Revitalization-Ready Guide - Chapter 3: Reuse Assessment

Due Diligence | Environmental Condition Impact Analysis |  Land Use Assessment |  Infrastructure Assessment |  Market Study |  Opportunities and Constraints Analysis

Due Diligence

A fundamental component of the reuse assessment is due diligence. Due diligence is conducted to obtain and verify available information regarding the property attributes and characteristics, physical and environmental condition, ownership, and other information relevant to its potential reuse and redevelopment. Due diligence is an essential step in evaluating a property regardless of the local government’s involvement in a property transaction or the property redevelopment. 

The discussion of due diligence is separated into environmental due diligence and real estate (or property) due diligence. Environmental due diligence is conducted to evaluate the environmental condition of the property and to meet the requirements for all appropriate inquiries (AAI) as defined in Section 101(35)(B) of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA,  otherwise known as the federal Superfund law). Real estate due diligence is conducted to identify attributes and characteristics about a property that affect the ability to transfer or reuse a property, such as zoning, potential liens, encroachments and building conditions.

Due diligence is typically conducted by a number of different entities: 

•  An environmental professional conducts environmental due diligence (sometimes referred to as a Phase I environmental site assessment) to identify potential releases of hazardous substances and petroleum products at the property, as well as other environmental conditions, including mold, radon, and asbestos.
• Real estate professionals or attorneys may be engaged to conduct title searches, property value assessments and other real estate-related issues. 
• Engineers may be needed to evaluate buildings and other physical conditions potentially affecting reuse of the property. 

Environmental Due Diligence

Environmental due diligence is conducted to gather specific information about the environmental condition of a property. An environmental investigation is necessary to identify the presence or potential presence of hazardous substances or petroleum in environmental media (e.g., soil, groundwater, surface water, sediment) and in building materials. It should include:

• Documentation of the storage and handling of hazardous substances and petroleum products and other activities on the property that are or may be the source of releases of hazardous substances and petroleum products to environmental media. 
• Environmental investigation and remedial actions previously conducted or planned on the property, and their status.
• The regulatory status (e.g., per applicable regulatory programs such as the Resource Conservation Recovery Act [RCRA], underground storage tanks [USTs] programs, state voluntary cleanup programs; local, state or federal oversight agency; administrative or other consent orders impacting the property; permits) of the property and activities on the property.
• Parties responsible for investigating and conducting remedial action on the property (responsible parties). 
• Restrictions resulting from the environmental condition and environmental restrictions associated with any remedial action conducted on the property (institutional controls and engineering controls). 

The environmental due diligence process typically begins with a Phase I environment site assessment (Phase I ESA). In many cases, the Phase I ESA also is conducted to meet the requirements for all appropriate inquiries established under CERCLA and set out in EPA regulations. AAI regulations outline specific pre-acquisition requirements for prospective property owners, including individuals and local governments, to qualify for protection from environmental liability under CERCLA as an innocent landowner, bona fide prospective purchaser (see Chapter 4 [AP1]for discussion of bona fide prospective purchaser), or a contiguous property owner. Even if a local government is not anticipating liability under CERCLA, conducting environmental due diligence in accordance with AAI requirements can offer protection from other potential liabilities and often informs risk management decisions (discussed in greater detail in Appendix A). For example, a prospective purchaser can qualify as a bona fide prospective purchaser (which includes all appropriate inquiries) because a third party can sue under CERCLA to recover costs even if EPA has not identified the property as a Superfund site. For this reason, make sure to verify that the Phase I ESA conducted for a property meets the requirements for AAI established in CERCLA and set out in EPA regulations. The all appropriate inquiries regulations recognize a Phase I ESA conducted in accordance with ASTM Phase I ESA standards as compliant with AAI requirements (See the All Appropriate Inquiries section below.)

Make sure to verify that the Phase I ESA conducted for a property meetings the requirements for AAI regulations. AAI need to be performed prior to taking title to the property if an entity wants to take advantage of CERCLA liability protections.

A Phase I ESA, and the generally accepted business practice for doing so, is most often conducted in accordance with the ASTM E1527-13 Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process. Based on the results of a Phase I ESA, additional investigation commonly referred to as a Phase II ESA may be necessary to better understand the type and extent of any potential releases to environmental media at the property. The following sections describe Phase I and II ESAs and all appropriate inquiries, and provide additional information on conducting environmental due diligence. This chapter also discusses how the information collected during the due diligence process is used to identify redevelopment obstacles and how such information may aid in the evaluation of the local government’s involvement in the redevelopment of the property.

Phase I Environmental Site Assessment

What recognized environmental conditions are present on the property?

Generally, the Phase I ESA does not involve the collection of samples for chemical analysis (although some states may require such at this stage); rather, the Phase I ESA involves a visual inspection of the property, review of historical information, interviews with individuals familiar with the property, and review of regulatory files. The purpose of the Phase I ESA is to identify recognized environmental conditions (or conditions indicative of releases or threatened releases of hazardous substances) on a property. When conducting a Phase I ESA (or all appropriate inquiries), information also may be collected to identify and characterize public health issues (e.g., trash, rodents) and safety issues (e.g., broken windows, damaged fencing) that may require action on the part of the current property owner or local government. A Phase I ESA (and all appropriate inquiries) must be overseen or supervised by an environmental professional. (See EPA’s Brownfields All Appropriate Inquiries webpage for additional information on a Phase I ESA and all appropriate inquiries.)

