&EPA
United States
Environmental Protection
Agency
REVITALIZATION-READY
A Guide to Revitalizing Land
in Your Community
BROWNFIELDS AND
LAND REVITALIZATION
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Summary of the Revitalization-Ready Guide
The Revitalization-Ready Guide (Ready Guide) provides a general process for evaluating a brownfield
property and identifying actions needed to bring it back to productive reuse. The Revitalization-Ready
Workbook is provided as a companion to the Ready Guide to document, support and facilitate the
decision-making process for the redevelopment of underutilized and/or abandoned properties that may
be contaminated. The Revitalization Workbook Manual is also provided to identify the questions
associated with tabs in the Workbook and provide guidance on entering data into each worksheet.
This guide incorporates all the concepts and processes outlined in the Process for Risk Evaluation,
Property Analysis and Reuse Decisions (PREPARED) Guide and expands on the PREPARED Workbook to
provide communities and non-government organizations with the information and tools to evaluate
development opportunities and attract developers. It streamlines the approach outlined on the
PREPARED Workbook, updates the regulatory discussions to include recent regulatory and policy
changes, and incorporates fact sheets and guidance developed since the PREPARED Workbook was
published. The Ready Guide was developed in conjunction with Environmental Protection Agency (EPA)
contractors having expertise in both private-sector and public-sector redevelopment projects involving
brownfield properties. It represents some of the potential methodologies that might be used.
Each community should apply its own judgment in deciding how the Ready Guide can help its city or
town and what is appropriate for the specific needs and purposes. Further, while much of the emphasis
in this guide will be on issues stemming from a property's environmental conditions, other factors
commonly associated with real estate development projects that will need to be taken into account are
discussed. Below are other important limitations and disclaimers that apply to the use of this guide.
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Disclaimers
General Disclaimer: This document describes a general approach that can be used to evaluate
information and guide decisions regarding potential options for facilitating reuse of properties. It does
not address all information, factors or considerations that may be relevant. The word "should" and
other similar terms used in this document are intended as general recommendations or suggestions that
might be generally applicable or appropriate and should not be taken as providing legal, technical,
financial or other advice regarding a specific situation or set of circumstances. EPA does not offer any
guarantees or warranties for or relating to the acquisition of or other involvement in a contaminated or
formerly contaminated property.
This document may be revised at any time without public notice.
Disclaimer Regarding Statutory Provisions and Regulations: This document describes and summarizes
statutory provisions, regulatory requirements and policies. It is not a substitute for these provisions,
regulations or policies, nor is it a regulation itself. In the event of a conflict between the discussion in
this document and any statute, regulation or policy, this document would not be controlling and cannot
be relied upon to contradict or argue against any EPA position taken administratively or in court. It does
not impose legally binding requirements on EPA or the regulated community and might not apply to a
particular situation based upon the specific circumstances. This document does not modify or supersede
any existing EPA guidance document or affect the Agency's enforcement discretion in any way.
Website or Product Endorsement Disclaimer: References in this document to any non-federal product,
service or enterprise do not constitute an endorsement or recommendation by EPA. This document also
provides links to non-EPA websites and documents that contain additional information that may be
useful or interesting and are consistent with the general purpose of this document. References to these
websites and documents, or to any specific commercial product, process, service, manufacturer or
company, do not constitute an endorsement or recommendation by EPA. EPA is not responsible for the
content of these non-EPA websites or documents and cannot attest to the accuracy of these websites or
documents.
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Revitalization-Ready
A Guide to Revitalizing Land in Your Community
Table of Contents
1 Introducing the Guide to Revitalizing Land in Your
Community 1
1.1 Overview 1
1.2 Background 2
1.3 About Risk Management 3
1.4 About Property Redevelopment 4
1.5 Let's Get Started 5
2 Community Needs and Concerns 7
2.1 Key Principles of Community Engagement 7
2.1.1 Define the Study Area 7
2.1.2 Gather Information/Data about the Study Area 8
2.1.3 Engage the Community Early and Throughout the Process 8
2.1.4 Envision the Project as a Long-Term Investment in the Area 9
2.1.5 Ensure that Meetings are Accessible and Accommodate a Community's Needs 9
2.1.6 Engage Stakeholders in the Neighborhoods 9
2.1.7 Ensure that a Community Has the Information and Resources to Participate in a
Meaningful Way 9
2.1.8 Establish a Transparent and Credible Process, and Provide Timely Follow-Up 10
2.1.9 Establish Realistic Expectations for Project Goals and Community Participation 10
2.2 Stakeholders 11
2.2.1 Critical Players in Brownfields Redevelopment 11
2.2.2 Brownfields Advisory Group 11
2.2.3 Stakeholder Committee 12
2.3 Community Needs and Concerns 12
2.3.1 Social 12
2.3.2 Health 13
2.3.3 Physical 13
2.3.4 Economic 13
2.3.5 Environmental 14
2.4 Establish Project Goals 14
2.4.1 Develop Property Inventory 14
2.4.2 Identify Important Community Considerations 15
2.4.3 Describe the General Vision for the Property 15
2.4.4 Craft the Goals and Objectives Statement 15
2.4.5 Review and Adjust Project Goals and Objectives, as Needed 16
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3 Reuse Assessment 17
3.1 Due Diligence 18
3.1.1 Environmental Due Diligence 19
3.1.2 Real Estate Due Diligence 27
3.2 Environmental Condition Impact Analysis 33
3.2.1 Environmental Investigation 34
3.2.2 Remedial Action 34
3.3 Land Use Assessment 35
3.4 Infrastructure Assessment 36
3.4.1 Utilities 36
3.4.2 Roads 36
3.4.3 Other Transportation 36
3.5 Market Study 37
3.6 Opportunities and Constraints Analysis 37
3.6.1 Opportunities 38
3.6.2 Constraints 38
4 Reuse Plan 40
4.1 Mapping and Visualization 40
4.2 Developable Area 41
4.3 Property Reuse Vision 42
4.4 Project Liabilities and Risks 43
4.4.1 Environmental Liability 45
4.4.2 Financial Risk 53
4.4.3 Community Needs and Concerns 54
4.5 Market Viability 54
4.6 Project Economics and Financial Analysis 55
4.6.1 Sources and Uses 56
4.6.2 Pro Forma 56
4.7 Feasibility 59
4.8 Property Disposition Strategy 59
4.8.1 Property Owner Evaluation 60
4.8.2 Selecting Property Disposition Strategies 63
4.8.3 Screening Property Disposition Strategies Based on Project Goals 67
5 Reuse Implementation Strategy 69
5.1 Risk Management Tools and Approaches 69
5.1.1 Understand/Quantify Risk 72
5.1.2 Control Risk 72
5.1.3 Transfer Risk 73
5.2 Brownfields Investment Package 74
5.2.1 Economic Context 74
5.2.2 Governance Context 75
5.2.3 Local Information 75
5.2.4 Project-Specific Information 75
5.2.5 Areas of Focus 75
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5.3 Resource Roadmap 75
5.4 Leveraging Resources 77
5.5 Site Investigation and Cleanup 78
5.6 Property Disposition 79
5.6.1 Interested Parties 79
5.6.2 Expression of Interest (EOI) Process 80
5.6.3 Request for Proposal (RFP) Process 80
5.6.4 Outreach 80
6 Reuse Implementation 81
6.1 Property Sale/Lease Agreement 81
6.1.1 Environmental Responsibility 81
6.1.2 Integrating Cleanup with Redevelopment 81
6.1.3 Engineering and Institutional Controls 81
6.2 Transactional Due Diligence 82
6.2.1 All Appropriate Inquiries 82
6.2.2 Geotechnical Study (Soil Study) 82
6.2.3 Property Survey 82
6.2.4 Local Government Review and Approval 82
Appendix A: RISK MANAGEMENT TOOLS AND APPROACHES ....85
A.l Activities 85
A.1.1 Meeting with Federal and State Regulators 85
A.1.2 Due Diligence and All Appropriate Inquiries 85
A.1.3 Environmental Investigation 85
A.1.4 Cleanup Action Planning 86
A.1.5 Reasonable Worst-Case Scenario Planning 86
A.1.6 Engaging Stakeholders 86
A.1.7 Financial Analysis 86
A.1.8 Timing Local Government Involvement 86
A.1.9 Interim Cleanup Action 87
A.1.10 Cleanup Action 87
A.1.11 Voluntary Cleanup 88
A.1.12 Maintenance and Monitoring of Remedial Systems and Structures 89
A.1.13 Institutional Controls 89
A.1.14 Oversight of the Environmental Contractors 90
A.1.15 Following Accepted, Good Commercial Practices 90
A.2 Statutory/Regulatory Protections 90
A.2.1 CERCLA Liability Protections for Local Government Acquisitions 90
A.2.2 State and Local Government Acquisitions of Brownfield Property 91
A.2.3 Bona Fide Prospective Purchaser Provision 91
A.2.4 Third-Party and Innocent Landowners 91
A.2.5 Other Determinations of Completion 92
A.3 Transactional Activities 92
A.3.1 Escrow Accounts 92
A.3.2 Purchase Price Adjustments 93
A.3.3 Grants 93
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A.3.4 Tax Benefits and Credits 93
A.3.5 Private Investors 93
A.3.6 Specialized Loans 93
A.3.7 Redevelopment Authorities 94
A.3.8 Land Banks 94
A.3.9 Contractual Provisions 95
A.4 Insurance 97
A.4.1 Comprehensive General Liability Insurance 97
A.4.2 Pollution Liability Insurance 97
A.4.3 Errors and Omissions Insurance 98
A.4.4 Cost Cap Insurance 98
A.4.5 Secured Lender Insurance 98
A.4.6 Finite Risk Insurance 98
A.4.7 Institutional Controls and Post-Remedial Care Insurance 98
Appendix B: LOCAL GOVERNMENT OVERVIEW OF CERCLA, RCRA,
PCBS, AND ASBESTOS REGULATIONS 100
B.l Introduction 100
B.2 Overview of CERCLA 101
B.3 Overview of RCRA 103
B.3.1 RCRA Subtitle C 104
B.3.2 RCRA Subtitle D 105
B.3.3 RCRA Subtitle I 105
B.4 Polychlorinated Biphenyls (PCBs) 106
B.5 Asbestos 107
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1 Introducing the Guide to Revitalizing Land in Your Community
1.1 Overview
The Ready Guide is designed to help your community redevelop the contaminated, potentially
contaminated, idle and underused properties in your city or town. It describes how you can initiate and
lead the redevelopment process by understanding your community's needs, collecting and evaluating
information, and defining the path forward to make the redevelopment happen.
Your community's decision to move forward on a redevelopment project will be based on answers to
the following core questions:
• Will the selected project meet your community's needs - social, public health, environmental
and economic goals?
• Is the project financially viable and realistic?
• Are the risks acceptable?
• Are the necessary resources available?
The Ready process is mapped out as five sections in this guide. Working through each section will help
your community address the questions above and evaluate various property redevelopment options.
der
Project Goals
Site Inventory
Community Engagement
Community Needs/Concerns
Community Needs and
Concerns
Define Path
Forward
Collect
Informatior
Collect Information
Evaluate Information
Reuse Plan
Reuse Assessment
Environmental Impact
Land Use/Infrastructure
Market Study
Opportunities and Constraints
Reuse Vision
Risks and Liabilities
Viability and Feasibility
Disposition Strategy
Revitalization
Define Path Forward
Reuse Implementation
Strategy
Risk Management
Investment Package
Site Investigation and Cleanup
Property Disposition
Make it Happen
Reuse Implementation
Leverage Resources
Support/Facilitate Reuse
Operation/Management
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The Guide:
• Provides a general process for evaluating a brownfield property to return it to a productive reuse.
• Discusses key steps in the process of redeveloping a
contaminated, potentially contaminated, idle or underused
property.
• Addresses key questions and other factors that should
generally be considered in implementing each step.
• Summarizes relevant background information and provides
references to other sources of information.
• Provides a Workbook that can help guide and support the
evaluation and decision-making process for a specific project.
The Guide also provides guidance for local governments
interested in facilitating the cleanup and reuse of brownfields,
other contaminated properties, and idled and underutilized
properties. As used in this guide, the term "local government"
includes local, regional and county governments; tribes; and
quasi-governmental organizations. The guide information and
actions can be used by states, tribes and non-governmental
organizations (such as nonprofits), keeping in mind that federal
and state laws provide certain liability protections and authorities
that may be available only to "local government" entities.
The potential actions generally available to your community, local
governments and other redevelopment entities are referred to in
this guide as property disposition strategies. Several property disposition strategies are explained in this
guide. These strategies may include acquisition approaches and non-acquisition approaches (e.g.,
transferring tax liens).
In an effort to ensure community vitality, a strong tax base, and
the health and safety of residents, your community may face
the prospect of acquiring - or taking other actions - to facilitate
reuse of one or more brownfield properties.
Brownfield properties are often difficult to redevelop due to
concerns regarding the environmental conditions and potential
liability. In cases where contamination complicates the reuse of
a property, local governments or development authorities can
play a pivotal role in transforming these properties into
community assets. This often becomes more important when
economic slowdowns put downward pressure on real estate
markets.
Understanding the term
"brownfield property"
This guide uses the term "brownfield"
to refer to a property:
• that is abandoned, idled or
underutilized and possibly
contaminated;
• where contamination is suspected
or is known to exist; and
• where the cleanup strategy includes
safely managing residual
contamination (such as maintaining
a protective cover system or cap,
deed restrictions).
EPA defines a brownfield as
"property, the expansion,
redevelopment, or reuse of which may
be complicated by the presence or
potential presence of a hazardous
substance, pollutant, or contaminant."
1.2 Background
This guide aims to give communities a
foundational understanding of the land
revitalization process, including key
questions to ask when decision-makers
want to identify where expert assistance
might be needed and improve
communication with those experts. It
will not, however, make anyone an
expert or avoid the need to obtain
competent legal, financial or technical
advice.
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Local governments or development
authorities can play a pivotal role in
transforming these properties into
community assets.
In many communities across the country, contaminated
properties representing every stage in the cleanup process are
being successfully reused as the result of local government
involvement. This includes Superfund sites and other properties
with serious environmental issues. Generally, a strong and
realistic site redevelopment plan helps increase environmental
protection at the site.
Nevertheless, it is common for a community to struggle with potential legal liability and other
complications associated with the environmental conditions of a brownfield property. This is particularly
true of smaller cities or towns and nonprofits that often operate with limited in-house staff and budgets.
Outside legal counsel and specialized consultants can provide essential expertise, but generally serve
only in an advisory capacity. Ultimately, the burden of deciding on a course of action usually rests with
local government officials or the redevelopment entity.
1.3 About Risk Management
A decision-making process generally involves an evaluation of risk. A basic premise of this guide is that
project risks involving brownfield properties, like most risks, cannot be entirely eliminated — only
managed.
Managing risks requires a fundamental understanding
of the risks that may exist, the likelihood of those risks
occurring, and the potential consequences if those risks
are realized. It also involves prioritizing those risks and
taking steps to contain the most significant risks within
acceptable limits.
•o
o
o
High Risk
o>
Medium Risk
\
Low Risk
; What is deemed acceptable will depend on a number
of factors, such as the development entity's basic goals
for the brownfield property and its general sensitivity
to risk. This is a determination that must be made by
local government and other officials based on the
needs of the local community.
Consequence
The discussion of risk in this guide includes financial
risk, civil/environmental liability, and the need to balance community concerns. Generally, these risk
categories are interrelated and should be considered together
in evaluating a property disposition strategy. While it can be
more complicated to consider several risk components at the
same time, the solutions that result from comprehensive
consideration of risks are generally more robust and often
more financially sound.
The solutions that result from
comprehensive consideration of risks
are generally more robust and often
more financially sound.
Risk management is typically conducted in an iterative, staged manner. Once risks are identified,
potential ways to manage these risks are considered, and the risks are reassessed.
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For brownfield properties, risk management can involve traditional tools such as insurance products and
indemnification agreements, state and federal settlement agreements or statutory liability protections,
or other approaches such as gathering additional data, delaying acquisition until the cleanup is close to
complete, or using a different method of property acquisition.
1.4 About Property Redevelopment
Redevelopment projects can vary greatly in their complexity and scope; however, from a developer's
perspective, the commercial redevelopment process can generally be simplified into four general
components:
• Predevelopment - Predevelopment activities often involve identifying and assessing potential
reuses, conducting due diligence, obtaining access to the property to conduct environmental
and other assessments of the property, and identifying potential costs and sources of funding.
• Deal Management - The deal is secured after the
predevelopment activities have generated enough
information for the developer or investor to make its
decision to purchase or take control of the property and
continue with the project. This typically includes
negotiating contracts, obtaining financing, establishing
cleanup plans, acquiring the property, and navigating the
local planning process.
• Property Preparation and Development - Preparing and
developing the property includes obtaining construction
and environmental approvals, coordinating cleanup and
construction activities, securing tenants, and completing
the redevelopment. The developer or investor also
chooses to sell or lease the property.
• Property Management - If the developer or investor
does not sell the property, it will be responsible for
several tasks involving property management long-term.
These tasks may include managing the financial aspects,
commercial operations, tenant issues, community
relations, and any long-term environmental issues, such
as operation and maintenance of any cleanup systems
and components associated with the property.
Early in the process of evaluating whether to proceed with plans for the redevelopment of a property, a
developer will typically attempt to weed out a project with poor or marginal investment potential and
identify deal-breakers that could eliminate the project from further consideration if not addressed.
These deal-breakers often result from significant data gaps and uncertainties that introduce
unacceptable risk into the project.
Predevelopment
Property
Management
Deal
Management
Preparation and
Development
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The developer then goes through the process of refining the project evaluation to determine whether
the potential benefits and return on investment from the project can justify spending the additional
resources to resolve these risks and to further refine the evaluation. Oftentimes, the answer will be no,
which can be an acceptable outcome. A successful reuse evaluation process is one that leads to a sound
decision even if the result is that the project is ultimately abandoned. A similar approach is applied to
the evaluation of potential property disposition strategies. There are, however, some fundamental
differences in how private developers and local governments might conduct the reuse evaluation
process.
For example, local governments may have a variety of
property disposition strategies available (see Chapter 4),
while developers are most often focused on property
acquisition scenarios. As a result, local governments may
need to perform a comparative analysis of the costs, risks
and benefits of multiple property disposition strategies.
A successful reuse evaluation process is
one that leads to a sound decision even
if the result is that the project is
ultimately abandoned.
Unlike private development projects that can be evaluated based on clear, quantifiable metrics (e.g., the
return on investment), a redevelopment entity's project goals also may be based on more subjective
considerations such as public safety or the need to make the surrounding area more livable.
Government entities may have more flexibility to wait for a longer period of time before realizing a
positive return on investment from a redevelopment project.
EPA's Anatomy of Brownfields Redevelopment provides an overview of the commercial brownfields
redevelopment process. Additionally, EPA has developed the Superfund Redevelopment Mapper to help
communities affected by Superfund sites reclaim and return land to safe and beneficial use. This web-
based mapping tool helps stakeholders explore potential reuse opportunities by providing users with
Superfund site locations and data layer options that highlight site features and site surroundings. The
information in the tool can help stakeholders make informed business decisions about land reuse that
align with community needs and priorities.
1.5 Let's Get Started
Review the five sections of this Guide:
S Community Needs and Concerns - helps you understand which property uses can best serve
the broader social and economic interests of the surrounding community (see Chapter 2).
S Reuse Assessment - helps you identify which attributes or characteristics are redevelopment
strengths or weaknesses when you collect property-specific information. Summarizing these key
findings helps you develop a realistic reuse plan with a greater opportunity for success (see
Chapter 3).
S Reuse Plan - helps you use the key findings and other reuse assessment information to look at a
range of desired redevelopment scenarios and build a realistic vision for the reuse of the
property (see Chapter 4).
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S Reuse Implementation Strategy - outlines the approach for how you will obtain regulatory
approvals, determine property disposition, evaluate liability assumption or transfer, and
implement the redevelopment plan (see Chapter 5).
S Reuse Implementation - identifies the key issues that can help or hinder the success of your
property reuse (see Chapter 6).
Use the Workbook to help you apply the concepts to a specific project,
Follow the links to useful EPA guidance documents, and
Review the regulatory information in Appendix B.
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2 Community Needs and Concerns
Community Needs and Concerns
Revitalization Ready
Collect Information
Bafl Reuse Assessment
Reuse Plai
Define Path Forward
Reuse Implementation Strategy
Make it Happen
Reuse Implementation
Reuse of brownfield properties may
provide an opportunity to improve a
community through uses that
address community concerns and
incorporate community needs.
The community needs and concerns
process helps identify property uses
that can best serve the broader
social and economic interests of the
surrounding community.
Uses not identified in a project's
market study often become apparent
through dialogue with the community.
Identifying community needs and concerns provides an
understanding of the physical, social, economic and
environmental context of neighborhoods adjacent to a
brownfield property through the eyes of individuals who live there. It is a two-way process to gather
information and enhance decision-making. The process is designed to strengthen the connectedness
and increase the capacity of the community by encouraging the residents of the neighborhood to get
involved in the process. Stakeholder involvement is crucial to creating a knowledge bridge between the
project team and the neighborhoods.
2.1 Key Principles of Community Engagement
Under an EPA grant, Groundwork USA
provides brownfield communities with a
range of community engagement
approaches that support equitable and
environmentally-just redevelopment.
Learn how you can incorporate these
approaches into a brownfield cleanup
and reuse project,
Successful community engagement often is the result of the
local government's (or other development entity's) and
developer's willingness to work with community
stakeholders to recognize and integrate specific community
objectives into a redevelopment project. These objectives
frequently involve issues of health and safety, job creation,
affordable housing, and community character and identity.
The principles discussed below are a guide for laying the
foundation for a collaborative relationship with all
stakeholders in a project.
2.1.1 Define the Study Area
The study area defines the community affected by a redevelopment project. It is typically the area
immediately surrounding the property (or properties) to be evaluated but may extend to a broader
community based on potential impacts of the redevelopment and input received during the
engagement process. The study area should be initially defined to guide the initiation of the
engagement process and revised based on input during the engagement process.
Defining the study area requires an understanding of the potential direct or indirect impacts by a
redevelopment. The boundaries of the study area can often be determined by physical barriers such as
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highways, surface water, open spaces; central areas or centers of activities such as institutions,
community centers, places of worship; block or neighborhood boundaries; and demographic, economic,
and social characteristics, depending upon the nature of affected community or the specific property
being evaluated. The study area boundaries should be mapped to provide a visual representation of the
area.
2.1.2 Gather Information/Data about the Study Area
Prior to the first meeting, gather information and data about the study area - primarily the area
immediately adjacent to the property. This information can provide a basic understanding of the area
and provide a basis for initial discussions and decisions. It is important to consider that reality may be
different than perception. Organizing this information in a visual format, such as a presentation on a
map of the area, will provide perspective on the area. Information that should be considered includes:
• Crime - A review of 911 calls and police and fire
incident reports can provide information on the issues
that are important to the neighborhood and what is
truly happening in the community.
• Property condition - A parcel-by-parcel survey of the
area can provide a basic understanding of the
condition and status of properties in the community.
This information can be collected by a walkthrough of
the area and from information maintained by local or
county property records. Information to consider
includes:
o Occupancy - vacant parcel (no structures),
occupied structure, unoccupied structure,
o Owner - name, contact information,
o Property tax status - current, delinquent and
delinquency amount,
o Occupancy status - owner occupied, rental,
o Property condition - maintained, overgrown,
trash/junk, abandoned vehicles,
o Structure type - residential, institutional,
hospital, school, commercial,
o Structure condition - maintained, fire
damage, boarded up and secure, damage to
structure,
o Street and sidewalk condition.
2.1.3 Engage the Community Early and Throughout the Process
Early engagement demonstrates that community input is valued and not just an effort to gain
acceptance for the project after key decisions have been made. It also reduces project costs and delays
by helping to identify community concerns and issues before the project moves too far forward.
Involving community stakeholders throughout the redevelopment process helps build consensus for
success project outcomes. (See Section 2.2 for a discussion of stakeholders.)
Key Principles of Community
~
Define the study area.
~
Gather information/data about the
study area.
~
Engage the community early and
throughout the process.
~
Envision the project as a long-term
investment in the area.
~
Ensure that meetings are accessible
and accommodate a community's
needs.
~
Engage stakeholders in the
neighborhoods.
~
Ensure that a community has the
information and resources to
participate in a meaningful way.
~
Establish a transparent and credible
process, and provide timely follow-up.
~
Establish realistic expectations for
project goals and community
participation.
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2.1.4 Envision the Project as a Long-Term Investment in the Area
The local government or other development entity should consider how a specific project might be part
of a broader, integrated area-wide strategy for eliminating environmental and economic barriers, and
supporting a community's long-term health and vitality. When the redevelopment project is approached
as a way to help revitalize a neighborhood rather than simply reuse a particular property, it is more
likely to be successful at garnering and retaining community support. An area-wide revitalization
strategy signals a commitment to the future welfare of the community. Area-wide planning also
provides opportunities for integrating large-scale infrastructure systems (e.g., transportation and utility
systems) and creating other synergies and efficiencies. In addition, developers and investors will often
be more likely to invest in a particular property if it is part of a larger revitalization effort designed to
transform an economically stagnant or deteriorating area. Local governments and developers can
further demonstrate their commitment to the local community by providing opportunities for local
businesses and residents to obtain work related to the reuse project. Such local job creation also helps
to build community support for the project.
2.1.5 Ensure that Meetings are Accessible and Accommodate a Community's Needs
When planning stakeholder meetings, the goal must be to provide equal and fair access to all by
eliminating barriers to community participation to ensure meetings are accessible and accommodate
the community's needs. The actual measures taken should be tailored to the individual community's
needs. Consider factors such as appropriate notice, the time of day, the availability of public
transportation and childcare, access for the disabled, and the need for translators for non-English
speakers. Community-based groups are often closely aligned with certain sectors of the community and
can help in mobilizing community members to participate in the stakeholder process. Making extra
efforts to reach out to the community and encourage participation sends an important message that is
likely to influence public perception even before the first meeting is held. At these meetings, present the
data you have gathered for discussion. This helps steer meetings away from individual agendas and
opinions, and gives attendees factual information about the neighborhood. The data presented should
reflect the realities of the neighborhood. The data also should provide an opportunity to discuss what
the data mean to those who live there.
2.1.6 Engage Stakeholders in the Neighborhoods
In addition to meetings, walk the study area and speak to/survey individuals who live area. Walk with
residents and have them tell you about the neighborhood. This can help you obtain a first-hand account
of what individuals in the area consider to be challenges, as well as assets of a neighborhood. It also will
help identify natural leaders of the community.
2.1.7 Ensure that a Community Has the Information and Resources to Participate in a Meaningful Way
Consensus-building functions best when all the parties involved have a basic grounding in the issues and
topics being discussed. Taking the time to provide stakeholders with the information necessary to better
understand the key topics and issues will generally lead to more informed and productive discussions.
For stakeholder education efforts to be effective, the information must be from a source that is viewed
as trusted and neutral. This information should be appropriate for the intended audience and should be
presented in a way that is not condescending to any group of stakeholders. In addition, the information
and resources available to stakeholder groups should be commensurate with the complexity of the
topics and issues being considered.
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2.1.8 Establish a Transparent and Credible Process, and Provide Timely Follow-Up
While it may not always be possible to arrive at a clear consensus on a given issue or set of issues, it is
important that the processes for soliciting input and making decisions be transparent, credible and
understood. The data you have gathered will be helpful in driving decision-making and goal-setting with
those involved. What are the priorities of this neighborhood based on the data? This model is data-
driven and neighborhood-led.
When issuing decisions, local governments should be sure to communicate to the community how input
was utilized. If community input is not incorporated into the redevelopment plans, the local government
should explain why. A local government or developer also should consider informing all stakeholders of
important decisions first so that stakeholders do not feel blindsided upon learning of those decisions
through the media.
Other efforts to ensure transparency could include providing a note-taker at stakeholder meetings to
document what was discussed and to serve as a reference point in future discussions. After the meeting,
notes or minutes should be circulated and reviewed for accuracy. Timely and straightforward responses
to any questions raised will help clear up potentially minor misunderstandings before they escalate into
major conflict.
2.1.9 Establish Realistic Expectations for Project Goals and Community Participation
The project goals — whether they originate from the local government or the community — must be
realistic and ultimately achievable. It is important to identify any constraints that might shape the
project goals and vision, and communicate them as early as possible in the community engagement
process. Studies that are typically conducted for this purpose, such as a market study and opportunities
and constraints analysis, can inform the final development plan. Among the other constraints that may
need to be considered are regulatory requirements and available local government resources. In some
cases, the ability to influence the nature and timing of a redevelopment also might be limited if, for
example, the property is likely to remain in private hands.
These underlying realities and competing trade-offs will provide the context in which final decisions will
be made. They also will help identify opportunities where flexibility to accommodate reasonable
community needs and concerns might be possible — and minimize the frustration and distraction of
pursuing those that are not. (See Section 2.4 for a discussion of establishing project goals.)
/ \
Documentation - Summarize community information (refer to Community and Demographics tabs in
the Revitalization-Readv Workbook.)
>¦
References:
EPA: Community Actions that Drive Brownfields Redevelopment
Groundwork USA: Best Practices for Meaningful Community Engagement Tip Sheet
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2.2 Stakeholders
The successful reuse of a brownfield property requires the involvement and commitment of a diverse
group of stakeholders. Various voices that need to be heard include those who:
• are or may be affected by the project;
• need to be aware and kept informed about the evaluation and decision-making process;
• can contribute information, resources or expertise; and
• whose consent or approval is important to the success of the project.
