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Designation of the Gowanus Canal as a Superfund site could forever stymie private investment along the infamous waterway, a survey conducted by a coalition of landowners and developers vigorously opposed to the naming revealed this week.
The group, Clean Gowanus Now!, surveyed five major lending institutions – Citibank, Capital One, Hypo Real Estate, HSBC and iStar Financial – and found that it would be nearly “impossible to secure financing for a development project adjacent to the Gowanus if the Environmental Protection Agency designates it a Superfund site.
“They uniformly responded that they would avoid financing projects near a Superfund site due to the high degree of risk from factors outside the borrower’s control,” the survey notes.
The survey found that lenders consider the litigation that inevitably results from a Superfund listing to greatly increase the risk factors in financing a project adjacent to a Superfund site.
One bank’s representative said that “there are just too many unknowns” with a Superfund listing and that financing a project next to a Superfund site is “scary stuff” for a lender. The banker thought the listing “would severely impact a developer’s ability to get financing” because “most traditional lending sources would shy away” from financing a project next to a Superfund site.
Another bank representative said that he would not finance a project next to a Superfund site because “it would be very difficult to quantify the risk involved in the project.” All of the bankers in the survey remained anonymous. The Clean Gowanus Now! coalition includes Africa−Israel, U.S.A.; Bayside Fuel Oil Depot Corporation; Foro Marble, Inc.; The Jewish Press; Jobco, Inc.; L&M Development Partners; Magnifico Enterprises; Monadnock Construction, Inc.; Nevins Canal Corporation⁄Nevins Street Realty; the Ribellino Family; Debbie & Buddy Scotto; the Tinneny Family; and Toll Brothers, Inc.
A Brooklyn real estate professional familiar with this section of Brooklyn said it was difficult to take the survey seriously.
“You think it’s hard for these rich guys to get anonymous quotes from bankers saying they don’t want to lend on a Superfund site?” said the source, who requested anonymity. “Banks don’t want to lend on any development sites now anyway. There’s no new construction lending.
“Even if this were not a Superfund site, this group claims the same level cleanup will occur. Isn’t a lender going to have the same issues about the cleanup being out of the borrower’s control? At the end of the day, the land is contaminated and development is premature until it’s clean and no further cross−contamination can occur,” the person said.
©2009 Community Newspaper Group
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