Environmentally Challenged Projects: If I Redevelop One, Can I Safely Sell It?

Berger Singerman LLP
Dawn M. Meyers

December 3, 2015

Many developers, however, continue to resist opportunities to redevelop “environmentally challenged” sites such as golf courses.  Perhaps the single most intimidating issue for those contemplating the redevelopment of such sites is environmental issues relating to such property.  With histories of soil and groundwater contamination, and the health hazards associated with both, redevelopers typically raise three primary environmental concerns:  (1) how much will remediation cost, (2) can the ultimate product be sold, and (3) what is the  continuing liability relating to the property.

Remediation costs will be dependent on the specifics of the particular site. Advanced soil management techniques including soil blending and capping can be expensive but highly effective in addressing primary contaminants.  Risk-based tools to address soil and groundwater contamination can help minimize some of those costs.  Further, a myriad of institutional controls which may include deed restrictions to reduce or prevent human exposure to the contaminants can all be used not only to address but even resolve the contamination more quickly and less expensively than traditional remediation.

As for the sellability of the project, the use of the remediation and control tools described above can result in the property receiving the environmental equivalent of a clean bill of health. As a “clean” site, it is a sellable site.  Reduction or elimination of potential liability, however, requires particular attention to detail.  The desired insulation starts with satisfying all regulatory responsibilities.  If engineering and/or institutional controls are utilized, notice to prospective purchasers is required.  While typically only a restrictive covenant is required to be recorded, thought should be given to including various notices and disclosures in the association documents as well as the purchase contracts.  Finally, environmental insurance can be a useful, albeit expensive, tool for sites such as these.

While large, well-located development tracts are increasingly rare, many developers have now started to reconsider the redevelopment of environmentally contaminated sites. Understanding the cost, sellability and liability associated with projects such as golf course conversions could turn your next redevelopment into a hole in one.

This article is being provided for informational purposes only and not for the purposes of providing legal advice or creating an attorney-client relationship. You should contact an attorney to obtain advice with respect to any particular issue or problem you may have. In addition, the opinions expressed herein are the opinions of Ms. Meyers and may not reflect the opinions of Synergy Environmental, Inc., Berger Singerman LLP or either of those firms’ clients.

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