Preparing polluted sites for reuse

Developers are seeing a changing regulatory landscape and continuing challenges with delays and costs as they look to take advantage of an improving economy to build on formerly polluted sites, a group of local experts says.

Speaking this month to environmental and real estate attorneys at a Minnesota State Bar Association legal education session, panel members with long histories in redeveloping contaminated land said that while it remains a complicated and costly proposition, state and local governments are still committed to helping -- especially now that the market is favoring urban "infill" sites.

The Minnesota Pollution Control Agency says the pace of brownfields redevelopment is picking up as the economy improves. It is touting how its Voluntary Investigation and Cleanup Program (VIC), has expedited several recent projects, including the building of the University of Minnesota's $175 million Amplatz Children's Hospital along Riverside Avenue in Minneapolis.

In that effort, some 770 cubic yards of soil contaminated with lead and polyaromatic hydrocarbon compounds left over from when the site hosted tire-repair and battery businesses had to be excavated and removed to an industrial landfill.

But the VIC program -- which seeks to spur sales of contaminated land by assuring buyers they won't be held liable for future problems if they follow approved clean-up methodology -- has undergone a recent change in direction, environmental consultant Dan Holte of Braun Intertec said.

"They're trying to get down to their core mission of brownfield redevelopment" with the change, he said.

The MPCA late last year decided to narrow the scope of who is covered under VIC by removing those projects in which the parties responsible for the pollution are doing the clean-up themselves. Many of those projects have dragged on for years because they are highly complicated and have no prospective buyer waiting in the wings.

"If there is a responsible party, and it has been in VIC for a long time and they haven't really advanced on a clean-up, they have tossed those sites and have threatened to toss others into other programs," Holte said.

Meanwhile, costly delays necessitated by complying with pollution regulations remain an obstacle for would-be redevelopers who want to strike quickly, added Margaret Knowlton, director of environmental risk for Opus Holding LLC, which is working on a new downtown Minneapolis headquarters for Xcel Energy.

It's thus becoming even more important for builders working on tight timelines to hire the best environmental consultants they can find to perform due diligence before buying a polluted property, she said.

"When drafting and negotiating a purchase agreement, it's a good idea to get a perspective on timing," she said. "If it's got a complicated history, you may need a longer due-diligence time."

If there are any known contamination issues with the property and the buyer wants to complete a state-approved investigation before the contingency date or the closing date, "you should generally allow four to six months," she cautioned.

A lack of clear guidelines from the federal and state government on what levels trigger the need for remediation is producing confusion among builders, Knowlton and environmental consultant J. Joseph Otte of Wenck Associates said.

"From my perspective, the issue is that concentrations of organic molecules and soil gas in indoor air are at thresholds that are very, very low," Otte said. "The screening criteria that have been developed are, in my opinion, exceedingly conservative and in many cases relate to contaminants that are naturally occurring."