If a local government is evaluating a property for which a Phase I ESA was previously conducted, the Phase I ESA should be reviewed and updated to ensure that the most current information on the environmental condition of the property is included in the Phase I ESA report. Further, if an existing Phase I ESA is to be used to meet the all appropriate inquiries requirements, the previous Phase I ESA must be reviewed and updated if the Phase I ESA is older than one year at the time of property acquisition. In addition, certain aspects of a Phase I ESA (i.e., interviews, lien searches, on-site inspection, and records review) must be updated if the tasks were conducted more than 180 days prior to the acquisition date of the property.

The Phase I ESA also may include visual inspections or records reviews for other potential environmental issues that may go beyond the general scope of the ASTM Phase I ESA standards. These additional potential issues, such as mold, radon, and asbestos, may be important to the future use, disposition or redevelopment of the property. An evaluation of the presence of any of the conditions listed below should be considered as part of a Phase I ESA when evaluating the reuse of a property:

• Asbestos-containing building materials, polychlorinated biphenyl (PCB)-containing transformers or ballasts, lead-based paint.
• Potable drinking water (where supplied by wells). 
• Mold.
• Radon.
• Wetlands.
• Threatened and endangered species.
• Earthquake hazard.
• Vapor intrusion (i.e., volatile contaminants entering the air space of a building from underlying soils or groundwater).

All Appropriate Inquiries

Does the Phase I ESA meet all appropriate inquiries requirements?

Meeting the requirements for AAI is necessary to potentially qualify for certain CERCLA liability protections. EPA published a final rule establishing standards and practices for conducting all appropriate inquiries that became effective on November 1, 2006. The AAI final rule, as amended, recognizes ASTM E1527-13 and ASTM E2247-16 - Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process for Forestland and Rural Property as compliant with the requirements for all appropriate inquiries. 

AAI must be overseen or supervised by an environmental professional. Under the AAI rule, an environmental professional is defined as someone who possesses sufficient specific education, training and experience necessary to exercise professional judgment to develop opinions and conclusions regarding conditions indicative of releases or threatened releases of hazardous substances on, at, in, or to a property, sufficient to meet the objectives and performance factors of the AAI rule. (Note: The ASTM E1527-13 and E2247-16 standards reference the definition contained in EPA’s AAI final rule [40 CFR § 312.10]). 

All appropriate inquiries must be conducted or updated within one year before the date on which the property is acquired (i.e., the date on which the new owner takes title to the property). Certain aspects of the AAI investigation must be conducted within 180 days prior to the date the property is acquired. These aspects include interviews; recorded environmental lien searches; federal, tribal, state and local government record reviews; visual inspections; and the environmental professional declarations. They must be updated prior to the property acquisition.

Required activities and other considerations in AAI include, but are not limited to:

• Definition of an environmental professional – Qualifications for and certification by environmental professionals performing due diligence work.
• Interviews – Interviews with past and present owners, operators and occupants of the facility to gather information about hazardous substances on the property.
• Historical sources of information – Previous activities and land uses since first development available from reviews of chain of title documents, aerial photographs, building department records, land use records, and other sources.
• Search for environmental cleanup liens – Searches for recorded environmental cleanup liens filed under federal, state or local law.
• Review of government records – Review of federal, state and local government records (e.g., waste disposal records, underground storage tank records, and hazardous waste handling, generation, treatment, disposal, and spill records).
• Visual inspections – Identification of likely environmental conditions associated with the use, handling, storage or disposal of hazardous substances or petroleum products on the land (e.g., surface staining, distressed vegetation, trash, disposal areas, and aboveground or underground tanks) or structures (e.g., hazardous substances or petroleum stored or used within buildings or other structures).
• Observations of adjoining properties - A walkthrough of the area surrounding the property to observe activities, conditions and land use associated with adjoining properties.
• Specialized knowledge or experience – Taking into account the prospective purchaser’s knowledge about the property and adjoining properties.
• Purchase price – Consideration of the relationship of the purchase price to the value of the property if the property was not contaminated.
• Knowledge of property – Commonly known or reasonably identified information about the property.
• Potential for hazardous substances – The degree of obviousness of the presence of hazardous substances and the ability to detect hazardous substances at the property.

An important part of the AAI investigation is the visual inspection of the property. This requires access to the property and its buildings and other structures. In cases where access cannot be obtained after all good faith efforts are employed, the AAI rule provides for a limited exemption to the visual inspection requirement that requires the environmental professional to:

•  visually inspect the property by another method (e.g., aerial imagery) or from an alternate vantage point (e.g., walking the property line);
• document efforts taken to gain access to the property;
• document the use of other sources of information to determine the existence of potential environmental contamination; and
• express an opinion about the significance of the failure to conduct a visual inspection or the ability of the environmental professional to identify conditions indicative of releases or threatened releases.

Documentation – Summarize the environmental status of the property (see Environmental tab in the Revitalization Ready Worksheet)

References:

ASTM: ASTM E1527-13 Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process

ASTM: ASTM E2247-16 Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process for Forestland or Rural Property

EPA: Brownfields All Appropriate Inquiries

EPA: EPA Brownfields Grants, CERCLA Liability, and All Appropriate Inquiries

EPA: All Appropriate Inquiries: Reporting Requirements Checklist for Assessment Grant Recipients

Phase II Environmental Site Assessment

Is additional assessment needed to investigate recognized environmental conditions? 

