Blending Nature With Development: A New Land Stewardship Ethos Emerges

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In the long-neglected mill town of Beacon, Scenic Hudson is sponsoring a development called Long Dock at Beacon. Its centerpiece is a narrow hotel and conference center that runs toward the river on pilings like a 900-foot-long eel, with a snout that tips downward at the water’s edge. It subtly but cost-effectively incorporates many innovative energy-conservation techniques.

A publicly accessible promenade wrapping the hotel will filter light to reduce shading of the river. (Fish, surprisingly, need sun.) A narrow channel of water sets the building off to the south, naturally filtering runoff from the roof and pavement. Scenic Hudson hopes to show people that profit-making development can be more than just technically green: It can express the unique qualities of an extraordinary stretch of river.

Beyond the hotel, Scenic Hudson will convert the southern two-thirds of the site into a park of wildlife-attracting, native-grass meadows. A chain of miniature, naturally-functioning marshes and a crescent of gravel beach will opens a panorama to the dramatic Hudson Highlands beyond, much of which has been preserved — thanks to Scenic Hudson.

The project faces hurdles only the most patient and dedicated owners could countenance. Making Long Dock Beacon appealing to investors has forced Scenic Hudson to undertake a complex and costly syndicated financial scheme involving private donations, public grants, and two state tax incentive programs. It has signed up Doral Arrowwood, an experienced hotel operator, which it hopes will build investor confidence.

As it sought to attract private financing, Scenic Hudson found that Long Dock Beacon does not fit existing development models, like strip malls do. “We have had to design the structure of the deal and its financing without being able to work off existing models,” explained Steve Rosenberg, Scenic Hudson’s senior vice president.

If conservation development is to grow beyond dedicated nonprofits and a few boutique investors, making the financial risk understandable to investors will be essential, pioneers in the field say. “For the most part, conservationists don’t understand private investment tools, and traditional developers don’t have environmental credibility; they don’t understand how to work with environmental goals,” says Beartooth Capital’s Palmer. “We’re going to see lot of growth in startups that blend those skill-sets to fill that gap.”

Beartooth, operating in four western states out of Bozeman, uses its expertise to analyze ecological values that can be nurtured while assembling legal and financial devices (like land swaps and tax deductions) that can help conservation-driven development generate returns. They are building on the example of “brownfield” developers, who pick up polluted industrial sites at low prices and invest in cleanups that make the sites marketable.

“While things may be changing,” says Selzer, of the Conservation Fund, “[Conservation development] still doesn’t fit into cookie cutter models many banks use in evaluating risk.” Those traditional models eliminate projects that take longer than usual or that cost more upfront than standard developments. That devalues precisely what ecologically conscious developers emphasize. “Usually, the more you try and be fair and particular to a place, the more expensive it is,” explains Greg Hendrickson, manager of the Hokukano Preserve project and a conservation-law attorney with the San Francisco firm of Coblentz, Patch, Duffy & Bass.

In a few years, a wide variety of green developments may appeal to mainstream investors as tax, regulatory and land-use policies shift in response to successful conservation developments. “By design, the developments we’re involved with often don’t comport with existing zoning regulations,” explains Selzer, the kind that usually encourage conventional suburban subdivisons. “So we work with local regulatory agencies to help them understand the benefits of environmentally-friendly design. We’ve had good success there.”

Christopher Leinberger, a real-estate analyst and developer who is now a fellow at the Brookings Institute in Washington, has devised what he calls a “patient equity” financing methodology — the bank-loan equivalent of slow food. The idea is to reward the painstaking effort the most sensitive conservation developments demand. Leinberger says his method works because the returns on conservation development can be better than conventional ones, though they may be slower in coming: “There’s lots of data coming in on that shows that people will pay as much as a 30 percent premium for green space,” adds Selzer, of the Conservation Fund.

As more people begin to understand the advantages of such “doing good while doing well” investments, more people like Leinberger will devise means to smooth the way.

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