse Act was passed, the General Assembly also passed into law provisions allowing deed restrictions to be used in certain voluntary cleanups, which provide a way for parties to propose long-term controls, such as restricting the use of property to commercial or industrial uses.

At the federal level EPA has backed brownfields pilot projects throughout the country, including 1997 grants for Charlotte, Fayetteville and High Point. Winston-Salem has received a 1998 pilot grant for the Liberty Street Corridor between the Z. Smith Reynolds Airport and downtown. The pilot programs work through brownfields cooperative agreements with EPA and emphasize community involvement, particularly among minorities and the economically disadvantaged. Winston-Salem's Liberty Street application emphasized the Corridor's under used sites suspected of environmental contamination, diverse population, the area's prime location between the airport and downtown, and built upon existing community studies and efforts, the potential for an urban/pedestrian thoroughfare different from suburban strips, and the history of the corridor, which includes an African-American historic area at its southern edges.

If brownfields sometimes represent a past of pollution and neglect, historic properties celebrate the past and preserve the roots and character of a community. Urban redevelopment and revitalization, particularly in downtown commercial districts, is hard to separate from historic preservation, and there are few downtown economic revitalization programs where historic preservation has not been a key element. Since 1976, federal tax incentives have been in place for the rehabilitation of income-producing historic structures. The success of this program in North Carolina is well-documented: more than 700 private-sector, income-producing historic rehabilitation projects have been undertaken over the last 20 years representing nearly $325 million in private investment. North Carolina's new historic preservation tax credits, effective January 1, 1998, increased from 5% to 20% the existing state tax credit for rehabilitations of income-producing historic properties that also qualify for the 20% federal investment tax credit. Nonincome-producing historic structures, including personal residences, may qualify for a new state tax credit of 30%.

North Carolina's historic tax credits are perhaps the most progressive in the nation, but can be supplemented further by local programs. Forsyth County, for example, offers a 50% property tax deferral for locally designated historic landmarks. Much more detailed information on the success and economic importance of historic preservation projects is laid out in the new Carolina Power & Light-sponsored study Profiting From the Past: the Impact of Historic Preservation on the North Carolina Economy. For developers who may be concerned about preservation restrictions, North Carolina's publicly stated goal is to give old and historic buildings a place in the contemporary real estate market, guaranteeing their continued use and economic vitality, not to create museums. Developers should also be aware that the definition of historic is not always immediately obvious. For example, the 1966 Wachovia Building in downtown Winston-Salem, while not at an age generally considered historic, is one of the foremost examples of the International Style of architecture and could potentially be eligible for the designation necessary to receive tax credits.

Of course the rural and "greenfields" sites often sought for new development should not be assumed to be pristine or without potentially complicating issues. Such sites could harbor archeological sites, graves, or even contamination from old small-scale rural manufacturing efforts which have long been forgotten. Existing acts and regulations cover each of these issues, and as was recently pointed out in these pages, it is a crime in North Carolina to deface, desecrate, plow over or cover up a grave site unless one is a professional archaeologist acting within the parameters of the law. (April 20, 1998, Lawyers Weekly, "A Landowner's Nightmare: Or, What's in a Grave.")

Taxpayers and those interested in preserving remaining rural settings should be supportive of brownfields and historic preservation programs in urban areas. The Urban Land Institute suggests that the life-time public costs of servicing dispersed (often "greenfield" or suburban) development is between 30% and 300% more than meeting the needs of more compact development. The roads, water and sewer systems, gas lines, power lines, curbs and sidewalks, parking facilities, and streetlights needed for development are increasingly expensive items drawing on increasingly scarce public funds. In large part these items are already paid for in areas with brownfields and historic properties. Public officials and developers who do not first evaluate older properties and neighborhoods before providing new infrastructure for suburban sprawl may not be doing local citizens any fiscal favors, particularly when government incentives and credits are available for older properties.

The interests of preservationists and brownfields redevelopers will not always coincide, and it may be that some historic properties come down to revamp a property or that some commercial/industrial projects adjust to accommodate history. But both strive toward creative utilization of what already exists, returning value to neglected but strategically well-placed properties, and slowing development of the rural areas so important to North Carolina. Even without governmental assistance the trend toward the restoration of older properties and the recycling of contaminated sites to mainstream use would continue based only on market forces and trends. With incentives in the form of tax credits and deferrals, grants and favorable policies, there is no reason developers and industry shouldn't take a serious look at the economics of redeveloping existing assets which can provide a vital contribution to a neighborhood or community.

Donald M. Nielsen is an environmental and land use attorney with Kilpatrick Stockton LLP in Winston-Salem. He assisted Winston-Salem and the Winston-Salem Chamber of Commerce in obtaining the city's recent EPA brownfields redevelopment grant. Mr. Nielsen also serves as chairman of the Forsyth County Joint Historic Properties Commission.

Stephen R. Berlin heads Kilpatrick Stockton's Environmental & Natural Resources Practice Group in Winston-Salem, where his practice includes environmental litigation, business transactions involving environmental issues and environmental compliance matters.

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