Picking Up The Pieces - Brownfields in a Post-RDA Califonria

In Feb 2012, the California state legislature won the legal battle to dismantle community redevelopment agencies (CRAs), reallocating roughly $1.7 billion in local property taxes away from brownfield cleanup towards the state’s budget deficit. In the midst of a recession, proponents argued that funds would be better spent on education and public safety, but the move was highly controversial and resulted in significant public outcry (and litigation).

Why? Because, at the time, only redevelopment agencies held certain powers to assess and clean up properties with environmental contamination. With authority granted in the Polanco Redevelopment Act, CRAs could identify blighted properties in specific redevelopment areas, coordinate a remedial action plan with the Department of Toxic Substance Control (DTSC) and State Water Board, and sue responsible parties for the cost of cleanup.

One of the most important features of the Polanco Act, however, was the provision for immunity from liability. If site cleanup was conducted in accordance with an approved remedial action plan, then the agency was immune from liabilities associated with previous environmental contamination. This immunity extended to those who entered into agreements with the CRA after the acceptance of the remedial action plan (subsequent purchasers, developers, lenders, etc.), thereby encouraging investment in high-risk properties.

Assembly Bill 440 (Gatto), signed by Gov. Brown in October 2013, was designed to reinvigorate brownfield cleanup by granting the power once held by redevelopment agencies to cities, counties, and housing authorities. Under the new bill, municipalities and successor agencies are re-tooled with the authority to initiate site cleanup and recoup costs from responsible parties with added provisions, such as:

Wider jurisdiction. Cities, counties, and housing authorities can use the AB 440 powers anywhere within their jurisdiction, not just areas designated for redevelopment.

Expanded rights. Agencies now have the right to order a property owner to provide a Phase I Environmental Site Assessment (ESA). This means a city has the right to see any existing Phase I documents and/or can force the owner to prepare one if needed, at their own expense.

Liability Protections. Similar to the Polanco Act, AB 440 offers agencies immunity from liability for release(s) addressed in the clean-up plan, transferable to future purchasers of the property and financiers. It is important to note that protections do not apply to those responsible for release of contaminants and associated parties prior to the clean-up plan, to those responsible for hazardous substances not identified in the plan, or those who obtain approval of the clean-up plan through fraud, nondisclosure, etc.

Owners and municipalities should be aware of this opportunity as it may lead to more infill projects.

 

For more information regarding AB 440 and related topics, contact Norman Eke at neke@converseconsultants.com

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