Toxic Turnaround Key to L.A.'s Future Growth.

INTEREST inputting L.A. infill sites back into productive, use is ramping up like never before, as developers and elected officials turn their attention back to the urban core.

There's just one key problem: much of that core is toxic.

Unlike the pristine land in outlying areas, infill sites are often oozing with the remnants of L.A.'s industrial past - chemicals, metals and other substances left behind by decades of oil refining, auto manufacturing, metal plating and other Old Economy activities.

Cleaning up the sites is an expensive, time-consuming and sometimes even highly politicized process. But no less than the future of L.A.'s economy relies on getting it done.

Today, even outlying suburbs like Santa Clarita are putting the brakes on development The sprawling city of L.A. simply has little room left to expand, making it more critical than ever to return polluted sites to productive use.

"We have either run out of pristine sites or in some cases, come to realize that cutting down forests for new development and putting chain-link fences around old factory sites is not a very good social planning approach," said Timi Hallem, a land-use attorney and partner at Tuttle & Taylor.

Several factors have spurred the increased momentum in redevelopment of "brownfields" -- the industry term for abandoned or underused properties with environmental contamination. Technological advances, new liability insurance and growing recognition among local and state governments that the sites offer prime reuse opportunities have all contributed to a new atmosphere.

Some institutional lenders remain overly wary, Hallem said, but increasingly, brownfields are being recognized for their development potential. This is especially true as developers and communities have embraced the buzzwords "smart growth" and "sustainable development" as remedies for endless sprawl.

Hundreds of contaminated sites throughout the Los Angeles region are being quietly cleaned and returned to productive use without the firestorm of publicity and politics surrounding the Belmont Learning Center fiasco earlier this year.

"It has become more commonplace. For a long time, people were so scared of environmental issues, lenders were so wary and people were so concerned about the blank-check risk -- (so much so) that everyone who could, shied away from brownfields," Hallem said.

Oilfields, refineries, steel mills, tire plants, aerospace manufacturing operations, military bases and trash dumps once dotted the LA. landscape. Now, they are coming back to life as brand new industrial parks, retail power centers and even housing subdivisions.

Of course, contaminated sites pose a major challenge, even with advances in technology and stepped-up government assistance. Cost, feasibility and, sometimes, politics can scuttle potential redevelopment. Belmont -- the half-completed high school atop an old downtown oilfield -- is the poster child for how not to redevelop a brownfield. The $170 million fiasco has also served as a wakeup call to the private sector to be extra vigilant and deal with issues early in the process.

Crude oil contamination is fairly common on sites around Los Angeles. Other problems run the gamut, from chemical solvents to heavy metals to methane. It's not just gritty inner-city areas that have environmental problems, either. Former agricultural land can contain pesticide residue, and even a small corner plot in the middle of the city may be marred by buried gas tanks or dry-cleaning waste.

"Today, those are all do-able (cleanup projects). Fifteen years ago, it was scary.

Today, people understand it better. We especially don't see it as a risk," said Bryan Ezralow, president of the Ezralow Co., which is developing a 500,000-square-foot retail center on an Environmental Protection Agency Superfund site in Monterey Park. "Anybody who says a site is 100 percent clean is not dealing with reality."

Ezralow is not alone in his belief that such sites are becoming increasingly feasible for profitable redevelopment. Developers, lenders, insurance companies, retailers and homeowners all have grown much more comfortable with the notion that a project may sit on once-tainted land, as long as it has been, cleaned in conformance with certain standards.

"People have shown their willingness to overlook past uses when the price and location are good," Hallem said.

Examples abound of successful L.A. projects built on once-tainted sites. The Mountain Gate Golf and Country Club in West L.A., which is ringed by pricey townhouses, sits on a former landfill. The Uniroyal plant in the City of Commerce was transformed into the Citadel factory outlet mall. And Taylor Yard, a former railroad maintenance area on the L.A.-Glendale border, is in the midst of being reincarnated as a light-industrial and retail development.

Over at the former Lockheed Martin Corp. aircraft production plant in Burbank, Zelman Development Co. plans to break ground this fall on a massive retail center, along with two hotels and more than a million square feet of office and industrial space. In Carson, Glimcher Realty Trust is in exclusive negotiations with the city on a former municipal landfill where it is looking to build a mall. And developer Richard Meruelo plans to build an $80 million produce market complex on an industrial site southeast of downtown.

Cities and neighbors of derelict industrial sites often welcome redevelopment as an economic engine and as a means of removing a potential health hazard.

"Most of these sites that have environmental contamination, the general public would like to see cleaned up," said Eric Bergstrom, senior manager with E&Y Kenneth Leventhal Real Estate Group.

Numerous firms specialize in diagnosing, cleaning and redeveloping such sites. At the same time, developers who never gave a second thought to environmental issues in the past have been forced to get up to speed.

"It's just another level of expertise you have to develop," said Ben Reiling, president of Zelman. "It's really a matter of having good consultants."

Not all brownfield sites are worth redeveloping, however. If the location is bad, for example, the numbers probably won't add up no matter how clean it is.

"We're industrial developers looking for good, well-located property. If it has contamination, we'll approach it," said Craig Furniss, senior vice president with Lowe Enterprises Commercial Group. "You have to understand how to deal with environmental issues. If you don't, you will have a more limited number of properties to deal with."

The science surrounding brownfields has progressed to the point that it's much easier to adequately characterize a site and pinpoint the contaminants. From there, it is easier to assess the cost, how long it will take to remediate and to what standard.

"The fact that the science is more precise has made an enormous difference," Hallem said. "You can make a cost-benefit analysis."

Several incentives have been enacted on the government front as well. Federal regulations have been amended to allow different standards for different proposed uses. The requirements are less stringent for an industrial development than for a school or apartment house, for example.

The federal government has also helped facilitate brownfield development with grants and tax breaks. Nearly $12 million in federal grants and loan guarantees were awarded to Santa Fe Springs last year to assist in the cleanup and redevelopment of the city's former oil refinery and tank farm into the Golden Springs Business Center.

Los Angeles has also been aggressive in its brownfields program. The city created a $3.6 million Brownfields Revitalization Fund and is one of 16 communities designated as a Federal Brownfields Showcase Community, which makes it eligible for grants and other technical assistance.

Environmental insurance has also been made more widely available in the last three years, to protect against the known and unknown risks. The cost of such coverage has come down, as insurers have grown more comfortable.

Then there are the advances in techniques used to clean contaminated sites. Among them, microbes can be used to eat away at pollutants, and soils can be "inoculated" with certain, cultures and oxygen to break down the hydrocarbons. Soil removal, methane extraction and soil capping are all common practices today.

Despite the advances, such measures are costly. Cleaning a site starts at $3 to $5 per square foot for commercial or industrial uses and can run up to $20 a foot for residential projects, adding millions to the project costs, said Larry Faigin, president and CEO of Seal Beach-based GreenPark Group.

"It's getting easier. Changes in the law have made it easier," Faigin said. "But the fact of the matter is, for significant sites, it's a double risk -- the usual risk plus the cleanup risk."