One of the more spectacular stories of the economic crash of 2008-09 was the collapse and subsequent $50 billion government bailout of General Motors. Fast forward to 2011, and the new, streamlined GM is out of bankruptcy and back on track as its cars and trucks are once again in demand. But a key part of GM’s turnaround was its ability to strip off numerous contaminated properties in need of costly environmental remediation. Those properties have now been collected in a government-administered trust that will make millions available to applicants who can propose viable plans for cleanup and “repurposing” of the 89 sites in 14 states. The goal is to rehabilitate and sell these properties as quickly as possible and get them back into productive use.
On March 31, 2011, the new Revitalizing Auto Communities Environmental Response (RACER) Trust came into being. Created in a court-approved settlement agreement among the federal government, the states where the “Old GM” sites are located, the legal entity for the former GM, and the St. Regis Mohawk Tribe, the Trust has $773 million in funding for property redevelopment. The RACER Trust Web site provides interactive maps and extensive detail (including designated funding) for each of the sites. Two-thirds of these properties are known to have some degree of environmental contamination, but some are empty production facilities or vacant land. While the greatest concentration of sites is in Michigan – and $160 million is available for funding projects at those sites alone – numerous locations can be found throughout the Midwest and Mid-Atlantic regions.
Section 65 of the settlement agreement established six criteria for selecting among prospective buyers of these properties:
- a sufficiently high purchase price
- the potential for the proposed reuse to create jobs in the state or affected community
- other benefits to the state or affected community, such as increasing tax revenue or reducing blight
- avoiding material cost increases in or interference with environmental remediation efforts
- views of the state, tribe, or affected community
- reputation and credibility of the prospective purchaser.
Some of the properties are already under redevelopment, including one former manufacturing facility in Delaware that will hire 2,000 workers to produce hybrid vehicles and sports cars. Trust officials have made it clear that proposals with a “green” focus will find a warm reception, and are encouraging the incorporation of solar roofs or other renewable energy generation features in planning for the remediated sites. Developers, renewable energy providers, investors, and entrepreneurs should find promising opportunities in this new program. Pepper Hamilton’s Sustainability, Clean Tech, and Climate Change Team has additional information about this initiative and financial incentives available to support it.