The Phase II ESA is an investigation that requires collection and analysis of environmental and other media samples (e.g., soil, groundwater, electrical equipment, insulation). The Phase II ESA will generally require that an access agreement is in place with the current property owner (if one exists) or other action to gain the access needed to collect the samples.

The Phase II ESA is intended to determine if a release of a hazardous substance or petroleum product is present in an area where an environmental condition was identified. The focus of the Phase II ESA is to investigate recognized environmental conditions to determine the type and extent of any release to environmental media that has occurred. The ASTM E1903-19 Standard Practice for Environmental Site Assessments: Phase II Environmental Site Assessment Process provides guidelines for conducting a Phase II ESA. The scope of a Phase II ESA will be specific to the property and to the environmental condition subject to further consideration.

The scope for a Phase II ESA should be developed in consultation with an environmental professional or other individual qualified in environmental investigations and should include:

• Identification of the environmental or other media to be sampled.     
• Number of samples to be collected.
• Analytical method to be used or specific hazardous substances and petroleum products to be evaluated.
• Target levels (e.g., state or federal standards, action levels or screening levels) above which potential further action is warranted.

The Phase II ESA may need to be conducted in several phases based on the extent of the identified environmental conditions and financial considerations of the local government or responsible entity. For example, where there is a significant amount of additional investigation to be conducted, the local government may want to prioritize specific actions for the Phase II ESA to first address the environmental conditions that will have the most impact on project objectives. The results of the initial Phase II ESA will then help in determining what additional investigation may be needed. Subsequent investigations may be needed to resolve other issues, such as determining the extent and severity of a release.

Reference:   
ASTM: ASTM E1903-19 Standard Practice for Environmental Site Assessments:  Phase II Environmental Site Assessment Process 

Environmental Regulatory Status

What federal and state cleanup statutes are likely to apply to the property?

Determining the regulatory status of the property is an important objective of environmental due diligence. Issues of environmental liability, regulatory process and other considerations relevant to redevelopment efforts are all dependent on which federal, state and local environmental laws could apply based on the environmental conditions, operating practices and other factors. Proper coordination with the regulatory programs having jurisdiction over the property’s cleanup also depends on having this information. Relevant regulatory programs are discussed in more detail in the Project Liabilities and Risks[AP2] section in Chapter 4).

Federal statutes that are commonly associated with the investigation and cleanup of a brownfield property are:

• Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), commonly known as Superfund. 
• Resource Conservation and Recovery Act (Subtitles C, D and  I), Resource Conservation and Recovery Act Overview.  
• Toxic Substance Control Act, Policy and Guidance for Polychlorinated Biphenyl (PCBs) 
• Clean Air Act (CAA), Overview of the Asbestos National Emission Standards for Hazardous Air Pollutants (NESHAP). 

There are a number of other federal environmental statutes that also may be relevant to a redevelopment project. For example, the management of runoff from the property could be regulated by the Clean Water Act, and any impacts on source water for public water supplies by the Safe Drinking Water Act. Identifying the applicability of these and other statutes also should be a part of the environmental due diligence process. 

It is important to identify the regulatory agency that is responsible for overseeing the

cleanup of the property. The cleanup of brownfields generally is overseen by state voluntary cleanup programs (VCPs). Other properties, such as Superfund sites or sites contaminated with PCBs, must be cleaned up in accordance with federal (EPA) standards. In the case of properties regulated under some federal statutes, such as RCRA, implementation and enforcement of the relevant cleanup program may be delegated by EPA to the state. In such cases, EPA authorizes the state environmental agency to oversee and enforce corrective action or cleanup requirements, in lieu of the federal program. State environmental agencies should be consulted regarding the applicability of state or federal cleanup requirements to any particular property. This is particularly the case for underground storage tanks (USTs) regulated under state UST programs and many brownfield sites that may be eligible for cleanup under state voluntary cleanup programs. Many of the state voluntary cleanup coordinators can facilitate and coordinate compliance with overlapping federal and state requirements.

The federal Brownfields Program is authorized under CERCLA to provide funding for the assessment and cleanup of certain brownfield properties so that the properties can be restored to a beneficial reuse. The program provides funds to assess and clean up brownfields and to enhance state and tribal response programs.

Land Use Controls
Are there land use controls implemented or identified for the property?

Land use controls may consist of institutional controls or engineering controls used alone or in combination to ensure protection of human health and the environment. Institutional controls are non-engineered administrative or legal controls that minimize the potential human exposure to contamination by restricting the activities or use of a property or the use of a resource such as groundwater. Institutional controls are generally divided into four categories:

• Proprietary controls (e.g., easement, real covenant, statutory covenant). 
• Government controls (e.g., zoning, building permit, land use ordinance).
• Enforcement and permit tools (e.g., consent decree, permit, order).
• Informational devices (e.g., deed notice, government advisory, state registry).

Engineering controls are physical or engineered measures. Engineering controls will vary from property to property, depending on the contaminants found and the type of media impacted. Common engineering controls include: 

• Asphalt, concrete or clean fill caps to create a cover to address issues such as surface water infiltration or direct contact with contaminated soil. 
• Engineered caps along with leachate collection systems associated with closed impoundments and landfills. 
• Active or passive vapor mitigation systems used to minimize potential migration of volatile vapors for subsurface soil or groundwater to indoor air.
• Groundwater barriers or systems used to limit or prevent groundwater migration.

