Environmental Issues

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US EPA has amended the Standards and Practices for All Appropriate Inquiries (“AAI”) to acknowledge another ASTM standard can be used to satisfy the AAI requirement for the landowner defenses to liability under Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) – innocent landowners, bona fide prospective purchasers, and continuous property owners. In addition to ASTM International Standard E1527-05, you can now use, when applicable, ASTM International Standard E2247-08 entitled Standard Practice for Environmental Site Assessments:  Phase I Environmental Site Assessment Process for Forestland or Rural Property (“ASTM E2247-08”).

 Continue Reading Another ASTM Standard Satisfies All Appropriate Inquiries under CERCLA

In the past, we have spoken about grants and loans available through the Ohio Department of Development for advanced energy residential projects, such as solar and wind energy installation.  Federal funding is also available for residential energy-reduction projects through The American Recovery and Reinvestment Act of 2009 (ARRA).  A total of $250 Million from ARRA was allocated to HUD for its Assisted Housing Green Retrofit Program (GRP).  Under GRP, HUD is offering up to $15,000 per residential unit for projects that reduce energy costs, reduce water use, and improve indoor environmental quality.  HUD expects to fund about 25,000 units (approximately 300-350 properties), with an average $10,000 provided to each unit.

Beginning June 15, 2009, HUD is accepting applications for GRP funding on a first come, first served basis, and subject to allocations for project categories, geographic location and owner/affiliate concentration.  HUD may offer either a Green Retrofit Grant or a Green Retrofit Loan repayable from a share of surplus cash and from sale and refinancing proceeds.  The performance period for completing all Green Retrofits will generally be twelve (12) months, but in no event may it exceed twenty-four (24) months.  The program requirements differ depending on the type of project-based assistance contract and depending on the owner entity (nonprofit or for profit).

The properties eligible to receive GRP funding are the following: Section 202 funded properties that have at least 32 units; Section 811 funded properties that have at least 8 units; properties receiving assistance pursuant to Section 8 with USDA Section 515 loans and which have at least 20 units; and all other Section 8 funded properties having at least 72 units.

 Continue Reading HUD Green Retrofit

Imagine purchasing a brand new home, only to discover it has a persistent rotten egg smell. On top of that, your new appliances mysteriously stop working and the home’s copper wiring turns black. It sounds like a nightmare, but for those in Florida and other southern states whose homes contain defective Chinese drywall, it is reality.

Although…

Recent activity in Washington, D.C. suggests that the federal government is moving one step closer to regulating greenhouse gas emissions.  US EPA has determined that greenhouse gas emissions are pollutants that endanger the public’s health and welfare.  US EPA’s endangerment finding could lead to regulation of greenhouse gas emissions under the Clean Air Act.  Alternatively, a new cap-and-trade bill has been introduced, which would remove greenhouse gases from regulation under the Clean Air Act, but would require a reduction in greenhouse gas emissions of 85% from 2005 levels by 2050. 

What does the potential regulation of greenhouse gases mean for real estate development? 

INCREASED ENERGY COSTS !

Energy-utility companies will be greatly impacted by regulation of greenhouse gases.  Particularly, in Ohio and other Midwest states, where electricity production is almost entirely dependent upon coal-burning, reducing greenhouse gas emissions could be quite costly.  Moody’s has estimated that consumer electricity costs will rise between 15-30% as a result of any cap-and-trade regulation.

With the expectation of increased energy costs, real estate developers should look to energy-efficient building systems or alternative energy sources as ways to reduce these costs.  The Ohio Department of Development and the Ohio Air Quality Development Authority offer grants to help offset some of the initial costs for installing alternative energy sources.  Additionally, tax credits are available for certain projects.

If you would like to learn more about potential climate change regulation and Ohio funding for alternative energy projects, these topics will be presented at the CREW of Greater Cincinnati 2009 Midwest Regional Conference.  The conference will take place April 23-25, 2009 at the Cincinnati Hilton Netherland Plaza.  Other topics presented at the Conference include:  "Successful Urban Renaissance Developments"; "Diversity by Design: Successful Inclusion Projects"; "Case Studies in Brownfield Redevelopment"; and "Capital Markets — Effects from Washington Decision Making".  Continue Reading Potential Effect of Climate Change Regulation on Real Estate Development

On January 27, 2009, the front page of the Columbus Dispatch read, “44,000 Jobs Gone.”Other articles report of companies shuttering their facilities or filing bankruptcy. As one affected employee interviewed for the Dispatch article succinctly stated, “It’s scary.” And it’s no less scary for landowners and lenders dealing with properties that have been abandoned.  Landowners whose tenants have abandoned their facilities are trying to recover past rent due and expenses related to cleaning up the equipment, products and chemicals remaining at the facility. Banks are foreclosing on property or are working within the bankruptcy court to recover their money. 

Landowners and first mortgage lenders in these situations should also be aware that they may be subject to environmental clean-up obligations under the Cessation of Regulated Operations (“CRO”) program. CRO was created to protect the public against exposure or pollution from hazardous chemicals left at abandoned facilities. CRO requires the owner or operator of the facility to secure the facility from trespass or vandalism and to comply with 30-day and 90-day deadlines in removing regulated substances and reporting on the progress. If the owner or operator of the facility fails to perform its CRO obligations, then the landowner or first mortgage holder may be responsible to perform certain CRO activities. 

Continue Reading The CRO Program: Landowner and Lender Responsibility when a Regulated Facility Closes

Recently at the January monthly Real Estate Roundtable breakfast sponsored by the University of Cincinnati, I was introduced to a fascinating new concept – the Roof Lease. Featured speaker Mike Phillips, President of Cincinnati based national real estate developer Phillips Edison Company, mentioned that Roof Leases are starting to spring up across the country. The basic…