Brownfields Revolving Loan Fund (RLF) 101 Presentation

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Brownfields Revolving Loan Fund (RLF) 101
Presentation
EPA Regions 8, 9, and 10February 5, 2009
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Overview

1. Setting up RLF Team Roles and Responsibilities
2. Marketing
3. RLF Financial Management
4. Site and Applicant Eligibility
5. Eligible Use of Funds
6. EPA Review and Approval Roles

Site testing and sampling at the Las Vegas, NV
Armory Site.
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Overview, contd

1. Cross-Cutting Requirements
2. Record-Keeping and Reporting
3. Program Income Tracking
4. Amendments and RLF Policies
5. Supplemental Funding
6. Closeout

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Topic 1 Setting up RLF TeamRoles and
Responsibilities
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Four Key Roles in RLF Program

• EPA Project Officer
• RLF Recipients (Grantee)
• Borrowers
• Sub-grantees

Three-tiered process
Setting up RLF Team Roles and Responsibilities
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EPA's Role

• Provide technical assistance
• Assist in review of documents
• Approve site and borrower eligibility
• Monitor financial, environmental, and periodic
  progress reports
• Monitor program and ensure compliance with
  cooperative agreement

Setting up RLF Team Roles and Responsibilities
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RLF Recipient (Grantee)

• Administer RLF program - create RLF program
  manager/coordinator role
• Ensure compliance with terms and conditions
• Environmental cleanup
• Financial management
• Compliance with federal, state, local laws

The Villa Italia Mall in Colorado.
Setting up RLF Team Roles and Responsibilities
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RLF Recipient (Grantee)

• Fulfill two key roles
• Fund Manager
• Qualified Environmental Professional (QEP)

Setting up RLF Team Roles and Responsibilities
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RLF Two Key Roles

• Fund Manager
• Establish criteria for selecting borrowers and
  sub-grantees
• Ensure prudent lending practices are used
• Establish methods of payment and disbursement
• Adhere to eligible cost requirements
• Ensure cost share and program income requirements
  are met

Setting up RLF Team Roles and Responsibilities
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RLF Two Key Roles

• Qualified Environmental Professional (QEP)
• Coordinate, direct oversee site-specific
  cleanups
• QEP can be State agency, but does not have to be
  government employee can be contractor
• Determine whether cleanup is authorized
• Review public comments
• Ensure compliance with applicable laws and
  regulations

Setting up RLF Team Roles and Responsibilities
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Borrowers and Sub-grantees

• Borrowers - contractually responsible to RLF
  recipient, not EPA
• Can be public or private parties
• Responsible for cleanup and documenting fund uses
• Sub-grantees - cannot be private parties and
  applicant must own the site
• Funds can only be used for eligible costs under
  the RLF program. Administrative costs not allowed

Setting up RLF Team Roles and Responsibilities
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Topic 2 Marketing
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Marketing Recap

• Marketing Plan as a grant deliverable.
• Recap of the March 2008 RLF Best Practices
  Conference Call on Marketing

Marketing
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Marketing Recap

• It starts with identifying your target audience
• Who in my community is a likely user of my loan
  product?
• Making the connection with your target audience
• What professional and/or information networks
  are these targets linked into?
• Delivering the message
• How do you make your message stick with your
  target audience?

Marketing
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Topic 3 RLF Financial Management
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Financial Management
RLF Fund Manager

• Maintain accounting records
• Develop internal budget controls for cash
  disbursement, revisions and record-keeping
• Ensure source documentation (payroll, time card,
  loan award documents, etc.)
• Develop/maintain payment schedule
• Ensure advances of loan funds are in an interest
  bearing account

RLF Financial Management
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Cost-Share (20)

• Can be in the form of cash, labor, materials or
  services that are eligible costs under the RLF
  Program
• Provide adequate documentation
• Federal funds cannot be used as match, except HUD
  CDBG dollars
• Pass 20 share onto borrowers sub-grantees
• Program income such as loan fees and interest
  payments are eligible

RLF Financial Management
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Prudent Lending Practices

• What are prudent lending practices?
• Refer to the procedures the grant recipient
  establishes to ensure sound financial management
  of the RLF
• Include establishing interest rates,
  repayment terms, fee
  
  structure, and collateral
  requirements
• Grantees often partner with
  financial organizations to
  
  assist with lending

Golden Urban Renewal Authority (GURA) cleanup and
redevelopment. Golden, Colorado
RLF Financial Management
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Prudent Lending Practices

• Collateral
• EPA requirements
• Assuming risk
• Creative ways to secure collateral
• Interest rates
• Public vs. private borrowers
• Repayment Terms
• Meeting the needs of the borrower and your RLF
  program

Cleanup underway in Missoula, Montana.
RLF Financial Management
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Topic 4 Site and Applicant Eligibility
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Eligible Sites

• The site must meet the brownfield definition,
  which is
• ...real property, the expansion, redevelopment,
  or reuse of which may be complicated by the
  presence or potential presence of a hazardous
  substance, pollutant, or contaminant.

