Attorney General Mike DeWine should be commended for putting together a comprehensive manual regarding legal issues, resources and incentives available to assist with economic development. The manual is called the 2015 Ohio Economic Development Manual.
The Attorney General collaborated with a number of state agencies and local economic development organizations in putting together the manual. These collaborators helped summarize a number of highly complex issues and programs.
To my knowledge, no other state official has attempted to compile such a manual. For those like myself who are engaged in economic redevelopment projects, in particular brownfield redevelopment, it can take a significant amount of time to stay up on the latest issues, programs and incentives.
While the manual is an excellent resource, there is no way it can provide anything other than a basic level of understanding regarding complex issues such as brownfield redevelopment. The purpose of this post is to raise awareness of the various layers of complexities related to brownfield redevelopment that are not discussed or oversimplified in the manual.
Overview of Brownfield Section of the Manual
The manual provides an overview of the stages of brownfield redevelopment as well as a quick summary of possible incentives.
Stages of Brownfield Redevelopment
The manual states the following as the stages for brownfield redevelopment:
- Identify Site
- Develop remediation Plan
- Due Diligence
- Phase I (paperwork, database review and site visit)
- Phase II (sampling)
- Cleanup- Under Ohio EPA's Voluntary Action Program (VAP). Once cleanup complete a Covenant-Not-to-Sue (CNS) will be issued by the State
- Due Diligence
The manual provides an overly simplistic view of brownfield redevelopment. Here are just some of the issues with this summary:
- Review of Phase I and Phase II Reports- As discussed numerous times on this blog, it is very important to closely review any Phase I report received on a property to make sure it was done correctly (ASTM or VAP standards). Also, it is not uncommon for different consultants to reach different conclusions as to whether something constitutes an issue to be identified in a Phase I report. Finally, formulating the purpose and scope of Phase II testing is a critical component to the due diligence process. Phase II costs can range from $10,000 to $300,000 depending on the site and risk mitigation strategy to be employed.
- Alternatives to Full Cleanup- There are alternatives available to property owners to mitigate environmental risk other than full cleanup of the property. A very common approach discussed at length in prior blog posts is the Bona Fide Purchaser Defense (BFPD) under CERCLA. Depending on the Client's risk tolerance and the issues presented at the site, BFPD can be a much faster and less expensive option to the VAP to mitigate risk and address the more serious threats a property may present.
- Eligibility Issues in the VAP- There are different types of contamination and sites that are not eligible for remediation under the VAP. These include, but are not limited to: underground storage tanks (USTs), hazardous waste management units (RCRA closure), PCBs, (TSCA) and sites under federal or state enforcement.
- Environmental Insurance- No where does the manual discuss the possibility of environmental insurance to address risks presented by a site. Such insurance is commonly used in business transactions as well as brownfield redevelopment projects.
- Cleanup Design- The manual suggests that a party can consult with Ohio EPA's VAP Technical Assistance program in developing its cleanup plan for a project. While Ohio EPA's Technical Assistance program is an extremely useful tool, the manual does not indicate that a private party has a great deal of control over designing a cleanup to meet applicable standards. Since the cleanup is the most expensive component, it is critical to evaluate the options available to meet standards (i.e. engineering controls, institutional controls and addressing exposure pathways).
The manual discusses the following incentives available to assist with brownfield redevelopment:
- Ohio EPA Targeted Brownfield Assessment- Ohio EPA program to pay for Phase I assessments and potentially Phase II activities using its Site Investigation Field Unit (SIFU).
- EPA VAP Technical Assistance- Ohio EPA provides technical assistance on how to complete a VAP cleanup on the property.
- Ohio Brownfield Fund- Loans up to $500,000 for Phase II activities and $5 million for cleanup
- JobsOhio Revitalization Loan and Grant Fund- Up to $200,000 for Phase II, $1 million in grant funds and $5 million in loan funds for cleanup activities.
- Abandoned Service Station Fund Program- Class C underground storage tank (USTs) cleanup fund for abandoned tanks. Up to $100,000 for assessment and $500,000 for cleanup activities.
This list of available incentives provided in the manual is a good basic overview of the major state programs in Ohio. However, the manual does not mention the fact there are a number of local brownfield incentive programs that will provide grant funds for Phase Is, Phase IIs and cleanup activities. In many instances, these local programs can be a better fit for a particular project.
Furthermore, each of the programs listed above have important eligibility criteria, limits on reimbursable costs as well as development or job creation requirements in order to secure funding. It is critical for a party to understand these commitments prior to accepting grant or loan funding.
This post is not meant as a criticism of the Attorney General's efforts in putting together the manual. The manual is a good place to start to get a basic understanding of various issues and programs that can impact economic development. However, with complex issues like brownfield redevelopment, the redevelopment process is more of an art than exact science. An over simplified view can result in failed projects or unnecessary costs.