A manufacturer has approached a community expressing interest in locating a plant in the area. The economic development staff of the community has proposed either of two plant sites for the facility. One location is a Greenfield and the other a Brownfield. The sites are about the same size and are both generally adequate for the plant location. In comparing the two sites and assessing the potential costs of locating on them, the following information has been developed.
Greenfield Brownfield
Initial Costs (dollars)
Plant construction 100,000,000 100,000,000
Site preparation 15,000,000 20,000,000
Site remediation 0 20,000,000
Utilities 5,000,000 3,000,000
Access roads 10,000,000 5,000,000
Workforce development 15,000,000 10,000,000
Brownfield/Greenfield economic incentives
(dollars per year)
Tax rate 1,500,000 750,000
Industrial loan payments 5,000,000 2,500,000
With the incentives, the community is trying to encourage use of the Brownfield. To do so it has reduced the Brownfield tax rate and it would make available low interest loans for the facility. To obtain the current total value of the taxes and loans use a present worth factor of 7.360 [10 years at 6% interest] for both sites.