Wondering what all the fuss about re-development of contaminated properties, or “Brownfields” relates to, and how the program works? Fret no more. When contemplating Brownfields, think Superfund (and its sibling environmental cleanup programs). Were it not for owner liability under Superfund and related environmental statutes, there would be no Brownfields. That is to say, it is a fact that new owners of contaminated sites can be held just as liable for the cost of cleanup as the original polluters, which is why would-be redevelopers of such sites are driven into the arms of Brownfields programs. Moreover, as of this year, newly enacted legislation allows an important new category of sites – those polluted by underground storage tanks – into the program.
There is no better route than Brownfields for those contemplating redevelopment of polluted properties. And redeveloping them they are – the state program has negotiated over 250 Brownfields agreements. As anyone knows who reads the news, creative reuse of available property in growing areas such as the Triangle, Triad and Charlotte is proceeding apace, and much of that property is at least minimally polluted. Using that program, developers and productive re-users can gain reassuring encapsulation of their liability, a “risk-based” cleanup whereby the site need not be made “cleaner” than necessary given the uses committed to, and one of the most generous tax breaks around (averaging 50 percent offthe redeveloped value of the property over the first five years).
As soon as a developer begins eyeing an even potentially contaminated site, begin to get your Brownfields ducks in a row. Study the site’s “use” history. Take environmental samples of environmental media (most problematically groundwater). Keep in mind that the criterion for entering the Brownfields program is merely a perception of contamination that is hindering redevelopment (e.g., your lender is nervous). Redevelopment is interpreted liberally by the program; typically, even if continuation of existing or past operations is planned, a minimal change or additional use will get you in the door.
There will be a $2,000 statutory fee to apply to be a prospective developer eligible to negotiate a Brownfields agreement with the state, and a $6,000 fee toward the end of the process (unless you got the fast track route, which costs a total of $30,000). And, as of the last five years or so, even those who have responsibility for the site’s pollution are eligible for the program: They may pay $15,000 for a “Ready for Reuse” Brownfields agreement that can immensely help market the property and that gets finalized when a buyer is identified. Existing owners of eligible sites may seek to enter the “regular” program by showing they did not pollute the site.
To be deemed eligible you must demonstrate: that there is pollution or the possibility of it is hindering the property’s redevelopment; a desire to buy or sell the property for redevelopment; and that you did not cause or contribute to the property’s contamination (unless you’re in the Ready for Reuse category). Once vetting has occurred and you’re in the program, you are off to the races, with your attorney and consultant interfacing with the program to submit any missing information and negotiate the Brownfields agreement. Given that most sites constitute “low-hanging fruit” (the dirtiest of the dirty, National Priorities List Superfund sites, are ineligible), the principle – if not only – work to be performed under the agreement is the imposition of land use restrictions, rather than actual remediation. These restrictions, some of which tend to be affirmative mandates, memorialize the measures necessary to protect public health and the environment at the site, and run with the land.
Once agreement has been reached on the agreement, negotiation of the three “ancillary” documents occurs. One of them is so pro forma that typically its wording is not even site-specific. Achievement of agreement on drafts of all four documents triggers the public comment period, which must last at least 30 days and has almost never been known to last any longer. In fact, it’s been a rare Brownfields project that has even garnered any comments.
At the conclusion of the comment period, the situation is ripe for finalization, whereby the program’s parent agency, the N.C. Department of Environment and Natural Resources, executes the documents and transmits them to the prospective developer for signing and recordation. The successful applicant has a Brownfields agreement that allows for redevelopment of the site and is protected against any further environmental regulatory action by DENR or other agencies, with a healthy property tax break over five years.
Why wait? Get ‘em – Brownfields agreements for contaminated sites – while they’re hot!
- By Robert R. Gelblum
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