Other terms, such as activity and use limitations, are sometimes used to describe these types of controls. Institutional controls and engineering controls must be maintained, monitored and evaluated for as long as unacceptable risks are present at a property. Land use controls are an integral part of the overall cleanup; failure to comply with land use controls can result in endangering human health or the environment, and cause the party responsible for maintaining the land use controls to incur costs to repair any resulting damage, face lawsuits from injured parties, or even jeopardize eligibility for liability protections under CERCLA and other environmental statutes. 

If land use controls already exist, it is important that the local government understands the obligations they impose and how they might be viewed by future owners, developers and property users. In some situations, EPA or the state may be willing to modify existing land use controls to facilitate the appropriate reuse of the property providing the cleanup will not be compromised. Where land use controls are being considered by the regulatory agencies but have not been finalized, there may be opportunities for local governments to weigh in on the final form they will take. Vague, confusing or unnecessarily restrictive or inflexible land use controls also can create significant obstacles to property reuse.

Regardless of whether they own or lease the property, local governments often play a key role in implementing, monitoring and enforcing certain land use controls, particularly those that they have the legal authority to implement (e.g., zoning restrictions, building or excavation permits, well construction permits). Local governments also can work proactively with developers, prospective buyers and tenants, and other parties to ensure that land use control requirements are understood and properly integrated into the planning and future reuse of the property. 

References:
EPA: Superfund: Institutional Controls
EPA: Institutional Controls: A Guide to Planning, Implementing, Maintaining, and Enforcing Institutional Controls at Contaminated Sites 
EPA: Engineering Controls on Brownfields Information Guide: How They Work with Institutional Controls; the Most Common Types Used; and an Introduction to Costs (pdf) (264.73 KB)  

Real Estate Due Diligence

Real estate due diligence is conducted to understand the administrative requirements and physical conditions that might affect the reuse of a property and determine whether or not the vision for a property is achievable. The reuse assessment requires information regarding the property attributes and conditions and other information relevant to its suitability for a potential reuse, including:

• Property value.
• Ownership.
• Parcel boundaries.
• Encumbrances on the property. 
• Property features.
• Development codes, policies, and relevant plans and planning studies. 
• Previous development plans.

An American Land Title Association (ALTA) survey can be a  helpful tool to support real estate due diligence. The ALTA survey is a detailed land parcel map showing boundaries, existing improvements of the property, utilities, encumbrances such as easements and other features such as the location of flood zones. 

Property Value 
What is the market value of the property?

The local government needs to have a sense of the current market value of the

property that reflects its physical and environmental condition. This evaluation should consider current property tax assessments, as well as historical sale values in the area. If there are appraisals, especially recent ones, these are useful in determining the appropriate current and future values of the property given potential reuse scenarios.

The value of the property may need to be adjusted to include additional costs associated with the environmental condition of the property and cleanup requirements that may transfer with the property. Knowledge of these costs can be factored into the purchase price if the local government intends to acquire the property or can enhance the property’s marketability if the goal is to facilitate redevelopment by a third party. Properties where the cost of cleanup exceeds the market value (i.e., upside down properties) typically will require financial assistance or other incentives from a local government for the property to be of interest to the real estate community. 

If a local government intends to acquire the property by exercising eminent domain, it should determine if state law allows adjustment of the purchase price to reflect cleanup costs. Otherwise, the local government may be forced to pay considerably more for the property than its actual discounted value. A May 2008 report by the Northeast-Midwest Institute provides a summary of how different states address this issue (see Mothballed Sites and Local Government Acquisition: How State Liability Protections, Eminent Domain Reforms, and Cost Recovery Authority Can Spur Local Government Action to Acquire and Redevelop Difficult Brownfields Sites).

Ownership
What is the ownership status?

A local government’s involvement will depend not only on who holds title to the property, but also on the owner’s intentions regarding the ownership or disposition of the property. In addition, the local government should assess the owner’s willingness (or unwillingness) to work cooperatively with the local government. In many cases, abandoned, mothballed or underutilized properties may present a liability for the property owner. Such situations may create opportunities for local governments to discuss a collaborative arrangement that will provide an incentive for the current owner to sell or otherwise dispose of the property. (See The Property Disposition Strategy [AP3]section in Chapter 4 for a discussion of some risk management considerations associated with the ownership status.) A working relationship with the owner can facilitate property access for conducting environmental assessments and can potentially avoid adversarial actions.

Parcel Boundaries 
What tax parcels make up the development area?

Locating Property Records Property records are typically maintained by the county assessor’s office. In many cases, parcel information can be obtained online using mapping or database search tools or by contacting the county assessor’s office. The assessor information typically includes ownership, parcel identifiers, acreage, tax status, and other relevant information. In many cases, large properties may consist of multiple parcels generally owned by the same individual or entity. A property or area being considered for redevelopment may consist of multiple tax parcels. Identify the parcel boundaries, assessor or parcel identification number, parcel address and other information that may be important to the transfer or reuse of the property. In some cases, the potential reuse may involve multiple properties. For purpose of the evaluation, a property is defined as one or more contiguous parcels of land. It is important to identify each parcel making up a property so that subsequent evaluation includes information for each parcel. Identify any discrepancies between property surveys and assessor parcel/tax records.

