| From: | Lenny Siegel <lsiegel@cpeo.org> |
| Date: | 21 Apr 2006 16:02:05 -0000 |
| Reply: | cpeo-brownfields |
| Subject: | [Fwd: RE: [CPEO-BIF] GASB Accounting for Pollution Remediation] |
Some of our subscribers report that they did not receive this message:-------- Original Message -------- Subject: RE: [CPEO-BIF] GASB Accounting for Pollution Remediation From: Bruce-Sean Reshen <breshen@mgppartners.com> I believe Beth Grimsby’s comment is in error. Not only would the proposed new GASB standard not retard the redevelopment of brownfields, its impact may be to accelerate redevelopment of sites in the hands of governmental units. First, it is important to state that this proposed standard would not impact private redevelopment efforts all. The impact would be confined to sites either actually or figuratively owned by governments. “Actual” ownership clearly refers to sites legally owned by the local, state or federal government. Under these circumstances the government would responsible for all remedial costs and any 3rd party costs. When I speak of “figurative” ownership, I am referring to those sites where the governmental unit has, in the absence of a viable private sector PRP, the responsibility to remediate the site in order to protect human health and the environmental. The government might also have responsibility under health and safety codes to provide medical assistance, housing costs and emergency financial assistance to 3rd parties threatened or damaged by the contamination. In either case, under the proposed GASB the government would be required to record liabilities for current and future remedial costs. In addition, government may be required to record obligations to 3rd parties injured by the contamination. The particular government would also be required to provide extensive disclosure of the nature and impact of these obligations in the financial statements. To the extent that these recorded liabilities affect the credit position of the governmental unit, it may result in a downgrading of the government’s bond ratings and future interest costs. In extreme circumstances it may adversely affect the liquidity and solvency of the governmental unit. As governments become aware of the potential impacts of their “ownership” of direct remediation and 3rd party environmental liabilities, logic dictates that they will be more, not less, amenable to working with the private sector to encourage responsible redevelopment of brownfield sites. Zoning, building and development agencies of the governmental unit will find it imperative to work cooperatively with potential private sector redevelopers who will promise to assume those remedial obligations in exchange for favorable zoning and development decisions. Thus, the likely impact of the new GASB pronouncement (when finalized) will be a stepwise change in paradigm. First, we will observe a downwards adjustment in the financial position of governmental units with severe brownfields obligations. This will serve to focus their attention on resolving remediation liabilities in the most efficient and expeditious manner. Second, we are likely to see these governments offer incentives and streamline the redevelopment process in order to entice developers to assume these environmental liabilities. The ultimate result will be to vastly accelerate the remediation and redevelopment of these sites. The writer is acutely aware that there are two other corollaries of this analysis. First, in the short run there will be an unfair and socially unproductive impact on poorer communities that were once home to many derelict industrial sites with severe contamination. It raises important environmental justice issues to burden these poorer communities with the impact of this proposed accounting pronouncement. These communities are most likely to see their balance sheets deteriorate, their credit ratings plunge and their ability to service their constituencies decline. The second corollary is that there will be severe social impacts in the affected communities, exacerbating social tensions and a sharpening the divergent interests between our core cities and our expanding suburban locales. It is clear that until the many benefits of brownfields redevelopment can be realized, there will be a need to support these communities with state and federal resources. The writer has been a Certified Public Accountant for over 20 years, has taught economics as a full time tenured professor and has spent the greater portion of his career in real estate development and brownfields activities. The writer’s company currently managed the Guardian Trust, whose mission is to provide for assured long term stewardship of sites remediated used risk-based technologies. ------------------------------------------------------------------------ From: brownfields-bounces@list.cpeo.org [mailto:brownfields-bounces@list.cpeo.org] On Behalf Of Jim McRitchie Sent: Thursday, April 20, 2006 2:41 PM To: lsiegel@cpeo.org; Brownfields Internet Forum; Beth Grigsby Subject: Re: [CPEO-BIF] GASB Accounting for Pollution Remediation How would it be detrimental? Isn't it largely just requiring disclosure of existing and projected liabilities? >> "Grigsby, Beth A" <bgrigsby@purdue.edu> 4/20/2006 10:57 AM >>>
