From polluted property to 17-story building, with help from state program

In News by The Dillon

Originally published in the News and Observer on December 14, 2016.

RALEIGH – A lot of ingredients go into the creation of a 17-story office building, but state officials and representatives of Kane Realty gathered outside the construction site of The Dillon on Wednesday to celebrate just one of them: a state environmental program.

The Brownfields Program allows developers to clean up a polluted property just enough to be safe for its future use, rather than make it pristine. The program limits their liability for pollution that remains, giving lenders the confidence to get behind their projects. It also provides property tax credits that often make financing the redevelopment of derelict properties possible.

The Dillon, on the west side of downtown Raleigh, is one of 400 development projects statewide to get started with the help of the Brownfields Program over the past 19 years. State officials marked The Dillon milestone across the street inside CAM, the Contemporary Art Museum of Raleigh, itself a Brownfields Project. Wednesday’s celebration was against the backdrop of workers putting up what will be The Dillon’s 1,000-space parking deck.

“Without the state Brownfields Program, we would likely have 400 sites in North Carolina that would be unusable and sitting empty,” Donald van der Vaart, secretary of the N.C. Department of Environmental Quality, said in a statement. “Instead, we’ve been able to make these sites productive again, and achieve a cleaner environment and a more vibrant economy for many North Carolina communities.”

The warehouse where The Dillon is going up was built by the Dillon Supply Co. in the 1950s or early 1960s to house its boiler division. The company later used the building as a steel warehouse and then for its forklift division, up until it sold the block to Kane Realty’s financing partner late last year for nearly $13.9 million.

The ground underneath the warehouse was polluted with leaking petroleum storage tanks and with solvents and other chemicals used over the decades, said John Gallagher of Aptus Management in Carrboro, the firm overseeing the brownfields work at the site. The brownfields agreement allowed Kane Realty to clean up the worst of the pollution and cap the site, so it could be safely used again, Gallagher said.

Once the office building and the adjoining apartments are completed, Kane Realty will be able to take advantage of property tax credits that average 50 percent over five years.

“On big projects like an old mill, where the financing is in question, that makes a big difference,” Gallagher said.

This corner of downtown Raleigh is being transformed with the help of brownfields agreements. In addition to CAM and The Dillon, the nearby Raleigh Union Station project and the building that houses the Citrix software company – both former Dillon Supply properties – were completed with brownfields agreements, which are handled by the state Division of Waste Management.

Van der Vaart said the state has identified some 1,800 sites in North Carolina with relatively low levels of hazardous pollution, and determined that about 1,000 of those would be good candidates for the Brownfields Program. Among the 400 completed agreements are 36 in Wake County, five in Orange County and 16 in Durham County, including projects that led to the redevelopment of Erwin Square and the Golden Belt Manufacturing Co. complex.

Another 26 Wake and Durham brownfields agreements are in the works, including one for the site of the former Dorothea Dix psychiatric hospital that will become a city park.

Richard Stradling, News and Observer