Thursday, October 2, 2014

Reuse of Environmentally-Impaired Property

Early in my legal career, I examined two huge closing binders of several hundred pages each for the sale of the Atlantic Steel property north of Georgia Tech in Atlanta to Atlantic Station, LLC.  The old steel mill had the usual slag piles and chemical spills but is now redeveloped for mixed use: banking, offices, institutions, retail, restaurants, high-rise condos, town houses, and affordable housing.  What the site has in common with many other environmentally-impaired properties is that it required a complex public-private partnership for redevelopment.

       The regulatory uncertainty caused by the presence of toxins and the need to clean them up can only be cured by certification from the appropriate federal and state agencies that no further remediation is necessary.  The agencies in turn demand vast documentation assuring that the toxins have been thoroughly investigated and then removed, neutralized, or contained.  Vast sums are expended on engineers and remediation services.  Until the agencies set forth in detail the conditions necessary for the site to be redeveloped so that participating parties can insure or indemnify their participation, little can be done.
Once the conditions are established for the declaration of no further need for remediation, the local governments (in the case of Atlantic Station- the City of Atlanta and Fulton County) have great incentive to mobilize resources, to return property to use, to expand the tax base, and to win a public victory over pollution and industrial blight.  For Superfund sites, once they find a redeveloper, the local governments will often issue redevelopment bonds to build the necessary infrastructure and cut the redevelopment costs for the private investors.  The industries and commercial interests most identified with the area likewise have incentives to participate in redevelopment projects if their public reputations would benefit, public investment is involved, and favorable terms for financing are available.  Likewise, financial institutions participate, partly for reputation's sake and partly because of tax and government incentives to finance such redevelopments.
More here and here and here.

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