Information on tax parcels can generally be obtained from the city or county auditor or assessor. These agencies typically have a web-based real estate property search or mapping application that can provide the parcel, ownership and tax information. 

Encumbrances on the Property

Encumbrances can include liens, easements, deed restrictions and other limitations that can restrict the ability to transfer title to the property or impact the ability to reuse a property for a desired purpose. Encumbrances on the property can be detected through a title search and review of a land survey such as an ALTA survey. 

Liens

Although title issues are not unique to brownfield properties, it is not uncommon to find that a brownfield property is abandoned or that owners declared bankruptcy or dissolved corporations that held title to the property. The prospect of complicated and time-consuming efforts to resolve these ownership issues can be a deal-breaker for many potential developers that might otherwise be interested in the property. Through foreclosure and other means, local governments may be able to obtain clear title and remove this potential impediment.

The types of liens that might encumber the property include those associated with mortgage, contractor or commercial services; federal, state and local tax delinquencies; and federal and state environmental response actions (i.e., environmental cleanup liens). If EPA or the state expended resources at a property as the result of environmental investigations, cleanup or other response actions, liens often are recorded on the property to establish that the state or EPA is due compensation, and if the lien is perfected, the relevant agency sues to recover these costs.

For example, CERCLA provides for two types of liens on properties where EPA conducted remedial or removal response actions: 

• The first type of lien is for all costs for which EPA expended resources and for which the property owner is liable. 
• The second type of lien, “the windfall lien,” is on a property purchased by a non-liable bona fide prospective purchaser, where EPA has unrecovered response costs at the property, and EPA’s response action increases the fair market value of the property. 

Depending on the circumstances surrounding the acquisition transaction, local governments or other entities acquiring the property may be subject to these liens.
Because federal and state governments may not have necessarily perfected liens on certain properties, it may be important to contact EPA and state regulatory agencies to inquire about the potential for these liens and about a process for resolving outstanding liens.

Easements

An easement is an agreement recorded with the deed for the property between the property owner and a third party that provides a legal right for the third party to use or enter a property. There can be a number of different easements associated with a property. The potential impacts on a property reuse will depend on the location of easements on the property and the type of easement. Easements can include:

• Utility easements that provide for the installation and maintenance of underground utilities such as sewer or water lines or aboveground utilities such as electricity, telecommunications and cable. They also can include easements for electric substations, transformers, pump stations and other surface structures. 
• Private use easements that include the installation, maintenance and use of a driveway to an adjacent property; installation and maintenance of a private sewer line or other utility connection to an adjacent property; or installation and maintenance of pipelines such as a petroleum pipeline. 
• Access easements that provide access on and across a property to access easement areas.
• Conservation easements that permanently limit uses (e.g., limits on the amount and type of development) of the property or portions of the property in order to preserve natural features or agricultural potential.

The terms of easement documents should be reviewed to identify the specific impacts on the property and the use of the property.

Restrictive Covenants

A restrictive covenant can restrict the use of a property. It is typically listed in the deed and will apply to current and future owners of the property. Restrictive covenants can include environmental land use controls (see the Due Diligence section in this chapter) or other land use controls placed on a property by previous owners. The terms of a restrictive covenant should be reviewed to identify the specific impacts on the property and the use of the property.

Property Features
What features of the property affect the potential reuse of the property?

An important part of real estate due diligence with respect to potential reuse of a property is identifying and understanding the features of a property that may affect the potential reuse of the property, including the total cost of any reuse. Physical features of a property can drive the market demand for specific types of reuse and impact the market value of the property. The following features of a property should be evaluated: 

Improvements

Buildings or structures, including any remaining foundations, on the property should be evaluated to determine if they are structurally sound and usable or of value to a potential developer. These could include former office buildings, industrial buildings used for manufacturing, docks on navigable waterways, water towers, electrical substations and other improvements that could be incorporated into a potential reuse.

Access

Access to the property will be an important consideration for many reuses. Access to the property by vehicle, public transportation and pedestrians should be considered. The evaluation should include a description of:

• the roads (e.g., multi-lane, primary road, secondary road) that provide access to the site for workers, customers or visitors, and suppliers, including the frontage road or primary access road for the property and the location, distance and route to major or interstate highways;
• the availability of commercial rail and water access, and information related to location, capacity and condition of the facility;
• public transportation (e.g., bus and light rail) that may be available to the property, including locations of stops with respect to the property; and
• the potential pedestrian access to the property, including sidewalks and road crossings.

Utilities

The evaluation should include the identification of utilities present on the property or accessible to the property. Information for each utility should include, at a minimum, the availability to the property, supplier and the capacity. Utilities include natural gas, electric, sanitary sewer, storm sewer, potable water, telecommunications and fiberoptic/high-speed internet.

Topography

The topography of a property affects the land area available for redevelopment, and influences runoff and flooding hazards, as well as land available for development. Significant increases or decreases in surface elevation should be identified, as well as significant slopes (e.g., greater than 15 percent). 

Historical or Archaeologically Sensitive Structures or Areas

If the property has historical significance or if during due diligence a potential historical or archaeological feature is identified, the historic or archaeological feature should be identified and evaluated to determine its impact on the reuse of the property. This may require engaging the services of a qualified historian or archaeologist to review background information, seek information from knowledgeable parties, and conduct additional studies as necessary.