• Abandoned, idled, or underused industrial or
  commercial properties
• Reuse/redevelopment is complicated by real or
  perceived environmental contamination

Site and Applicant Eligibility
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Eligible Sites
Sites with the following contaminants can be
eligible for RLF loans and sub-grants

• Hazardous substances
• Petroleum contamination
• Asbestos lead based paint
• Controlled substances (e.g., meth labs)
• Mine-scarred lands
• Among other contaminants

Site and Applicant Eligibility
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Petroleum Sites
State review based on statutory requirements to
determine whether the site is

• Relative low risk
• No viable responsible party
• Applicant not responsible party
• No RCRA order

Site and Applicant Eligibility
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Properties not considered Brownfields by EPA

• Listed sites or sites proposed for listing on the
  National Priorities List (NPL)
• Sites subject to CERCLA orders or consent
  decrees or,
• Federal properties (except land held in trust for
  an Indian tribe)

Site and Applicant Eligibility
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Eligible Borrowers and Sub-grantees

• Eligible Borrowers
• Any public or private entity with control or
  access of the brownfields site

• Eligible Sub-grantees
• States
• Local governments
• Tribes
• Non-profit organizations
• Redevelopment agencies
• Land clearance authorities
• Other quasi-governmental entities created by
  state or local governments

Gold Hill Mesa Redevelopment, Colorado Springs,
Colorado
Site and Applicant Eligibility
Site and Applicant Eligibility
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Sub-grantee Eligibility Restrictions

• Cannot sub-grant to yourself
• Sub-grantee must own the land
• For profit organizations are not eligible for
  sub-grants
• Max of 200,000 sub-granted per site, and up to
  40 of your grant
• Cannot pair two sub-grants from separate RLFs for
  work on one site.
• It is ok to pair a 200k cleanup grant and a
  200k RLF sub-grant

Site and Applicant Eligibility
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Eligible Borrower/Sub-grantee
The borrower/sub-grantee cannot be a potentially
liable party under CERCLA 107

• Past owner or operator during release of
  contamination
• Cause or contributor to contamination
• Generator or transporter of contamination

Site and Applicant Eligibility
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All Appropriate Inquiries (AAI)

• AAI is the process of evaluating a property for
• Potential environmental contamination
• Potential liability for environmental
  contamination
• Requires Phase I environmental site assessment
  within in one year prior to voluntary
  acquisition.
• Also known as Environmental due diligence and
  Environmental site assessment standards
• ASTM Standard E1527 - 05
• AAI Rule available at www.epa.gov/brownfields.re
  gneg.htm

Idalia Court RLF Cleanup, Aurora Colorado
Site and Applicant Eligibility
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Topic 5 Eligible Use of Funds
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Eligible Activities and Costs
Activities
Costs

• Removing, mitigating a or preventing a release
• Capping contamination
• Excavation, consolidation or removal of
  contaminated soils
• Site assessment activities that are necessary to
  the cleanup process
• Site monitoring including sampling and analysis
• Installation of drainage controls
• Installation of fences and signs
• Among other cleanup activities

• Expenses for site cleanup activities
• Financial management expenses
• Costs for monitoring groundwater or soil for
  contamination
• VCP or State cleanup program fees
• Expenses for travel, training, equipment and
  contractual support
• Purchasing environmental insurance

Eligible Use of Funds
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Ineligible Activities and Costs
Activities
Costs

• Pre-cleanup assessment, identification and
  characterization
• Construction, demolition and development
  activities that are not cleanup actions
• Public or private drinking water supplies that
  have deteriorated through ordinary use
• Among other activities not
  related to the cleanup

• A penalty or a fine
• A federal cost share requirement
• Costs of complying with federal laws other than
  those of the applicable cleanup
• Administrative costs

Eligible Use of Funds
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Topic 6 EPA Review and Approval Roles
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EPA Review and Approval Roles

• The process will vary by Region, state program,
  and project
• A more detailed checklist is available
• Project Activities/Items

Task/Activity EPA Role EPA Role EPA Role
Approve Review File
Site and Applicant Eligibility
Community Involvement Plan (CIP)
Analysis of Brownfields Cleanup Alternatives (ABCA)
Cleanup Plan
Decision Document
Endangered Species Act (ESA) National Historic Preservation Act (NHPA)
Loan or Sub-grant Documents
Quality Assurance Project Plan (QAPP)
No Further Action (NFA) Letter
Property Profile Form (PPF)/ACRES
X
X
X
X
X
X
X
X
X
X
EPA Review and Approval Roles
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Topic 7 Federal Cross-Cutting Requirements
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Federal Cross-Cutting Requirements

• What are they?
• Requirements of other federal laws and Executive
  Orders that apply to federal financial assistance
  and activities
• Who is responsible?
• EPA retains ultimate responsibility but often the
  grantee is doing the on-the-ground work
• In sum, were in this together

