Financial Analysis
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A detailed market analysis is a key aspect of the revitalization project. Revitalizing potentially contaminated sites is still basically a real estate deal with all of those associated requirements, plus the additional issue of perceived or real environmental impairment. In addition to the typical real estate costs, additional project costs that may also need to be considered include:
- Site acquisition unique to potentially contaminated property
- Site improvements and relative utility (obsolescence) of existing structures
- Environmental and ecological site assessment
- Environmental remediation costs (including, the cost of capital for financing remediation is significantly higher so the added interest cost through remediation needs to be considered)
- Environmental liability insurance
- Revitalization costs (including existing buildings and infrastructure)
- Holding time for complete remediation and testing required for any unexpected contaminants found during the remediation process
- Liens (back taxes, prior mortgages, utility liens, etc.)
- Building interior or construction material hazards (lead-based paint, asbestos, etc.)
- Maintaining land use controls
There are also many local site-specific considerations that affect the potential demand for the reuse of particular properties, including:
- Site location and accessibility
- Current and projected property value
- Current and projected market value of surrounding sites
- Projected economic considerations of the community
- Site size and configuration
- Local revitalization pressures and needs (for example, low-cost housing and jobs)
- Area infrastructure, especially transportation and utility services, serving the site
- Local zoning and potential for rezoning, if necessary
- State and local tax burden on the property or applicable to site activities
- Availability, cost, and skill of labor for construction or business operations at the site
- Public and private utility rates
- Crime and degree of public safety at the site
- Current site conditions and use (for example, presence of or site damage by squatters)
- Regulatory agency processes
- Process and timing of obtaining entitlements
- Political or community positions
It should be clearly understood that these are only some of the important considerations that normally determine or influence the appraisal of the market value of property and/or the evaluation of the feasibility of an economic reuse of property.