Environmental Management Plans: Restoring Property Values

In the previous blog , we introduced two closely related priorities: maintaining and restoring property value, and discussed the first of those. Now let’s take a look at the second.

Restoring Value…Through Cleanup Programs

Among the most heavily regulated commercial operations around us are dry cleaning, petroleum, and industrial facilities that utilize hazardous substances or generate hazardous waste. Florida, like many other states, has created petroleum and dry cleaning solvent cleanup programs that are funded by industry-based taxes. The programs are designed to protect the environment by funding assessment and remediation at sites that are eligible for the programs. All of the programs are now closed, with the exception of the Petroleum Contamination Participation Program, which requires FDEP knowledge of a pre-1995 discharge. Determining if a petroleum or dry cleaning site is eligible for cleanup funding, and if so, identifying how and when funds may be made available, is critical to risk management.

It’s important to note that while the aforementioned programs are closed to new applicants, there are thousands of properties statewide that did get counted in those programs years ago, but were never cleaned up. That means that there could be properties in your community that could still receive state funds for cleanup!

The fact that the petroleum and dry cleaning programs aren’t accepting new applicants isn’t a complete dead end for all properties, however. Many hazardous waste sites, industrial facilities, and other potentially impacted properties may be eligible for Brownfield Redevelopment Act incentives.

“Brownfields,” in general terms, are potentially contaminated properties. Local governments can declare any property or group of properties to be designated Brownfield sites. By following the procedures established in the Brownfield Redevelopment Act, property owners can take advantage of numerous regulatory and economic incentives provided through local, State, and federal governments. The incentive for government is to return underutilized/abandoned properties to the tax base. The incentives for property owners include tax credits, low interest rate loans, funds based on the number of employees working on the redeveloped property, and permitting leniency or waivers.

Florida Statutes Section 376.308(5) provides some administrative immunity from FDEP-mandated assessment and remediation services on properties that are eligible for the cleanup programs. Owners of properties that are eligible for the cleanup programs are not compelled to assess or clean up contamination on the eligible site until the property reaches priority status (based on the hazard ranking scoring system set forth in the rules). Chapter 376 offers no immunity for third-party lawsuits based on off-site migration of contaminants. So for properties that are eligible for cleanup programs, off-site migration and potential claims associated with third-party liabilities represent the greatest concern for purchasers and lenders.

Off-site migration of contaminants is a source of liability that is very difficult to manage. A diligent assessment of the extent of off-site migration and/or an environmental insurance policy to protect against a third-party lawsuit are typically necessary to adequately manage these concerns if off-site migration of contaminated groundwater is extensive.

The key takeaways here are that the value of impacted properties can often be maintained and restored with expert assistance—opening the potential for those properties to be put to productive, profitable use.