Stakeholders may be involved throughout the project development process or brought in periodically to
support certain project aspects.
2.2.1 Critical Players in Brownfields Redevelopment
Involving stakeholders who can support and drive the reuse planning process and the ultimate
redevelopment of the property is critical to the project's success. The number and background of
stakeholders will vary based on the community and the project. Stakeholders that typically can be
critical players in the redevelopment of a brownfield property include:
• Property owners.
• Developer/developer team.
• Equity investor (a fund or a wealthy investor).
• Potential buyers.
• Public sector stakeholders, including local or regional governments, neighborhood or
community groups, nonprofit organizations, foundations.
• Private sector stakeholders, including investors, lenders, developers, insurers.
• State and federal regulators.
• Other parties, including environmental and legal support.
2.2.2 Brownfields Advisory Group
At the onset of the reuse evaluation process, consideration should be given to identifying an initial
group of key stakeholders that are committed to the development and implementation of a successful
reuse strategy. This stakeholder group may be relied upon to sponsor and move the project forward.
The brownfields advisory group is a project management team tasked with facilitating and managing the
reuse evaluation process, as well as overseeing the implementation strategy. Typical advisory group
tasks include:
• Bring diverse groups together looking for potential synergies.
• Communicate and coordinate with stakeholders.
• Provide essential internal and external expertise (technical, legal, financial).
• Facilitate and manage the reuse evaluation process.
• Commit (some but not all) financial and other resources to the process.
• Set key goals and carry out key strategies.
• Generate and maintain synergy to keep the project moving forward.
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Common brownfields advisory group candidates include representatives from the local government,
community foundations, local and regional economic development agencies, a developer, and
neighborhood and community associations.
f
Documentation: Develop your brownfields advisory group roster, including contact information (refer
to the Stakeholder tab in the Revitalization-Readv Workbook).
2.2.3 Stakeholder Committee
When developing reuse strategies for a large property or a large number of properties, many
communities find broader representation from a stakeholder committee is needed.
A stakeholder committee provides the expertise and human resources needed for the brownfields
advisory group to conduct the reuse evaluation. The committee consists of stakeholders with a diverse
range of knowledge and expertise who are willing to meet on a regular basis throughout the reuse
evaluation process and implementation of the reuse strategy. The committee provides advice and
expertise to the brownfields advisory group in areas such as economic/financial issues, technical issues,
and legal and regulatory policies, as well as social and political issues related to the evaluation and
implementation of the reuse strategy. Examples of stakeholder committee members include
representatives from local and regional government agencies, business associations, community
nonprofit organizations, educational institutions, and neighborhood associations, as well as local
consultants, engineers, real estate professionals, and state and federal regulatory agencies.
f
Documentation - Develop your stakeholder roster and contact information (refer to the Stakeholder
tab in the Revitalization-Readv Workbook).
2.3 Community Needs and Concerns
Community needs are gaps between the services and resources that currently exist in the community.
Identifying community needs and concerns will help your community understand which reuse
opportunities will address the gaps.
Take time to identify the social, health, physical, economic and environmental needs of the affected
community and neighborhood. Engage various community organizations such as youth groups,
educators, business organizations, churches and nonprofit organizations, as well as individual residents
and local business owners. These organizations can assist local government officials in gaining
perspectives on community health, environmental hazards and the social challenges affecting the
residents impacted by the brownfield property and surrounding neighborhoods. Community needs and
concerns may be identified by considering these needs:
2.3.1 Social
• Do individuals in a neighborhood reach out and help one another, or are individuals socially
isolated?
o Can they find a ride somewhere if they need one?
o Can they borrow a needed tool?
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o Who in the neighborhood would they call in case of an emergency?
• Is the community experiencing blight, crime, vagrancy, reduced social capital or loss of
community connectedness due to vacant, abandoned and brownfield properties?
• Is there a lack of services in the community due to the existence of abandoned and blighted
properties?
2.3.2 Health
• What proportion of the community members are elderly, young, people of color, or low-
income?
• What community health information exists (such as a community health improvement plan or
other health agency-led assessments)?
• What are the specific public health challenges faced by residents within the reuse area, and
what are their underlying causes? For example, is the community suffering from a high
incidence of diabetes, heart disease, cancer, asthma or drug addiction?
• What environmental or health risks are present in the area?
• Does the community have documented health disparities?
• Is there a lack of health centers or other resources?
• Is the community considered a food desert?
Gather health assessment information from local health departments and if possible, have these
broken down by zip codes or census tract areas (the smaller the unit, the better). Work with health
partners to determine the underlying causes of community conditions. These could be lack of access
to fresh fruit and vegetables, lead-contaminated housing or water, or poor condition of housing
stock.
2.3.3 Physical
• Does the community have a general concern about physical infrastructure such as roads,
condition of the sidewalks, utilities, condition of buildings, dead trees, or inadequate night
lighting?
• Is there a lack of open and green space in the community?
• Is the physical condition of the property or area targeted for redevelopment causing safety
concerns (abandoned and derelict structures, open foundations, compromised infrastructure)?
• Are there lots that are overgrown or not mowed, or sites for illegal dumping, tires and trash?
2.3.4 Economic
• What are the economic stressors the community is facing, such as lack of jobs, high
unemployment, distressed local government budget that leads to subpar local services, or high
rates of poverty?
• Has the lack of development created a reduced tax base?
• Have decreased private property values led to reduced social services to the surrounding
community?
• Has there been a disruption of major economic activities, such as closing of businesses due to
the pandemic?
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2.3.5 Environmental
• Are there concerns regarding air quality, water pollution and presence of hazardous waste sites?
• Are there biological, physical and chemical effects resulting from site contamination,
groundwater impacts, surface runoff migration of contaminants, or waste dumped on the site?
Collecting or linking baseline health and environmental measures will identify unmet community needs
and concerns, and inform redevelopment planning options. For example, health monitoring or health
impact assessments can show that limited access to health care services or a lack of sidewalks,
recreational opportunities or food access can negatively affect the community. In this case, community
representatives likely will voice needs for increased health care services, green space, parks, trails and
fresh grocers during the development of project goals and objectives for site reuse.
References:
Centers for Disease Control and Prevention (CDC): Community Needs Assessment
EPA: Plan for Brownfields Redevelopment Success: Community Health Assessment
2.4 Establish Project Goals
It is essential that your community dedicate substantial, thoughtful effort to develop clear project goals.
These goals will directly affect all aspects of the project strategy. Spending time early on to carefully
frame the goals will ensure resources are used effectively and efficiently.
At a minimum, project goals should consider the following questions:
• What is the community's desired outcome of the redevelopment?
• How important is the redevelopment to the affected neighborhoods?
• How time-critical is the redevelopment?
Along with the project goals, the community vision (described below in Section 2.4.3) helps frame the
development of a goals and objectives statement.
The first step in the project evaluation process is to clearly articulate both the community's and the
project developer's goals and objectives for the project. This is accomplished by completing the
following steps:
• Develop property inventory.
• Identify important community considerations.
• Describe the community's and the developer's general vision for the property.
• Craft the shared goals and objectives for the project.
2.4.1 Develop Property Inventory
Start by developing an inventory of the property or properties that are being considered for reuse. In
some cases, a property may be a consolidation of multiple parcels with different owners. The purpose of
this inventory is to document basic information about the property.
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For purposes of the evaluation, a property is defined as one or more contiguous parcels of land. It is
important to identify each parcel. Necessary data include property name, address, current owner, tax
map parcel number, parcel size, appraised value, current zoning, existing structures on property, brief
description of past uses, potential future use, and environmental status and tax delinquency
information.
f
Documentation - Develop your property inventory (refer to the Property Inventory tab in the
Revitalization-Readv Workbook).
2.4.2 Identify Important Community Considerations
Identify considerations that are important to the successful development and implementation of the
reuse strategy: social, public health, physical and economic. Issues important to the project can include:
• Community needs and concerns.
• Budget constraints.
• Future use constraints.
• Impacts the property may have on larger development plans in the area.
• Potential "deal-breakers" or issues that would stop the project.
• Pre-existing issues that would rule out or impede certain outcomes.
• Needs and interests of the community where the project is located.
2.4.3 Describe the General Vision for the Property
The purpose of the vision is to understand potential or preferred redevelopment scenarios for a
brownfield site based on stakeholder expectations. Early on in the process, identify and summarize the
expectations and reasons for reuse of the property. This general vision will form the basis for the
evaluation of potential reuse opportunities during the reuse planning process (see Section 4.3).
2.4.4 Craft the Goals and Objectives Statement
The goals and objectives statement for the property will describe the purpose and anticipated outcomes
for the project. The statement should be as specific as possible to help stakeholders understand the
project, the reasons for the redevelopment, and the reasons for the local government's (or other
development entity's) involvement.
• Review the expectations for redevelopment, including the reasons for the redevelopment,
potential benefits, importance and critical timing, and priorities.
• Develop a few sentences or short paragraphs that describe the goals and objectives for the
property and the local government's participation in the reuse of the property. Base this text on
what is known about the property, the considerations related to the property, and the
expectations for the property.
• Communicate the goals and objectives to the stakeholder committee, elected officials and the
public. Build a consistent message around the project and most importantly, its benefits.
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2.4.5 Review and Adjust Project Goals and Objectives, as Needed
The process of redeveloping a brownfield property is an iterative one; therefore, it is important to
recognize that the project goals and objectives may change based on facts discovered during the
evaluation process. During the reuse evaluation process, the goals and objectives of all stakeholders
should be reviewed and revised. Subsequent revisions and the reasons for revisions to the goals and
objectives should be documented. This provides an opportunity to communicate changes in goals and
set appropriate expectations.
<"
Documentation - Develop your goals (refer to the Goals tab in the Revitalization-Readv Workbook).
-
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3 Reuse Assessment
Understand needs
Community Needs and Concerns
Collect Information
JL
Reuse Assessment
Revitalization Ready
Evaluate Information
s/ Reuse Plan
Define Path Forward
Q. Reuse Implementation Strategy
Make it Happen
Reuse Implementation
Reuse Assessment
A reuse assessment should include a
review of the property location; the
property's environmental condition; the
surrounding community, size, and
condition of buildings and other
significant structures; available
utilities; infrastructure and property
access (e.g., roads, rail, bridges,
waterways); environmental features
that might limit developable space or
otherwise restrict usage (e.g.,
wetlands, natural features, surface
water, flood plains); and other relevant
factors.
The reuse assessment identifies and evaluates attributes and
characteristics about the property and summarizes key findings
that will help develop a realistic reuse plan for a property with a
greater opportunity for success. It also provides the information
needed to determine the optimum role for the local government
in the reuse and redevelopment process. The reuse assessment
compiles information resulting from:
• Due Diligence - Identifying attributes and characteristics of the property.
o Environmental Due Diligence - Assessing the environmental condition and regulatory
issues affecting the use of the property (see Section 3.1.1).
o Real Estate Due Diligence - Identifying available infrastructure, accessibility, easements,
zoning and other characteristics to support reuse of the property see Section 3.1.2).
• Environmental Condition Impact Analysis - Assessing the impact of the environmental condition
on potential reuse of a property (see Section 3.2).
• Land Use Assessment - Identifying land use options consistent with the surrounding area, local
planning and zoning, and viable uses of the property (see Section 3.3).
• Infrastructure Assessment - Evaluating available infrastructure (access, transportation, utilities)
and infrastructure needs to support reuse (see Section 3.4).
• Market Study - Providing insight into potential reuse options (residential, commercial, retail,
industrial). It looks at information such as population, demographics and market demand (see
Section 3.5).
• Opportunities and Constraints Analysis - Identifying attributes and characteristics of the
property (environmental condition, available infrastructure, accessibility, easements, zoning)
that provide positive or negative impacts to one or more possible uses of the property (see
Section 3.6).
• Feasibility Analysis - Evaluating the economic viability of potential reuse options. This typically
involves a preliminary financial analysis of a potential reuse (see Section 4.6).
Depending on the in-house capability of the local government, outside expertise may be needed to
conduct or interpret the information developed during the reuse assessment. The reuse assessment also
can provide insight on information gaps, which can help inform the due diligence process. Further, it can
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be important in establishing what is likely to be the highest and best use of the property from both the
developer's and the local government's perspectives and in determining its market value.
Information management is an important component of the reuse assessment process. Information
collected during the reuse assessment should be organized and documented in a manner that:
• supports decision-making;
• is easily retrieved;
• can be presented to and understood by stakeholders and potential developers; and
• includes spatial information and graphic illustrations of key property features and the
• surrounding area (see Section 3.1.2.5).
Reference:
EPA: Plan for Brownfields Redevelopment Success: Site Reuse Assessment
3.1 Due Diligence
A fundamental component of the reuse assessment is due diligence. Due diligence is conducted to
obtain and verify available information regarding the property attributes and characteristics, physical
and environmental condition, ownership, and other information relevant to its potential reuse and
redevelopment. Due diligence is an essential step in evaluating a property regardless of the local
government's involvement in a property transaction or the property redevelopment.
The discussion of due diligence is separated into
environmental due diligence and real estate (or property) due
diligence. Environmental due diligence is conducted to
evaluate the environmental condition of the property and to
meet the requirements for all appropriate inquiries (AAI) as
defined in Section 101(35)(B) of the Comprehensive
Environmental Response, Compensation and Liability Act
(CERCLA, otherwise known as the federal Superfund law). Real
estate due diligence is conducted to identify attributes and
characteristics about a property that affect the ability to
transfer or reuse a property, such as zoning, potential liens,
encroachments and building conditions.
Due diligence is typically conducted by a number of different entities:
• An environmental professional conducts environmental due diligence (sometimes referred to as
a Phase I environmental site assessment) to identify potential releases of hazardous substances
and petroleum products at the property, as well as other environmental conditions, including
mold, radon, and asbestos.
• Real estate professionals or attorneys may be engaged to conduct title searches, property value
assessments and other real estate-related issues.
• Engineers may be needed to evaluate buildings and other physical conditions potentially
affecting reuse of the property.
Due Diligence
Environmental due diligence is
conducted to evaluate the
environmental condition of the property
and to meet the requirements for all
appropriate inquiries (AAI).
Real estate due diligence is conducted
to identify attributes and characteristics
about a property that affect the ability to
transfer or reuse a property.
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3.1.1 Environmental Due Diligence
Environmental due diligence is conducted to gather specific information about the environmental
condition of a property. An environmental investigation is necessary to identify the presence or
potential presence of hazardous substances or petroleum in environmental media (e.g., soil,
groundwater, surface water, sediment) and in building materials. It should include:
The environmental due diligence process typically begins with a Phase I environment site assessment
(Phase I ESA). In many cases, the Phase I ESA also is conducted to meet the requirements for all
appropriate inquiries established under CERCLA and set out in EPA regulations. AAI regulations outline
specific pre-acquisition requirements for prospective property owners, including individuals and local
governments, to qualify for protection from environmental
liability under CERCLA as an innocent landowner, bona fide
prospective purchaser (see Section 4.4.1.1.2 for discussion
of bona fide prospective purchaser), or a contiguous
property owner. Even if a local government is not
anticipating liability under CERCLA, conducting
environmental due diligence in accordance with AAI
requirements can offer protection from other potential
All Appropriate
inquiries
d Use Controls
imental
latory
itus
Phase II
Environmental
Assessment
Documentation of the storage
and handling of hazardous
substances and petroleum
products and other activities
on the property that are or
may be the source of releases
of hazardous substances and
petroleum products to
environmental media.
Environmental investigation
and remedial actions
previously conducted or
planned on the property, and
The regulatory status (e.g., per
applicable regulatory programs
such as the Resource
Conservation Recovery Act
[RCRA], underground storage tanks [USTs] programs, state voluntary cleanup programs; local,
state or federal oversight agency; administrative or other consent orders impacting the
property; permits) of the property and activities on the property.
Parties responsible for investigating and conducting remedial action on the property
(responsible parties).
Restrictions resulting from the environmental condition and environmental restrictions
associated with any remedial action conducted on the property (institutional controls and
engineering controls).
Make sure to verify that the Phase I ESA
conducted for a property meets the
requirements for AAI regulations. AAI
need to be performed prior to taking title
to the property if an entity wants to take
advantage of CERCLA liability
protections.
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liabilities and often informs risk management decisions (discussed in greater detail in Appendix A). For
example, a prospective purchaser can qualify as a bona fide prospective purchaser (which includes all
appropriate inquiries) because a third party can sue under CERCLA to recover costs even if EPA has not
identified the property as a Superfund site. For this reason, make sure to verify that the Phase I ESA
conducted for a property meets the requirements for AAI established in CERCLA and set out in EPA
regulations. The all appropriate inquiries regulations recognize a Phase I ESA conducted in accordance
with ASTM Phase I ESA standards as compliant with AAI requirements (see Section 3.1.1.2).
A Phase I ESA, and the generally accepted business practice for doing so, is most often conducted in
accordance with the ASTM E1527-13 Standard Practice for Environmental Site Assessments: Phase I
Environmental Site Assessment Process. Based on the results of a Phase I ESA, additional investigation
commonly referred to as a Phase II ESA may be necessary to better understand the type and extent of
any potential releases to environmental media at the property. The following sections describe Phase I
and II ESAs and all appropriate inquiries, and provide additional information on conducting
environmental due diligence. Section 3.6 discusses how the information collected during the due
diligence process is used to identify redevelopment obstacles and how such information may aid in the
evaluation of the local government's involvement in the redevelopment of the property.
3.1.1.1 Phase / En vironmental Site Assessment
What recognized environmental conditions are present on the property?
Generally, the Phase I ESA does not involve the collection of samples for chemical analysis (although
some states may require such at this stage); rather, the Phase I ESA involves a visual inspection of the
property, review of historical information, interviews with individuals familiar with the property, and
review of regulatory files. The purpose of the Phase I ESA is to identify recognized environmental
conditions (or conditions indicative of releases or threatened releases of hazardous substances) on a
property. When conducting a Phase I ESA (or all appropriate inquiries), information also may be
collected to identify and characterize public health issues (e.g., trash, rodents) and safety issues (e.g.,
broken windows, damaged fencing) that may require action on the part of the current property owner
or local government. A Phase I ESA (and all appropriate inquiries) must be overseen or supervised by an
environmental professional. (See Section 3.1.1.2 and EPA's Brownfields All Appropriate Inquiries
webpage for additional information on a Phase I ESA and all appropriate inquiries.)
If a local government is evaluating a property for which a Phase I ESA was previously conducted, the
Phase I ESA should be reviewed and updated to ensure that the most current information on the
environmental condition of the property is included in the Phase I ESA report. Further, if an existing
Phase I ESA is to be used to meet all appropriate inquiries requirements, the previous Phase I ESA must
be reviewed and updated if the Phase I ESA is older than one year at the time of property acquisition
(see Section 3.1.1.2). In addition, certain aspects of a Phase I ESA (i.e., interviews, lien searches, on-site
inspection, and records review) must be updated if the tasks were conducted more than 180 days prior
to the acquisition date of the property.
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The Phase I ESA also may include visual inspections or records reviews for other potential environmental
issues that may go beyond the general scope of the ASTM Phase I ESA standards. These additional
potential issues, such as mold, radon, and
asbestos, may be important to the future use,
disposition or redevelopment of the property.
An evaluation of the presence of any of the
conditions listed below should be considered
as part of a Phase I ESA when evaluating the
reuse of a property:
• Asbestos-containing building
materials, polychlorinated biphenyl
(PCB)-containing transformers or
ballasts, lead-based paint.
• Potable drinking water (where
supplied by wells).
• Mold.
• Radon.
• Wetlands.
• Threatened and endangered species.
• Earthquake hazard.
• Vapor intrusion (i.e., volatile
contaminants entering the air space of a building from underlying soils or groundwater).
3.1.1.2 All Appropriate Inquiries
Does the Phase I ESA meet all appropriate inquiries requirements?
Meeting the requirements for AAI is necessary to potentially qualify for certain CERCLA liability
protections. EPA published a final rule establishing standards and practices for conducting all
appropriate inquiries that became effective on November 1, 2006. The AAI final rule, as amended,
recognizes ASTM E1527-13 and ASTM E2247-16 - Standard Practice for Environmental Site Assessments:
Phase I Environmental Site Assessment Process for Forestland and Rural Property as compliant with the
requirements for all appropriate inquiries.
AAI must be overseen or supervised by an environmental professional. Under the AAI rule, an
environmental professional is defined as someone who possesses sufficient specific education, training
and experience necessary to exercise professional judgment to develop opinions and conclusions
regarding conditions indicative of releases or threatened releases of hazardous substances on, at, in, or
to a property, sufficient to meet the objectives and performance factors of the AAI rule. (Note: The
ASTM E1527-13 and E2247-16 standards reference the definition contained in EPA's AAI final rule [40
CFR§ 312.10]).
All appropriate inquiries must be conducted or updated within one year before the date on which the
property is acquired (i.e., the date on which the new owner takes title to the property). Certain aspects
of the AAI investigation must be conducted within 180 days prior to the date the property is acquired.
What is a Recognized Environmental
Condition?
A recognized environmental condition (REC) as defined in
ASTM 1527-13 means the presence or likely presence of
any hazardous substances or petroleum products on a
property under conditions that indicate an existing release,
a past release, or a material threat of a release of any
hazardous substances or petroleum products into
structures on the property or into the ground, groundwater,
or surface water of the property. The term includes
hazardous substances or petroleum products under
conditions in compliance with laws (e.g., permitted
discharges).
Under this definition, a recognized environmental condition
could relate not only to spills, releases or other
unauthorized disposal of hazardous substances or
petroleum products, but also to permitted or otherwise
authorized discharges or disposal activities.
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These aspects include interviews; recorded environmental lien searches; federal, tribal, state and local
government record reviews; visual inspections; and the environmental professional declarations. They
must be updated prior to the property acquisition.
Required activities and other considerations in AAI include, but are not limited to:
• Definition of an environmental professional - Qualifications for and certification by
environmental professionals performing due diligence work.
• Interviews - Interviews with past and present owners, operators and occupants of the facility to
gather information about hazardous substances on the property.
• Historical sources of information - Previous activities and land uses since first development
available from reviews of chain of title documents, aerial photographs, building department
records, land use records, and other sources.
• Search for environmental cleanup liens - Searches for recorded environmental cleanup liens
filed under federal, state or local law.
• Review of government records - Review of federal, state and local government records (e.g.,
waste disposal records, underground storage tank records, and hazardous waste handling,
generation, treatment, disposal, and spill records).
• Visual inspections - Identification of likely environmental conditions associated with the use,
handling, storage or disposal of hazardous substances or petroleum products on the land (e.g.,
surface staining, distressed vegetation, trash, disposal areas, and aboveground or underground
tanks) or structures (e.g., hazardous substances or petroleum stored or used within buildings or
other structures).
• Observations of adjoining properties - A walkthrough of the area surrounding the property to
observe activities, conditions and land use associated with adjoining properties.
• Specialized knowledge or experience - Taking into account the prospective purchaser's
knowledge about the property and adjoining properties.
• Purchase price - Consideration of the relationship of the purchase price to the value of the
property if the property was not contaminated.
• Knowledge of property - Commonly known or reasonably identified information about the
property.
• Potential for hazardous substances - The degree of obviousness of the presence of hazardous
substances and the ability to detect hazardous substances at the property.
An important part of the AAI investigation is the visual inspection of the property. This requires access to
the property and its buildings and other structures. In cases where access cannot be obtained after all
good faith efforts are employed, the AAI rule provides for a limited exemption to the visual inspection
requirement that requires the environmental professional to:
• visually inspect the property by another method (e.g., aerial imagery) or from an alternate
vantage point (e.g., walking the property line);
• document efforts taken to gain access to the property;
• document the use of other sources of information to determine the existence of potential
environmental contamination; and
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• express an opinion about the significance of the failure to conduct a visual inspection or the
ability of the environmental professional to identify conditions indicative of releases or
threatened releases.
References:
ASTM: ASTM E1527-13 Standard Practice for Environmental Site Assessments: Phase I Environmental
Site Assessment Process
ASTM: ASTM E2247-16 Standard Practice for Environmental Site Assessments: Phase I Environmental
Site Assessment Process for Forestland or Rural Property
EPA: Brownfields All Appropriate Inquiries
EPA: EPA Brownfields Grants. CERCLA Liability, and All Appropriate Inquiries
EPA: All Appropriate Inquiries: Reporting Requirements Checklist for Assessment Grant Recipients
3.1.1.3 Phase II En vironmental Site Assessment
Is additional assessment needed to investigate recognized environmental conditions?
The Phase II ESA is an investigation that requires collection and analysis of environmental and other
media samples (e.g., soil, groundwater, electrical equipment, insulation). The Phase II ESA will generally
require that an access agreement is in place with the current property owner (if one exists) or other
action to gain the access needed to collect the samples.
The Phase II ESA is intended to determine if a release of a hazardous substance or petroleum product is
present in an area where an environmental condition was identified. The focus of the Phase II ESA is to
investigate recognized environmental conditions to determine the type and extent of any release to
environmental media that has occurred. The ASTM E1903-19 Standard Practice for Environmental Site
Assessments: Phase II Environmental Site Assessment Process provides guidelines for conducting a
Phase II ESA. The scope of a Phase II ESA will be specific to the property and to the environmental
condition subject to further consideration.
The scope for a Phase II ESA should be developed in consultation with an environmental professional or
other individual qualified in environmental investigations and should include:
• Identification of the environmental or other media to be sampled.
• Number of samples to be collected.
• Analytical method to be used or specific hazardous substances and petroleum products to be
evaluated.
• Target levels (e.g., state or federal standards, action levels or screening levels) above which
potential further action is warranted.
The Phase II ESA may need to be conducted in several phases based on the extent of the identified
environmental conditions and financial considerations of the local government or responsible entity. For
example, where there is a significant amount of additional investigation to be conducted, the local
government may want to prioritize specific actions for the Phase II ESA to first address the
environmental conditions that will have the most impact on project objectives. The results of the initial
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Phase II ESA will then help in determining what additional investigation may be needed. Subsequent
investigations may be needed to resolve other issues, such as determining the extent and severity of a
release.
Reference:
ASTM: ASTM E1903-19 Standard Practice for Environmental Site Assessments: Phase II Environmental
Site Assessment Process
3.1.1.4 En vironmental Regula tory Sta tus
What federal and state cleanup statutes are likely to apply to the property?
Determining the regulatory status of the property is an important objective of environmental due
diligence. Issues of environmental liability, regulatory process and other considerations relevant to
redevelopment efforts are all dependent on which federal, state and local environmental laws could
apply based on the environmental conditions, operating practices and other factors. Proper
coordination with the regulatory programs having jurisdiction over the property's cleanup also depends
on having this information. Relevant regulatory programs are discussed in more detail in Section 4.4.1
Federal statutes that are commonly associated with the investigation and cleanup of a brownfield
property are:
• Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA),
commonly known as Superfund.
• Resource Conservation and Recovery Act (RCRA) (Subtitles C, D and I), Resource Conservation
and Recovery Act (RCRA) Overview.
• Toxic Substance Control Act (TSCA), Policy and Guidance for Polvchlorinated Biphenvl (PCBs)
• Clean Air Act (CAA), Overview of the Asbestos National Emission Standards for Hazardous Air
Pollutants (NESHAP).
There are a number of other federal environmental statutes that also may be relevant to a
redevelopment project. For example, the management of runoff from the property could be regulated
by the Clean Water Act, and any impacts on source water for public water supplies by the Safe Drinking
Water Act. Identifying the applicability of these and other statutes also should be a part of the
environmental due diligence process.
24
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It is important to identify the regulatory agency that is responsible for overseeing the cleanup of the
property. The cleanup of brownfields generally is overseen by state voluntary cleanup programs (VCPs),
Roles & Responsibilities for Brownfields Activities
Awards Grants, Oilers Technical Assistance, and Provides
Toots and Guidance
on bra»rrMds and tand rewtateafljon lepra rtcfuing SfiHiffiOi
cteariup, toll* and i««s planning
Sets Cleanup Standards. Develops Environmental Pohcy,
a nd Oversees arid Approves Site Cleanup and Reuse
Decisions
Brownfields
Grantee
to condud acMies sud» as site assessner-J and dean neaton c#
browntefcte mverfemes. and devetepriwil o( site reuse fians
Uses EPA Grants. Technical Assistance, and Other Federal,
State and Local Funds
Other properties, such as Superfund sites or sites contaminated with PCBs, must be cleaned up in
accordance with federal (EPA) standards. In the case of properties regulated under some federal
statutes, such as RCRA, implementation and enforcement of the relevant cleanup program may be
delegated by EPA to the state. In such cases, EPA authorizes the state environmental agency to oversee
and enforce corrective action or cleanup requirements, in lieu of the federal program. State
environmental agencies should be consulted regarding the applicability of state or federal cleanup
requirements to any particular property. This is particularly the case for underground storage tanks
(USTs) regulated under state UST programs and many brownfield sites that may be eligible for cleanup
under state voluntary cleanup programs. Many of the state voluntary cleanup coordinators can facilitate
and coordinate compliance with overlapping federal and state requirements.
The federal Brownfields Program is authorized under CERCLA to provide funding for the assessment and
cleanup of certain brownfield properties so that the properties can be restored to a beneficial reuse.
The program provides funds to assess and clean up brownfields and to enhance state and tribal
response programs.