Property Shape 

Site reuse configuration is determined in part by property shape. Property that is exceptionally narrow, shallow, or unusually-shaped may affect its reuse.

Flood Plain

Properties in areas adjacent to or in low lying areas near a river or stream may be prone to flooding during significant rain events. These properties may be within 100-year or 500-year flood zone areas. Properties should be evaluated to determine if some or all of the property is within a 100- or 500-year flood zone. It also is important to consider the potential impacts of climate change within the context of the property and determine how those changes may affect the ability to maintain both a safe remedy and safe reuse of the site. State and local building codes should be reviewed for regulatory requirements related to development in a flood plain. Federal, tribal, state, and local regulations could affect the ability to construct a structure or the design of the structure.

Reference:
FEMA: FEMA Flood Map Service Center 

Wetlands

Development in wetlands areas may be limited by conservation easements and state or federal regulations. The property should be evaluated for the presence of state or federal designated wetlands. Wetlands are defined as areas where water covers the soil or is present either at or near the surface of the soil all year or for varying periods of time during the year, including during the growing season (see EPA: What Is a Wetland?). As a result, in some cases, areas of a property that may not be designated as a wetland but meet the above definition may need to be evaluated to determine if the area may be classified as a wetland. Identification of wetlands should be considered as part of the scope of a Phase I ESA.

Most activities that directly affect wetlands are regulated. State (and in some cases federal) regulations should be evaluated for limitations or requirements that address activities and development in the area of wetlands, including requirements for buffer areas around a wetland. In general, activities that would disturb wetlands would require a permit from one or more state or federal agencies. 

Documentation – Summarize the property characteristics (refer to Property Characteristics tab in the Revitalization Ready Worksheet)

References:
EPA: Wetlands Protection and Restoration 
EPA: Wetlands Regulations 

Endangered Species or Protected Habitats 

The property should be evaluated to determine if there are endangered species or protected habitats on the property. Areas of a property where endangered species or protected habitats have been identified may need to be excluded from development activities. Identification of endangered species or protected habitats should be considered as part of the scope of a Phase I ESA.

Development Codes, Policies, and Relevant Plans and Planning Studies
What is the current zoning of the property and its relationship to local master plans and other planning studies?

Zoning and other local ordinances, building and other development-related codes, and local plans and studies play an important role in the potential uses of a property, as well as the establishment of cleanup goals under federal and state cleanup regulations. Exposure models used by EPA and state governments to assess human health risks from contamination are based on assumptions about reasonably anticipated future land uses. From an environmental condition perspective, EPA and the state will typically consider zoning and master plans along with other relevant factors in making future land use assumptions, particularly in conjunction with models used to establish risk-based cleanup standards.

Development codes and policies, including zoning ordinances and maps, development regulations and processes, design guidelines, form-based code and historic areas, should be reviewed, and applicable codes and polices identified. Plans and studies, including comprehensive plans, sub-area/special district plans, parks and trails plans, streetscape design standards, current traffic studies, and other plans and studies, should be reviewed, and relevant plans and planning studies identified.

Previous Development Plans
Are there previous development plans for the property?

Previous plans for reuse and redevelopment of the property, even if they were never implemented, can provide useful information on prior or existing property conditions, such as utility infrastructure, structural integrity of buildings, wetland delineations, and physical obstacles to construction. In addition, they may suggest potential redevelopment opportunities that would have undergone some level of financial and market analyses at the time. Although this information should not be used as the sole source of historical information on a property (especially if it is somewhat outdated), it could be useful in providing preliminary information (especially if property access is not available) and help focus future information gathering efforts.

Documentation – Summarize the land use characteristics (refer to Land Use Characteristics tab in the Revitalization-Ready Workbook)

Environmental Condition Impact Analysis

What is the status of cleanup on the property?

The environmental condition impact analysis considers how the environmental condition and activities to address the environmental condition could affect, or be affected by, redevelopment. It also is used to identify significant data gaps that may result in potential deal-breakers that could eliminate the project from further consideration by potential developers if not addressed, or drive uncertainties that introduce unacceptable risk into a transaction. 

The analysis of the environmental condition is driven, in a large part, by the status of the cleanup activities to address the environmental condition. Without a completed environmental investigation, it will be harder to determine reuse alternatives, develop a vision for the property, engage a developer and transfer the property (see the Environmental Condition Impact Analysis section in this chapter). At a minimum, a completed environmental investigation provides an understanding of areas of the property that are affected by hazardous substances or petroleum and in need of remedial action before reuse of the property can be accomplished. 

In cases where the intent is to transfer the property to a third party for development, having a remedial action work plan (see the Environmental Condition Impact Analysis section in this chapter) in place that defines the actions needed, restrictions that may be placed on the property, and long-term operation, maintenance, or monitoring required, is essential to transfer of the property. The goal is to create synergy by integrating the redevelopment and cleanup to optimize the use of the property and to minimize costs and unacceptable project risks.

Environmental Investigation

Environmental investigations typically go beyond the scope of traditional Phase I and Phase II ESAs and are intended to:

• Characterize the nature and distribution of hazardous substances and petroleum products in environmental media.
• Evaluate the potential fate and transport of hazardous substances and petroleum products in environmental media.
• Assess risks to human health and the environment, and determine the need for cleanup action.
• Develop a conceptual site model to identify potential cleanup actions.

