Photo: Michael Price
Trash to treasure: Michael Goldstein touts ‘high returns' in brownfield redevelopment
For decades, a defunct landfill adjacent to Palm Beach International Airport sat vacant, occasionally attracting interest from developers who quickly shied away after learning about the property’s history.
The city of West Palm Beach operated a waste incinerator on the site and used it as a dumping ground for incinerator ash from the 1920s through the 1960s. The landfill also served as a repository for medical waste and spent military ordnance.
Where others sensed trouble, Michael Goldstein saw an opportunity. “The location is phenomenal. It’s an infill site two blocks from an I-95 exit and it’s at the gateway to Palm Beach International Airport, which is a tremendous economic engine,” says Goldstein, a Miami environmental lawyer who is spearheading the redevelopment of the landfill.
Today, the 25-foot-tall mound of waste is being cleaned up. A Wawa convenience store is slated for the site. Goldstein and his investors have enticed a self-storage company to buy and build on a portion of the nine-acre property, and a hotel developer is planning to develop another section of the parcel. Retail and a restaurant will fill out the remainder.
The project is one of dozens of brownfield redevelopments Goldstein has worked on over the past 2½ decades — and one of seven in which he’s personally invested. “Given the experience I’ve had over the past 25 years in helping other clients work through these types of risky, complicated brownfield sites, I felt very comfortable becoming a principal in the development group,” he says.
Goldstein, 49, says he chanced into the brownfield legal business early in his career while working for a Superfund lawyer in Miami. Thumbing through the Federal Register in 1995, he came across a notice that the Environmental Protection Agency was issuing brownfield cleanup grants to help local governments remediate contaminated land. He encouraged the Miami-Dade County Commission to go after the money.
With Miami’s booming real estate market, Goldstein predicted the county would eventually run out of clean land on which to build. “I felt if the county wasn’t prepared to deal with development applications involving contaminated land, it would be a huge opportunity missed.”
The county took the young lawyer’s advice and ultimately landed millions of dollars in grant funding. It also put Goldstein in charge of a brownfield task force that crafted an array of additional local economic and regulatory incentives to encourage redevelopment in south Florida. Goldstein went on to help state lawmakers draft the Florida Brownfield Redevelopment Act in 1997 and work on national brownfield policy.
Since then, the University of Miami-trained attorney says he’s worked on 126 sites in Florida’s brownfield program. His clients range from “large, very well-funded and sophisticated developers” like Walmart to affordable housing developers looking for better returns by building on environmentally challenged sites, to cities and counties seeking to transform environmental eyesores into public parks.
But while developers have warmed to the prospect of building on brownfields, bankers haven’t followed suit. Some lenders worry about the risk of financing real estate deals involving costly cleanups and potential liability issues — even though the state provides liability protection to brownfield developers who’ve executed approved cleanup agreements.
Goldstein says he is working on hosting a national environmental lender conference early next year with the aim of establishing a network of bank officers who have a good understanding and a “track record of lending” on brownfield projects.
In the meantime, Goldstein is seeking to create his own brownfield funding entity in the form of a $200-million fund.
“There is an extreme appetite for this type of opportunity because conventional real estate deal flow has dried up,” says Goldstein. “We’re looking at a 20% internal rate of return to our investors, at least.”
State incentives for brownfield redevelopment include:
» A $2,500 tax refund for each new job created
» 50% tax credit (applicable to Florida’s corporate income tax) for cleanup costs
» An additional 25% tax credit for projects that will include affordable housing
» A sales tax credit on building materials for housing or mixeduse projects
» Up to five years of state loan guarantees Cleanup liability protection