3.1.1.5 Land Use Controls
Are there land use controls implemented or identified for the property?
Land use controls may consist of institutional controls or engineering controls used alone or in
combination to ensure protection of human health and the environment. Institutional controls are non-
engineered administrative or legal controls that minimize the potential human exposure to
contamination by restricting the activities or use of a property or the use of a resource such as
groundwater. Institutional controls are generally divided into four categories:
25
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What are Land Use
Controls?
• Proprietary controls (e.g., easement, real covenant,
statutory covenant).
• Government controls (e.g., zoning, building permit,
land use ordinance).
• Enforcement and permit tools (e.g., consent decree,
permit, order).
• Informational devices (e.g., deed notice, government
advisory, state registry).
Engineering controls are physical or engineered measures.
Engineering controls will vary from property to property,
depending on the contaminants found and the type of media
impacted. Common engineering controls include:
• Asphalt, concrete or clean fill caps to create a cover to
address issues such as surface water infiltration or
direct contact with contaminated soil.
• Engineered caps along with leachate collection
systems associated with closed impoundments and
landfills.
• Active or passive vapor mitigation systems used to
minimize potential migration of volatile vapors for
subsurface soil or groundwater to indoor air.
• Groundwater barriers or systems used to limit or prevent groundwater migration.
Other terms, such as activity and use limitations, are sometimes used to describe these types of
controls. Institutional controls and engineering controls must be maintained, monitored and evaluated
for as long as unacceptable risks are present at a property. Land use controls are an integral part of the
overall cleanup; failure to comply with land use controls can result in endangering human health or the
environment, and cause the party responsible for maintaining the land use controls to incur costs to
repair any resulting damage, face lawsuits from injured parties, or even jeopardize eligibility for liability
protections under CERCLA and other environmental statutes.
If land use controls already exist, it is important that the local government understands the obligations
they impose and how they might be viewed by future owners, developers and property users. In some
situations, EPA or the state may be willing to modify existing land use controls to facilitate the
appropriate reuse of the property providing the cleanup will not be compromised. Where land use
controls are being considered by the regulatory agencies but have not been finalized, there may be
opportunities for local governments to weigh in on the final form they will take. Vague, confusing or
unnecessarily restrictive or inflexible land use controls also can create significant obstacles to property
reuse.
Regardless of whether they own or lease the property, local governments often play a key role in
implementing, monitoring and enforcing certain land use controls, particularly those that they have the
legal authority to implement (e.g., zoning restrictions, building or excavation permits, well construction
permits). Local governments also can work proactively with developers, prospective buyers and tenants,
Land use controls may consist of
institutional controls or engineering
controls used alone or in combination to
ensure protection of human health and
the environment.
Institutional controls are non-engineered
administrative or legal controls that
minimize the potential human exposure
to contamination by restricting the
activities or use of a property or the use
of a resource such as groundwater.
Engineering controls are physical or
engineered measures such as fences,
caps or treatment systems designed to
limit direct contact with contaminated
areas or control migration of
contaminants through environmental
media.
26
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and other parties to ensure that land use control requirements are understood and properly integrated
into the planning and future reuse of the property.
References:
EPA: Superfund: Institutional Controls
EPA: Institutional Controls: A Guide to Planning. Implementing. Maintaining, and Enforcing Institutional
Controls at Contaminated Sites
EPA: Engineering Controls on Brownfields Information Guide: How They Work with Institutional
Controls: the Most Common Types Used: and an Introduction to Costs
Documentation - Summarize the environmental status of the property (see the Environmental tab in
the Revitalization-Readv Workbook)).
• Property value.
• Ownership.
• Parcel boundaries.
• Encumbrances on the property.
• Property features.
• Development codes, policies, and
relevant plans and planning studies.
• Previous development plans.
An American Land Title Association (ALTA) survey can be a helpful tool to support real estate due
diligence. The ALTA survey is a detailed land parcel map showing boundaries, existing improvements of
the property, utilities, encumbrances such as easements and other features such as the location of flood
zones.
3.1.2.1 Property Value
What is the market value of the property?
The local government needs to have a sense of the current market value of the property that reflects its
physical and environmental condition. This evaluation should consider current property tax
assessments, as well as historical sale values in the area. If there are appraisals, especially recent ones,
Property
Value
Previous
Development
Plans A
Ownership
Development
Codes, I
Policies, and
Relevant Plan£
and Planning
Studies
' Parcel
Boundaries
Encumbrance
s on the
property
Property
features
3.1.2 Real Estate Due Diligence
Real estate due diligence is conducted to understand the administrative requirements and physical
conditions that might affect the reuse of a
property and determine whether or not the
vision for a property is achievable. The reuse
assessment requires information regarding
the property attributes and conditions and
other information relevant to its suitability for
a potential reuse, including:
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these are useful in determining the appropriate current and future values of the property given
potential reuse scenarios.
The value of the property may need
to be adjusted to include additional
costs associated with the
environmental condition of the
property and cleanup requirements
that may transfer with the
property. Knowledge of these costs
can be factored into the purchase
price if the local government
intends to acquire the property or
can enhance the property's
marketability if the goal is to Rea| Estate/Environmenta| Value Pyramid
facilitate redevelopment by a third
party. Properties where the cost of cleanup exceeds the market value (i.e., upside down properties)
typically will require financial assistance or other incentives from a local government for the property to
be of interest to the real estate community.
If a local government intends to acquire the property by exercising eminent domain, it should determine
if state law allows adjustment of the purchase price to reflect cleanup costs. Otherwise, the local
government may be forced to pay considerably more for the property than its actual discounted value. A
May 2008 report by the Northeast-Midwest Institute provides a summary of how different states
address this issue (see Mothballed Sites and Local Government Acquisition: How State Liability
Protections. Eminent Domain Reforms, and Cost Recovery Authority Can Spur Local Government Action
to Acquire and Redevelop Difficult Brownfields Sites)
3.1.2.2 Ownership
What is the ownership status?
A local government's involvement will depend not only on who holds title to the property, but also on
the owner's intentions regarding the ownership or disposition of the property. In addition, the local
government should assess the owner's willingness (or unwillingness) to work cooperatively with the
local government. In many cases, abandoned, mothballed or underutilized properties may present a
liability for the property owner. Such situations may create opportunities for local governments to
discuss a collaborative arrangement that will provide an incentive for the current owner to sell or
otherwise dispose of the property. (See Section 4.8.1 for a discussion of some risk management
considerations associated with the ownership status.) A working relationship with the owner can
facilitate property access for conducting environmental assessments and can potentially avoid
adversarial actions.
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3.1.2.3 Parcel Boundaries
What tax parcels make up the development area?
A property or area being considered for redevelopment may consist of multiple tax parcels. Identify the
parcel boundaries, assessor or parcel identification number, parcel address and other information that
may be important to the transfer or reuse of the property. In some cases, the potential reuse may
involve multiple properties. For purpose of the evaluation, a property is defined as one or more
contiguous parcels of land. It is important to
identify each parcel making up a property so
that subsequent evaluation includes information
for each parcel. Identify any discrepancies
between property surveys and assessor
parcel/tax records.
Information on tax parcels can generally be
obtained from the city or county auditor or
assessor. These agencies typically have a web-
based real estate property search or mapping
application that can provide the parcel,
ownership and tax information.
3.1.2.4 Encumbrances on the Property
Are there encumbrances on the property that will affect potential reuse?
Encumbrances can include liens, easements, deed restrictions and other limitations that can restrict the
ability to transfer title to the property or impact the ability to reuse a property for a desired purpose.
Encumbrances on the property can be detected through a title search and review of a land survey such
as an ALTA survey.
3.1.2.4.1 Liens
Although title issues are not unique to brownfield properties, it is not uncommon to find that a
brownfield property is abandoned or that owners declared bankruptcy or dissolved corporations that
held title to the property. The prospect of complicated and time-consuming efforts to resolve these
ownership issues can be a deal-breaker for many potential developers that might otherwise be
interested in the property. Through foreclosure and other means, local governments may be able to
obtain clear title and remove this potential impediment.
The types of liens that might encumber the property include those associated with mortgage, contractor
or commercial services; federal, state and local tax delinquencies; and federal and state environmental
response actions (i.e., environmental cleanup liens). If EPA or the state expended resources at a
property as the result of environmental investigations, cleanup or other response actions, liens often are
recorded on the property to establish that the state or EPA is due compensation, and if the lien is
perfected, the relevant agency sues to recover these costs.
For example, CERCLA provides for two types of liens on properties where EPA conducted remedial or
removal response actions:
Locating Property Records
Parcel information can be obtained online using mapping
or database search tools or by contacting the county
assessor's office.
The parcel information typically includes ownership,
parcel identifiers, acreage, tax status, and other relevant
information.
Large properties may consist of multiple parcels
generally owned by the same individual or entity.
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• The first type of lien is for all costs for which EPA expended resources and for which the
property owner is liable.
• The second type of lien, "the windfall lien/' is on a property purchased by a non-liable bona
fide prospective purchaser, where EPA has unrecovered response costs at the property, and
EPA's response action increases the fair market value of the property.
Depending on the circumstances surrounding the acquisition transaction, local governments or other
entities acquiring the property may be subject to these liens.
Because federal and state governments may not have necessarily perfected liens on certain properties,
it may be important to contact EPA and state regulatory agencies to inquire about the potential for
these liens and about a process for resolving outstanding liens.
3.1.2.4.2 Easements
An easement is an agreement recorded with the deed for the property between the property owner and
a third party that provides a legal right for the third party to use or enter a property. There can be a
number of different easements associated with a property. The potential impacts on a property reuse
will depend on the location of easements on the property and the type of easement. Easements can
include:
• Utility easements that provide for the installation and maintenance of underground utilities
such as sewer or water lines or aboveground utilities such as electricity, telecommunications
and cable. They also can include easements for electric substations, transformers, pump stations
and other surface structures.
• Private use easements that include the installation, maintenance and use of a driveway to an
adjacent property; installation and maintenance of a private sewer line or other utility
connection to an adjacent property; or installation and maintenance of pipelines such as a
petroleum pipeline.
• Access easements that provide access on and across a property to access easement areas.
• Conservation easements that permanently limit uses (e.g., limits on the amount and type of
development) of the property or portions of the property in order to preserve natural features
or agricultural potential.
The terms of easement documents should be reviewed to identify the specific impacts on the property
and the use of the property.
3.1.2.4.3 Restrictive Covenants
A restrictive covenant can restrict the use of a property. It is typically listed in the deed and will apply to
current and future owners of the property. Restrictive covenants can include environmental land use
controls (see Section 3.1.1.5) or other land use controls placed on a property by previous owners. The
terms of a restrictive covenant should be reviewed to identify the specific impacts on the property and
the use of the property.
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3.1.2.5 Property Features
What features of the property affect the potential reuse of the property?
An important part of real estate due diligence with respect to potential reuse of a property is identifying
and understanding the features of a property that may affect the potential reuse of the property,
including the total cost of any reuse. Physical features of a property can drive the market demand for
specific types of reuse and impact the market value of the property. The following features of a property
should be evaluated:
3.1.2.5.1 Improvements
Buildings or structures, including any remaining foundations, on the property should be evaluated to
determine if they are structurally sound and usable or of value to a potential developer. These could
include former office buildings, industrial buildings used for manufacturing, docks on navigable
waterways, water towers, electrical substations and other improvements that could be incorporated
into a potential reuse.
3.1.2.5.2 Access
Access to the property will be an important consideration for many reuses. Access to the property by
vehicle, public transportation and pedestrians should be considered. The evaluation should include a
description of:
• the roads (e.g., multi-lane, primary road, secondary road) that provide access to the site for
workers, customers or visitors, and suppliers, including the frontage road or primary access road
for the property and the location, distance and route to major or interstate highways;
• the availability of commercial rail and water access, and information related to location,
capacity and condition of the facility;
• public transportation (e.g., bus and light rail) that may be available to the property, including
locations of stops with respect to the property; and
• the potential pedestrian access to the property, including sidewalks and road crossings.
3.1.2.5.3 Utilities
The evaluation should include the identification of utilities present on the property or accessible to the
property. Information for each utility should include, at a minimum, the availability to the property,
supplier and the capacity. Utilities include natural gas, electric, sanitary sewer, storm sewer, potable
water, telecommunications and fiberoptic/high-speed internet.
3.1.2.5.4 Topography
The topography of a property affects the land area available for redevelopment, and influences runoff
and flooding hazards, as well as land available for development. Significant increases or decreases in
surface elevation should be identified, as well as significant slopes (e.g., greater than 15 percent).
3.1.2.5.5 Historical or Archaeologically Sensitive Structures or Areas
If the property has historical significance or if during due diligence a potential historical or archaeological
feature is identified, the historic or archaeological feature should be identified and evaluated to
determine its impact on the reuse of the property. This may require engaging the services of a qualified
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historian or archaeologist to review background information, seek information from knowledgeable
parties, and conduct additional studies as necessary.
3.1.2.5.6 Property Shape
Site reuse configuration is determined in part by property shape. Property that is exceptionally narrow,
shallow, or unusually-shaped may affect its reuse.
3.1.2.5.7 Flood Plain
Properties in areas adjacent to or in low lying areas near a river or stream may be prone to flooding
during significant rain events. These properties may be within 100-year or 500-year flood zone areas.
Properties should be evaluated to determine if some or all of the property is within a 100- or 500-year
flood zone. It also is important to consider the potential impacts of climate change within the context of
the property and determine how those changes may affect the ability to maintain both a safe remedy
and safe reuse of the site. State and local building codes should be reviewed for regulatory
requirements related to development in a flood plain. Federal, tribal, state, and local regulations could
affect the ability to construct a structure or the design of the structure.
Reference:
FEMA: FEMA Flood Map Service Center
3.1.2.5.8 Wetlands
Development in wetlands areas may be limited by conservation easements and state or federal
regulations. The property should be evaluated for the presence of state or federal designated wetlands.
Wetlands are defined as areas where water covers the soil or is present either at or near the surface of
the soil all year or for varying periods of time during the year, including during the growing season (see
EPA: What Is a Wetland?). As a result, in some cases, areas of a property that may not be designated as
a wetland but meet the above definition may need to be evaluated to determine if the area may be
classified as a wetland. Identification of wetlands should be considered as part of the scope of a Phase I
ESA.
Most activities that directly affect wetlands are regulated. State (and in some cases federal) regulations
should be evaluated for limitations or requirements that address activities and development in the area
of wetlands, including requirements for buffer areas around a wetland. In general, activities that would
disturb wetlands would require a permit from one or more state or federal agencies.
f \
Documentation - Summarize the property characteristics (refer to Property Characteristics tab in the
Revitalization-Readv Workbook).
S J
References:
EPA: Wetlands Protection and Restoration
EPA: Wetlands Regulations
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3.1.2.5.9 Endangered Species or Protected Habitats
The property should be evaluated to determine if there are endangered species or protected habitats on
the property. Areas of a property where endangered species or protected habitats have been identified
may need to be excluded from development activities. Identification of endangered species or protected
habitats should be considered as part of the scope of a Phase I ESA.
3.1.2.6 Development Codes, Policies, and Relevant Plans and Planning Studies
What is the current zoning of the property and its relationship to local master plans and other
planning studies?
Zoning and other local ordinances, building and other development-related codes, and local plans and
studies play an important role in the potential uses of a property, as well as the establishment of
cleanup goals under federal and state cleanup regulations. Exposure models used by EPA and state
governments to assess human health risks from contamination are based on assumptions about
reasonably anticipated future land uses. From an environmental condition perspective, EPA and the
state will typically consider zoning and master plans along with other relevant factors in making future
land use assumptions, particularly in conjunction with models used to establish risk-based cleanup
standards.
Development codes and policies, including zoning ordinances and maps, development regulations and
processes, design guidelines, form-based code and historic areas, should be reviewed, and applicable
codes and polices identified. Plans and studies, including comprehensive plans, sub-area/special district
plans, parks and trails plans, streetscape design standards, current traffic studies, and other plans and
studies, should be reviewed, and relevant plans and planning studies identified.
3.1.2.7 Previous Development Plans
Are there previous development plans for the property?
Previous plans for reuse and redevelopment of the property, even if they were never implemented, can
provide useful information on prior or existing property conditions, such as utility infrastructure,
structural integrity of buildings, wetland delineations, and physical obstacles to construction. In
addition, they may suggest potential redevelopment opportunities that would have undergone some
level of financial and market analyses at the time. Although this information should not be used as the
sole source of historical information on a property (especially if it is somewhat outdated), it could be
useful in providing preliminary information (especially if property access is not available) and help focus
future information gathering efforts.
f
Documentation - Summarize the land use characteristics (refer to Land Use Characteristics tab in the
Revitalization-Readv Workbook).
3.2 Environmental Condition Impact Analysis
What is the status of cleanup on the property?
The environmental condition impact analysis considers how the environmental condition and activities
to address the environmental condition could affect, or be affected by, redevelopment. It also is used to
33
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identify significant data gaps that may result in potential deal-breakers that could eliminate the project
from further consideration by potential developers if not addressed, or drive uncertainties that
introduce unacceptable risk into a transaction.
The analysis of the environmental condition is driven, in a large part, by the status of the cleanup
activities to address the environmental condition. Without a completed environmental investigation, it
will be harder to determine reuse alternatives, develop a vision for the property, engage a developer
and transfer the property (see Section 3.2.1). At a minimum, a completed environmental investigation
provides an understanding of areas of the property that are affected by hazardous substances or
petroleum and in need of remedial action before reuse of the property can be accomplished.
In cases where the intent is to transfer the property to a third party for development, having a remedial
action work plan (see Section 3.2.2) in place that defines the actions needed, restrictions that may be
placed on the property, and long-term operation, maintenance, or monitoring required, is essential to
transfer of the property. The goal is to create synergy by integrating the redevelopment and cleanup to
optimize the use of the property and to minimize costs and unacceptable project risks.
3.2.1 Environmental Investigation
Environmental investigations typically go beyond the scope of traditional Phase I and Phase II ESAs and
are intended to:
• Characterize the nature and distribution of hazardous substances and petroleum products in
environmental media.
• Evaluate the potential fate and transport of hazardous substances and petroleum products in
environmental media.
• Assess risks to human health and the environment, and determine the need for cleanup action.
• Develop a conceptual site model to identify potential cleanup actions.
Environmental investigations are generally conducted to comply with specific federal or state
environmental statutes and associated regulatory cleanup programs (e.g., RCRA, CERCLA, USTs, state
voluntary cleanup programs). As a result, the scope and extent of the environmental investigation may
be driven by the requirements of those statutes and programs.
Environmental investigations typically involve the collection of soil, sediment, groundwater and surface
water samples through, for example, the installation of soil borings and monitoring wells. The data
collected are used to support the environmental risk assessment and the selection and design of
cleanup actions. Depending on the size of the property and potential distribution of hazardous
substances and petroleum products in environmental media, the environmental investigation may be
conducted in multiple phases.
If the intended reuse of the property is known, the environmental investigation can often be tailored to
reflect those uses. This can not only streamline the environmental investigation, thereby reducing costs
and minimizing delays, but also help ensure that the cleanup will be protective for those intended uses.
3.2.2 Remedial Action
Remedial, or cleanup, actions generally are designed to reduce or eliminate potential exposures to
hazardous substances or petroleum products in environmental media. Remedial actions can range from
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relatively aggressive approaches such as soil removal and groundwater extraction and treatment to less
aggressive approaches such as monitored natural attenuation (where lines of evidence show that
protective cleanup levels will be achieved over a reasonable time frame), passive vapor barriers, and
institutional controls (e.g., environmental covenants, land use restrictions) that complement other
remedial actions involving engineering controls. Often, a combination of remedial action approaches is
used. Remedial actions are generally conducted to comply with specific federal or state regulatory
cleanup statutes and programs (e.g., RCRA, CERCLA, USTs, state voluntary cleanup programs).
In many cases, elements of the remedial
action can be integrated into the reuse
plan, speeding up the remedial action
and saving costs. For example, building
slabs and parking areas can effectively
cap contaminants if their design is
coordinated with the remedial action
requirements.
Local governments should carefully consider how property
reuse plans will affect remedial actions, as well as how
remedial actions will affect property reuse plans. Reuse
plans should be compatible with remedial actions.
Necessary remedial actions will sometimes introduce
physical obstacles (e.g., groundwater extraction wells,
treatment structures) and other constraints that limit the
use of all or portions of the property while the cleanup
actions are underway or in place.
Discussing reuse plans with the party responsible for carrying out the remedial action can help identify
potential conflicts between the redevelopment and remedial actions. Discussions should be focused on
avoiding or mitigating conflicts without compromising the ability of the remedial action to protect
human health and the environment or introducing unjustifiable costs. In many cases, elements of the
remedial action can be integrated into the reuse plan, speeding up the remedial action and saving costs.
For example, building slabs and parking areas can effectively cap contaminants if their design is
coordinated with the remedial action requirements.
f
Documentation - Summarize the environmental status (refer to Environmental tab in the
Revitalization-Readv Workbook).
3.3 Land Use Assessment
The current land use may indicate quite a bit about the property's redevelopment potential. The
evaluation of land use for the property should consider surrounding land use, zoning, local or regional
land use plans, land use controls, and physical features, as well as the environmental condition,
potential remedial action and related restrictions.
For example, land use controls may specifically exclude residential-type development on a property. In
some cases, states may not allow certain waste to be placed in on-site landfills or capped with
protective covers if they are located within flood plains. This may result in the waste being moved to
other on-site locations, potentially occupying land intended for redevelopment purposes, or being sent
at greater expense to an off-site facility.
Wetlands and other water bodies can introduce ecological receptors that can influence cleanup. Even
existing roads and access routes that may be suitable for the planned redevelopment may not be
adequate for hauling large volumes of contaminated soil off-site or bringing clean fill onto the property.
All of these can drive up redevelopment costs or create significant obstacles to property reuse.
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Reference:
EPA: Plan for Brownfields Redevelopment Success: Land Use Assessment
3.4 Infrastructure Assessment
The infrastructure assessment reviews the infrastructure available to the property to develop an
understanding of the condition, capacity and location of the infrastructure, and to identify needs (e.g.,
enhancement, upgrades or expansion) to support reuse. The infrastructure assessment should look at
both public and private infrastructure systems that may be available or needed to support a potential
reuse.
3.4.1 Utilities
The availability and capacity of utilities can be an important consideration in the location of many
commercial and industrial activities. Access to reliable high-speed internet, water, natural gas and
electricity can be significant attractions to commercial and industrial users. Availability of utilities is
important not only for commercial and industrial users, but also for all economic stability in an area and
the overall real estate market forecasts for a location.
3.4.2 Roads
Current transportation patterns and proposed changes to those patterns are critical components of an
infrastructure assessment. Traffic patterns determine the travel paths for the population and thus the
areas that will receive the highest concentration of potential client activity. Traffic patterns are
especially important for tenants whose business requires a high amount of foot traffic and visibility. A
location along a major roadway can represent a much higher demand for commercial and light industrial
uses. Proximity to interstate highways and major truck routes or access to rail or water for receiving or
shipping of materials can represent a much higher demand for industrial uses such as manufacturing or
warehousing. Traffic patterns also could be a key source of air pollution for overburdened communities.
Consideration should also be given to the potential impacts on air quality in the area and potential
opportunities to mitigate air pollution from traffic.
3.4.3 Other Transportation
The location, capacity, condition and connectivity of rail can represent a much higher demand for
industrial users that need rail service to receive or ship materials. Similarly, docking, loading/unloading
facilities, channel and dock area water depth, and location of roads and rail can be important to certain
industrial user. Mass transit (e.g., bus service, light rail) may be important to residential development or
to employee or customer access to businesses.
\
Documentation - Summarize the land use characteristics (refer to Land Use Characteristics tab in the
Revitalization-Readv Workbook).
Reference:
EPA: Plan for Brownfields Redevelopment Success: Infrastructure Evaluation
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3.5 Market Study
A market study is conducted to evaluate the economic viability of potential redevelopment options. It is
an analysis of socioeconomic, industry sector and market information.
Socioeconomic information includes information about the area population, unemployment, median
household income, poverty, education and median home value/rent. Industry sector information
includes common markets, technologies and worker skills. Market information includes information
about type of market (e.g., industrial; office/commercial; retail/restaurant/hotel), overall market
climate, building demand/vacancy, lease rates and building costs.
Understanding the market will provide insights into the potential reuse for a property, as well as the
land use, infrastructure and property features needed to support potential reuses. It also will help the
community determine if the current zoning is outdated relative to the current market.
Documentation - Summarize the market information (refer to Market Assessment tab in the
Revitalization-Readv Workbook).
Reference:
EPA: Plan for Brownfields Redevelopment Success: Market Study
3.6 Opportunities and Constraints Analysis
What are the obstacles that may impact the successful implementation of each potential reuse and
property disposition strategy?
Opportunities and constraints are attributes and characteristics of the property that positively or
negatively impact one or more possible uses of a property. They are associated with a particular reuse
strategy and the potential reuse envisioned for a property. It is important to have a comprehensive
understanding of the opportunities and constraints to potential reuse of the property in order to
effectively evaluate a particular reuse strategy.
The opportunities and constraints analysis involves an evaluation of the property attributes and
characteristics to develop strategies to incorporate the opportunities into the reuse strategy and
develop actions to address the constraints.
Opportunities and constraints analysis looks at the information gathered in the reuse assessment and
determines how redevelopment will be supported or constrained based on four key components:
• Site Characteristics Analysis: documents the property features and physical conditions identified
during the real estate due diligence that might affect the reuse of a property, such as landscape
(e.g., wetlands, floodplain, surface water, topography); buildings and structures; and deeded
rights (e.g., legal easements, restricted uses, water rights).
• Environmental Condition Impact Analysis: determines the impact of environmental conditions
on the property reuse.
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• Land Use Assessment: identifies land use options consistent with land characteristics and local
land use regulations.
• Infrastructure Assessment: identifies current conditions (e.g., utilities) that may be present
potential opportunities or constraints on future uses.
This evaluation process can be guided by considering the goals and vision for the property and the
information generated as part of the due diligence, land use assessment, infrastructure assessment and
market study.
Keep in mind that an opportunity for one land use could be a constraint for another. For example, the
presence of buildings on a property may be of value for an office use, but not a warehouse use.
3.6.1 Opportunities
Opportunities can include property features such as status on environmental condition (e.g., the site
received a no further action determination, has been cleaned to unrestricted use), infrastructure, usable
buildings and other improvements on the property, access (e.g., proximity to an interstate highway),
location, and property size and shape (e.g., large rectangular property).
• What are the opportunities that may positively impact the successful implementation of each
potential reuse and property disposition strategy?
• Is an opportunity unique to a particular land use? The value of each opportunity should be
identified. For example, rail access may be valuable to a manufacturer, but may not be of value
to a commercial user.
• Is there information missing that may be helpful in evaluating a potential opportunity? In many
cases, there may not be sufficient information generated during the due diligence process
(referred to as data gaps) to identify potential opportunities or quantify the potential value of an
opportunity. If a data gap has been identified, the required information should be obtained.
3.6.2 Constraints
Information obtained through the due diligence process enables your community to identify potential
redevelopment constraints for a property. These constraints can include those associated with the
environmental conditions, as well as those commonly encountered through traditional real estate due
diligence (e.g., title encumbrances, easements, inadequate infrastructure). Resolving these obstacles
and the project risks they present will be key to the implementation of a successful reuse strategy.
The constraints will often depend on the property disposition strategy being considered. Constraints
may, however, be common to more than one property disposition strategy. There are many
combinations of constraints that could apply to brownfield properties. Similarly, the range of actions
that a local government might take to resolve them will vary widely based on the particular
circumstances surrounding the property, the local government's comfort with taking risks, available
resources and other factors.
The process of identifying constraints is iterative. As due diligence proceeds and more information is
obtained, certain redevelopment constraints may be eliminated or revised, or new obstacles may be
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identified. As constraints are identified, they should be prioritized on the basis of their impact on the
project.
Some common redevelopment obstacles include environmental liability, sufficient
developable/buildable acreage, and necessary property improvements/infrastructure needs.
Assessing project constraints may include property features such as environmental conditions (e.g.,
extensive remedial action required), infrastructure, buildings, past improvements on the property that
are currently unusable and require asbestos removal and demolition, zoning, easements, land use
controls and access.
• What are the constraints that may negatively impact the successful implementation of each
potential reuse and property disposition strategy? Identify each constraint that may impact the
successful implementation of each potential reuse.
• What risk or liability is associated with each constraint?
• What information is still missing? If a data gap has been identified, it can be effectively
addressed by obtaining the required information. As additional information is made available,
constraints and related risk and liability should be revised accordingly.
Documentation - Summarize the constraints (refer to the Constraints tab in the Revitalization-Readv
Workbook).
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4 Reuse Plan
Revitalization Ready Reuse Implementation Strategy
Collect Information
a Reuse Assessment
Define Path Forward
Make it Happen
Reuse Implementation
Community Needs and Concerns
Reuse Plan
Reuse planning is a process that
utilizes the information generated
during the reuse assessment to build a
realistic plan for the potential reuse
options for the property. The process
typically looks at a range of desired
reuse scenarios. A public planning
process that provides for meaningful
community engagement will help
identify potential community needs
and concerns, and build public support
for the proposed project. The reuse planning process involves:
• Mapping and visualization of the property/parcel boundaries and property features and
encumbrances.
• Determining developable area of the property.
• Developing a reuse vision.
