Re: [CPEO-BIF] Cherry vs. Inner City Sites

[jhernandez@bdlaw.com]

We've been spending significant time on trying to level the playing field
between the economic "haves" in the Brownfields redevelopment arena, and
the economic "have nots".  We're working on enacting policy legislation for
California which would: (1) allow local government to compel owners of
abandoned or idled smaller properties (which are not otherwise in the
environmental enforcement world) to investigate and cleanup contaminated
sites under state environmental agency oversight; (2) provide limited
immunities from state environmental liabilities to local governments, and
new owners/occupants/lenders, of sites that complete this new local
government-initiated cleanup process; and (3) compel the state
environmental agencies to establish numerical cleanup thresholds which are
consistent with existing federal/State Superfund remedies.

This menu is probably fairly specific to California, which has for example
lagged far behind the 30+ other states that have already adopted their own,
or use US/EPA regional, lookup tables - and which still has wildly
fluctuating/unpredictable remedy selection decisions coming out of a myriad
number of state laws regarding, and local/state agencies with overlapping
jurisdiction over, contaminated site cleanup issues.

Our new legislation, Senate Bill 32 (Escutia), is modelled to a significant
degree on a similar piece of California legislation - now over ten years
old - that empowered redevelopment agencies to compel the initiation of
site investigation and cleanup activities.  This older law, commonly called
the Polanco Act, has proven a very effective tool for redevelopment
agencies and community groups working with redevelopment agencies to cause
the consensual (and if necessary contentious) investigation and cleanup of
abandoned sites, and sites owned by "recalcitrant sellers".  It also
provides a very favorable cost-reimbursement mechanism so that local
agencies can either continue to pressure the current owner/operator to do
the investigation and cleanup, or the local agency can undertake this work
itself (with or without a "take-out" buyer in place) and recover its
cleanup costs and attorneys fees using effectively the same legal
authorities that US/EPA has to recover costs under the federal Superfund Act.

A major limitation of the Polanco Act is that California redevelopment
areas tend to be established around larger geographic planning areas, and
leave smaller areas and sites unaddressed - leading to the decline in those
neighborhods affected by Brownfields not located in redevelopment areas.
SB 32's continued focus on local agency empowerment is aimed at providing
local residents and community groups with a more politically responsive and
locally accountable bureaucracy for blighted Brownfields properties that
don't happen to be located in established redevelopment areas, and it also
recognizes that local government support is critical to the successful
redevelopment of the property for whatever appropriate new uses are
approved as part of the ordinary city land use approval process.

The liability relief provisions for new owners/tenants/etc. that are
triggered by the completion of an approved cleanup, and the objective
numerical cleanup thresholds, are designed to provide lenders (including
those using CRA funding) and "normal" borrowers - i.e., those that need the
money, rather than having their own equity to front all initial enviro
cleanup costs - with the increased predictability/certainty that they need
on cleanup costs/schedules and residual liability so that these properties
can be more easily transacted.

There's no question that there will still be "upside down" BF properties
that can't be economically redeveloped without public subsidies, but public
(and philanthropic) subsidies are also easier to secure with more certain
cleanup cost/schedules and post-cleanup liability protections.

Other than the Polanco Act for redevelopment agencies, which pre-dates the
"Brownfields" term but certainly not the "Brownfields" problem,
California's primary legislative response to Brownfields was an $85 million
loan program, enacted last year.  In what can only be called a breathtaking
example of environmental "injustice", the loan program EXCLUDED properties
that already had a mortgage, and also EXCLUDED borrowers who already owned
adjacent properties - effectively cutting off access to lower and
middle-income borrowers, as well as local community-based owners who had
not yet abandoned their neighborhoods.  Corrective legislation is being
proposed this year, but the "corrections" still do not assure access to
loans for local borrowers who would - but for the Brownfield issue -
otherwise qualify for a loan.  So the loan program really works for those
with money who aren't from the affected neighborhoods - not exactly an
environmental justice showpiece.

This year, California is also considering legislation to set up a
subsidized environmental insurance program, to be offered on a sole source
basis to a reported major insurer (and major campaign contributor).  The
insurance details are still skeletal, but the concept is that the state
would pay 50% of the premium cost for some form of enviro insurance.  The
bill is being pushed by some as an alternative to providing liability
relief to "innocent" post-cleanup new owners/tenants, but does nothing to
provide the "front-end" certainty/predictability on cleanup costs/schedule,
or long-term liability protection for affected properties.

One political observation, for what it's worth, is that "Brownfields" are
still politically handled as an "environmental" issue, at least in
California - and as such the issue gets caught between the environmental v.
business advocacy lobbyists that have been (profitably) battling each 
other for years.  It has been extraordinarily difficult for community
groups with a redevelopment/community health perspective - from affordable
housing CDCs to community park advocates to local-ownership advocates - to
wedge themselves into this political status quo.  These groups have
relatively little "steady" political presence, and nothing like the
lobbying presence of the major enviro/business organizations.

I'd welcome all thoughts on these/related issues - as a minority attorney
who grew up in a heavily polluted, poor California community which has
virtually NONE of the Brownfields redevelopment "cherry" projects, it
simply strikes me as environmentally and socially unacceptable to ignore
the fact that we've set up a system that provides anything but equal access
to environmental solutions for Brownfields properties.

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