Real estate developers, brokers and property managers have precious little time to handle environmental challenges and when they occur, it seems to be at the most inopportune time and it can become a major distraction.
Whether you are purchasing or refinancing real estate, under construction, or renovating buildings, environmental issues that are subject to State and Federal regulation can be present in virtually any project. In no particular order, among the issues you might face are:
Environmental Due Diligence
When purchasing or refinancing real estate, a visual and historical survey known as a Phase I Environmental Site Assessment (ASTM E1527-13) will daylight historic contamination, and provided the statutory procedure is adhered to, it becomes your first step to qualify for the innocent landowner’s defense to CERCLA (Comprehensive Environmental Response and Compensation Liability Act). Commonly known as “Polluter Pays,” buyers will be responsible for any historic impact on a site once they close unless they complete thorough environmental due diligence that starts with a Phase I.
Note: To simplify our industry’s technical jargon, an extensive list of Environmental Acronyms and Metrics can be found at:
Vapor intrusion in the form of Volatile Organic Compounds (e.g. gasoline, paints, dry cleaners etc.) can migrate through soil and groundwater and seep into buildings, and has come under considerable scrutiny by regulators in the past eighteen months. In fact, a vapor migration investigation standard (ASTM E2600-10) was published December 30, 2013. Subsequent engineering controls, such as installing a ventilation system or sealing cracks in foundations with epoxy coatings, are now a few of the more commonly accepted remedies for soilgas.
Underground and Above Storage Tanks (USTs / ASTs) are used for backup generators, heating oil and specialty chemicals. Depending on the size, number, use and contents of the tanks, users are required to have detailed spill plans and secondary containment systems.
Asbestos and Lead Based Paint
Asbestos-containing pipe insulation, floor and ceiling tiles, fire doors, plaster, window caulk etc. can be present in any building built prior to 1981. Unfortunately, we still see foreign asbestos containing wallboard coming into the US and being used in construction to this day. Similarly, Lead-Based Paint (LBP) can be present in any residence built prior to 1978. LBP also continues to be used on structural steel. Either of these conditions need to be inspected and quantified prior to any renovation or demolition project as there is intense scrutiny by state regulators.
Note: Child care centers licensed in the State of Michigan before December 7, 2006, located in a building constructed prior to 1978, have until January 2, 2017 to obtain a lead risk hazard assessment (paint, dust, soil).
Real estate developers seek brownfield property because the sites are well located, infrastructure is already in place, they are knowledgeable about incentives for environmental cleanup and typically the asking price is below market. There are a number of ways a property can qualify for brownfield incentive programs: a property with subsurface contamination above residential criteria, blighted or obsolete buildings, properties in a Land Bank and even if your property is not contaminated, any contiguous or adjacent property that is contaminated can get you into the program. Eligible activities for reimbursement can include environmental assessments, asbestos and lead paint assessment and abatement, interior and site cleaning and demolition, debris removal, removal of contaminated soils and transformers, infrastructure, interest, brownfield plan and work plan costs.
Obtaining incentives to defray the cost of the above activities and ensuring that a project cash flows can be a long and arduous process. A preliminary review by an experienced consultant can help real estate professionals determine if they want to devote the necessary time and capital to redevelop a brownfield property.
The term Wetland applies to public and private lands regardless of zoning or ownership. Wetlands are generally defined as “land characterized by the presence of water, that under normal circumstances, supports wetland vegetation and aquatic life,” and are commonly referred to as bogs, swamps and marsh. Identifying Wetlands involves three factors: the predominance of wetland vegetation, hydric soils and signs of hydrology. Activities in regulated wetlands that require a permit include placing fill in a wetland; dredging or removing soils or minerals from a wetland; constructing, operating or maintaining any use or development in a wetland; or draining surface water from a wetland.
Compliance, Plans and Permits
Dry cleaners, gas stations, auto repair facilities, car dealerships, child care facilities, tool and die shops, metal fabricators, plastic injection molders, automotive suppliers, specialty chemical companies, railroads, electroplaters, manufacturers, steel plants, waste management companies, utilities, oil/gas producers, petroleum distributors, health care, general contractors, scrap yards, asphalt plants, print shops, and paper plants have parking lot runoff, parts cleaning processes, outdoor storage of raw materials, manufacturing scrap and rejects, air emissions, painting/adhesive/printing processes, chemicals used in manufacturing, vent hoods and booths, secondary containment and spill prevention systems that may be subject to regulation. A site walk and informal report of findings by an experienced professional gives landlords and tenants a roadmap to achieve and maintain compliance.
Real estate professionals should engage environmental consultants that speak in laymen’s terms, have extensive knowledge of current and pending requirements and a proven track record of navigating the maze of local, state and federal regulations in order to provide cost-effective solutions.
This article was researched and written by ASTIs Director of Development Doug Brown. Mr. Brown can be reached at 810/599-8131, 616/957-5601 or email@example.com.