• Identifying project risks and liabilities.
• Evaluating market viability.
• Developing a financial analysis and evaluating project economics.
• Evaluating project feasibility.
• Identifying property disposition strategies.
References:
EPA: Brownfields Program
EPA: Community Engagement
EPA: Community Reuse Property Prioritization Tool
EPA: Considering Reasonably Anticipated Future Land Use and Reducing Barriers to Reuse at EPA-lead
Superfund Remedial Sites
EPA: Superfund Redevelopment Program
Focus WV Brownfields: Focus WV Brownfields Minai Grant Program Decision Enhancer Tool and Focus
WV Brownfields Mini Grant Program Decision Enhancer Tool Handbook
4.1 Mapping and Visualization
The first step in the reuse planning process is to clearly define the property and the area surrounding
the property. This is an important component of the reuse visioning and planning process that will
require technical expertise in the use of computer-aided design (CAD), geographic information systems
(GIS) or other mapping applications to complete.
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Mapping and visualization are accomplished by developing a series of base maps that show the property
boundaries and the surrounding area. Using maps to show the property and results of the reuse
assessment is important during the visioning process. The mapping should include information
generated during the reuse assessment such as:
• Aerial photography for the property and the area surrounding the property.
• Property boundary, including tax parcel boundaries.
• Boundary of the study area or surrounding area significant to the property reuse.
• Roads in the surrounding area, including location of interstate highway access.
• Rail accessible to the property.
• Surface water features (e.g., river, stream, lakes) in the area of the property.
• Topography (contours) identifying significant slopes or depressions.
• Flood/flood plain (100-year and 500-year).
• Wetlands and endangered species or protected habitats.
• Significant features related to the environmental condition that would impact development,
such as closed impoundments or landfills, location of existing or planned engineering controls
such as capped areas, location of existing or planned remedial action systems, monitoring or
recovery wells.
• Current zoning for the property and
surrounding area.
• Current land use.
• Utilities available to the property.
• Easements on the property.
• Existing buildings and remaining foundations.
• Historical or archaeologically sensitive
structures or areas (National Register of Historic
Places or local designation).
4.2 Developable Area
Using the base mapping, the next step in the planning process is to determine the area of the property
that can be developed. The developable area is the area that can be used for buildings and other
structures or for parking and other activities not requiring a structure.
Total developable acres are the result of the total acres of the property minus acres associated with
restricted property features that cannot be disturbed or built on:
Total Developable Acres = Total Acres — Restricted Acres
Restricted features can include wetlands, areas containing endangered species and protected habitats,
closed impoundments, areas with significant slopes, archaeologically sensitive areas, deed-restricted
areas restricting the type of development, inaccessible areas of the property, or other features that
would prevent the use of an area of the property.
In addition to features that cannot be disturbed or built on, there are areas that can be incorporated
into a reuse but may have restrictions that affect the type of development that can be placed in these
Commercial ¦ C1
Commercial • C2
Mixed-Use - C4
Residential - R3
Residential - R4
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areas. These use-limited areas can include easement areas (e.g., underground or aboveground utilities
or pipelines), flood plain areas, deed-restricted areas limiting the type of development, and areas where
the shape or accessibility limit the use of the area. These areas may be usable for parking, landscaping,
storage and other uses that do not involve the placement of permanent structures. While the use-
limited areas are included in the developable areas, the use limitations need to be delineated and
considered when evaluating reuse scenarios.
4.3 Property Reuse Vision
Based on the reuse assessment and the developable area, the reuse visioning process identifies and
evaluates various uses for the property. A site reuse vision should reflect the community's reuse
priorities while integrating the physical, economic and environmental realities that affect
implementation and success.
The visioning process takes into account the
community needs and concerns, environmental
condition analysis, land use assessment,
infrastructure assessment and the available area that
can be developed to construct reuse scenarios. For
brownfield properties, viable land uses may be
impacted by the cleanup previously performed or
planned for the property in the future. Cleanup
activities, when completed, typically will result in one
or more institutional controls being established, such
as a deed restriction limiting land use (e.g., to
commercial or industrial uses). Any proposed future
reuse alternatives that would not comply with the
institutional control may require additional cleanup
activities.
The Revitalization-Readv Workbook identified
potentially viable land uses for the subject property.
In addition, the Workbook helped identify key property, demographic, and market information
necessary to determine the size and scope of a reuse. With this information, the potential land use
options should be considered, and a conceptual reuse plan developed which identifies the size, scope,
and characteristics of a potential reuse. Each conceptual reuse plan should identify proposed buildings,
pedestrian and vehicular circulation patterns, and parking needs. Consideration should be given to the
type and square footage of new buildings and required parking. In addition, the assistance of planning,
land use, legal, financial, and technical professionals is recommended.
The reuse planning exercise should take into account the following
a) Property considerations
• Maximum acreage/area available for development
• Maximum lot coverage allowed
• Maximum height and floor to area ratios allowed by zoning
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• Required setbacks
• Required parking
b) Property controls
• Land Use
• Environmental
c) Existing buildings (if applicable)
• Condition
• Potential reuses
• The market and its drivers
• Who will occupy this space and what will they pay?
• Maximized density may exceed demand
d) Property location, accessibility, and visibility
• Available workforce
• Energy costs
e) The location of the property
In keeping with the environmental setting, is the development making maximum use of natural assets
and controlling any contamination issues?
The result of the reuse visioning process is one or more viable
reuse scenarios for the property for further evaluation and
development of the reuse plan. The reuse scenarios should be
documented, including illustrations of potential features that
represent the scenarios identified. These illustrations can
include sketches, renderings and plot plans to communicate
reuse concepts to the community, regulatory agencies and
the real estate market.
The visioning process takes into account
the community needs and concerns,
environmental condition analysis, land
use assessment, infrastructure
assessment and the available area that
can be developed to construct reuse
scenarios.
c \
Documentation - Develop documentation of the reuse scenarios, including illustrations of potential
features that represent the scenarios identified. Illustrations can include sketches, renderings, and
plot plans that can be used to communicate reuse concepts to the community, regulatory agencies
and the real estate market
V S
Reference:
EPA: Plan for Brownfields Redevelopment Success: Site Reuse Vision
4.4 Project Liabilities and Risks
Considering the potential reuse scenarios developed during the visioning process, each scenario should
be evaluated to identify the potential associated liabilities and risks. This guide focuses on discussions
related to liabilities that a local government or a potential purchaser may assume as a result of its
actions related to the brownfields redevelopment process.
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For example, if the local government purchases the property
without conducting due diligence or all appropriate inquiries
or it is the current property owner, it may or may become the
party responsible for cleanup under the applicable
environmental regulations and also liable for damages
associated with any environmental releases associated with
the property.
Risks are the potential adverse consequences to the potential
reuse that may result from a particular constraint on the
property. For example, the need for funding to complete
cleanup is a risk associated with whether the property reuse
can be implemented.
Liabilities and risks should be evaluated from the perspective
of the community, property owner (if other than the community) and a potential developer. Evaluating
project liabilities and risks involves the identification and prioritization of liabilities and risks that could
adversely impact the achievement of the local government's project goals. These project risks and
liabilities are generally associated with the constraints identified during the reuse assessment:
• Environmental liability
o Liability under federal and state environmental statutes and regulatory programs can be
the most significant liability at brownfield sites,
o Other legal liabilities (e.g., common law liability associated with a contractual dispute
concerning an indemnity or an easement) may be present and should be evaluated.
• Financial risks
o Financial risks are the costs related to environmental liability (e.g., cleanup, third-party
claims) and developing and maintaining the property (e.g., demolition, asbestos
abatement, funding for the reuse or the cleanup, operation and maintenance of
engineering or institutional controls, post-closure operation, monitoring, and
maintenance),
o Legal liability also can present a financial risk.
• Community issues
o Issues raised by community members may pose a risk. This includes the concerns they
express regarding the physical and environmental condition of the property and how
they will be affected by the reuse,
o Consensus from the community on potential reuse scenarios is an important component
of a successful reuse strategy. Lack of consensus is a risk.
Evaluating liabilities and risks for a brownfield property generally starts with identifying potential
environmental liabilities. Environmental liabilities and risks to a local government are driven, in a large
part, by the local government's current or past ownership or use of a property or the potential
acquisition of a property. Liabilities and risks to a potential purchaser are driven by their willingness to
Liability and Risk
Project risks and liabilities are generally
associated with the constraints identified
during the reuse assessment.
Liabilities are responsibilities that a local
government or another entity may become
legally obligated or accountable for during
the brownfield redevelopment process.
Risks are the potential adverse
consequences that may result from a
particular liability or constraint on the
property.
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assume certain liabilities and risks and the impact of their actions during the development of the
property.
Once potential environmental liabilities have been identified, risks associated with those liabilities
Environmental Liability
Evaluating potential environmental liability is
fact-specific and requires a thorough
understanding of the applicable laws, property
conditions and operating circumstances. The
extent to which the environmental condition is
being addressed or has been addressed will
govern the extent of liability and risk that may
be associated with the property. At a
minimum, an environmental investigation that
defines the type and extent of contamination
on the property is necessary to make a
reasonable evaluation of potential liability.
should be evaluated. In general, the risk will be a function
of the ability of the local government or future property
owner/developer to address a liability. Other risks may
not be associated with a specific liability but may be
constraints that affect the ability to successfully
implement a reuse strategy. In many cases, a risk can be
translated into a financial need.
The liability or risk associated with each constraint may be
minor, moderate or major. The evaluation of liabilities
and risks should include how difficult it will be to
overcome the liability or risk. Liabilities and risks will be
unique to a property or a transaction. All liabilities and
risks, however, will need to be considered and factored
into the evaluation and decision-making process. The
liability and risk management framework that is described in this guide should, however, apply equally
well in evaluating those issues. The management of risk is discussed in detail in Appendix A: Risk
Management Tools and Approaches. The following sections discuss the origins of some of the liabilities.
f
Documentation -Document potential liabilities and risks for each constraint (refer to the Constraints
tab in the Revitalization-Readv Workbook).
4.4.1 Environmental Liability
Determining if there is environmental liability is an important first step in the evaluation of project risks.
Environmental liability is the generic term used to describe the various obligations, costs, and
responsibilities that can result from cleanup and management of an environmental impact to a property
or not complying with federal, state or local environmental statutes and regulations. Environmental
liability also may arise from violations of common law liabilities or be due to negligent behavior or illegal
activities. Common law liability also encompasses contractual disputes arising through indemnification
agreements, service contracts relating to the cleanup and management of a particular property, or other
legal agreements.
While environmental liability is a key consideration when evaluating the potential reuse of a property, it
must be viewed in the context of the entire project since specific facts concerning the project will dictate
the significance of environmental liability for a particular property or project.
For example, if the environmental conditions associated with the property are limited or pose minimal
risks to human health or ecological systems, environmental liability may not result in significant project
risks. However, if contamination is extensive and not adequately addressed, the risks of taking on
environmental liability may be much greater and need to be carefully managed.
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Identifying potential environmental liability should be looked at it from the perspective of ownership
and control of the property, as well as any actions taken to arrange or transport a hazardous substance
for disposal or treatment from a property. In general, a current property owner or prospective property
owner may be liable for cleanup as a result of either its current or prior ownership of the property, or its
acquisition of the property. The extent to which the environmental condition is being addressed or has
been addressed will govern the extent of liability and risk that may be associated with the property. At a
minimum, an environmental investigation that defines the type and extent of contamination on the
property is necessary to make a reasonable evaluation of potential liability.
Evaluating potential environmental liability requires a thorough understanding of the environmental
condition of the property and the federal or state laws and regulations that apply to the property.
In some cases, a party responsible for cleanup of a property may have been identified under a state or
federal regulatory program. If there is a responsible party identified to conduct the cleanup, the local
government should evaluate the viability of the responsible party, the responsible party's objectives for
the cleanup (land use restrictions, engineering controls, remedial action approach), the responsible
party's progress on cleanup, and the potential for the local government or a future property owner to
step in to complete the cleanup. The local government also should consider what happens if the
responsible party fails to complete the cleanup and whether it could incur liability by performing
environmental investigations, cleanup, building demolition, or physical improvements on a property it
does or does not own or lease.
Environmental liabilities to a local government can be driven by regulations or liabilities assumed under
a property sale agreement:
• If a local government owned a property while hazardous substances or petroleum products
were managed at the property, or if a local government managed hazardous substances or
petroleum products at a property owned by a third party, the local government may be liable
for any releases or contamination that occurred during the period of time that it owned or used
the property.
• A local government or a purchaser also can incur environmental liabilities for past releases at a
property, depending on how the property is acquired.
• A local government or a purchaser can elect to assume certain environmental liabilities such as
conducting and completing remedial action; long-term operation, monitoring and maintenance
associated with a remedy; handling and disposing of contaminated materials encountered
during construction; and installing and maintaining engineering controls such as vapor
mitigation systems.
If the local government is not an owner of the property or a responsible party, but is interested in
purchasing the property and retaining ownership or transferring the property to a third party, the local
government should consider the following questions concerning liabilities that may be assumed as a
result of becoming an owner of the property:
• Could the local government incur liability by acquiring or leasing a property?
o Can the local government be found to be liable for contamination associated with its
past uses or ownership?
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o Is the local government potentially exempt from environmental liability associated with
past uses or owners (i.e., due to current ownership status or due to the type of planned
acquisition of the property)?
o Does the local government need to demonstrate its claim to liability protection (e.g.,
innocent landowner, bona fide prospective purchaser, contiguous property owner)?
o Has the local government conducted sufficient due diligence and all appropriate
inquiries prior to acquiring the property to meet the liability protection requirements?
• Is contamination present on the property that originates from an off-property source?
o Is there a responsible party addressing this contamination?
o Will the contamination adversely impact the ability to reuse the property (e.g., require
cleanup, engineering controls or restrict land use?
o Will the local government or a future property owner need to address the
contamination in order to reuse the property?
o Does the contamination impede the ability to achieve cleanup objectives for
environmental conditions on the property?
• Has contamination associated with an environmental condition on the property migrated (or is
likely to migrate) off the property?
• Are there institutional controls, engineering controls, or operating treatment systems ongoing at
the property that the local government or other future owner would be responsible for in
operating, maintaining and monitoring?
• Could a local government be responsible for reimbursing EPA or the state for unrecovered
response costs if Superfund liens have been placed on the property?
• Is the local government protected from past owners or third parties seeking to recover costs
they spent to perform environmental investigations and cleanup involving the property?
Two important steps in determining potential environmental liability under federal and state statutes
and regulations are: 1) identify the responsible regulatory agencies during the due diligence process;
and 2) meet with these regulatory agencies to identify the potential liabilities related to cleanup
activities on a property, and options for avoiding or mitigating those liabilities. Sections 4.4.1.1 through
4.4.1.5 provide a brief overview of regulatory programs that can apply to cleanup of a brownfield
property.
4.4.1.1 Comprehensive Environmental Response, Compensation and Liability Act of1980 (CERCLA)
CERCLA provides EPA with broad federal authority to respond to releases or threatened releases of
hazardous substances, pollutants and contaminants that may endanger public health or the
environment. It also allows EPA to compel responsible parties to perform cleanups or to reimburse the
government for cleanups performed by EPA.
There are many different types of contaminated or potentially contaminated properties subject to
CERCLA. Some contaminated properties are Superfund sites where the federal government is, or plans
to be, involved in cleanup efforts. Other properties are brownfield sites, which may be impacted by the
presence or potential presence of a hazardous substance, pollutant or contaminant. Generally, the
federal government does not oversee or become directly involved in the cleanup of brownfield
properties. Local and regional governments, in partnership with state environmental agencies, often
need to take the lead for overseeing the assessment and cleanup of brownfield sites. CERCLA provides
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EPA with the authority for EPA to provide grant funding to government entities and nonprofits for the
assessment and cleanup of brownfield sites.
4.4.1.1.1 Environmental Liability under CERCLA
CERCLA established the "polluter pays" principle through a comprehensive liability scheme, which
enables EPA to order certain categories of parties to conduct or pay for the cleanup of releases or
threatened releases of hazardous substances. CERCLA's liability scheme helps to ensure that wherever
possible, "potentially responsible parties" (PRPs), rather than the general public, bear the costs to assess
and clean up environmental contamination. Under CERCLA, the following categories of persons may be
considered PRPs and held liable for the costs or performance of a cleanup and damages under CERCLA
to address releases or threatened releases of hazardous substances:
• the owner or operator of the facility;
• any person who owned or operated any facility at the time of disposal of any hazardous
substance;
• any person who arranged for the disposal or treatment, or arranged for the transport for the
disposal or treatment, of a hazardous substance at any facility; or
• any person who transported, or who accepted for transport to a disposal or treatment facility,
any hazardous substance.
4.4.1.1.2 CERCLA Liability Protections
Although a local government may fall into one of the classes of PRPs described above, there are liability
protections that may apply to certain local government acquisitions of contaminated property. For
example, protections from CERCLA liability may be applicable in cases where a local government
becomes the owner or operator of a property previously contaminated by a third party.
The following liability protections may apply to local
governments and may provide the opportunity for local
governments to establish that they are either exempt from
liability or are eligible to claim protection from liability based
upon the manner in which they acquired a property and
have met continuing obligations. To retain protection from
liability, local governments must not manage hazardous
substances on the property after acquisition and must take
"due care" or comply with "continuing obligations" following acquisition.
To retain protection from liability, local
governments must not manage
hazardous substances on the property
after acquisition and must take "due
care" or comply with "continuing
obligations" following acquisition.
CERCLA (at section 101(20)(D)) relates to the liability of state and local governments that acquire
ownership or control of a contaminated property through seizure or otherwise in connection with law
enforcement activity, or through bankruptcy, tax delinquency, abandonment or other circumstances in
which the government acquires title by virtue of its function as sovereign. EPA generally intends to
exercise its enforcement discretion and treat a local government acquisition as "by virtue of its function
as sovereign" only when a local government acquires title to a property via a function that can be
effectively performed only by governments using a mechanism available only to governments. Liability
as an "owner or operator" can be impacted if the government has caused or contributed to the release
or threatened release of a hazardous substance from the facility.
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Local governments may qualify for "bona fide prospective purchaser" (BFPP) liability protection (per
CERCLA §§ 101(40) and 107(r)(l). A local government may qualify as a BFPP if it acquires ownership of or
a leasehold interest in a property after January 11, 2002, and meets the following threshold criteria:
• The local government performed AAI into the previous ownership and uses of the property prior
to acquiring the property.
• The local government is not potentially liable for releases that occurred at the property before
the acquisition and has "no affiliation" with any other party that is potentially liable for
contamination at the property.
• The local government must also meet certain continuing obligations for maintaining BFPP status
after acquiring the property (CERCLA § 101(40)(B))
CERCLA (at § 107(b)(3)) also provides a "third-party" affirmative defense to CERCLA liability for any
owner, including local governments, that can prove, by a preponderance of the evidence, that the
contamination at the property was caused solely by an act or omission of a third party. CERCLA's third-
party defense also includes an "innocent landowner defense" as an exclusion to the definition of a
"contractual relationship" in CERCLA §§ 101(35) that applies to a government that acquired the facility
by escheat, or through any other involuntary transfers or acquisition, or through the exercise of eminent
domain authority by purchase or condemnation. A local government asserting the third-party defense
must show that the act or omission did not occur in connection with a contractual relationship, that it
exercised due care with respect to the hazardous substance concerned, and that it took precautions
against the third party's foreseeable acts or omissions, and the consequences thereof.
4.4.1.1.3 Property Acquisitions and CERCLA Liability
As summarized above, the method or type of property acquisition taken by a local government can
determine the application of CERCLA liability protections. Additionally, a local government may consider
layering any available CERCLA liability protections. For example, a local government may want to
consider undertaking all appropriate inquiries prior to acquiring a property in an effort to qualify for the
bona fide prospective purchaser protection, even in cases where the local government believes it
qualifies for an exemption to liability based upon the type of acquisition undertaken (i.e., qualifies for
the section 101(20)(D) exemption). Local governments also should understand that the liability
protections do not shield government entities from any potential liability that they may have as
"arrangers" or "transporters" of hazardous substances under CERCLA.
To maintain any BFPP liability protection following the acquisition of a contaminated property, local
governments must comply with the "continuing obligations" provided at CERCLA (section 101(4)(B)) that
include:
• Complying with land use restrictions and not impeding the effectiveness or integrity of
institutional controls.
• Exercising appropriate care by taking "reasonable steps" to prevent the release of hazardous
substances. These obligations are site-specific but may include stopping continuing releases,
preventing threatened future releases, and/or limiting exposure to earlier hazardous substance
releases. Institutional controls may play a critical role in complying with reasonable steps.
• Providing full cooperation, assistance and access to persons authorized to conduct response
actions or natural resource restoration.
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• Complying with information requests and administrative subpoenas.
• Providing legally required notices.
For additional information on the liability protections afforded local governments under CERCLA, see
Superfund Liability Protections for Local Government Acquisitions after the Brownfields Utilization.
Investment, and Local Development Act of 2018.
References:
EPA: Brownfields Laws and Regulations
EPA: Superfund Liability Protections for Local Government Acquisitions after the Brownfields
Utilization. Investment, and Local Development Act of 2018
EPA: Enforcement Discretion Guidance Regarding Statutory Criteria for Those Who May Qualify as
CERCLA Bona Fide Prospective Purchasers. Contiguous Property Owners, or Innocent
Landowners ("Common Elements")
EPA: Windfall Lien Administrative Procedures
4.4.1.2 Resource Conservation and Recovery Act (RCRA)
RCRA regulates the management of solid and hazardous waste and underground storage tanks (USTs). It
applies to the generators, transporters and facilities that treat, store or dispose of hazardous waste. In
many respects, RCRA serves as a complement to CERCLA by helping to ensure the proper management
of waste that might otherwise result in releases requiring cleanup under CERCLA.
RCRA is composed of three primary programs (or RCRA Subtitles) that may affect redevelopment
projects involving a brownfield property:
4.4.1.2.1 RCRA Subtitle C - Hazardous Waste Program
Subtitle C establishes a federal program to manage the treatment, storage and disposal (TSD) of
hazardous waste from cradle to grave (from generation to final disposition), and cleanup of
contamination caused by the treatment, storage or disposal of hazardous waste. If the property under
evaluation is currently or was a permitted TSD facility, it is necessary to consider three obligations under
Subtitle C: closure/post-closure, corrective action and financial responsibility requirements. If
closure/post-closure and corrective action requirements were not completed, a local government
acquiring or leasing the property may, in certain circumstances, need to conduct those activities.
Further, where hazardous waste will remain on-site in landfills or other disposal areas as part of the
permanent cleanup, the local government could potentially assume the responsibility for monitoring
and maintaining those areas. A local government acquiring or leasing a TSD facility that completed these
required investigations will be able to do so with considerable knowledge of the environmental
conditions of the entire facility, at least as it applies to hazardous waste and constituents (non-RCRA
waste or materials may not have been addressed).
Because RCRA, like many other state and federal environmental statutes, is a complex law with an
equally complex body of regulations, local governments are strongly encouraged to seek experienced
counsel and technical consultants before engaging in activities for which RCRA might be applicable. (See
Appendix B for additional information and resources.)
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References:
EPA: Corrective Action Sites around the Nation
EPA: Resource Conservation and Recovery Act (RCRA) Laws and Regulations
EPA: State Authorization under the Resource Conservation and Recovery Act (RCRA)
EPA: Underground Storage Tanks (USTs)
EPA: Oil Spills Prevention and Preparedness Regulations
4.4.1.2.2 RCRA Subtitle D - Solid Waste Program
Subtitle D establishes requirements for the management of non-hazardous solid waste, such as in
municipal solid waste landfill facilities, solid waste disposal facilities, and construction and demolition
landfills. When acquiring or leasing a property, a local government should consider the possibility that
past disposal of solid waste may have taken place, particularly if the property has a history of
commercial or industrial use. The local government could become responsible for making those facilities
compliant with RCRA Subtitle D, including monitoring groundwater, conducting cleanup requirements,
and addressing any releases that may have occurred. (See Appendix B for additional information and
resources.)
4.4.1.2.3 RCRA Subtitle I - Underground Storage Tank Program
Subtitle I established requirements for the management, closure and corrective action of underground
storage tanks (USTs) in states, territories and tribal lands that contain petroleum and hazardous
substances. USTs are generally regulated by state UST programs with EPA providing support to tribal
governments.
If the local government is an owner or operator of an UST or purchases or leases a property with an
operating or abandoned UST, the local government may become responsible under Subtitle I for the
closure of the UST system and investigation and cleanup if a release is found. While there are no
innocent purchaser provisions in RCRA Subtitle I, some state brownfields laws provide relief from state
liability for unknown tanks and unknown tank releases for purchasers that conduct appropriate due
diligence prior to taking title to a property. The Underground Storage Tank Lender Liability Rule also
provides certain exemptions for lenders and other parties that maintain indicia of ownership in an UST
primarily to protect a security interest. (See Appendix B for additional information and resources.)
4.4.1.3 Polychlorinated Biphenyls (PCBs)
Local governments that acquire or lease a property may encounter PCBs in equipment or products that
were manufactured prior to 1979 (such as transformers, capacitors and other electrical equipment;
paints; caulk; and hydraulic fluids), or as contamination arising from past use or disposal. The cleanup,
management and disposal of PCBs and PCB-contaminated waste in a redevelopment context is
regulated under the Toxic Substances Control Act (TSCA).
Under TSCA, a property contaminated with regulated levels of PCBs must be cleaned up or
decontaminated in accordance with certain specified requirements. Similarly, equipment or products
containing PCBs at regulated levels that are not authorized for use, no longer in use or leaking must be
properly disposed of or decontaminated.
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TSCA is a strict liability statute. Persons responsible for addressing PCB contamination under TSCA may
include past and new property owners and operators, and other parties that caused or contributed to
the PCB contamination. (See Appendix B for additional information and resources.)
4.4.1.4 Asbestos
Any institutional, commercial, public, industrial, or residential structure, installation, or building that will
be undergoing demolition or renovation must be first properly inspected for regulated asbestos-
containing materials regardless of the age of the facility. Before initiating demolition and renovation
activities, the owner or operator must notify EPA or the delegated state or local agencies, remove all
regulated asbestos-containing materials from the affected areas, and properly dispose of them into an
asbestos NESHAP-approved landfill. Privately-owned residential buildings having four or fewer dwelling
units are generally excluded; however, if these buildings are demolished or renovated as part of a
commercial or public project (e.g., urban redevelopment, highway construction, or any commercial or
industrial development), they would be regulated.
The processing, handling and disposal of asbestos and asbestos-containing material when a building is
being demolished or renovated are regulated under the Clean Air Act NESHAP. NESHAP also regulates
asbestos in active and inactive waste disposal sites. (See Appendix B for additional information and
resources.)
4.4.1.5 Sta te Voluntary Cleanup Programs
EPA does not oversee cleanup activities at brownfields. Instead, brownfields often are cleaned up in
accordance with and under the oversight of state "voluntary cleanup programs" (VCPs) or state
response programs.
State VCPs play a significant role in assessing and cleaning up brownfields. The benefits of enrolling a
brownfield in a state VCP include guidance and oversight provided by the state program, including
guidance related to risk-based cleanups and constituent-based cleanup levels, as well as guidance on the
use and long-term monitoring of institutional controls.
State response programs laws also provide certain protections from environmental liability for sites
cleaned up in accordance with VCP requirements. Actions taken by a local government to fulfill liability
protection requirements are often documented as a "no further action" (NFA) decision or NFA letter.
Individual states often use their own terms to refer to these NFA decisions or NFA letters. Generally,
states make a "no further action" decision after determining that a brownfield site, or one part of a
brownfield site, that is enrolled in the state response program, poses no unacceptable risks to human
health or the environment. This usually follows investigative or cleanup activities taken by the property
owner or prospective purchaser under state program oversight or following a state's comprehensive
review of the cleanup actions taken at a brownfield. Obtaining a "no further action" decision generally
means that the state will not require additional remedial action, based on the state agency's knowledge
of site conditions when it issues the NFA. Some NFA decisions are conditioned on compliance with
institutional or engineering controls that are designed to prevent exposure to contaminants left in place
following risk-based cleanup activities.
EPA can support state VCPs through grant funding to establish and enhance VCPs and may enter into
non-binding memoranda of agreements (MOAs) with individual states. MOAs include general
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enforcement assurances to encourage the assessment and cleanup of sites addressed under VCP
oversight.
CERCLA limits EPA's authority to take enforcement and cost recovery actions against persons who
conduct a response action at a brownfield site in compliance with a state response program. That
limitation is referred to as an "enforcement bar." There are significant exceptions to the enforcement
bar, including when a state requests EPA assistance to perform a response action; when contamination
has migrated across state lines or onto property subject to the jurisdiction of the federal government;
when contamination presents an imminent and substantial endangerment to public health, welfare or
the environment; or when previously unknown information indicates that further remediation is
necessary to protect public health, welfare or the environment.
References:
EPA: Cleaning Up Brownfields Under State Response Programs - Getting to "No Further Action"
International City/Council Management Association and Public Entity Risk Institute: A Primer for Local
Governments on Environmental Liability
EPA: State Brownfields and Voluntary Response Programs
4.4.2 Financial Risk
Financial risk is present in all development projects.
For a private developer, financial risk generally relates to profitability (i.e., whether its investment will
be able to provide a reasonable rate of return). For a local government looking to facilitate the
redevelopment of an underutilized or abandoned property, the main focus is often to limit the amount
of local government funds that are needed and to ensure those funds are used to maximum public
benefit.
