Venture Is Formed to Buy And Clean Up Tainted Realty Owned by

Dames & Moore Ventures and the Brookhill Group have formed a new company to focus on buying and cleaning up environmentally tainted real estate controlled by financial institutions, government agencies, and corporations.

The new venture teams Dames & Moore, a leading environmental engineering firm, and Brookhill, which has specialized in turning around underperforming shopping centers for banks and the Federal Deposit Insurance Corp.

Dames & Moore/Brookhill has raised $200 million of debt and equity to acquire tainted properties, said Ronald B. Bruder, president of Brookhill.

The new venture targets the so-called brown-field tracts - buildings and land affected by environmental contamination. It is being pitched as a possible solution to a nettlesome problem faced by banks that risk liability for cleanup costs if they foreclose on such property.

Alan P. Krusi, the president of Dames & Moore Ventures said the new venture has the financial strength to indemnify the owner of a tainted property from future liability.

What's more, he said, the property owner could participate in the benefits of the cleanup. "Rather than disposing of a contaminated property at a very large discount as is often required, sellers may elect to recover a portion of the lost value either through remediation or redevelopment or both."

The brown-fields market is heating up lately because of state and federal regulatory incentives to return abandoned sites to productive use, said Kathy Robb, a partner at the New York law firm Hunton & Williams.

Some two dozen states have taken measures to authorize the cleanup of brown-field sites, which are estimated to number in the hundreds of thousands nationwide.

Ms. Robb said the level of restoration is "largely a negotiated process" between property owner and regulator. Typically, she said, regulators might work with the owner to decide, "Do we really have to clean up to playground-level a site that going to be used for industry?"

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