It's not easy being green: but, as Cherokee Investment Partners shows, it can be lucrative. So Tom Darden takes the good with the bad.

• Author: Richter, Chris
• Position: Cover Story

The Burlington Mills plant in Mooresville sits shuttered. The glass-and-lattice design dates the entrance on its north side, where tall weeds along the sidewalk and in the parking lot sway with the breeze. Churned dirt hems in the south side--the old side--where the windows and doors are new. It could fit in a chic warehouse district in Durham or Raleigh and be home to hightech companies or upscale apartments.

The north side someday will look like the south side and resemble the architect's rendering splayed across a wall in the lobby outside Tom Darden's office. That's his plan, anyway. He's CEO of Raleigh-based Cherokee Investment Partners LLC, which buys contaminated properties--brownfields--cleans them up and sells them. The 39-acre Mooresville site, its only North Carolina property, was supposed to be a learning experience, Cherokee's first time investing in a textile mill.

"We're licking our wounds," he admits. "We've spent a lot more than we'd planned, and we don't yet see the light at the end of the tunnel." Cherokee had spent more than $9 million on the project by early 2004, about $3 million more than budgeted for this stage. Removing groundwater contaminants went as planned, but it underestimated the amount of asbestos and demolition work. Add the cost of readying the building for tenants, a weak market for industrial space and the location--30 miles north of Charlotte--and the learning experience might wind up a painful lesson.

It won't be a fatal one. Cherokee has invested or committed $896 million in more than 300 sites in 36 states and three other countries. It closed its latest venture fund, the $620 million Cherokee Investment Partners III, in 2002 and announced late last year that it will lead the $1.1 billion redevelopment of a neighborhood in one of the nation's poorest cities.

None of this would have happened had a deal not gone bad. But Darden, 49, long ago learned to look for the good in the bad. Where others saw risk and ruin, he recognized opportunity. A Morehead Scholar and Yale law graduate, he could have picked a career path that didn't wind through brownfields. But unlike this one, which has taken him where he wants to be, it wouldn't have been paved with bricks.

He's always been drawn to clunkers--the ones people want off the balance sheet or, when he was young, out of their driveways. At 13, before he had a driver's license, he bought his first car, a 1959 English Ford Consul convertible, for $50. "It was sitting in the garage of the parents of a kid that I knew. They wanted to get rid of it. It was worthless." He took it home, tore it apart, rebuilt it and sold it. By the time he was 20, he had owned 20 cars and motorcycles. If he didn't trade them, he'd sell them for more than he paid. It was a nonprofit enterprise, breaking even with the parts and labor he put in.

Breaking even isn't an option when your lifeblood is investors' trust and money. Camden, N.J.'s Cramer Hill neighborhood is a 450-acre clunker, but it could rejuvenate a city. Across the Delaware River from Philadelphia, Camden is Campbell Soup's headquarters, but it's mostly an industrial city without industry. Thirty-six percent of its nearly 80,000 residents live in poverty. The city began soliciting development proposals after the state legislature allocated $175 million for redevelopment.

"Cherokee came in with a fresh eye," says Randy Primas, Camden's chief operating officer and its mayor from 1981 to 1990. "They had not been subjected to the years and years of negative press that the city had gotten in terms of the conditions that were here. What they saw was a tract of land that had waterfront access overlooking Philadelphia." The plan for Cramer Hill and an adjacent landfill calls for building more than 5,000 homes, 500,000 square feet of retail...