The specific financial risks to the local government that are associated costs may be significantly higher
than predicted or expected, or worse: that despite the local government's investment, the desired
redevelopment does not occur.
For this reason, a local government's financial risk is often closely tied to the financial risk of a potential
developer. A project that carries a high financial risk to a developer is far less likely to be pursued or
ultimately successful. Impaired marketability of a property contributes to the local government's
financial risk. Environmental issues, left unaddressed, can adversely affect marketability.
There is a relationship between a local government's environmental liability and its financial risk. EPA's
memorandum Superfund Liability Protections for Local Government Acquisitions after the Brownfields
Utilization. Investment, and Local Development Act of 2018 discusses a local government's potential
liability under various federal environmental statutes, and explains the provisions under which they may
minimize or avoid liability.
A local government's real concern often boils down to the financial risk resulting from its environmental
liability. Will the environmental liability result in costs to the local government that exceed what they
are willing or able to assume for cleanup, redevelopment and other costs? In this regard, financial risk
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may be more likely to influence the local government's decision on whether or not to proceed with a
property disposition strategy.
For these reasons, understanding the project economics from the perspectives of both the local
government and potential developers is necessary to assess financial risk. Section 4.6 provides an
overview of some of the factors that influence project economics and describes a useful tool that can be
used to estimate the financial viability of potential redevelopment scenarios.
4.4.3 Community Needs and Concerns
Community needs and concerns regarding the current conditions of the property, and the status of
cleanup and the redevelopment need to be considered and addressed. These needs and concerns often
relate to environmental justice issues such as the social, economic and health effects of contamination
and economic blight experienced by community members and potential added burdens such as
increased pollution, traffic, congestion or gentrification resulting from the redevelopment.
Addressing community needs and concerns requires first identifying those most meaningful to the
community and how the community wants to resolve those issues. Continued community engagement
is a critical tool for accomplishing this goal. Having an ongoing dialogue with the community throughout
the project is necessary to maintain a spotlight on its priorities and ensure community input is included
as part of the cleanup and redevelopment decision-making
process. The support of the community becomes especially
important if the local government plans to access the
property to conduct environmental assessments, acquire or
lease the property, or take other actions that might require
the local government to expend public funds or incur
significant financial and other risks.
A positive project pro forma will not
matter if the needs and concerns of the
community are not being met and the
community stakeholders oppose the
project.
Building a community-supported redevelopment approach reduces the likelihood that community
opposition will delay or even derail a project. If the potential for community opposition is high enough,
developers and investors may be driven away. Simply put, a positive project pro forma will not matter if
the needs and concerns of the community are not being met and the community stakeholders oppose
the project.
4.5 Market Viability
A community will typically start with a visioning process to determine the viable land use options.
Incorporating community feedback throughout the visioning process is critical to prioritize
redevelopment options for an area. It is critical that the redevelopment vision is based in market and
economic realities for the area. Understanding what reuses the market will support, and being able to
communicate those findings as they relate to community priorities, are fundamental to project success.
Determining market viability of a specific land use involves focusing on market information that is
specific to that use and using that information to create a financial analysis for that use. The findings of
the financial analysis will help alleviate further financial risks.
Using the results of the market study that already detailed many attributes of an area's market (see
Section 3.5), market viability for a specific land use is based on the following:
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• Potential viable land use options: Industrial; office/commercial; retail/restaurant/hotel; green
space.
• Overall (area) market climate.
• Building demand/vacancy.
o Optimal size (square footage),
o Tenant requirements.
• Lease rates/rents.
• Building costs (per square foot).
It is important to reach out to local and regional industry experts to ascertain both quantitative and
qualitative market information. This information is critical to establishing optimal and best use for a site
and will help to further develop the financial analysis. Some potential questions to help guide your
community toward a better market understanding and financial analysis are:
• What are the market opportunities/challenges for the area?
• What type(s) of building and configuration(s) are in greatest demand?
• What triple net rents (tenant or lessee promises to pay all the expenses of the property,
including real estate taxes, building insurance and maintenance) are achievable for each type?
• What is the average cost per square foot or range of cost per square foot to build each type?
• What industries or companies are generating requirements at present (also known as market
clusters)?
• What is the potential demand for a specific building type (residential, commercial, industrial,
warehouse) versus vacancy rates for that building type in this location?
• What are the potential triple net rent and potential user or industry for any existing buildings
on-site?
4.6 Project Economics and Financial Analysis
Local governments should perform a basic financial analysis for each of the viable land use options
identified to better understand the potential return on investment and overall viability of the project.
While an interested party (developer or investor) is unlikely to develop the property exactly as described
in the land use vision, going through the financial analysis process with your community will help
everyone understand economic concerns. In addition, the financial analysis allows the development
community to better understand the reuse possibilities and alleviate overall risks in regard to potential
return.
From a local government perspective, a financial analysis will assist in weighing the financial risks and
benefits of local government involvement in the redevelopment project. This evaluation may include
estimating the potential costs to the local government of undertaking the identified reuse (e.g., property
acquisition costs) and identifying potential sources of revenue and other funding to implement the
project.
A general understanding of the financial viability of a desired redevelopment will help in determining
whether the project goals are realistic and likely to attract private investment. Having an understanding
of the potential property uses enables the community to construct a sources and uses chart for the
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viable land use scenarios, and use the chart to build a pro forma spreadsheet to conduct an analysis.
The pro forma analysis will help identify:
• potential financial viability of different redevelopment scenarios;
• relative effect of various cost and revenue assumptions on profitability; and
• amount of subsidies or incentives needed to attract investment.
Preparing a sources and uses chart, and pro forma requires an understanding of the market (see Section
4.5) and the intended property uses (which serve as the basis for potential costs and project revenue).
4.6.1 Sources and Uses
A sources and uses chart is a tool used often by local governments to evaluate public-led redevelopment
projects and/or facilitate private development. The chart helps identify, organize and balance potential
expenses, funding needs and sources of funding.
Essentially, the sources and uses chart includes two lists:
• a list of the funding requirements broken down by the type of activity or expenditure required
for a reuse project; and
• a list of the known or potential sources of funding that can be used to offset an expenditure.
Since federal, state and local funding may have specific limitations to the site's use (e.g., site
assessment, remedial action, construction), the sources of funding should match the needed
expenditure. Private funding may not have these types of limitations; however, in developing the
sources and uses chart, it is valuable to match the sources of funds with the planned expenditures to
keep track of the funded and non-funded expenditures.
A template of a working sources and uses chart detailing possibilities of known or potential funding for a
redevelopment project is provided in the Revitalization-Readv Workbook. Local governments are
encouraged to incorporate the information appropriate for the specific project.
f
Documentation - Document sources and uses of funds for the project (refer to the Sources and uses
tab in the Revitalization-Readv Workbook).
4.6.2 Pro Forma
A pro forma is a tool used to predict a project's financial viability. The tool is designed as a set of
calculations that projects the financial return that a proposed real estate development is likely to create.
It is a basic "go/no-go" analysis that local governments and developers use to decide whether to move
forward with a project.
A developer will use a pro forma to alleviate quantifiable risks that can be calculated through the
analysis. A local government can use a basic pro forma analysis to prepare financial estimates to assess
how a developer might look at various redevelopment scenarios, and to evaluate the general impact of
various cost and/or revenue assumptions. Generally, the more certainty a local government can bring to
a property, the better positioned it will be to attract development.
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The first step in developing a pro forma is to identify assumptions for modeling the analysis. These key
assumptions are based on expected costs and revenue for the project. There are few absolutes as to
how such analyses can be constructed, but there are common practices and techniques that nearly all
pro forma attempt to provide in one form or another. At the center of these calculations is a set of
assumptions based on the overall revenue and costs for the project. The components for these
assumptions are derived from the market, and environmental and infrastructure assessments previously
discussed.
Basic cost assumptions include:
• Cost of land - acquisition costs of purchasing the property if needed.
• Infrastructure/property development cost - site preparation costs based on findings of the
infrastructure assessment.
• Building construction costs - costs associated with best use scenarios for buildings determined
through the market study.
• Soft costs - costs that are not considered hard development cost, such as legal fees, permit fees,
and architectural drawings.
• Costs of capital - interest and fees assumed through debt.
• Environmental costs:
o Investigation and cleanup action determined through the environmental assessment,
o Legal or consulting fees, soft costs associated with investigation and cleanup,
o Maintenance of institutional or engineering controls,
o Environmental liability insurance.
Basic revenue assumptions include:
• Selling shovel-ready property - when appropriate for project success, as a whole or as divided
parcels.
• Constructing and selling individual building or units within building - sales price determined by
the best use conceptual scenarios and regional market.
• Constructing and leasing buildings or units within building - lease rates determined by the best
use conceptual scenarios and regional market.
• Creating and selling/leasing pad sites - driven by the regional market.
• Tax revenue.
• Other revenue (e.g., advertising signage, renewable energy production, cell towers).
A pro forma is most useful when it is well-structured and contains all the elements that pertain to
revenue and cost. This includes everything from the base rental income to all the potential costs that are
associated with investment properties. Pro forma inputs can be adjusted to run various reuse scenarios
that will give the local government rough estimates of the potential revenue.
A pro forma analysis can range from a very simplified approach to one that is very detailed and
evaluates complex factors. The pro forma provided in the Revitalization-Readv Workbook is a simplified
or "back-of-the envelope" version of a pro forma that allows a local government to quickly evaluate the
viability of a reuse option. It also helps evaluate the general impact of various cost and/or revenue
assumptions. However, the pro forma in this guide will not substitute for a detailed financial analysis, is
not applicable to complex projects, and should not be used to make investment decisions. Where the
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local government does not have the in-house expertise to appropriately use a pro forma, it should
consider obtaining an outside party with that expertise.
The pro forma worksheet provides default values (such as per-square-foot construction costs and lease
revenues for various types of reuses) that can be used to calculate each line item. These default values
are examples of the types of values to be input; they may not reflect current economic and market
conditions or account for regional variations from national averages. Local real estate brokers, economic
development officials, lending institutions or developers should be able to provide appropriate values
for a particular geographic area. A range of values can be used where estimates are uncertain.
It is important to understand and evaluate all assumptions included in the analysis, particularly those
that can dramatically affect results. For example, a small change in the capitalization rate
(Net Operating Income/Development Value [property purchase and development costs]) can quickly cause
the project to become less financially viable. Keep in mind that the rate of return in the pro forma
worksheet also does not reflect the number of years the project will take. Developers, investors and
lenders use discounted cash flow and other methods to adjust for the time value of money.
The pro forma worksheet provides an estimate of profitability, but just because the project appears to
be profitable, that does not necessarily mean that developers will be willing to acquire and redevelop
the property. Individual developers and investors will have their own view of what is considered an
acceptable return on investment that takes into account project risk. As a general rule, higher project
risk carries the expectation of higher potential returns. Developers will use other tools as well, such as
market analysis, highest and best use studies, and other investment-related information, to determine
the viability of a project.
There are a variety of ways that the pro forma worksheet can help guide the reuse evaluation process,
including:
• A local government can evaluate whether a desired reuse is financially viable, assuming the
property is free of contamination. This best-case scenario will provide a baseline for estimating
the minimum number of public incentives or other assistance that might be needed to make the
property marketable. Based on that analysis, the local government can begin to make some
judgment on questions such as to whether certain reuse options are impractical, whether
additional resources to conduct a Phase II ESA would be justified, and how to prioritize
information gathering efforts.
Even before verifiable information on the environmental conditions is available, the local
government can build on those baseline estimates by making certain assumptions regarding the
environmental conditions (i.e., that asbestos insulation will be present in all or certain
buildings). This can help determine the relative contribution of those added costs should they
prove to be true.
• If the Phase I ESA determines that the property has already been extensively investigated and
that information is available, or the local government has conducted its own Phase II ESA, the
pro forma worksheet can be used to estimate how various cleanup alternatives could affect the
costs and profitability of reuse scenarios should those costs be passed on to the developer of
the property.
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Likewise, where cleanup has already occurred, the financial analysis can take into account the
associated costs that might be passed on, such as operation and maintenance costs, settlement
of environmental liens, and any costs to modify the existing cleanup, if necessary, to
accommodate a proposed reuse.
• Added interest costs resulting from protracted delays in construction, rehabilitation and
remediation activities can be considered.
• The impact of parceling the property under different scenarios can be evaluated. For example, it
might be that the revenue generated by selling off portions of the property could be used to
finance cleanup or property improvements on the other portions.
• Local governments can estimate the revenues they would receive from a project. Real estate
taxes and permit fees can be estimated based on the size and type of the redevelopment
project. Retail rents generally reflect sales volume and can be interpolated to calculate sales tax
revenue.
Documentation - Develop a pro forma for the project (refer to the Pro Forma tabs in the
Revitalization-Readv Workbook).
4.7 Feasibility
After reviewing the project economics and financial analysis, the local government needs to understand
project feasibility. This includes identifying key assets and opportunities to attract investment to the
redevelopment area.
Each reuse scenario identified during the reuse visioning process should be evaluated - taking into
account the project risks and liabilities, overall market viability, and economics of the potential reuse -
to determine whether it should move forward with the development of a reuse implementation
strategy, be redesigned, or be abandoned altogether.
Determining overall feasibility of a proposed reuse is not dependent on resolving all identified
constraints, risks or liabilities. Rather, feasibility depends on resolving the constraints, risks and liabilities
that would make the implementation of a reuse scenario impossible (or extremely difficult) to
implement. The presence of constraints, risks or liabilities is not necessarily a reason to remove a reuse
scenario from further consideration.
Risk management tools and approaches will be evaluated as part of the development of the
implementation strategy. Other examples of issues that may affect the feasibility of a reuse include
minimal or non-existent markets for a reuse, significant economic constraints, or significant land use
restrictions due to environmental issues.
4.8 Property Disposition Strategy
As used in this guide, disposition of a property is the retention, sale, transfer or lease of a property for
purposes of positioning the property for sustainable reuse and cleanup of the property. A disposition
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strategy is a framework for deciding ownership and development of the property, and how to achieve it
in a manner that supports established project goals for sustainable reuse and provides value to the
property owner, potential buyer and developer. The strategy should include an analysis of pros and cons
that help characterize risks associated with the range of ownership and transfer options.
The process of developing a property disposition strategy involves preparing a document that evaluates
and compares disposition alternatives for the project site, such
as property sale, ground lease, or lease with option-to-
purchase. The strategy also discusses benefits and challenges,
liabilities, obligations and risk transfer options. Finally, the
strategy will help to identify a preferred alternative and
associated actions for implementation.
A property disposition strategy is focused on property
ownership and sustainable reuse. Essentially, it defines the local
government's role and involvement in the implementation of a reuse strategy. There are a variety of
property disposition strategies available to local governments that can be used to facilitate the
redevelopment of brownfield properties. These typically fall into two general categories:
• acquisition approaches, in which the local government takes title to the property for some
period of time; and
• non-acquisition approaches, in which the local government encourages and participates in the
reuse effort.
Each action carries its own set of issues that must be understood in order to develop a strategy for
managing project risks and, ultimately, achieving a successful project. Development of a property
disposition strategy requires a multi-disciplinary team, including an environmental professional, real
estate professional, insurance consultant, planner and/or other related professionals.
4.8.1 Property Owner Evaluation
The property disposition and risk management strategy for a property could differ somewhat depending
on whether or not there is an existing owner who may be willing to work cooperatively with the local
government.
In cases where the strategy will involve the purchase of a property or the involvement of a property
owner, it is important to understand the viability of a property owner and the property owner's
willingness to participate in the reuse process before selecting a property disposition and risk
management strategy. Sections 4.8.1.1 and 4.8.1.2 discuss how the development of a property
disposition and risk management strategy might be shaped by whether or not there is a viable property
owner that may be willing to work cooperatively with the local government, or an unknown or
uncooperative property owner.
4.8.1.1 Properties with Coopera ting Owners
Owners of mothballed properties may have an incentive to improve the property or remove unusable
structures in order to reduce their maintenance costs or insurance premiums, improve their corporate
image, or reduce liability from potential fires or other safety hazards. For many owners, however, a
variety of concerns may trump these potential benefits. These concerns include, but are not limited to:
Property Disposition
Disposition of a property is the
retention, sale, transfer or lease of a
property for purposes of positioning the
property for sustainable reuse and
cleanup of the property.
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• Prohibitive demolition or property preparation costs.
• Environmental investigations that might identify contamination issues and trigger action to
address those issues under federal, state or local laws.
• Lack of expertise in dealing with environmental liability and cleanups.
• Transfer of the property, which could lead to uses that aggravate existing environmental
conditions and cause the owner to incur greater liability and expense.
By recognizing that these types of concerns exist, the local government and the property owner may be
able to work collaboratively to advance the interests of both parties. This cooperation could enable the
local government to gain access for conducting due diligence, avoid a contentious and time-consuming
eminent domain taking, or avoid altogether the burden and risk of acquiring the property or taking on
the demolition and cleanup activities. It may even be possible to fashion an agreement or structure
financial incentives so that the local government has some control over the future use and timing of
property development.
A comprehensive plan with clear benefits to the local government can help build support among those
within the community and local administration concerned with using public resources to bring about
improvements on private property. A cooperative arrangement with the property owner, along with the
property access that may entail, also may help the local government and property owner become
eligible to receive federal and state brownfields funding to offset the environmental investigation and
cleanup costs.
Parceling or subdividing a property is an option that can sometimes help address some of the property
owner's concerns and provide other strategic benefits in facilitating redevelopment. These benefits may
include:
• Freeing up areas of the property for earlier development.
• Creating a source of revenue through the sale of a portion of the property, which can then be
used to clean up other contaminated areas or improve the safety, appearance or marketability
of the remaining areas (e.g., by demolishing buildings or making other improvements).
• Helping to ensure that the components of a permanent cleanup remedy (e.g., an area capped
with a protective cover) remain protective by retaining control over the use of those areas. In
some cases, it may be possible to use these areas in a manner that ensures protectiveness while
supporting the reuse of the surrounding properties (e.g., by installing a parking lot or pocket
park over the areas).
• Evaluating the potential use of parceling, which requires not only the knowledge of the
environmental conditions for the entire property, but also its effect on legal liability (which may
differ depending on applicable statutes). For example, parceling a portion of a property may not
change the legal status of those parcels under CERCLA or RCRA; however, where the buyer of a
portion of a property has no relationship with the responsible party and contamination is
completely contained on the remaining portion of the property, the buyer may not be
considered an owner or operator under CERCLA or RCRA. Consequently, parties involved in the
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transfer or leasing transactions need to discuss any regulatory implications with EPA, the
authorized state, or other federal/state agencies as needed before proceeding.
• Where the local government agrees to conduct or participate in environmental investigations,
building demolitions, cleanup or other activities on the property, the local government will need
to assess whether that involvement could subject it to unacceptable legal, financial and other
risks. The local government also should consider whether risk management tools, such as those
outlined in this chapter and in Appendix A, might be appropriate.
In conducting these types of activities, the local government must be careful that doing so does not
worsen conditions on or surrounding the site, which could subject the local government to liability
under environmental laws, or negligence and other common law liabilities.
Even building demolition can carry environmental liability risk if not carefully planned and executed. For
example, demolition may release asbestos from insulation into the air or surrounding soils. The removal
of building foundations or slabs could alter groundwater flow or allow contaminants in the underlying
soil to leach into groundwater or migrate to the surface. Burying demolition debris and other materials
on the property could create additional sources of contamination or create a pathway for volatile
contaminants to migrate to the surface. Other issues could arise from the temporary placement of
contaminated demolition debris, which if not conducted properly could create a contaminant release.
Before proceeding with on-site activities, the local government will need to have sufficient
understanding of the property's environmental conditions in order to develop measures to minimize the
potential for causing or contributing to a release. Keeping a building slab or foundation in place might be
one way to avoid releasing underlying contaminants or altering groundwater flow. Placing demolition
debris on an impermeable surface and covering the debris piles to control airborne releases also could
help prevent releases.
Other measures could include analyzing soils below areas that will be used for debris storage to support
a defense against potential future claims that the storage activities caused or contributed to a release.
4.8.1.2 Properties with Unknown Owners or with Non-Cooperating Owners
Gaining access at abandoned properties or those with an uncooperative owner in order to assess
environmental conditions, let alone conduct demolition and cleanup, can be problematic. In situations
where a fire or other public safety threat exists, most local governments and states have the authority
to enter the property to address those specific issues, but these authorities may be limited and may not
extend to other areas of the property. Very few states have laws in place to enable local governments to
access a property to perform an environmental assessment or conduct cleanup, or to allow it to seek
cost recovery for those activities. Where access is available, the local government needs to consider the
environmental liability and other project risks associated with undertaking any activities on the
property.
If the results of a Phase I ESA conducted on an abandoned property provide reason to believe that
significant contamination issues do exist, it is advisable to notify EPA or the state. This will help protect
the health and safety of the community and could potentially help the local government avoid legal and
political risks.
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If EPA or the state believes that there is a sufficient basis for these concerns, the Agency may initiate its
own investigation into the environmental conditions. EPA and state agencies can use various authorities
to obtain information relevant to that investigation and, if necessary, to gain access to the property.
Should the situation dictate, they may be able to take further steps to address these issues or compel
the responsible parties to do so. While this may not always occur in the timeframes desired by the local
government due to federal and state resource constraints, procedural issues and other reasons, the end
result might be that the cleanup and revitalization of the property moves forward with less direct
involvement by the local government.
If the property is a high priority for the local government, and obtaining access for investigation, building
demolition or cleanup is not a viable option, acquisition may be the only available means of dealing with
abandoned properties. There are no absolute guidelines for making this decision. It will depend on how
much information is known about the environmental conditions and other pertinent factors, how risk-
averse the local government is, whether the potential project risks can be adequately managed, and
other considerations specific to the situation.
It is important to consider which federal and state environmental statutes may apply. For example,
under certain state and federal environmental statutes and state property transfer laws, some level of
environmental investigation and, if necessary, cleanup might be automatically triggered and transferred
to the local government upon acquisition or leasing. Even if the primary intent of the local government
is to acquire the property to demolish buildings or make other improvements, the local government may
find that it must then address other areas of the property as well. The type of acquisition (e.g., eminent
domain taking, property tax foreclosure, direct acquisition) may affect liability protections under federal
and, possibly, state environmental statutes.
Acquiring a property that has already been investigated or remediated will reduce the uncertainty and
therefore make the project risks more predictable. A property where these activities have occurred,
even where some contamination remains on the property as part of the permanent remedy, can often
be the preferable acquisition over a property where the environmental conditions are largely unknown.
This decision will depend on whether the investigation and cleanup were comprehensive and occurred
under the proper level of oversight. If the property is acquired, long-term continuing obligations will
need to be met in order to preserve any liability protections that may be available to a local government
under CERCLA and other applicable statutes.
A local government considering the acquisition of a property may be able to access federal and state
funds or other resources to cover some of the costs of environmental assessment and cleanup. EPA's
Brownfields website is a starting point for identifying potential sources of assistance.
4.8.2 Selecting Property Disposition Strategies
The disposition strategy will outline the assets of the property, the liabilities and responsibilities to be
assumed by a purchaser or developer, and the liabilities and responsibilities to be retained by the local
government. Some of the more common property disposition strategies include:
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• Acquisition and long-term
ownership
• Acquisition and interim
ownership with subsequent
transfer to third party i—
O ®
£ • Leasing by municipality v>
c . 30
O * Acquisition and
simultaneous transfer to a ~
q third party
^ • Collaboration with the
property owner
¦ • Transfer of tax liens
• Incentives to promote
redevelopment
• Acquisition and long-term ownership.
• Acquisition and interim ownership
with subsequent transfer to a third
party.
• Leasing by the local government.
• Acquisition and simultaneous transfer
to a third party.
• Collaboration with the current
property owner.
• Transfer of tax liens.
• Incentives to promote redevelopment.
These actions and the issues they raise are
broadly representative of most real-world
situations.
In a generalized way, these property disposition strategies are organized in descending order of local
government control over the property. Often, having more control comes with an increased potential
for incurring project risk.
To establish the proper baseline for evaluating these property disposition strategies, local governments
should compare them to a no action option in which the local government does not directly intervene to
facilitate redevelopment. When considering the acquisition of a property, the method of acquisition
(e.g., tax foreclosure, escheat, eminent domain, purchase, inheritance, abandonment, donation) may be
important.
4.8.2.1 Acquisition and Long-Term Ownership
Taking title provides control over the property to the title holder. Local governments often take and
retain title to an underutilized property if there is a public reuse planned, such as a park or local
government facility. Ownership also may allow the local government to have a greater role in the
cleanup and reuse of the property. By controlling the land uses, local governments also can better
ensure that land use restrictions are being met and cleanup components (e.g., groundwater monitoring
wells, landfill caps) are properly maintained and not compromised.
If a local government intends to acquire the property by exercising eminent domain, it should determine
if state law allows adjustment of the purchase price to reflect cleanup costs. Otherwise, the local
government may be forced to pay considerably more for the property than its actual discounted value. A
May 2008 report by the Northeast-Midwest Institute provides a summary of how different states
address this issue (see Northeast-Midwest Institute: Mothballed Sites and Local Government
Acquisition: How State Liability Protections. Eminent Domain Reforms, and Cost Recovery Authority Can
Spur Local Government Action to Acquire and Redevelop Difficult Brownfields Sites. May 2008).
While different responsibilities may apply depending on state and federal laws, in general, the specific
responsibilities of taking title to a brownfield property may include:
• Responsibility for carrying out the cleanup action on the property.
• Responsibility for cleanup action beyond the property boundaries.
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• Responsibility for responding to third-party suits related to the contamination on the property
or emanating from the property (unless otherwise protected from these suits through, for
example, a settlement agreement with EPA and/or the state).
Other parties, including former owners and operators of the property, also may be responsible for a
property's environmental issues.
4.8.2.2 Acquisition and Interim Ownership with Subsequent Transfer to a Third Party
Acquisition by the local government followed by a transfer to a third party is a way to involve private
developers in the redevelopment process while potentially shielding them from some of the
uncertainties and difficulties of property acquisition.
Some local governments have redevelopment authorities or land banks that will take title to properties
and hold them while parcels are assembled, and redevelopment proposals are evaluated. Typically, the
properties are then leased, sold or transferred to a developer who will implement an agreed upon
redevelopment plan. An advantage to the local government is that the private entity performs the
redevelopment and, in many cases, the cleanup action as well. A disadvantage to the local government
is that it may have limited control over the cleanup and the future use of the property.
4.8.2.3 Leasing by the Local Government
In this action, the local government enters into a long-term ground lease with the owner that allows for
the development and use of the property (e.g., establishing a library on the property) without taking
title.
One potential advantage is that the current owner may assume some or all of the responsibility for
conducting cleanup and maintaining the remedy components (such as treatment systems or landfill
covers). Alternatively, the local government may agree to take on those obligations. In either case, the
terms of the lease would typically need to cover these roles and responsibilities.
Leasing does not necessarily shield the local government from environmental liability. For example, as
discussed later in this guide, a party leasing a brownfield property may, depending on the
circumstances, be liable as an operator under certain federal and state environmental statutes. Some
courts also have held that long-term leases can be equivalent to ownership for the purposes of
establishing liability.
A local government also may incur legal liability for causing or contributing to the environmental
contamination as the result of its use of the property or by a party that sublets the property from the
local government. Conducting due diligence to understand the environmental conditions can therefore
be as important when leasing a property as it is with acquiring a property.
Before entering into a lease, a local government should carefully consider its environmental liability risk,
including whether it might qualify for any liability protections under specific statutes.
4.8.2.4 Acquisition and "Simultaneous" Transfer to a Third Party
Acquisition and simultaneous transfer to a third party is similar to the above approach, except that the
local government and the third-party recipient of the property prearrange their agreements for the
property, and the property's transfer can be accomplished immediately after the acquisition by the local
government. This has the potential advantage to the local government of minimizing expenditures and
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property maintenance responsibilities; however, control limitations may be similar to those where the
local government acquires the property and transfers it to a third-party months or even years later.
4.8.2.5 Col la bora tion with the Property Owner
In some situations, the property owner may be unwilling or unable to perform environmental
investigation, cleanup or other activities needed to improve the marketability of the property or address
health and safety issues but may allow or work with the local government to do so. To gain support for
this approach, local government officials may need to build a convincing case that such collaboration is
in the best interests of both the property owner and the local government.
Collaborative partnerships may be one way to deal with mothballed properties, where the owner
continues to pay property taxes, but does not do anything to clean up or improve the property.
Cooperative owners can provide property access for environmental assessments and other
investigations without involving the local government in the chain of title.
Depending on the nature of activities performed by the local government, the local government may
need to consider obtaining indemnifications and other agreements with the property owner. As with
other property disposition strategies that lead to direct involvement in activities on the property (e.g.,
investigation, cleanup, construction), the local government should consider whether this carries an
unacceptable risk of legal liability.
4.8.2.6 Transfer of Tax Liens
Where allowed under state law, the local government may transfer or sell tax liens for the property to a
third party who then forecloses on the property and takes title. This action can be used where the
property is abandoned or where the current title holder is in arrears on tax payments. State laws
governing the right of redemption by the owner or other party with a vested interest in the property
also will need to be taken into account.
While this process can take a year or longer to complete, it may be worth considering in situations
where the local government can attract qualified developers and exercise sufficient control over
development. Many local governments also auction portfolios of tax liens.