Federal Cross-Cutting Requirements
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Federal Cross-Cutting Requirements

• What are the main requirements to look out for?
• Endangered Species Act
• National Historic Preservation Act
• Occupational Safety and Health Act
• Davis-Bacon Prevailing Wage Rates
• MBE/WBE
• AND there are others

Federal Cross-Cutting Requirements
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Topic 8 Record Keeping and Reporting
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Record Keeping

• Quarterly Reports
• Due 30 days after the quarter ends
• Document progress of outputs/outcomes and project
  milestones
• Budget recap including approved budget vs. costs
  incurred for quarter and remaining funds
• Complete Property Profile Forms (PPF) and update
  as information obtained
• i.e. types of contaminants removed, institutional
  controls, funds leveraged, jobs created, etc.

Record Keeping and Reporting
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Record Maintenance

• Maintain records for at least three years after
  submitting last report
• Obtain EPA approval prior to destroying records
• Additional record keeping may be necessary if RLF
  continues to operate after closeout
• RLF grants records are not subject to the Federal
  Freedom of Information Act

Record Keeping and Reporting
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Auditing

• Grantees are required to secure an outside
  auditor to conduct periodic program audits
• Costs incurred for securing the services of an
  outside auditor to conduct audits is an
  ineligible direct cost
• Must ensure sub-grantee and borrower compliance
  with RLF terms conditions

Record Keeping and Reporting
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Topic 9 Program Income Tracking
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Program Income

• What is program income?
• The amount of money earned during the period of
  the award
• It refers to the funds that have come back to the
  RLF after you have made your loans and sub-grants
• It is the grantees responsibility to track
  program income

Belmar Redevelopment - Lakewood, Colorado
Program Income Tracking
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Program Income

• Program income includes
• Principal repayments
• Interest earned on outstanding loan principal
• Loan fees
• Closing fees
• Other income generated from RLF operations

Program Income Tracking
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A Few ThingsAbout Program Income

• Grantee needs to loan/sub-grant program income
  before using grant funds
• Does not affect the 40 sub-grant limit
• i.e., a grantee could sub-grant 100 of its
  program income budget if desired.
• Program income still subject to 200,000 per site
  limit on sub-grants
• Program income no longer needs to follow the
  original petroleum/hazardous substance budget

Program Income Tracking
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Topic 10 Amendments and RLF Policies
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Policies That Affect RLF Grantees

• Amendments
• Program Waiver allows for maximum project period
  of fifteen years
• Extensions are linked to supplemental funding
  awards

Amendments and RLF Policies
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Policies That Affect RLF Grantees

• Closeout
• Accrued Program Income
• Funds that return to you following closeout
• Closeout agreement may include a reporting plan
• How CERCLA and Federal requirements will apply to
  activities after closeout

Amendments and RLF Policies
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Policies That Affect RLF Grantees

• Discounted Loans
• Eligibility treated same as sub-grants (no
  private entities)
• Amount of principal forgiveness is limited to 30
  or 200K
• Amount of principal forgiveness plus sub-grants
  cannot exceed 40 of award

Amendments and RLF Policies
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Topic 11 Supplemental Funding
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Supplemental Funding

• National competitive request for proposals
• Available to new rules RLF grantees
• Requests must be made in writing via a letter
  addressing the stated considerations
• Letters must be postmarked by
• February 11, 2009
• Awards are expected late Spring 2009

if Considerations on next slide are met
Supplemental Funding
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Considerations

• Must have successfully issued a loan and/or
  sub-grant
• Substantially depleted existing RLF funds
• Demonstrate need, including number of sites and
  community benefits
• Ability success to revolve the RLF grant
• Illustrate ability to utilize RLF grant to
  address cleanup funding gaps
• Community benefit from past and potential loan(s)
  and/or sub-grant(s)

Supplemental Funding
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Funding

• If awarded, existing cooperative agreements and
  workplans will be amended
• Grantees must note the type of funding requested
  (i.e. 500k hazardous substance and 0 for
  petroleum)
• Supplemental funding awards are typically between
  200,000 - 500,000

Supplemental Funding
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Topic 12 Closeout
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Closeout

• Think of it as retirement planning
• Do you envision a Brownfields program
  post-closeout?
• Review the current policy
• Stay tuned for updates

Centennial Park in Englewood, Colorado.
Closeout
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Coming Up
Next call April Suggestions for Topics?
National RLF Grantee Workshop, June 2-4,
Minneapolis, MN
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On QuickPlace

• This presentation
• Policy Documents
• Closeout
• Discounted Loans
• Model Budget Program Income Tracking Sheet
• Project Approval Checklists
• Other stuff?

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RLF Best Practices Web Site
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Questions?
Ribbon-cutting ceremony at the Assistance League
in Bakersfield, California.
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