http://www.gasb.org/plain-language_documents/pollution_plain-language.pdf http://www.gasb.org/exp/ed_pollution_remediation_obligations.pdf <dhtmled2://exchweb/bin/redir.asp?URL=http://www.gasb.org/exp/ed_pollution_remediation_obligations.pdf> NEWS RELEASE 01/31/06 GASB Issues Exposure Draft That Would Put the Cost of Cleaning Up Pollution on Governments' Financial Statements New Proposal Identifies Five Key Circumstances Under Which Accounting for Pollution Remediation is Required Norwalk, CT, January 31, 2006-The Governmental Accounting Standards Board (GASB) today issued an Exposure Draft intended to provide guidance and consistency with respect to the accounting and reporting of obligations and costs related to pollution remediation. The proposal reflects the Board's intention to ensure that certain costs and long-term obligations not specifically addressed by current governmental accounting standards will be included in financial reports. The proposed standards build on a Preliminary Views draft that was released for public comment in March 2005. Specifically, the proposal sets forth the key circumstances under which a government would be required to report a liability related to pollution remediation. According to the proposal, a government would have to estimate its expected outlays for pollution remediation if any of the following occur: 1. Pollution poses an imminent danger to the public or environment and a government has little or no discretion to avoid fixing the problem 2. A government has violated a pollution prevention-related permit or license 3. A regulator has identified (or evidence indicates a regulator will do so) a government as responsible (or potentially responsible) for cleaning up pollution, or for paying all or some of the cost of the clean up 4. A government is named in a lawsuit (or evidence indicates that it will be) to compel it to address the pollution 5. A government begins to clean up pollution or conducts related remediation activities (or the government legally obligates itself to do so). In addition to the liabilities, expenses, and expenditures which would be estimated using an "expected cash flows" measurement technique and be reported in the financial statements, the proposed standard would require governments to disclose information about their pollution clean up efforts in the notes to the financial statements. "Today's proposal intends to improve financial reporting by fostering more transparent and more consistent accounting that encourages comparability," said Robert Attmore, Chairman of the GASB. "The proposed standard also enhances the ability of users to assess a government's obligations by requiring both earlier reporting of obligations and recognition of obligations that may not have previously been reported." The requirements of this proposed Statement would be effective for financial statements for periods beginning after June 15, 2007. A copy of the proposal may be downloaded from the GASB's website at www.gasb.org. The GASB encourages interested individual and organizations to comment on this Exposure Drafts. The comment deadline is May 1, 2006. Comment letters should be submitted electronically to director@gasb.org or via regular mail Beth A. Grigsby, LPG Brownfields Outreach Program Manager Purdue Center for Regional Development Burton D. Morgan Center for Entrepreneurship, Room 220 1201 West State Street West Lafayette, IN 47907-2057 765.494.9928 cell: 317.430.6514 ------------------------------------------------------------------------ From: brownfields-bounces@list.cpeo.org on behalf of Lenny Siegel Sent: Thu 4/20/2006 12:02 PM To: Brownfields Internet Forum Subject: [CPEO-BIF] Rolling Hills Estates (CA) golf course project abandoned Golf course doesn't make the cut in Rolling Hills Estates With $2.5 million already spent, the developer decides to abandon the project on the former Palos Verdes Landfill site. By Nick Green Daily Breeze (CA) April 20, 2006 Los Angeles County officials will formally announce today they have abandoned plans to build a golf course on the former Palos Verdes Landfill site in Rolling Hills Estates, the Daily Breeze has learned. The contentious proposal had incited widespread opposition from local government officials and community groups. The announcement comes less than a month after the Daily Breeze reported a long overdue environmental analysis of the site was in limbo. County Supervisor Don Knabe made the disclosure Wednesday afternoon to a group of local mayors attending a meeting of the consortium of county Sanitation Districts, which operates the landfill site. ... For the entire article, see http://www.dailybreeze.com/news/articles/2664211.html --
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