Sometimes, however, a party will acquire the portfolio with the intention of taking action on only certain
properties in the portfolio. This may actually delay or inhibit redevelopment on the remaining
properties.
4.8.2.7 Incentives to Promote Redevelopment
Generally, incentives and incentive packages pose fewer project risks to a local government but provide
it with less control over the development of the property. For example, certain financial incentives, such
as those that involve forgiving back property taxes, could carry few environmental liability risks, but may
result in significant financial risk and lack support within the community. Still, local government
incentives can sometimes be viewed as a more attractive alternative than property disposition
strategies that require more direct and active local government involvement in the brownfield property.
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Other examples of local government incentives are:
4.8.2.7.1 Zoning and Use Exemptions
The local government may increase a property's attractiveness to developers by changing zoning or
creating zoning and use exceptions prior to the developer talking title, as zoning and land use often
represents a great source of uncertainty for developers. However, the local government can run the risk
of establishing an unwanted precedent by granting such exceptions.
4.8.2.7.2 Tax Increment Financing (TIF)
TIFs can be a tool to attract developers to properties that are otherwise financially unappealing. TIFs
encourage development of many types of underutilized properties, not just those with environmental
issues. As with non-brownfield properties, the development needs to result in an increase in the value of
the property for this technique to make economic sense. The local government also should carefully
consider future obligations and tax revenues to make sure it can afford to grant this type of incentive.
(See Council of Development Finance Agencies [CDFA]: Tax Increment Finance (TIF) Resources for
additional information on tax increment financing.)
4.8.2.7.3 Infrastructure Improvements
The local government can make a project more financially attractive by providing infrastructure
normally paid for by the developer. A local government's investments on new infrastructure will
generally have to be made before any tax revenues are realized.
4.8.3 Screening Property Disposition Strategies Based on Project Goals
The local government should screen its property disposition strategies to determine compatibility with
project goals and risk management considerations to identify one or more strategies that warrant
further consideration.
The first question is whether the local government needs to intervene at all. If developers are willing to
reuse the property in a way that the local government supports, the local government may be advised
to step out of the way and let the development proceed. On the other hand, if no one has brought
forward a proposal that is acceptable to the local government, or financially attractive to a developer,
more proactive involvement by the local government may be appropriate.
The screening process eliminates a property disposition strategy from further consideration when it is
apparent that it will not reasonably achieve the project goals. Screening avoids spending resources
unnecessarily and provides an early reality check for the project.
Documentation: Identify and document the key elements of the disposition strategy for the project
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References:
EPA: Plan for Brownfields Redevelopment Success: Site Disposition Strategy
Northeast-Midwest Institute: Mothballed Sites and Local Government Acquisition: How State Liability
Protections. Eminent Domain Reforms, and Cost Recovery Authority Can Spur Local Government Action
to Acquire and Redevelop Difficult Brownfields Sites. May 2008
Northeast-Midwest Institute: Commentary - Overcoming Impediments to Public Agency Acquisition of
Brownfield Sites. September 2009
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5 Reuse Implementation Strategy
Community Needs arid Concerns
Implementing a reuse strategy occurs
after the reuse planning process
Collect Information
a Reuse Assessment
Define Path Forward
Reuse Plan
property disposition to move forward
with implementation. The reuse
implementation strategy outlines the
approach for:
identified one or more feasible reuse
scenarios, along with a plan for
Revitalization Ready Reuse Implementation Strategy
Make it Happen
Reuse Implementation
• Identifying risk management tools and approaches to mitigate or minimize risks and liabilities
(see Section 5.1).
• Developing a Brownfields Investment Package (see Section 5.2) and Resource Roadmap (see
Section 5.3 )to Identify resources and attract investment.
• Leveraging resources (see Section 5.4).
• Addressing site investigation and cleanup on the property (see Section 5.5).
• Disposing of the property (see Section 5.6).
5.1 Risk ManagementTools and Approaches
Risk management includes several activities, including risk evaluation, risk control and risk transfer. This
section provides an introduction to the tools and approaches that are commonly used by local
government when redeveloping brownfield sites. Risk management is discussed in more detail in
Appendix A.
Risk evaluation identifies likely adverse events and includes a two-part evaluation for each event: the
likelihood of an adverse event occurring, and the consequences of that event. A particular event may be
likely to occur, but if the consequences are low, the risk also could be considered low. If an event has a
high likelihood of occurring and a high potential consequence, the risk may be considered high and
unacceptable.
Risk is a function of the likelihood and consequences of an adverse event. In evaluating risk, both factors
need to be considered together. In the graphic below, Point A (high likelihood, high consequence) is a
high-risk event, while Point B (high likelihood, low consequence) and Point C (low likelihood, high
consequence) represent only low-risk events.
Once potential adverse events are identified and there is an understanding of their likelihood and
consequences, potential ways to manage these risks can be considered. The risks can then be
reassessed under the risk management approach.
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Ideally, risk management evaluations are made on a
quantified basis. However, they are often made on a
qualitative or comparative level: How likely is it? What
could happen if it occurs? And what can be done to
minimize either or both? Incomplete or unreliable
information complicates these determinations.
As a practical matter, risk management usually comes
down to managing uncertainty. For example, when
crossing the street, a pedestrian evaluates the
frequency and speed of the cars, the distance to be
traveled, their own agility, conditions of the road, and
other relevant information before making that
decision. Without that information, the pedestrian
doesn't have certainty of safety and may decide that
Uncertainty in the context of redevelopment can be associated with information that:
• is potentially available, but unknown (e.g., data gaps in sampling and analysis); and
• must be inferred or imagined because it involves an event that has not yet occurred and is not
fully within one's control (e.g., will EPA take an enforcement action? Will an abutting property
owner sue?).
These categories of uncertainty are often interdependent. For example, with greater understanding of
the environmental condition at a property, the local government can more certainly predict whether
EPA or the state might require further investigation or cleanup of the property.
Risk management is typically conducted in an iterative, staged manner and can involve traditional tools
or other approaches, including:
• Insurance products.
• Indemnification agreements.
• Additional data gathering.
• Delay of acquisition until further cleanup is completed.
• Use of a different method of property acquisition.
There are no shortcuts to risk management. The selection of risk management tools and approaches to
use in any particular circumstance will depend on the local government's needs and sensitivity to risk.
No one tool or approach is likely to provide absolute protection.
Some tools and approaches, such as insurance products or contractual provisions, can provide
important benefits, but should not be used as a substitute for careful analysis and proactive strategies
that reduce uncertainties and the source of potential risks.
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o
o
1
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Hig-h R
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No one tool or approach is likely to provide absolute protection. Employing multiple layers of protection
will often be necessary — with specific tools and approaches reinforcing or building on others. For
example, indemnification agreements can be most effectively negotiated if the parties have a clear
understanding of the risk they are attempting to transfer.
Indemnification agreements also may need to contain
specific escrow or insurance provisions that back up the
indemnification provisions. Similarly, insurance underwriters
may be more likely to provide broad pollution coverage and
charge the lowest premiums for environmental conditions
that are well-characterized and controlled.
No one tool or approach is likely to
provide absolute protection. Employing
multiple layers of protection will often be
necessary — with specific tools and
approaches reinforcing or building on
others.
Each tool and approach has distinct limitations that must be understood in order to be used effectively.
For example, indemnification agreements can be used to clarify responsibilities between the local
government and another party, such as the property owner and developer; however, the
indemnification agreements will not necessarily shield the party being indemnified against CERCLA
liability. Local governments should seek expert legal advice regarding the use of indemnities and should
be aware that, depending on the circumstances of their use, they also may undercut the ability to meet
the requirements of some CERCLA liability defenses. As another example, insurance products can limit a
local government's financial exposure with respect to the specific circumstances defined by the
coverage but may be inappropriate as a long-term solution. Insurance products also are difficult to
obtain for smaller-scale projects and may be prohibitively expensive in some cases.
Risk management tools and approaches can generally be separated into three categories to 1) better
understand or quantify risks; 2) control risk; or 3) transfer risk. Sections 5.1.1 through 5.1.3 provide
additional discussion for each of these categories. Within each of these categories, risk management
tools can generally be further categorized as relating to:
• Property activities.
• Statutory/regulatory protections.
• Transactional activities, including contract provisions.
• Insurance.
Some risk management tools and approaches associated with each of these categories that are available
to local governments are identified in Appendix A. The uses and limitations of some of these tools are
further described on EPA's Brownfields website. Useful resources available on that website are:
• Environmental Insurance and Risk Management Tools: Glossary of Terms
• Environmental Insurance and Risk Management Tools in Brownfields Cleanup and
Redevelopment
• Environmental Insurance Helps Ensure Redevelopment
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Before discussing specific risk management tools and
approaches, the local government should first gather
information that can reduce data gaps. To that end, one
of the most important steps that a local government
can take is to consult with EPA or the state agencies
overseeing the cleanup with respect to the
environmental status of the property and the cleanup
required for the property. EPA and the states
understand the legal and technical complexities
associated with the cleanup and reuse of brownfields
and are sympathetic to the challenges that local
governments face in tackling them. They want to help local governments safely bring properties
burdened by environmental issues back to the public tax rolls.
5.1.1 Understand/Quantify Risk
Understanding the risks involved in a transaction or a course of action is the foundation of risk
management. Information gaps can hinder the ability to adequately define and quantify project risk —
and can in themselves introduce risk — and efforts to close the most significant of those information
gaps will often be the first focus in managing risk. Where significant information gaps exist, the local
government will need to assess whether the costs and risks of obtaining that information are justified.
Risk quantification considers the potential economic costs attributable to that risk and allows that risk to
be accounted for in the project pro forma. Not all risks can be reduced to purely economic terms;
however, some risks may need to be evaluated on a qualitative or comparative basis. Actions to
understand and quantify risk are generally associated with property activities (see table above).
5.1.2 Control Risk
Some risks can be controlled by taking actions to eliminate or reduce the source of the risk. One
example of risk control is assuming the responsibility for conducting a cleanup action in accordance with
applicable regulatory requirements. A local government may also control potential liability and risk by
ensuring that the local government meets the criteria for qualifying for and maintaining any applicable
statutory liability exemptions. Risks also can be controlled through transactional strategies and
insurance mechanisms. Actions to control risks are generally associated with property activities,
statutory/regulatory protections, and transactional activities (see table below for examples).
Understand and Quantify Risk
Property Activities that
Local Governments May Take
Meeting with EPA and State Regulators
Due Diligence/All Appropriate Inquiries
Environmental Investigation
Cleanup Action Planning
Reasonable Worst-Case Scenario Planning
Engaging Stakeholders
Financial Analysis
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Control Risk
Property Activities a Local Government May Take
Statutory/Regulatory Protections
Timing Local Government Involvement
Statutory Exemptions and Defenses
Interim Cleanup Action
Prospective Purchaser Agreements
Cleanup Action
No Action/No Further Action Letters
Voluntary Cleanup
Other Determinations of Completion
Remedial Systems Monitoring and Maintenance
Transactional Activities
Institutional Controls
Escrow Accounts
Oversight of the Environmental Contractors
Purchase Price Adjustment
Following Accepted, Good Commercial Practices
Grants
Tax Benefits and Credits
Private Investors
Specialized Loans
Redevelopment Authorities
Land Banks
Transfer Risk
Transactional Activities
Insurance
Indemnification
Comprehensive General Liability
Representations and Warranties
Pollution Liability
As Is Provision
Errors and Omissions
Covenants
Cost Cap
Assumption, Retention and Release Provisions
Secured Lender
Schedule of Included or Excluded Liabilities
Finite Risk
Post-Signing and Pre-Closing Conditions
Institutional Controls and Post-Cleanup Action Care
Fixed Price or Performance-Based Contracts
5.1.3 Transfer Risk
Risks that the local government cannot control cost-effectively can sometimes be transferred to third
parties through mechanisms such as indemnification agreements and insurance. For example, if the
local government ends up with a statutory obligation to clean up contamination at a property, risk
transfer can potentially reduce its financial exposure. It is critical to understand the limitations of the
risk transfer mechanisms. Actions to control risks are generally associated with transactional activities
and insurance (see table below for examples).
f \
Documentation - Summarizes risk and liabilities and actions (refer to the Constraints tab in
Revitalization-Readv Workbook).
< J
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5.2 Brownfields Investment Package
A brownfield investment package is a document and/or website that will help you communicate the
distinctive assets, advantages, and financial information for your redevelopment project. It should
describe a viable investment opportunity based on your community's specific goals and redevelopment
vision.
While a brownfield investment package ("package") is used to explain the overall market traction and
potential for the redevelopment in a way that attracts local, regional, and national capital and other
resources, it also helps communities organize their stakeholders around a unified vision and make
decisions driven by market realities and site potential.
The process of creating a brownfield investment package offers your community an opportunity to
better understand the obstacles and constraints that can be overcome through prioritized local
investment and development decisions. It is especially useful for weaker market areas. Your community
can use the process to think through how to implement that redevelopment and organize assets and
incentives in ways that advance sustainable and inclusive growth.
Many communities establish a task force led by public, private and civic institutions as their first step in
designing a package. This approach helps ensure that a broad mix of city, anchor institutions and
community leaders can work together and with the community to create the package. The task force is
often set up to assign responsibilities with firm deadlines to the members. Once the package is
complete, the task force members can help bring visibility to the package and identify appropriate
incentives (e.g., zoning, low-cost or no-cost land, tax increment financing and tax abatements) that align
with the community's vision and priorities.
Organizing a task force is not feasible for every community; however, your community can create the
package with an organization leading the effort who coordinates with key stakeholders and keeps the
community up to date. Encourage key stakeholders to voice their support throughout the process to
signal local commitment to the project. When complete, use as many channels as possible outside your
local area to bring the highest visibility to the package.
In addition to describing key investment opportunities, local flavor and enthusiasm should be evident
throughout the package. Use the package to celebrate the unique character and assets within your
community. Your brownfield investment package should contain the following common elements:
5.2.1 Economic Context
All communities exist within (and are economically attached to) a broader area and regional economic
ecosystem. To that end, the brownfields investment package should represent the redevelopment area
at varying economic levels based on market potential. It should set the economic context by providing
information on driving market clusters, sectors, institutions and companies that define its unique assets
and demonstrate the strongest economic growth opportunities given general trends and dynamics.
When applicable, it also should explore recent trends in entrepreneurship, company formation and
growth, and venture funding.
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5.2.2 Governance Context
The brownfields investment package also should act as an introduction to local governance by providing
an overview of government structure and leadership. It should indicate which state and local entities are
the most important points of contact and include their contact information. The package needs to
provide a transparent description of any local resources and incentives relevant to your redevelopment.
5.2.3 Local Information
After setting the larger context, the brownfields investment package should present a granular
assessment of your community's competitive position and prospects. It should include specific
information on growth dynamics, investment patterns and catalytic projects in the immediate area.
5.2.4 Project-Specific Information
The brownfields investment package also should describe the range of opportunities specific to the
redevelopment area. This should include whether it is near infrastructure, areas of economic growth,
the availability of additional land and buildings for economic use, or the presence of anchor institutions
like universities, hospitals, and major employers. It is useful to include whether your community has site
control, how the redevelopment aligns with city goals, completed conceptual design(s) and adequate
financial analysis.
5.2.5 Areas of Focus
The brownfields investment package should be grounded in local data and local opportunities. It should
reveal a distinctive economy with several pathways for growth and investment. The package should be
used to set the stage for different types of investors - public, private and civic - to immediately
familiarize themselves with your community and redevelopment opportunity. The package should
generally include the following key focus areas:
• Regional introduction and governance;
• Market summary;
• Area overview and assets;
• Specific property overview; and
• Development potential.
Reference:
EPA: Creating a Brownfields Investment Package
5.3 Resource Roadmap
After project costs are determined, your community will need to identify potential funding sources to
implement necessary actions. Funding sources can include:
• Tax increment financing (TIF), or TIF equivalent.
• Tax credits.
• Tax exemptions.
• Enterprise Zones and Quality Jobs Programs.
• Opportunity Zones.
• New market tax credits.
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Permit/impact fee waivers and rent abatement.
Sales tax revenue sharing.
Grants.
Bond issuance.
Cash/local government direct investment.
Job credits.
To help with the funding responsibilities, a local government should engage in partner discussions or
develop a Resource Roadmap (see EPA's Setting the Stage for Leveraging Resources for Brownfields
Revitalization and Plan for Brownfields Redevelopment Success: Resource Roadmap) to identify
potential sources for the funding needed for the project, as well as the timing and requirements that are
associated with the funding. The Resource Roadmap will serve as a useful tool for developing a strategy
for leveraging funding for brownfields and community revitalization.
The Resource Roadmap can be a handy
guide for project teams pursuing grant
and loan funding. It also can be a great
information tool to provide to local
leadership (such as a city council) and
funding champions (such as state and
local legislators).
A Resource Roadmap is a document, sometimes in matrix
form, that identifies revitalization priorities, their key
components and phases, and the estimated cost for each
project component and phase (or at least the most
important next phases). While the Resource Roadmap is
similar to the sources and uses chart in that they both
identify sources of funds for a project, it serves as a strategic
guide to project leveraging by matching individual project
components to appropriate funding and financing sources, whereas the sources and use chart provides
an accounting of available funds to identify, organize and balance potential expenses, funding needs and
sources of funding. The Resource Roadmap identifies all potential funding sources for your project,
including the timing and complexity of the funding process. In concert with the other planning phases,
the Resource Roadmap outlines a strategy for identifying and tapping into available funding sources for
individual project components from federal, state, philanthropic, private sector and local financing
sources.
The Resource Roadmap can be a handy guide for project teams pursuing grant and loan funding. It also
can be a great information tool to provide to local leadership (such as a city council) and funding
champions (such as state and local legislators). The Resource Roadmap can help map out potential
sources of funding and how to meet matching-share requirements for individual funding sources.
Communities also should be able to inform developers/investors of available sources/incentives and
financial benefits to allow projects to progress where financing gaps exist that would otherwise make
projects economically unviable.
What is involved in creating a Resource Roadmap?
Defining the specific project components and phases for each priority brownfield project.
Estimating costs for each component and phase.
Identifying the best sources for funding each component and phase.
Creating a chart or matrix with this information, organized by project component and phase.
Updating the Resource Roadmap as funding commitments are pursued and secured.
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Reference:
EPA: Plan for Brownfields Redevelopment Success: Resource Roadmap
Initial investments, when made
strategically, can result in attracting
additional investments because they
establish commitment to a project, instill
confidence in the potential success of a
project, and address the sustainability of
the project.
5.4 Leveraging Resources
Leveraging is the use of existing resources or funding to
attract additional resources or funding. Wise use of existing
investments may lead to other investments (funding or
other types of resources) from other parties. It is a good
idea for communities to begin their brownfields
redevelopment projects by establishing strong leadership,
assembling a team of committed partners, engaging with
the community, and carefully assessing how to make the
best use of limited local dollars so that initial local
investments will leverage additional funding.
Initial investments, when made strategically, can result in attracting additional investments because
they establish commitment to a project, instill confidence in the potential success of a project, and
address the sustainability of the project. Initial local investments can include:
• Using available local funds for planning, site assessments or property purchases.
• Focusing personnel on identifying and securing sources of seed money for a project (e.g.,
government or foundation grants) and those that will leverage additional investment (i.e.,
community planning grants or brownfields assessment or cleanup grants).
Examples of leveraging include:
• When a local government uses its own local resources to purchase property and conduct an
environmental assessment of the property, or when a local government obtains a brownfields
assessment grant and uses those funds to assess the environmental conditions at the property,
the community can use the results of that investment to attract private investment.
o The initial investment in the property purchase or the environmental assessment
demonstrates commitment on the part of the local government to the reuse or
redevelopment of the property.
o The same initial investment in the environmental assessment of a property provides
information to potential investors or developers that can delineate the level of risk
associated with further investments in the property or project.
• Many nonprofit funders require grant applicants to demonstrate local commitment to a project
by committing matching funds or in-kind resources, such as staff time and the use of locally
owned equipment.
• Local investment or project commitment: Private investors and developers often judge a
project's potential for success by the degree of local investment and commitment.
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• Redevelopment projects established within local government master plans as priority projects
may have a better chance of attracting private investment than projects merely listed in a
Request for Proposal (RFP) or real estate posting.
• Projects or properties where local governments invested in infrastructure improvement, transit
upgrades or beautification projects may have a greater advantage in attracting additional
funding due to the demonstration of local commitment.
• Federal and state agencies may give preference to grant applicants who can demonstrate
commitments of resources from other funding sources, particularly when the locality uses those
resources in effective ways to make genuine progress toward meeting project goals.
• Projects where strong local leadership shows a willingness to collaborate with other partners
and investors demonstrate a potential for sustainability. Potential investors are attracted to
projects where local leaders are committed to working with them over the long term for the
mutual benefit of all investors.
• Strong public participation and the ability to demonstrate community commitment to a project
also can be leveraged to attract the collaboration and investment of private partners. Investors
need a sense of commitment and a level of confidence that their investments will lead to
success and an acceptable rate of return.
• Technical assistance and in-kind contributions from project partners demonstrate local
commitment to the project, which often is essential when applying for state and federal grants
and in attracting outside developers.
The EPA guide Setting the Stage for Leveraging Resources for Brownfield Redevelopment will help local
communities successfully leverage resources for brownfields and community revitalization. It focuses
primarily on what communities can do before they solicit funding to organize themselves and make the
preparations necessary for mounting a successful leveraging effort. The guide provides a step-by-step
approach to help localities organize efforts to pursue and secure funding from a variety of sources for
brownfields and community revitalization, including successful case studies and resources from EPA.
Reference:
EPA: Anatomy of Brownfields Redevelopment
EPA: Community Actions that Drive Brownfields Redevelopment
5.5 Site Investigation and Cleanup
An important part of the reuse implementation strategy is developing an approach to address the site's
environmental condition and related cleanup. This approach needs to include how environmental
cleanup activities will be handled during any property transaction or the redevelopment activity.
As discussed in Section 4.4.1, a completed site investigation is important to understanding and
addressing potential risks and liabilities to the local government or to a current or future owner or
developer of a property. In particular, the completed site investigation is needed to evaluate potential
remedial actions that will be required for the property, and the potential for land use and engineering
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controls that may impact the use of portions of the property. Decisions with respect to remedial action,
including the use of land use controls, should be made in the context of the proposed use for the
property. The approach to remedial action on the property will be critical to the reuse.
The approach to site investigation and cleanup may differ depending on the property disposition
strategy selected. In some cases, if the local government is planning to purchase the property, it may
elect to complete the investigation and the cleanup activity prior to bringing on a developer or
transferring the property to a developer. In cases where the economics of a property transaction
support the transfer of the responsibility for completing the cleanup, the local government may want to
have a future buyer or developer complete the remedial action.
Integrating implementation or completion of remedial actions with development activities on the
property can create synergies and project efficiencies. For example, roads, parking and foundations can
act as engineering controls by limiting direct contact with contaminated soil. Locating monitoring wells
and remedial action equipment, and taking into consideration the location of buildings and structures
on the property, can be critical to the ability to effectively develop the property. These synergies and
efficiencies provide an economic benefit while accelerating the implementation and completion of
development on the property. Taking advantage of these synergies and efficiencies can be achieved by
involving the agencies overseeing the investigation and cleanup required for the property in the reuse
planning process.
Reference:
EPA: Brownfields Road Map to Understanding Options for Site Investigation and Cleanup: Sixth Edition
5.6 Property Disposition
The disposition of a property requires defining an approach to ownership and development of a
brownfield property in a manner that provides value to the current and potential future owner and
developer. Depending on the property disposition strategy (see Section 4.8) that is to be used, the
approach for disposition may be different. For example, if the local government is the owner of the
The disposition of a property requires
defining an approach to ownership and
development of a brownfield property in
a manner that provides value to the
current and potential future owner and
developer.
property and intends to remain as the owner, disposition
may involve the lease of the property to a developer or a
contract with a developer to develop the property. If the
local government is planning to purchase the property or
transfer the property to a third party, the disposition will be
the sale or transfer of the property. The disposition may
involve a request to solicit and identify prospective
purchasers or developers.
5.6.1 Interested Parties
A local government or other development entity will need to identify parties interested in acquiring,
redeveloping, leasing and using the redevelopment site. Potentially interested parties should be
identified based on the attributes needed to complete the proposed development. For example, a
potential consideration is identifying parties that have experience with brownfields redevelopment or
access to resources necessary to successfully implement the reuse plan.
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5.6.2 Expression of Interest (EOI) Process
The process typically includes testing the market through an expression of interest (EOI), potentially
followed by a more formal request for proposals. An EOI is a formal, often confidential, process that will
gauge interest in a site and identify potential redevelopment opportunities. The process involves a
written request for non-binding EOls, site tours and review of responses. The EOI request packages
materials that describe the site, available utilities and infrastructure, and environmental status. Through
the EOI process, communities can obtain conceptual development proposals and pre-qualified
development teams.
5.6.3 Request for Proposal (RFP) Process
An RFP is a formal, competitive process for obtaining acquisition and redevelopment offers for a
redevelopment site. It involves a written RFP package with documentation on site conditions and assets,
copies of existing surveys and deeds, information about site tours and interviews, and a review of
proposals. The solicitation materials of the RFP also should clearly define the municipality's goals for
redevelopment. The process is usually implemented after completing a site reuse assessment.
Interested parties must have access to reliable information on the site to submit a bid.
5.6.4 Outreach
As part of the process, it is crucial to reach out to necessary markets to identify interest and relay
information on site potential and EOI/RFP status. This may include outreach outside of the regional area
to markets that may have interest in the assets unique to the municipality. The outreach process also
may include scheduling events around the EOI/RFP processes to attract key individuals from the
development community to the municipality for them to visit the site and understand the potential
opportunities for redevelopment. The outreach process should occur before and during the solicitation
process. The more thorough the outreach process, the better the opportunities for achieving the desired
redevelopment goals.
References:
EPA: Plan for Brownfields Redevelopment Success: Evaluation of Market Viability
EPA: Plan for Brownfields Redevelopment Success: Site Disposition Strategy
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6 Reuse Implementation
Define Path Forward
Revitalization Ready Q* Reuse Implementation Strategy
Collect Information
U Reuse Assessment
Community Needs and Concerns
Reuse Plan
Implementation of a reuse plan will
vary based on the property or
properties involved, the environmental
condition of the property and many
other factors that are unique to a
particular transaction. Below are
several key issues that can be
important to the successful
implementation of the reuse.
Make it Happen
V Reuse Implementation
6.1 Property Sale/Lease Agreement
The property transaction will involve a contractual agreement to define the terms of the transaction and
the responsibilities of the buyer and seller with respect to the environmental condition of the property.
This typically will involve outlining the responsibilities of both parties with respect to cleanup and long-
term operation, maintenance and monitoring, as well as providing indemnities and financial assurance
mechanisms.
6.1.1 Environmental Responsibility
The property sale/lease agreement should clearly define the parties responsible for conducting
remaining investigation and cleanup activities, as well as responsibility for long-term operation,
monitoring and maintenance of ongoing remedial action, and institutional and engineering controls. The
agreement should describe the responsibilities for performance of environmental activities, including
financial responsibility and regulatory compliance; provide indemnities related to the retained or
assumed environmental responsibilities, procurement of pollution legal liability (PLL) insurance or other
financial mechanism; and address other risk and liability transfer issues.
6.1.2 Integrating Cleanup with Redevelopment
Coupling redevelopment with cleanup activities can ensure cost-effective site cleanup and address
potential environmental risk. Brownfields real estate transactions provide an opportunity to integrate
environmental cleanup with sustainable reuse of a property. The design and implementation of the
reuse of the property can incorporate potential cleanup activities, as well as long-term operation,
maintenance and monitoring related to the environmental condition of the property. Reuse planning
can incorporate siting of cleanup equipment, monitoring wells and buildings to avoid conflicts with the
development.
6.1.3 Engineering and Institutional Controls
Many brownfield properties incorporate in their remedial plans controls that restrict property access or
use. The presence of existing or proposed engineering and/or institutional controls should be identified
in the transaction. Typically, engineering controls such as asphalt caps and fencing require periodic
inspections and repairs as necessary to ensure they remain protective of human health and the
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environment. Institutional controls such as land use restrictions often take the form of deed restrictions
or easements. Property owners must be aware of these restrictions and ensure they transfer to the new
owner if the property is sold.
6.2 Transactional Due Diligence
When implementing a reuse project, there are many items to be aware of in order to complete a
transaction and make the project a reality. Below is a list of information that may be needed prior to
closing on a transaction.
6.2.1 All Appropriate Inquiries
As discussed in Section 3.1.1, the Phase 1 ESA is an environmental due diligence report prepared for real
estate transactions such as land purchases and building purchases. If a property is impacted by an
environmental condition on the property or on adjacent properties, in order to meet the AAI
requirements and qualify for certain protections from liability under CERCLA, ensure that the one-year-
and-180-days prior to acquisition update requirements for all appropriate inquiries are met (see Section
3.1.1.2).
6.2.2 Geotechnical Study (Soil Study)
The goal of a geotechnical investigation is to obtain information on the physical properties of the soil to
support development on the property. In the case of a geotechnical investigation for a development
project, the following are important areas of examination:
• Footprint of the building.
• Land area on which the building will be located.
• Land slope.
• Land closeness to water (lake, stream, river).
• Geographical location where the building will be located.