Environmental investigations are generally conducted to comply with specific federal or state environmental statutes and associated regulatory cleanup programs (e.g., RCRA, CERCLA, USTs, state voluntary cleanup programs). As a result, the scope and extent of the environmental investigation may be driven by the requirements of those statutes and programs.

Environmental investigations typically involve the collection of soil, sediment, groundwater and surface water samples through, for example, the installation of soil borings and monitoring wells. The data collected are used to support the environmental risk assessment and the selection and design of cleanup actions. Depending on the size of the property and potential distribution of hazardous substances and petroleum products in environmental media, the environmental investigation may be conducted in multiple phases. 

If the intended reuse of the property is known, the environmental investigation can often be tailored to reflect those uses. This can not only streamline the environmental investigation, thereby reducing costs and minimizing delays, but also help ensure that the cleanup will be protective for those intended uses.

Remedial Action

Remedial, or cleanup, actions generally are designed to reduce or eliminate potential exposures to hazardous substances or petroleum products in environmental media. Remedial actions can range from relatively aggressive approaches such as soil removal and groundwater extraction and treatment to less aggressive approaches such as monitored natural attenuation (where lines of evidence show that protective cleanup levels will be achieved over a reasonable time frame), passive vapor barriers, and institutional controls (e.g., environmental covenants, land use restrictions) that complement other remedial actions involving engineering controls. Often, a combination of remedial action approaches is used. Remedial actions are generally conducted to comply with specific federal or state regulatory cleanup statutes and programs (e.g., RCRA, CERCLA, USTs, state voluntary cleanup programs).

Local governments should carefully consider how property reuse plans will affect remedial actions, as well as how remedial actions will affect property reuse plans. Reuse plans should be compatible with remedial actions. Necessary remedial actions will sometimes introduce physical obstacles (e.g., groundwater extraction wells, treatment structures) and other constraints that limit the use of all or portions of the property while the cleanup actions are underway or in place. 

In many cases, elements of the remedial action can be integrated into the reuse plan, speeding up the remedial action and saving costs. For example, building slabs and parking areas can effectively cap contaminants if their design is coordinated with the remedial action requirements.

Discussing reuse plans with the party responsible for carrying out the remedial action can help identify potential conflicts between the redevelopment and remedial actions. Discussions should be focused on avoiding or mitigating conflicts without compromising the ability of the remedial action to protect human health and the environment or introducing unjustifiable costs. In many cases, elements of the remedial action can be integrated into the reuse plan, speeding up the remedial action and saving costs. For example, building slabs and parking areas can effectively cap contaminants if their design is coordinated with the remedial action requirements. 

Documentation – Summarize the environmental status (refer to Environmental tab in the Revitalization-Ready Workbook)

Land Use Assessment

The current land use may indicate quite a bit about the property’s redevelopment potential. The evaluation of land use for the property should consider surrounding land use, zoning, local or regional land use plans, land use controls, and physical features, as well as the environmental condition, potential remedial action and related restrictions. 

For example, land use controls may specifically exclude residential-type development on a property. In some cases, states may not allow certain waste to be placed in on-site landfills or capped with protective covers if they are located within flood plains. This may result in the waste being moved to other on-site locations, potentially occupying land intended for redevelopment purposes, or being sent at greater expense to an off-site facility. 

Wetlands and other water bodies can introduce ecological receptors that can influence cleanup. Even existing roads and access routes that may be suitable for the planned redevelopment may not be adequate for hauling large volumes of contaminated soil off-site or bringing clean fill onto the property. All of these can drive up redevelopment costs or create significant obstacles to property reuse.

Reference:

EPA: Plan for Brownfields Redevelopment Success: Land Use Assessment  (pdf) (308.22 KB)

Infrastructure Assessment

The infrastructure assessment reviews the infrastructure available to the property to develop an understanding of the condition, capacity and location of the infrastructure, and to identify needs (e.g., enhancement, upgrades or expansion) to support reuse. The infrastructure assessment should look at both public and private infrastructure systems that may be available or needed to support a potential reuse.

Utilities

The availability and capacity of utilities can be an important consideration in the location of many commercial and industrial activities. Access to reliable high-speed internet, water, natural gas and electricity can be significant attractions to commercial and industrial users. Availability of utilities is important not only for commercial and industrial users, but also for all economic stability in an area and the overall real estate market forecasts for a location.

Roads

Current transportation patterns and proposed changes to those patterns are critical components of an infrastructure assessment. Traffic patterns determine the travel paths for the population and thus the areas that will receive the highest concentration of potential client activity. Traffic patterns are especially important for tenants whose business requires a high amount of foot traffic and visibility. A location along a major roadway can represent a much higher demand for commercial and light industrial uses. Proximity to interstate highways and major truck routes or access to rail or water for receiving or shipping of materials can represent a much higher demand for industrial uses such as manufacturing or warehousing. Traffic patterns also could be a key source of air pollution for overburdened communities. Consideration should also be given to the potential impacts on air quality in the area and potential opportunities to mitigate air pollution from traffic.

Other Transportation

The location, capacity, condition and connectivity of rail can represent a much higher demand for industrial users that need rail service to receive or ship materials. Similarly, docking, loading/unloading facilities, channel and dock area water depth, and location of roads and rail can be important to certain industrial user. Mass transit (e.g., bus service, light rail) may be important to residential development or to employee or customer access to businesses. 

