The Ohio Department of Development working with the Ohio Water Development Authority (OWDA) has released their policies for use of the revamped low interest brownfield loan program. Under the program, private companies (among others) can get a low interest loan up to $500,000 for performing sampling (assessment) and up to $5 million for clean up.
As discussed in my prior post announcing changes to the loan program, the single biggest change is that the loan program now allows companies that own contaminated property and caused or contributed to the contamination to qualify for the program. Any company that caused or contributed to contamination is not directly eligible for Clean Ohio funding.
Here are some key requirements that are spelled out in the new policies governing the program.
- Clean Up Loans– Must already have done all the assessment and have designed a remedy to qualify for a clean up loan.
- Redevelopment Requirement?- The ODOD website says the project must involve redevelopment for the property to be qualify for the loan. Therefore, it would appear an existing company with no expansion plans cannot qualify for the loan if they simply want to address historical contamination issues on property they own. As discussed below, the actual wording of the policy may provide greater flexibility.
- Eligible Costs– assessment, demolition, remediation and consultant costs
- Payment Term– below market interest rate over a 10 year term
The most disappointing aspect of the policies governing the new loan program is the requirement for redevelopment of the property. The loan program will have a very limited appeal to only existing companies responsible for historical contamination wishing to expand.
However, the actual wording of the policy says projects are eligible "where expansion or redevelopment is complicated by known or potential releases of hazardous substances.” This is far more open ended that requiring a demonstration actual expansion or redevelopment will occur.
Hopefully, ODOD and OWDA will allow a more expansive interpretation of this language. Why not give the benefit of the low interest loan to companies who simply want to address historical contamination on their property? Certainly the State could justify rewarding these "volunteers" because the policy explicitly make clear any company that is under a legal mandate (order or permit requirement) to clean their property is ineligible.
Policy 1.03 CERCLA Limitation for Eligible Borrowers:
Policy 1.03- Borrowers must be exempt from Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), as amended CERCLA liability for hazardous substance cleanup applications.
I don’t know what "exempt from CERCLA" really means. Is this a reference to Bona Fide Purchaser defense? There are very few exemptions from CERCLA for companies responsible for existing contamination. Policy 1.03 could use further clarification.
Will There Be Interest?
Whle the greater flexibility provided by the new policies make the program more attractive, it will be interesting to see whether it garners any interest. Even with the changes, the program will appeal to a small subset of companies looking to address historical contamination. Any other party that has no responsibliity for contamination has a far better option under the Clean Ohio program.