6.2.3 Property Survey
A property survey is a legal document that shows the location of all improvements relative to a
commercial property's boundaries. For property transactions, an American Land Title Association (ALTA)
survey provides a detailed land parcel map, showing all existing improvements of the property, utilities
and significant features of the property. It identifies easements and exceptions cited within an insurance
title commitment document. The ALTA survey is a combination of a boundary survey, title survey and a
location survey, and generally contains an illustration of the physical features of the property and a
written report detailing the surveyor's opinions and concerns.
6.2.4 Local Government Review and Approval
Once the initial plans have been developed and the purchase contract signed, it is time for the
implementation process to occur. This next phase focuses on critical signoffs and approvals required for
the proposed reuse development to come to life.
In order for projects to become realities, they must first get the approval of the appropriate local
government and other government entities. These local government processes should be reviewed to
ensure they are appropriate, required and adequate for optimal development. If possible, local
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governments can listen and work with the development community to better understand their needs in
order to design the most efficient process for both parties. Submittal and review often entail several
processes.
6.2.4.1 Zoning Review
Zoning review is meant to ensure the compliance with standards and provisions set by each local
government, while encouraging quality development. It is intended to encourage the most appropriate
use of the land, enhance aesthetic value, and facilitate adequate provision of transportation, schools,
parks, and other public requirements.
6.2.4.2 Site Plan Review
A detailed site plan is submitted, along with associated documents to particular government
departments, agencies, utility companies and others, for review and initial comments. The purpose of
the review is to address how the particular development is designed and to address any issues related to
public safety, water supply, sewage disposal, utilities, traffic, emergency access, public obstructions, and
a variety of other elements.
6.2.4.3 Design Review
A design review provides architectural building elevations, landscape plans and drawings related to
design principles and aesthetic requirements. Once the site plan and design are approved during the
design review process, a developer will generally be allowed to submit construction drawings for review
by the local government building department.
6.2.4.4 Entitlement Process
As part of implementation, a development must be granted permission from local regulatory agencies
and the community. From a developer's perspective, it is crucial to be prepared for this stage of the
implementation process, as there will be many questions from local government planners, local
residents and government leaders. From a local government perspective, it is important that these
processes are streamlined to ensure the process is as efficient as possible. Examples of entitlement can
be:
• Rezoning.
• Zoning variances.
• Use permits.
• Utility approvals.
• Road approvals.
• Landscaping.
6.2.4.5 City Council or Local Planning Commission Approval
Reuse developments must often first receive approval from the city council, local government planning
commission or some other local government body. Working with and gaining approval from the
government's planning department generally allows for a planning commission or city council to
approve the project at a formal public hearing. However, not all projects need the official approval of a
city council or planning commission.
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6.2.4.6 Public Hearing
In addition, a public hearing may be required for local property owners and residents, in order to hear
feedback on the proposed reuse development. Any individual or community group, including a
neighborhood council, may speak on the proposed project.
As the project works its way through the entitlement and local approval processes, a developer will
begin to get a much better sense of what cost and timing are required to construct the project
successfully. Local government efficiency during this process is critical to further reduce risk and
alleviate any unnecessary concerns that may arise.
6.2.4.7 Building Plan Submittal and Approval
Once a project receives approval from the local planning commission or city council, it moves into
construction drawing/building plan submittal with the building department.
The local government will then review the plan for compliance with the approved preliminary site plan,
project conditions of approval, the required building plan checklist, and all applicable codes and
ordinances. A planner will review the site plan for final approval.
Once plans have been reviewed during the usual rounds of the review process and determined to be in
compliance with the local government codes, building permits are then issued. These permits give the
developer authority to start construction work. While the approval requirements are necessary, it is
important for the local government to facilitate the most efficient process as possible to remain
transparent and effectively guide the development community through implementation.
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APPENDIX A: RISK MANAGEMENT TOOLS AND APPROACHES
A.l Activities
A.l.l Meeting with Federal and State Regulators
Unless a local government is already an owner or responsible party for the property, there is probably
little downside for the local government in discussing potential property disposition strategies with the
regulatory agencies. These discussions can help identify potential pitfalls and other considerations that
might keep the local government from making costly and avoidable mistakes.
Federal and state agencies have considerable expertise in the environmental laws and programs that
might relate to a particular project, and although they cannot provide specific legal and technical advice,
they can help explain and guide local governments through the regulatory process. If the agencies have
had direct involvement with the property, they also should be able to discuss the nature of that
involvement, known environmental conditions, the need for additional studies and cleanup, future plans
for the property, potential EPA and state environmental liens, and other issues. In addition, they may be
able to point the local government toward funding and other resources that can be used for reuse
planning, environmental assessment and cleanup.
To make the most of these discussions, local government officials should first carefully consider the
material contained in this guide and how it might apply to their project.
A.l.2 Due Diligence and All Appropriate Inquiries
As described in Section 3.1, due diligence helps a local government to define the potential issues, costs
and risks associated with a property. Eliminating data gaps through due diligence can significantly
reduce uncertainty.
An all appropriate inquiries investigation is necessary to potentially qualify for certain liability
protections under CERCLA (see Section 3.1.1.2).
A.l.3 Environmental Investigation
Under many cleanup programs, Phase I and II ESAs are conducted to determine whether serious
environmental issues exist or could exist on the property.
Environmental investigations typically go beyond Phase I and II ESAs and provide the basis for making
actual cleanup decisions. As a result, environmental investigations generally provide a higher level of
confidence that the environmental conditions have been adequately characterized. This reduces
uncertainty regarding the cost and duration of cleanup activities, the likelihood of unanticipated events
complicating the cleanup, and other factors that could have an adverse impact on a redevelopment
project. For these reasons, developers and investors are generally more willing to consider properties
where environmental investigations have been conducted. Environmental investigations are discussed
in more detail in Section 3.2.1.
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A.1.4 Cleanup Action Planning
Cleanup action planning that takes into account future land use often allows the cleanup and private-
party property development efforts to be better coordinated. This can provide a number of risk
management benefits, including:
• Ensuring that future use of the site does not undermine the protectiveness of the cleanup.
• Minimizing unnecessary impediments to reuse.
• Reducing the costs of both cleanup and redevelopment by addressing them in the same
construction event.
• Designing buildings and other planned redevelopment infrastructure to be compatible with
cleanup activities.
The reuse assessment, described in Chapter 3, can be a useful resource document to help inform the
cleanup action planning process.
A.1.5 Reasonable Worst-Case Scenario Planning
Reasonable worst-case scenario planning is essentially used to answer the question: What is the worst
thing that could happen by moving forward with a particular property disposition strategy? This process
helps the local government to better understand the upper limits of its potential risk and liability.
Further, it helps to focus management efforts on the environmental issues that could have a large
impact on the project schedule and costs. Reasonable worst-case analysis also can help determine
appropriate insurance limits.
The worst-case scenario should be based on available information with reasonable, but conservative,
assumptions about the risks and liabilities that may be encountered. In some cases, several scenarios
may need to be evaluated to more fully assess potential risks.
A.1.6 Engaging Stakeholders
As discussed in Chapter 2, proactive stakeholder engagement will help ensure that community issues are
identified and addressed early in the redevelopment process. Reuse planning that involves community
stakeholders is a primary strategy for understanding and addressing community and environmental
justice issues prior to soliciting requests for proposals from developers. Developers typically want to
understand the interests of the community so they can determine without great expense whether their
development idea will be acceptable. In addition, once stakeholders have bought into a neighborhood
or community plan, they can be influential advocates for achieving that vision.
A.1.7 Financial Analysis
As discussed in Sections 4.4.2 and 4.6, financial risk is an essential consideration for a local government
involving itself in the cleanup and reuse of a brownfield property. Some level of financial analysis,
commensurate with the magnitude of financial risk, should be performed. That financial risk will likely
depend on the property disposition strategy and the specific nature of the activities contemplated.
A.1.8 Timing Local Government Involvement
The timing of local government involvement is a strategically important determination that can
dramatically impact project risk. Sometimes a situation necessitates a more immediate response by the
local government. In other situations, the local government may have the time to allow certain events to
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play out or to take additional steps to identify and manage risks before proceeding with a potential
acquisition or other property disposition strategy.
Examples of such steps include:
• Allowing EPA- or state-mandated assessments or cleanup activities to proceed, thereby reducing
uncertainty regarding a property's environmental conditions.
• Working with the community and other stakeholders to gain consensus around future uses of
the property and performing comprehensive investigations that more completely characterize
risks.
• Developing a plan for phased cleanup and redevelopment activities on larger properties.
• Identifying potential funding sources for cleanup, demolition, infrastructure replacement and
other activities.
• Negotiating partnership agreements with the current owners or potential developers.
The local government should also consider the possibility that delaying or foregoing action on a
property, even if the property is still privately owned, could in itself create unacceptable risks for the
local government.
A.1.9 Interim Cleanup Action
In some cases, it may be necessary or beneficial to undertake an interim cleanup action to address
imminent hazards on a property. Examples of these interim actions include the removal of abandoned
drums, cleanup of spills, and construction of security fences.
Performing interim cleanup actions to address the worst environmental problems or stabilize the
environmental conditions at the site also will make the property more marketable and possibly allow a
developer to obtain financing and insurance at more favorable rates.
Interim actions can be used to control cleanup costs (e.g., reducing the volume of material to be treated
or removed by taking steps to prevent the further spread of contamination). Interim actions also may
help guard against claims that a local government caused or contributed to a release through its
inaction. For reasons such as these, a local government may sometimes consider initiating interim
cleanup actions at a property.
Before taking any interim cleanup actions, however, a local government should ensure that it
understands any risks associated with the action, including the incurrence of liability. The interim actions
must be taken in a manner that does not worsen the environmental conditions at the site. The action
also must be in compliance with federal, state and local environmental requirements. To provide proper
coordination between federal, state and local authorities, most federal and state environmental cleanup
programs require proper notification prior to conducting interim cleanup actions.
After the completion of an interim cleanup action, additional environmental investigation, monitoring
and/or further cleanup action may be needed before a comprehensive, final cleanup is achieved.
A.1.10 Cleanup Action
As discussed in Section 3.2, a cleanup, or remedial, action is conducted primarily to reduce or eliminate
real or potential exposures to hazardous substances and other regulated materials. From a development
standpoint, cleanup actions can help manage project risk by reducing uncertainty associated with the
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environmental conditions. The extent to which this is true will depend on the specific nature of the
cleanup action.
If a local government is contemplating conducting a cleanup action or evaluating a property at which
cleanup actions have already taken place, it is important to consider how those cleanup actions are
likely to influence redevelopment efforts. Cleanup actions that remove all contaminants are generally
more desirable to developers but are not always technically feasible or cost-effective. Long-term
management of some waste in place is therefore often the best choice for many properties (see Section
3.2).
With effective planning between the entity conducting the cleanup action and the entity seeking to
facilitate the redevelopment of the property - which in some cases may be the same entity - potential
barriers to redevelopment and therefore project risks can be minimized.
Many factors can impact how well a cleanup action reduces project risk. Apart from non-cleanup-related
issues (e.g., the economy), these may include permanence (e.g., have contaminants been completely
removed? Have they been converted to a physical or chemical form that effectively prevents leaching or
reduces toxicity?). Other factors include the need for long-term operation and maintenance (see
Appendix A.1.12), the need for institutional controls (see Appendix A.1.13), the time it takes to complete
the cleanup action, and any physical barriers that might limit future uses (e.g., treatment buildings,
monitoring wells).
EPA does not have the authority under CERCLA to conduct or to require responsible parties to conduct
actions that are solely intended to provide enhancements or betterments to the property. An example
of a potential enhancement might be the construction of a parking lot that is not needed to implement
the cleanup. An EPA memorandum, Considering Reasonably Anticipated Future Land Use and Reducing
Barriers to Reuse at EPA-lead Superfund Remedial Sites. (March 17, 2010), further discusses when
actions taken to facilitate reasonably anticipated future land use may be within the scope of CERCLA
authority. With proper planning, it may be possible for the local government or developer (if one
already exists) to fund and/or construct enhancements in coordination with the cleanup activities.
A.l.ll Voluntary Cleanup
State response programs, commonly referred to as voluntary cleanup programs (VCPs), play a significant
role in assessing and cleaning up brownfields and other lower-risk sites. Many states have VCPs to
encourage and facilitate the cleanup of brownfield properties. The specific details of these programs
vary from state to state, but they are often designed to provide more flexibility to parties performing
investigation and cleanup activities. This flexibility potentially allows such parties greater control over
the conduct and scheduling of those activities and helps to reduce the associated costs.
EPA does not oversee cleanup activities at brownfield sites. Instead, EPA can support state VCPs through
grant funding to establish and enhance VCPs and may enter into non-binding memoranda of
agreements (MOAs) with individual states that include general enforcement assurances to encourage
the assessment and cleanup of sites addressed under VCP oversight. Further, at certain sites being
addressed under a state VCP, the 2002 Brownfields Amendments provide that EPA may not take a
CERCLA enforcement action against parties at the site, absent special circumstances. This provision
creates an important incentive for performing voluntary cleanups of brownfields under state VCP
oversight.
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EPA has entered into non-binding MOAs with most states that clarify the general roles and
responsibilities of each agency regarding cleanups under the state VCP. While an MOA, or absence of an
MOA, does not alter EPA's or a state's legal authority, the MOA may provide the general public and
development community with some confidence that EPA and the state agency are working in a
coordinated manner.
Links to state VCPs can be found in the Cleaning Up Brownfields under State Response Programs -
Getting to 'No Further Action' report.
A.1.12 Maintenance and Monitoring of Remedial Systems and Structures
Many brownfield properties can have residual contamination after the completion of a cleanup action.
To ensure continued protection of human health and the environment, engineering controls (such as
pavement that acts as a cap over contaminants) and monitoring (such as measurements of contaminant
levels in groundwater or indoor air) are often required. The engineering controls generally necessitate
some sort of maintenance. For example, where pavement will be serving as a soil barrier or cap, periodic
inspection for cracks and repaving are common maintenance activities.
Site monitoring serves to verify the results of environmental investigations, reveal trends in
contamination levels, and monitor the performance of remedial systems and structures. Site monitoring
may include the collection and analysis of groundwater, soil, air or other media. Generally, the cleanup
action plan or closure report will identify the required maintenance and monitoring activities.
Likely and known maintenance and monitoring requirements should be identified early on in planning
for the redevelopment. This includes determining which parties will be responsible for fulfilling these
requirements. If a local government takes on management responsibilities of a property through
acquisition or leasing, it should prepare a plan for meeting any obligations it might have regarding the
operation, maintenance and monitoring of the remedial systems and structures. This includes
establishing a routine schedule for inspecting engineering controls and conducting monitoring to
identify deficiencies and other developing problems before they become more serious.
Failure to perform the required maintenance or monitoring can allow the property conditions to
deteriorate and endanger human health and the environment, and may result in potential liability (see
discussion under CERCLA in Section 4.4.1.1). In addition, most post-closure environmental insurance
policies require fulfillment of maintenance and monitoring requirements as a condition of coverage.
Failure to properly conduct maintenance and monitoring can result in denial of insurance coverage
claims.
A.1.13 Institutional Controls
Institutional controls typically include easements, environmental covenants or deed notices, which
notify property users and future owners about the presence of residual contaminants that remain after
the completion of the cleanup action and of any restrictions on future uses of the land, surface water
and groundwater. (See Section 3.1.1.5 for further discussion of institutional controls.) Generally, the
cleanup action plan or the closure report for the cleanup action will identify the required institutional
controls.
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A.1.14 Oversight of the Environmental Contractors
Performing appropriate oversight of the site assessment, cleanup action and construction contractors
can potentially help reduce the local government's common law liability if something goes awry with the
redevelopment. The local government can include work out and mediation clauses in its contracts if
there is doubt as to the contractor's ability to fully perform the agreed obligations. The contracts also
can be staged or drafted with contingency clauses to reduce uncertainty on complicated development
projects.
Forward commitment contracts can sometimes be used to provide the certainty that a local government
needs to proceed with a project while providing flexibility if conditions change as the project progresses.
A.1.15 Following Accepted, Good Commercial Practices
The local government can potentially minimize the risk of contractual- and negligence-based liability by
following accepted good commercial and customary practices and by fulfilling the terms of the contracts
to which it has agreed.
A.2 Statutory/Regulatory Protections
Statutory exclusions and defenses can often be the first layer of protection for local governments or
other entities considering the acquisition or leasing of a potential brownfield property because they are
embodied directly into the law. Although sometimes subject to interpretation and legal challenges, they
can provide a solid foundation for building a risk management strategy. Government enforcement
discretion policies, while they do not carry the same weight as statutory exclusions and defenses and do
not bind private parties, also can potentially provide important protections for the local government.
Potential liability protections under federal and state cleanup statutes may or may not apply to a
specific property depending on the method of acquisition and other site-specific facts. A clear
understanding of potential statutory liabilities and the available exemptions and defenses to them is
needed for the local government to evaluate the various types of acquisition and control options. It also
is critical to fully understand the threshold conditions and continuing obligations that are necessary to
qualify for and maintain these liability protections.
A.2.1 CERCLA Liability Protections for Local Government Acquisitions
In 2018, Congress enacted the Brownfields Utilization, Investment, and Local Development Act of 2018
(BUILD Act). The BUILD Act amended CERCLA's Section 101(20)(D) liability protection for state and local
government acquisitions of brownfield property by adding a new category of exempt acquisitions and by
removing a requirement that the properties must be acquired "involuntarily." To assist local
governments and to clarify its enforcement discretion intentions, EPA developed guidance to provide an
overview of CERCLA's liability framework and protections and EPA's enforcement discretion policies that
may apply to local governments (see EPA: Superfund Liability Protections for Local Government
Acquisitions after the Brownfields Utilization. Investment, and Local Development Act of 2018).
Liability protections that may apply to local government acquisitions of brownfield property are
provided in Appendix A.2.2 to Appendix A.2.4 and summarized in the table below.
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A.2.2 State and Local Government Acquisitions of Brownfield Property
CERCLA § 101(20)(D) now provides that "[t]he term 'owner or operator' does not include a unit of State
or local government which acquired ownership or control through seizure or otherwise in connection
with law enforcement activity, or through bankruptcy, tax delinquency, abandonment or other
circumstances in which the government acquires title by virtue of its function as sovereign." EPA
generally treats a "unit of State or local government" to mean any unit of government within a state,
including a: (a) county; (b) borough; (c) local government; (d) city; (e) town; (f) township; (g) parish; (h)
local public authority, including any public housing agency under the United States Housing Act of 1937;
(i) special district; (j) school district; (k) intrastate district; (I) council of governments, whether or not
incorporated as a nonprofit corporation under state law; and (m) any other agency or instrumentality of
a multi-regional or multi-intrastate local government. In addition, EPA generally intends to exercise its
enforcement discretion and treat a local government acquisition as "by virtue of its function as
sovereign" only when a local government acquires title to a property via a function that can be
effectively performed only by governments using a mechanism available only to governments. (See the
table below for a list of these functions.)
A.2.3 Bona Fide Prospective Purchaser Provision
The bona fide prospective purchaser liability protection may be available for a local government that
purchases or leases a brownfield property if it establishes its bona fide prospective purchaser status
prior to acquisition and maintains its status after acquisition. It protects parties from certain CERCLA
liability as long as certain threshold conditions and continuing obligations, including all appropriate
inquiries, are conducted prior to acquiring the property, the purchaser does not contribute to hazardous
substances on the property, and the purchaser is not potentially liable or affiliated with a liable party for
cleanup on the property.
If there are concerns about state environmental liability, the appropriate state regulators should be
contacted to determine the availability of prospective purchaser agreements under state law.
A.2.4 Third-Party and Innocent Landowners
CERCLA § 107(b)(3) provides a "third-party" affirmative defense to CERCLA liability for any owner,
including a local government, that can prove, by a preponderance of the evidence, that the
contamination was caused solely by an act or omission of a third party whose act or omission did not
occur "in connection with a contractual relationship." CERCLA's third-party defense also includes an
"innocent landowner defense" as an exclusion to the definition of a "contractual relationship." The
"innocent landowner defense" includes "a government which acquired the facility by escheat, or
through any other involuntary transfers or acquisition, or through the exercise of eminent domain
authority by purchase or condemnation."
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Potential CERCLA
Liability Protections for
Local Government
Methods of Property Acquisition
Tax Lien and Delinquency
Foreclosures
Bankruptcy
Escheat
Eminent Domain
Transfer
Purchase
Inheritance or Bequest
Abandonment
Gift/Donation
State and Local
Government
Acquisitions
•
•
•
•
•
•
Bona Fide Prospective
Purchasers
•
•
•
•
•
•
•
•
•
Third-Party and
Innocent Landowners
•
•
•
•
Reference:
EPA: Superfund Liability Protections for Local Government Acquisitions after the Brownfields Utilization.
Investment, and Local Development Act of 2018
A.2.5 Other Determinations of Completion
States with voluntary cleanup programs provide no further action determinations or other documents to
verify when cleanup requirements under voluntary cleanup programs or other regulatory programs
have been adequately met. Each state will impose its own limitations on the scope of the document and
on the nature of any disclaimer and reopener language; however, in general, these determinations can
provide some level of closure and comfort to the various parties with a potential financial stake in the
property and its redevelopment (e.g., lenders, insurers, investors, tenants). In addition, some states
provide liability protections from state regulatory enforcement to purchasers that generally meet all
appropriate inquiries requirements and other requirements under the state voluntary cleanup program.
State determinations of compliance do not resolve issues of federal liability at the site.
A.3 Transactional Activities
A.3.1 Escrow Accounts
Escrow accounts can be used to cover issues not resolved in the purchase and sale of a property.
Whatever purpose the escrow agreement has usually occurs after the closing. This may include escrow
funds for remediation, long-term monitoring and fees associated with closure.
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A.3.2 Purchase Price Adjustments
If the buyer agrees to complete remediation or meet some other obligation in the future related to the
remediation or other activity identified during the due diligence, the seller can offer an adjustment to
the purchase price rather than pay for that expense directly.
A.3.3 Grants
Although not normally thought of as a risk management tool, grants can reduce the local government's
financial exposure or provide the funds necessary for the successful completion of the project. Local
governments may be eligible for certain types of EPA brownfield grants, including property-specific
grants for Phase I and Phase II ESAs, even though they are not the owners of a property. The 2018 BUILD
Act expanded brownfields assessment grant eligibility to nonprofit organizations organized under
Section 501(c)(3) of the Internal Revenue Code. Nonprofits are now eligible for both EPA Brownfields
Assessment and Cleanup Grants.
A.3.4 Tax Benefits and Credits
Federal and state tax incentives exist to help reduce the financial risk associated with redeveloping
brownfield properties. EPA has a discussion of various tax incentives that can be used in brownfields
redevelopment on its website, including Opportunity Zones, New Market Tax Credits, Low Income
Housing Tax Credits, Historic Rehabilitation Tax Credits, and Energy Efficiency and Renewable Energy Tax
Credits (see EPA: Supporting Brownfields Redevelopment using Tax Incentives and Credits). A number of
states also have created tax incentives specifically targeted to brownfield properties (see ASTSWMO:
2020 State Brownfields Program Analysis). State brownfield program coordinators should be contacted
for information regarding those incentives.
A.3.5 Private Investors
Investors put money into a redevelopment project in return for a share of the profits from the project.
Because their money is fully at risk, private investors carefully consider the risks associated with
redeveloping brownfield properties. Many private investors understand that it is generally in their best
interests to work with local governments to help ensure a successful outcome and, therefore, may help
the local government identify areas of potential risk that the local government had not anticipated or
fully understood. At the same time, the interests of the private developers and the local government
may not always be aligned, so the local government should be cautious of overly relying on that advice
and assistance.
Private investors also often provide the initial, partial financing that provides enough certainty that
other more traditional financing sources can feel comfortable financing the remaining amount.
A.3.6 Specialized Loans
Loans are generally secured by collateral that the lender can seize if the borrower defaults on the loan.
Redevelopment projects for brownfield properties have historically been perceived as too risky for
traditional bank loans, but there are lenders that have established expertise in these projects. They are
often familiar with the government and private grants that can help fund a project, and they understand
brownfield properties and cleanup action projects. Like the private investors discussed in Appendix
A.3.5, some of the specialized lenders can help guide the local government's reuse evaluation process
because of their experience with these types of projects.
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In some cases, these specialized lenders will provide early, partial financing that gives enough certainty
that other more traditional lenders can feel comfortable financing the remaining amount.
A.3.7 Redevelopment Authorities
In general, redevelopment authorities are public administrative units charged with redeveloping
blighted areas within a particular jurisdiction. Many were created initially in response to the post-World
War II housing shortage and the availability of federal money to address urban redevelopment. The
specific powers of a redevelopment agency are spelled out in the enabling legislation from which it
derives its authority. Examples of specific powers include buying and selling property, acquiring property
through the exercise of eminent domain, granting tax concessions to encourage commercial and/or
residential development, receiving loans and grants from the federal government, borrowing money,
and entering into contracts.
It is not unusual for a local government to transfer property that it owns to the redevelopment authority
for that same jurisdiction. Based on the enabling legislation, there can be important legal and policy
reasons to make such a transfer. However, if a local government is liable under CERCLA as an
owner/operator at the time of disposal or as a generator or transporter, it does not lose its status as a
liable party by transferring the property to a redevelopment authority. Similarly, the redevelopment
authority may not be able to qualify as a bona fide prospective purchaser if it is found to be affiliated
with a liable party (for example, the local government transferring the property) through any corporate,
contractual or financial relationship other than the relationship created by the mechanism transferring
title to the property.
Under CERCLA, a redevelopment authority also may be liable as the current owner of a brownfield
property, or as the owner/operator at the time during which hazardous substances were disposed of at
the property, or as the generator or transporter of the hazardous substances disposed of at the
property.
A redevelopment authority also may find itself liable under CERCLA if EPA concludes that the
redevelopment authority and a liable local government are one and the same entity. In reaching that
conclusion, EPA will review the enabling legislation creating the redevelopment authority, as well as
other factors specific to the situation, including the level of control the local government exerts over the
redevelopment authority. (See Section 4.4.1.1 and Appendix A.2 for an explanation of potential liability
protections under CERCLA.)
A.3.8 Land Banks
An increasing number of states and local governments are passing legislation to develop land banks.
Land banks can be an effective tool in redeveloping and reusing properties in areas suffering from
abandonment and blight. Land banks differ from redevelopment authorities. Generally speaking,
redevelopment authorities are created to use significant governmental powers to develop or redevelop
particular properties for a particular purpose. In contrast, land banks are created to acquire the growing
number of privately or public-owned urban parcels that are not being reclaimed or redeveloped by
market forces.
Land banks are governmental or non-governmental entities created to assemble, temporarily manage
and develop vacant, abandoned and tax-delinquent properties in order to convert them to a productive
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use. While most land bank properties may not be contaminated, local governments should be aware of
the potential for contamination prior to acquiring the property.
Whether a local government acquiring a land bank property qualifies for liability protection under the
CERCLA involuntary acquisition exemption, bona fide prospective purchaser provision, third-party
defense, or other statutory provisions will be determined on a case-by-case basis depending on the
specific facts at issue. (See Section 4.4.1.1 and Appendix A.2 for an explanation of the liability
protections under CERCLA.)
References:
EPA: Land Revitalization Fact Sheet: Land Banking
Additional information can be found on the U.S. Department of Housing and Urban Development Land
Banks and Land Banking website.
A.3.9 Contractual Provisions
Reducing exposure to common law liability begins with following the accepted, good commercial
practices of due diligence. Performing proper oversight of contractors also can help reduce the local
government's common law liability. Representations, warranties, indemnification agreements and other
specific contractual language between the responsible parties, redevelopers, cleanup action contractors
and the local government can sometimes further reduce the local government's financial exposure
when conducting due diligence, environmental investigations, cleanup action and construction. This
contractual language can, for instance, define conditions for taking possession of the property by the
local government, describe schedules, and identify and assign liability responsibilities. Local
governments can be either a buyer or a seller depending on the property disposition strategy selected.
The following are examples of contractual provisions that may apply to brownfield properties. These
provisions are most commonly included in transactional agreements (e.g., lease, purchase and sales
agreement), although some also may be applicable to other agreements. For example, indemnifications
are often found in service contracts for conducting due diligence, cleanup action, or the operation and
maintenance of equipment. Private contracts may transfer financial responsibilities between parties but
do not affect statutory liability.
The local government should consult with legal counsel when evaluating the uses and benefits of
contractual provisions. The following descriptions are intended to better inform discussions with legal
counsel and should not be relied upon to make decisions regarding their applicability to a given set of
circumstances.
A.3.9.1 Contractual Provisions
An indemnification in a contract can sometimes be used to obtain a release from liability for certain
future legal claims, liabilities and lawsuits, and also for compensation for any loss the local government
may incur. This can include liabilities associated with known environmental conditions or possibly an
unknown environmental condition that may have been associated with prior use of the property. As
with many contractual agreements, the value of the indemnity is only as good as the financial viability
and longevity of the party giving the indemnity. Local governments should seek expert legal advice
regarding the use of indemnities and should be aware that, depending on the circumstances of their
use, they may undercut the ability to meet the requirements of some CERCLA liability defenses.
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A. 3.9.2 Representa tions and Warranties
Representations and warranties can be used to define certain facts and provide assurances about the
property or its environmental condition (e.g., all underground storage tanks have been removed and no
further action is warranted). Specific remedies or consequences can be included if the representations
and warranties are not accurate or not fulfilled (e.g., the seller or responsible party will remove an
underground storage tank discovered subsequent to the property transfer and conduct any corrective
action required by the regulatory agency). As with many contractual agreements, the value of the
representations and warranties is only as good as the financial viability and longevity of the party giving
the indemnity.