Documentation – Summarize the land use characteristics (refer to Land Use Characteristics and tab in the Revitalization-Ready Workbook)

Reference:
EPA: Plan for Brownfields Redevelopment Success: Infrastructure Evaluation  Plan for Brownfields Redevelopment Success: Infrastructure Evaluation  (pdf) (208.1 KB)

Market Study

A market study is conducted to evaluate the economic viability of potential redevelopment options. It is an analysis of socioeconomic, industry sector and market information. 

Socioeconomic information includes information about the area population, unemployment, median household income, poverty, education and median home value/rent. Industry sector information includes common markets, technologies and worker skills. Market information includes information about type of market (e.g., industrial; office/commercial; retail/restaurant/hotel), overall market climate, building demand/vacancy, lease rates and building costs. 

Understanding the market will provide insights into the potential reuse for a property, as well as the land use, infrastructure and property features needed to support potential reuses. It also will help the community determine if the current zoning is outdated relative to the current market.

Documentation – Summarize the market information (refer to Market Assessment tab in the Revitalization-Ready Workbook)

EPA: Plan for Brownfields Redevelopment Success: Market Study  (pdf) (298.86 KB)

Opportunities and Constraints Analysis

What are the obstacles that may impact the successful implementation of each potential reuse and property disposition strategy?

Opportunities and constraints are attributes and characteristics of the property that positively or negatively impact one or more possible uses of a property. They are associated with a particular reuse strategy and the potential reuse envisioned for a property. It is important to have a comprehensive understanding of the opportunities and constraints to potential reuse of the property in order to effectively evaluate a particular reuse strategy. 

The opportunities and constraints analysis involves an evaluation of the property attributes and characteristics to develop strategies to incorporate the opportunities into the reuse strategy and develop actions to address the constraints.

Opportunities and constraints analysis looks at the information gathered in the reuse assessment and determines how redevelopment will be supported or constrained based on four key components:

• Site Characteristics Analysis: documents the property features and physical conditions identified during the real estate due diligence that might affect the reuse of a property, such as landscape (e.g., wetlands, floodplain, surface water, topography); buildings and structures; and deeded rights (e.g., legal easements, restricted uses, water rights).
• Environmental Condition Impact Analysis: determines the impact of environmental conditions on the property reuse.
• Land Use Assessment: identifies land use options consistent with land characteristics and local land use regulations.
• Infrastructure Assessment: identifies current conditions (e.g., utilities) that may be present potential opportunities or constraints on future uses. 

This evaluation process can be guided by considering the goals and vision for the property and the information generated as part of the due diligence, land use assessment, infrastructure assessment and market study. 

Keep in mind that an opportunity for one land use could be a constraint for another. For example, the presence of buildings on a property may be of value for an office use, but not a warehouse use.

Opportunities

Opportunities can include property features such as status on environmental condition (e.g., the site received a no further action determination, has been cleaned to unrestricted use), infrastructure, usable buildings and other improvements on the property, access (e.g., proximity to an interstate highway), location, and property size and shape (e.g., large rectangular property).

• What are the opportunities that may positively impact the successful implementation of each potential reuse and property disposition strategy?
• Is an opportunity unique to a particular land use? The value of each opportunity should be identified. For example, rail access may be valuable to a manufacturer, but may not be of value to a commercial user.
• Is there information missing that may be helpful in evaluating a potential opportunity? In many cases, there may not be sufficient information generated during the due diligence process (referred to as data gaps) to identify potential opportunities or quantify the potential value of an opportunity. If a data gap has been identified, the required information should be obtained. 

Constraints

Information obtained through the due diligence process enables your community to identify potential redevelopment constraints for a property. These constraints can include those associated with the environmental conditions, as well as those commonly encountered through traditional real estate due diligence (e.g., title encumbrances, easements, inadequate infrastructure). Resolving these obstacles and the project risks they present will be key to the implementation of a successful reuse strategy.

The constraints will often depend on the property disposition strategy being considered. Constraints may, however, be common to more than one property disposition strategy. There are many combinations of constraints that could apply to brownfield properties. Similarly, the range of actions that a local government might take to resolve them will vary widely based on the particular circumstances surrounding the property, the local government’s comfort with taking risks, available resources and other factors.

The process of identifying constraints is iterative. As due diligence proceeds and more information is obtained, certain redevelopment constraints may be eliminated or revised, or new obstacles may be identified. As constraints are identified, they should be prioritized on the basis of their impact on the project. 

Some common redevelopment obstacles include environmental liability, sufficient developable/buildable acreage, and necessary property improvements/infrastructure needs.

Assessing project constraints may include property features such as environmental conditions (e.g., extensive remedial action required), infrastructure, buildings, past improvements on the property that are currently unusable and require asbestos removal and demolition, zoning, easements, land use controls and access.

• What are the constraints that may negatively impact the successful implementation of each potential reuse and property disposition strategy? Identify each constraint that may impact the successful implementation of each potential reuse. 
• What risk or liability is associated with each constraint? 
• What information is still missing? If a data gap has been identified, it can be effectively addressed by obtaining the required information. As additional information is made available, constraints and related risk and liability should be revised accordingly.

Documentation – Summarize the constraints (refer to the Constraints tab in the Revitalization-Ready Workbook)