A. 3.9.3 "As Is" Provisions
An "as is" provision can sometimes be used to avoid liability by the seller for defects in the land and
liability for potential contamination. In this case, the buyer could be accepting liability for known, or
possibly unknown, contamination on a property. The use of an "as is" provision requires a good
understanding of the risks and liabilities associated with the property. This provision is typically used
where the buyer determines that the potential risk and liabilities are well defined, acceptable and
economically feasible.
In accepting an "as is" provision, the local government is relying on the representations and warranties
of the seller. It is important to note that an "as is" provision does not always completely relieve the
seller of its duty to disclose defects in the property to the buyer. Under many state laws, the seller is
required to disclose known facts that may adversely affect the value of the property.
A.3.9.4 Environmental Covenants
A covenant can sometimes be used to obligate one party to engage in or refrain from specific actions,
such as a deed restriction prohibiting certain types of activities or construction on a property by the
property owner or lessee. Many states have implemented environmental covenants, which are
agreements between the regulatory agency and a responsible party that define responsibilities for long-
term stewardship of engineering and institutional controls (see Appendix A.1.13). These covenants may
include property owners or lessees of a property. Additional information on environmental covenants is
available in the Environmental Covenants Act.
A.3.9.5 Assumption, Retention and Release Provisions
The buyer and seller of a property can allocate risk or liability for certain conditions through a provision
where the buyer accepts, or the seller retains, responsibility for known or unknown environmental
conditions and releases the other party from liability for current and future claims arising from the
specified conditions. This approach is typically used to allocate risk of future liability for a currently
existing but unknown condition. The provision should be structured to ensure that the seller is
protected from risk or liability caused by future buyers of the property or tenants of the property.
A. 3.9.6 Schedule of Included or Excluded Liabilities
Where the buyer and seller have agreed to the transfer or retention of certain liabilities, the contract
should include a schedule or list of liabilities that are going to be assumed by the buyer or retained by
the seller.
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A. 3.9.7 Post-Signing and Pre-Closing Conditions
Post-signing and pre-closing conditions are agreements between the parties of a property transfer that
allow certain actions to be taken or certain conditions prior to closing or during some pre-determined
timeframe after signing an intent to purchase. Typically, these provisions can provide an opportunity for
the buyer or seller to back out of the deal, adjust the purchase price, or seek other remedies if
conditions are not met. These provisions can be used to allow a buyer to conduct environmental
investigations or other activities and terminate or modify a transaction if certain unacceptable
conditions or thresholds are found. These conditions also can include cost-sharing provisions for
environmental investigations and property access agreements.
A.3.9.8 Fixed Price or Performance-Based Contracts
Fixed price and performance-based contracts can be used to control financial risk by reducing
uncertainty in the cost of assessment and cleanup action activities. For example, fixed price and
performance-based contracts with environmental cleanup contractors can help clearly define the costs
of assessment and cleanup activities. These types of contracts are routinely used in the construction
industry and increasingly in the environmental field.
A.4 Insurance
Obtaining insurance coverage for certain risks may be worth considering if a local government is actively
managing the property or leading the redevelopment effort. Alternatively, or in addition, the local
government can ask to be named as an additional insured on developers' and cleanup action
contractors' environmental liability policies.
The following are examples of insurance provisions that may apply to brownfield properties. These and
other insurance products are discussed in EPA's Environmental Insurance Helps Ensure Redevelopment
fact sheet. The underwriting of brownfield properties is a specialized and evolving area of insurance, and
local governments should consult with a qualified expert and legal counsel to discuss the benefits and
limitations of these products for a given set of circumstances.
A.4.1 Comprehensive General Liability Insurance
Comprehensive general liability insurance generally provides broad protection against situations in
which an entity must defend itself against lawsuits or pay damages for bodily injury or property damage
from third-party claims. These claims are enforced and interpreted based on state law. Comprehensive
general liability insurance can be used to address general redevelopment issues and other potential
liabilities; however, it has become more restrictive over time and rarely covers environmental liabilities.
A.4.2 Pollution Liability Insurance
Pollution liability insurance can sometimes be used to protect the local government against third-party
claims for bodily injury, property damage, and off-site and on-site cleanup costs. In addition, it can be
used to provide some protection against newly discovered contaminants, natural resource damage
claims, regulatory reopeners, and other contamination-related costs. These policies are typically short-
term, averaging from one to five years and often not more than 10 years. Regulatory reopener coverage
usually begins when the project has achieved a "No Further Action" status and extends coverage for 10
years.
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A specialized form of pollution liability insurance is contractor's pollution liability insurance. This type of
insurance covers contractors against the possibility that their activities on the property will make the
pollution worse or cause third parties to be harmed. It is usually purchased on an annual basis by the
contractors providing cleanup action services. For large, complex projects, contractor's pollution liability
insurance can be purchased on a project basis, with limits dedicated to the specific project. It is
important for the local government to make sure that all of the contractors and subcontractors involved
in the project have adequate pollution liability insurance limits and that they maintain this coverage
throughout the project and for some period after completion.
A.4.3 Errors and Omissions Insurance
Errors and omissions insurance can sometimes be used to protect the local government from errors in
professional services. Generally, this insurance is purchased on an annual basis by the consultant or
attorney providing services to the redevelopment project. The local government should make sure that
the professionals involved in a project have adequate errors and omissions insurance coverage that is
maintained throughout the project and for some period after completion.
A.4.4 Cost Cap Insurance
Cost cap insurance can sometimes be used to reduce financial risk by providing the insured an upper
limit on the costs of cleanup action. Costs over budget are paid by the insurer, with limitations. Cost cap
insurance can address issues such as cost overruns for cleanup action expenses, changes in regulatory
standards/laws, and newly discovered contaminants. Policies are based on the cleanup action cost plan
and terms typically based on the anticipated length of the cleanup action.
A.4.5 Secured Lender Insurance
A secured lender insurance policy can sometimes be used to provide coverage to the lender for the
outstanding loan balance in the event of a default on projects where environmental contamination
exists. Typically, a secured lender policy allows the insurer to either pay off the outstanding loan balance
or pay for cleanup action costs and certain other damages.
A.4.6 Finite Risk Insurance
Finite risk insurance can sometimes be used to transfer broad financial liabilities from the insured to the
insurer. Typically, the insured pays the insurer the entire expected cost of the cleanup action — plus a
risk premium to cover potential cost overruns, unanticipated cleanup action, and third-party liability —
before redevelopment begins, and the insurer assumes financial responsibility for the cleanup action. In
many finite risk policies, the insurer also provides oversight of the cleanup action program. This type of
insurance is generally applied to longer-term and more costly cleanup actions. These policies also can be
negotiated in a manner that allows the return of unspent monies at the end of the project.
A.4.7 Institutional Controls and Post-Remedial Care Insurance
These insurance provisions may potentially be used to reduce financial risk associated with institutional
controls (see Appendix A.1.13) and post-remedial maintenance and monitoring activities (see Appendix
A.1.12). The insurance would typically cover cost overruns related to the design and establishment of
the institutional control and damages resulting from an error in the design, or establishment of the
institutional control, an error or omission on the part of the parties maintaining the control, or failure of
the control.
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The policy terms are typically renewable in multi-year increments, based on the anticipated length of
the post-cleanup action monitoring and maintenance. (See Section 3.1.1.5 for a general discussion of
institutional controls.)
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APPENDIX B: LOCAL GOVERNMENT OVERVIEW OF CERCLA, RCRA,
PCBS, AND ASBESTOS REGULATIONS
B.l Introduction
Local governments may become involved with contaminated properties in several ways, many of which
present opportunities to facilitate cleanup or redevelopment. Depending on the type and manner of
involvement, the local government may be concerned with potential liability for cleanup costs under
various federal, state and local laws. This appendix provides an overview of the key federal laws that
may apply to local governments that become involved with contaminated property, with an emphasis
on CERCLA and applicable EPA enforcement discretion policies.
Some Potential Avenues for Local Government Involvement at Contaminated Properties
• Promoting redevelopment through municipal incentives such as zoning and use exemptions, tax
increment financing, and infrastructure improvements.
• Responding to emergencies and potential public health, safety, and environmental hazards.
• Foreclosing on and transferring tax-delinquent properties.
• Collaborating with a current owner to obtain access, investigate, clean up, and redevelop
property.
• Acquiring property and "simultaneously" or subsequently transferring it to a third party.
• Utilizing a "land bank" or redevelopment agency to acquire, hold, lease, and/or control vacant,
abandoned, and tax-delinquent properties.
• Acquiring property for short-term and long-term use or redevelopment.
• Enforcing zoning and building codes and planning future land use.
• Performing demolition, site assessment, investigation, and cleanup activities.
• Securing property access and institutional controls such as deed restrictions, environmental
covenants, and land use controls.
• Participating in public meetings concerning the site property.
(EPA: Superfund Liability Protections for Local Government Acquisitions after the Brownfields Utilization,
Investment, and Local Development Act of 2018)
Local governments that are contemplating involvement with potentially contaminated properties should
start coordinating with relevant regulatory agencies as early as possible to discuss how the local
government may be able to protect itself from being held liable for costs or damages that may be
associated with the cleanup and reuse of the property.
EPA encourages the cleanup and revitalization of contaminated properties by addressing potential
liability concerns, specifically by clarifying its enforcement intentions by describing circumstances when
it may exercise its enforcement discretion to not pursue enforcement actions against certain parties that
may fall within a category of liable parties under CERCLA and implementing landowner liability
protections provided by law. In addition, many states have created landowner liability protections and
voluntary cleanup programs that can coordinate satisfaction of both state and federal legal
requirements.
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EPA recommends that local governments refer to applicable statutory language, regulations, and EPA
guidance documents (referenced throughout this guide) prior to taking any action to acquire ownership
or control, or to clean up or redevelop contaminated property. Local governments also should consult
with the appropriate state environmental agency and their own legal counsel. EPA's Regional offices
may be able to provide information and assistance to local governments considering the acquisition of
contaminated property.
Prior to acquiring ownership or control of a potentially contaminated property, all parties, including
local governments, are strongly encouraged to perform an environmental site assessment, such as "all
appropriate inquiries" (AAI)1, to ensure they make informed decisions regarding the property's
environmental conditions. This information can help a local government ensure that its activities do not
disturb or exacerbate site contamination. This information also can help to preserve its ability to satisfy
certain federal or state liability protections.
B.2 Overview of CERCLA
The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) (42 U.S.C. §§
9601 et. seq.) was enacted in 1980 in response to public concern about abandoned hazardous waste
sites. CERCLA authorizes the federal government to assess and clean up contaminated sites and provides
authority for responding to releases or threatened releases of hazardous substances, pollutants, and
contaminants.
CERCLA established a comprehensive liability scheme, which enables EPA to order certain categories of
parties to conduct or pay for the cleanup of releases or threatened releases of hazardous substances.
EPA may exercise its response authority through removal, remedial, and enforcement actions. The
National Oil and Hazardous Substances Contingency Plan (NCP), 40 C.F.R. Part 300, provides the
"blueprint" or guidelines for conducting removal and remedial actions under CERCLA.
There are different types of contaminated or
potentially contaminated properties subject to CERCLA
in the United States. Below are two examples of
properties subject to CERCLA.
Many of the properties that local governments
may be interested in acquiring may qualify as
brownfield sites.
• Superfund sites are polluted sites where the federal government is, or plans to be, involved in
cleanup efforts. EPA manages these polluted sites through removal (short-term) actions or
remedial (long-term) actions. Over 1,300 sites are listed on EPA's National Priorities List (NPL).
Consistent with the NCP, remedial actions financed by the Hazardous Substances Superfund
Trust Fund are undertaken only at sites on the NPL.
• Brownfield sites are properties where "the expansion, redevelopment, or reuse of which may be
complicated by the presence or potential presence of a hazardous substance, pollutant, or
contaminant.2" Generally, the cleanup of brownfield sites is less complex than at Superfund
1 All appropriate inquiries (AAI) is a process of evaluating a property's environmental conditions and assessing the
likelihood of any contamination. Parties must conduct AAI before acquiring property to obtain certain liability
protections discussed below. For more information, see EPA's Brownfields All Appropriate Inquiries website.
2 Overview of EPA's Brownfields Program, EPA
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sites. States and tribal governments are responsible for establishing and enforcing assessment
and cleanup standards for addressing environmental contamination at brownfield sites. States
and tribes also oversee cleanup activities at sites enrolled in state and tribal voluntary cleanup
programs.
CERCLA Liability Overview
Under CERCLA § 107(a), the following categories of persons may be considered potentially responsible
parties (PRPs) and held liable for the costs or performance of a cleanup under CERCLA to address
releases or threatened releases of hazardous substances and damages to natural resources:
• The owner or operator of the facility;
• Any person who owned or operated any facility at the time of disposal of any hazardous
substance;
• Any person who arranged for the disposal or treatment, or transport for the disposal or
treatment, of a hazardous substance at any facility; or
• Any person who accepted any hazardous substance for transport to a disposal or treatment
facility that such person selected.
CERCLA's liability scheme helps to ensure that wherever possible, PRPs, rather than the general public,
pay for cleanups. Under CERCLA, a PRP's liability for cleanup is interpreted as:
• Strict - A party is liable if it falls within one of the four categories of parties in CERCLA § 107(a)
regardless of whether the party was at fault or negligent, or the party's conduct was in
compliance with industry standards;
• Joint and Several - If two or more parties are liable for the contamination at a site, any one or
more of the parties may be held liable to the government for the entire cost of the cleanup,
regardless of its contribution to the site, unless a party can show that the injury or harm at the
site is divisible; and
• Retroactive - A party may be held liable even if the hazardous substance disposal occurred
before CERCLA was enacted in 1980.
Liability Protections under CERCLA
Although a local government may fall into one of the classes of PRPs described above, there are liability
protections that may apply to local government acquisitions of contaminated property.
CERCLA provides certain exemptions from liability, as well as defenses to liability. These liability
protections are self-implementing. More information on these protections and EPA's enforcement
discretion documents that may apply are addressed in detail in the memo from Director Cynthia
Mackey, Superfund Liability Protections for Local Government Acquisitions after the Brownfields
Utilization. Investment, and Local Development Act of 2018.
The CERCLA liability protections (exemptions and defenses) that may apply to local government
acquisitions of contaminated property include:
• CERCLA § 101(20)(D) exempts certain units of local government from the definition of "owner or
operator" under specified circumstances.
• CERCLA §§ 101(40) and 107(r)(l) offer liability protection from "owner or operator" liability to
parties that acquire a contaminated property with knowledge of the contamination and achieve
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and maintain their status as bona fide prospective purchasers (BFPPs). (See EPA: Bona Fide
Prospective Purchasers for additional information.)
• CERCLA §§ 107(b)(3) and 101(35)(A) provide liability protection to parties that acquire
contaminated property and meet the third-party defense requirements and the innocent
landowner (ILO) criteria set forth in those sections.
The method or type of property acquisition by a local government plays a critical role in the
application of CERCLA liability protections. If it is unclear whether a particular liability protection may
apply, a local government may consider increasing the likelihood that it will not be deemed liable by
layering the available CERCLA liability protections. It is
important to note that the exemptions under CERCLA §
101(20)(D) and BFPP liability protection do not shield
government entities from any potential liability that they
may have as "arrangers" or "transporters" of hazardous
substances under CERCLA. EPA's enforcement discretion is
limited to the unique circumstances of each case and does
not protect against third-party suits.3
It is important to note that the
exemptions under CERCLA §
101 (20)(D) and BFPP liability protection
do not shield government entities from
any potential liability that they may have
as "arrangers" or "transporters" of
hazardous substances under CERCLA.
CERCLA § 101(20)(D), as amended by the 2018 Brownfields Utilization. Investment and Local
Development (BUILD) Act, provides liability protections to state and local governments that acquire
ownership or control of a contaminated property. However, these protections do not permanently or
unconditionally insulate a government entity from potential CERCLA liability.
Rather, CERCLA § 101(20)(D) provides a non-exhaustive list of examples of acquisition methods that may
exempt local governments from potential liability as an "owner" or "operator" under CERCLA. This
includes an exemption from the definition of "owner or operator" for "a unit of State or local
government which acquired ownership or control through seizure or otherwise in connection with law
enforcement activity, or through bankruptcy, tax delinquency, abandonment or other circumstances in
which the government acquires title by virtue of its function as sovereign" if that government entity did
not cause or contribute to the release or threatened release.
B.3 Overview of RCRA
The Resource Conservation and Recovery Act (RCRA) was enacted in 1976 to address problems from
municipal and industrial waste and amended in 1984 to address the prevention, detection and cleanup
of releases from petroleum and hazardous substance underground storage tanks.
RCRA establishes the framework for a national system of control for solid waste and underground
storage tanks:
• Subtitle C focuses on hazardous solid waste.
• Subtitle D is dedicated to non-hazardous solid waste requirements.
3 Property transactions with PRPs that EPA deems are intended to interfere with CERCLA's liability scheme are not
eligible for EPA's enforcement discretion
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• Subtitle I regulates underground storage tanks (USTs) containing petroleum and hazardous
substances.
Most states are authorized by EPA to take the lead in implementing the RCRA program; however, the
extent of the authorization may vary from state to state. State authorized programs are required to be
no less stringent than the federal requirements. As such, RCRA requirements may vary somewhat from
state to state. In general, states regulate underground storage tanks, including cleanup; however,
cleanup under RCRA Subtitle C or Subtitle D may be regulated by either EPA or the state. EPA
implements the underground storage tank program in Indian Country and provides support to tribal
governments.
B.3.1 RCRA Subtitle C
RCRA Subtitle C regulates the generation, transportation, and treatment, storage, and disposal (TSD) of
hazardous waste. The RCRA program authorizes EPA to require the investigation and cleanup of
hazardous waste disposed of at RCRA Subtitle C facilities. This cleanup process is known as RCRA
corrective action. An individual facility can fall into more than one TSD category and have multiple
regulated Hazardous Waste Management Units.
Owners/operators of operating RCRA Subtitle C facilities generally must obtain a permit. There are some
exceptions to the permit requirement, including generators that store their waste for less than 90 days;
however, these exempted facilities still must comply with specific requirements, such as record-keeping,
manifesting, and labeling of containers. Hazardous waste transporters must be licensed.
Certain obligations apply to RCRA Subtitle C facilities, including closure/post-closure, corrective action,
and financial responsibility requirements. Differences in obligations depend on whether the facility is
classified as a permitted TSD facility, interim status TSD facility, or hazardous waste generator.
A local government that acquires or leases a TSD facility that has not completed its closure/post-closure
and corrective action requirements may need to conduct those activities. In addition, the local
government could potentially assume the responsibility for monitoring and maintaining areas where
hazardous waste will remain on-site as part of the permanent cleanup, such as in landfills or other
disposal areas. Unlike CERCLA, where the "responsible parties" include previous owners, the RCRA
closure/post-closure obligations transfer to the party owning or operating the facility. However, under
certain circumstances, EPA does have enforcement authority under RCRA to compel past owners to
remediate contamination.
The RCRA Subtitle C financial assurance requirements require owners/operators of TSD facilities (except
for states and the federal government) to demonstrate that they can cover the estimated future costs of
closure/post-closure. RCRA TSD owners and operators also are required to demonstrate financial
responsibility for corrective action that may be necessary to protect human health and the environment.
The required financial assurance can be provided via a variety of mechanisms. The Transmittal of Interim
Guidance on Financial Responsibility for Facilities Subject to RCRA Corrective Action memo provides a
general overview of financial assurance requirements for corrective action.
Before acquiring or leasing a RCRA Subtitle C facility, the local government should contact EPA or the
authorized state to discuss the status of closure/post-closure and corrective action activities and
financial assurance/liability coverage. If the owner/operator still exists, it may be advisable to meet
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with them to negotiate the transfer or retention of obligations for conducting closure/post-closure and
corrective action activities.
Guidance on RCRA corrective action can be found at RCRA Online. Guidance on RCRA corrective action
enforcement can be found at RCRA Corrective Action Cleanup Enforcement.
B.3.2 RCRA Subtitle D
RCRA Subtitle D regulates the disposal of nonhazardous solid waste (such as municipal garbage and
industrial waste), as well as hazardous waste exempted from RCRA Subtitle C (such as hazardous waste
received from households and conditionally exempt small quantity generators) and disposal of coal
combustion residuals (such as in landfills and surface impoundments).
Under RCRA Subtitle D, state and local governments are the primary planning, permitting, regulating,
implementing, and enforcement agencies. However, EPA establishes the technical design and operating
criteria that states must include in their own regulations to be authorized to implement RCRA.
Some of the types of Subtitle D facilities include municipal solid waste landfill facilities, waste piles,
industrial nonhazardous waste landfills, surface impoundments, land application units, and construction
and demolition landfills. Solid waste disposal facilities that do not comply with the applicable regulations
are considered open dumps and are prohibited. EPA also issued regulations under the Clean Air Act that
apply to emissions from large landfills. In addition, certain criteria under the Clean Water Act and other
federal statutes may be applicable.
A local government that is considering acquiring or leasing a facility should consider the possibility that
past disposal of solid waste may have taken place, particularly if the property has a history of
commercial or industrial use. The local government could become responsible for making those facilities
compliant with RCRA Subtitle D, including addressing any releases that may have occurred.
Additional information on RCRA (Subtitle D) is available at Resource Conservation and
Recovery Act (RCRA) Overview. The standards that apply to municipal solid waste landfill
facilities units are discussed further at What is a Municipal Solid Waste Landfill? Information
pertinent to the disposal of construction and demolition debris, discussed further at Industrial
and Construction and Demolition (C&D) Landfills.
B.3.3 RCRA Subtitle I
The RCRA Subtitle I program regulates the design, construction, installation, operation, testing, release
detection, and closure of underground storage tanks (USTs) containing petroleum and hazardous
substances. The investigation, remediation and financial responsibility for releases from USTs also are
regulated under RCRA Subtitle I.
Not all USTs are regulated under the Subtitle I program. Some of the storage tank facilities that are not
regulated under Subtitle I include:
• Facilities where less than 10 percent of the combined volume of a tank and associated piping are
underground.
• Farm and residential tanks of 1,100 gallons or less capacity used for storing motor fuel for
noncommercial purposes.
• Tanks storing heating oil used on the premises where it is stored.
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• Tanks on or above the floor of underground areas, such as basements or tunnels.
• Septic tanks and systems for collecting storm water and wastewater.
• Flow-through process tanks.
EPA has approved most state UST programs to operate in lieu of the federal UST program. In states that
have not been approved by EPA, both state and federal UST regulations apply. EPA has an enforcement
agreement with most of these states that allows the state to lead on enforcement efforts. More
information on program approvals for each state is available at State Underground Storage Tank (UST)
Programs.
Many of the state UST programs are more stringent or broader in scope than the federal requirements.
In some states, for example, tank programs include heating oil and above-ground tanks. While there are
no innocent purchaser provisions in RCRA Subtitle I, some state brownfields laws provide relief from
state liability for unknown tanks and unknown tank releases for purchasers that conduct appropriate
due diligence prior to taking title to a property. The federal UST Lender Liability Rule also provides
certain exemptions for lenders and other parties that maintain indicia of ownership in a UST primarily to
protect their security interest (40 CFR §§ 280.200-280.230).
Owners or operators of regulated USTs are required to maintain financial responsibility for remediation
costs should a release occur. Federal and state governments and their agencies that own USTs are not
required to demonstrate financial responsibility; however, local governments must do so. The UST
regulations specify several options for demonstrating financial assurance. Additional information on the
UST financial responsibility requirements can be found at Resources for UST Owners and Operators.
In addition to Subtitle I requirements, state and local fire and building codes also apply to underground
tanks containing petroleum and other flammable and combustible liquids. Tanks containing petroleum
located in proximity to navigable waterways of the United States or adjoining coastlines also may be
subject to the Spill Prevention Control and Countermeasures (SPCC) requirements, unless they are fully
regulated by EPA's UST regulations. EPA is the lead federal response agency for oil spills occurring in
inland waters, and the U.S. Coast Guard is the lead response agency for spills in coastal waters and
deep-water ports. (See Oil Spills Prevention and Preparedness Regulations for more information about
the SPCC program.)
Additional information on UST programs is available at Underground Storage Tanks (USTs) or by
contacting EPA and state offices. An EPA document, Musts for USTs. describes these requirements. The
full text of the laws, regulations, and relevant codes is available at Underground Storage Tanks (USTs)
Laws and Regulations. EPA's Office of Underground Storage Tanks has additional information and
resources relating to corrective action at UST sites at Cleaning Up Underground Storage Tank (UST)
Releases and relating to petroleum brownfields at USTs: Petroleum Brownfields.
B.4 POLYCHLORINATED BlPHENYLS (PCBs)
In enacting section 6(e) of the Toxic Substances Control Act (TSCA) Title I, Congress directed EPA to
regulate the use and disposal, manufacturing, processing, and distribution in commerce of PCBs. In this
regard, TSCA legislated true cradle-to-grave (from manufacturing to disposal) management of PCBs in
the United States.
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Although TSCA provides the primary regulatory framework for controlling PCBs, these compounds also
are regulated to some extent under the Clean Air Act, Clean Water Act, RCRA, and CERCLA.
Section 6(e) of Title I of TSCA cannot be delegated to the states, and therefore jurisdiction remains with
EPA. However, several states have established their own laws and regulations concerning PCBs, and in
some instances, EPA may coordinate with states.
While PCBs are no longer commercially produced in the United States, local governments that acquire or
lease a property may still encounter PCBs in certain equipment or products that were manufactured
prior to 1979, such as transformers, capacitors and other electrical equipment, hydraulic fluids, paints,
and caulk, and other building materials, or as contamination arising from past use or disposal. Similarly,
equipment or property contaminated with PCBs at regulated levels that are not authorized for use, no
longer in use or leaking must be properly disposed of or decontaminated.
TSCA is a strict liability statute. Persons responsible for addressing PCB contamination and equipment
that contains PCBs under TSCA Title I can potentially include past and new property owners and
operators, and other parties that caused or contributed to the PCB contamination.
When considering the acquisition or leasing of property that has undergone a prior PCB cleanup, the
local government should consider whether the land use assumptions upon which those cleanups were
based are consistent with the intended future use. Certain uses may require more stringent
requirements than what was previously acceptable. Such assumptions are often, but not necessarily
always, incorporated into deed restrictions on the property.
EPA has published a manual for addressing the cleanup of PCB remediation waste: Polychlorinated
Biphenyl (PCB) Site Revitalization Guidance Under the Toxic Substances Control Act (TSCA). A PCB
Questions and Answers Manual that responds to a number of specific technical and regulatory issues is
available at Revisions to the PCB Q and A Manual. Other information, including an electronic version of
the PCB regulations, can be found on EPA's PCB website at Polychlorinated Biphenyls (PCBs).
B.5 Asbestos
The National Emission Standards for Hazardous Air Pollutants (NESHAP) requirements for asbestos
promulgated under Clean Air Act (CAA) §112 establish work practices to minimize the release of
asbestos fibers during activities involving the processing, handling, and disposal of asbestos and
asbestos-containing material when a regulated facility, such as a building, is being demolished or
renovated.
NESHAP also regulates asbestos in active and inactive waste disposal sites. These requirements and
standards are described in 40 CFR Part 61, Subpart M. The CAA allows EPA to delegate NESHAP authority
to state and local agencies. Even after EPA delegates this responsibility, the Agency retains the authority
to oversee delegated programs and enforce NESHAP regulations. Additional information regarding the
asbestos NESHAP is available on EPA's website at Asbestos.
Besides NESHAP, other federal laws govern how asbestos materials must be handled in schools, public
buildings, and commercial or industrial buildings. For example, Title II of TSCA (also called the Asbestos
Hazard Emergency Response Act [AHERA]), addresses asbestos in schools. TSCA's Title II also establishes
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accreditation requirements for persons conducting asbestos inspections and response actions
(abatement activities) in schools, and public and commercial buildings (defined by statute as any non-
school building except residential apartment buildings of fewer than 10 units). The Occupational Safety
and Health Administration (OSHA) regulates exposure to asbestos in the workplace through the
Construction Industry Standards (29 CFR §1926.1101) and General Industry Standards (29 CFR
§1910.1001) (see Asbestos). The NESHAP regulations and other relevant laws and regulations are
available at Asbestos Laws and Regulations.
A release of asbestos also can cause liability under other federal environmental statutes, including:
• Under CERCLA, asbestos is a hazardous substance. Thus, generally, a release or threatened
release of asbestos may subject a local government to CERCLA liability. Generally, unless a
building or structure is in danger of collapse or could otherwise release asbestos to the
environment, EPA's Superfund program is not typically involved in asbestos abatement
activities. An important exception would be situations where removal of the building or
structure is a necessary part of a CERCLA response action (for example, removal of a building or
structure is necessary to provide access to the underlying contamination).
• While the federal RCRA Subtitle C regulations do not specifically list asbestos as a hazardous
waste, EPA does have the authority to require cleanup of asbestos using, for example, section §
7003 of the RCRA statute.
States also may regulate asbestos under their authorized RCRA programs or other laws establishing
additional requirements. In addition, requirements governing asbestos are sometimes instituted at the
local or county level.
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Office of Brownfields and Land Revitalization (5105T) | EPA-560-F-21-193 | November 2021 | www.epa.gov/land-revitalization
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