A bill under consideration would streamline process
When engineers investigated the land around East Providence’s Rumford Chemical Works plant – the bulk of which developers plan to renovate into condos and retail shops – they found five old fuel tanks buried on the site.
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Though not leaking, said developer Colin P. Kane, of The Peregrine Group, the tanks need to be removed before his firm starts construction. But prior to digging up the tanks, he said, a lengthy regulatory process must be followed.
“We pay for it,” Kane said. “It takes time to investigate. It takes time to evaluate. It takes time to identify an appropriate solution. And it takes time to remove.”
With Rhode Island’s developable land scarce and pricey, investors are turning to industrial sites to build housing and offices. Add tax incentives for restoring old buildings to the mix, and the number of projects to clean tainted land has soared.
The R.I. Department of Environmental Management, which regulates the cleanup of these so-called brownfields, has struggled with the increased caseload from the projects, agency officials say.
The process protects future residents from contamination and shields developers from lawsuits. But Kane said it can cost millions of dollars to comply with regulations and to remedy the pollution, which typically takes more than two years.
This year, the General Assembly is considering a bill to streamline the process and save time and money for both developers and the DEM. In addition, the measure would define a public comment period to give residents time to voice their concerns about the projects.
“Cleaning up environmental contamination can be costly,” said Tracy Baran, an attorney with Partridge Snow & Hahn in Providence who represents developers. The pollution can exist deep in the soil or in the groundwater, “so those are issues that really raise costs.”
Sometimes developers buy industrial sites before knowing the extent of environmental damage, Baran said, and they become responsible for cleaning up a previous owner’s mess.
To avoid liability, she said, developers must obtain a DEM-approved plan to remedy the situation. As long as they follow the necessary steps in the plan, they insulate themselves from lawsuits from the department or from abutters.
Kelly Owens, associate supervising engineer for DEM’s Office of Waste Management, said developers can expedite the process by getting an early start and conducting the required tests. Otherwise, they’ll spend time returning to unresolved issues and delay construction.
“We want the development to take place,” she said, “but if they come in too late, it becomes very difficult.”
Depending on the nature of pollution on the site, Owens said, a developer can expect oversight from several offices within the DEM. In Waste Management alone, she said, her eight-person staff is handling about 650 brownfields projects.
The proposed legislation, Owens said, would speed up the process by eliminating the need for so-called settlement agreements, which developers must now obtain to avoid liability for pollution on a site that has been approved for cleanup. The bill sets out the needed steps to get liability protection, building the procedure into the law instead of having lawyers draft agreements for each project, according to Owens.
Yet another problem with brownfields development is the amount of risk developers take when paying upfront costs to evaluate a property before they own or develop it, Kane said. Developers often bet their own capital on these projects because banks are hesitant to give financing for the risky endeavors and government subsidies are scarce.
With federal grants, the R.I. Economic Development Corporation and the DEM have built up a multimillion dollar revolving fund to offer loans for brownfields development. Also, the agencies award up to $200,000 to nonprofits that take on the projects.
Though recognizing the state loan program, Kane said his firm needs millions of dollars to clean contaminated property, and subsidized loan programs are often more useful for nonprofits than for private developers. The Rumford Chemical site alone will cost about $1 million to fix before construction begins, for example.
“At the end of the day, a lot of it is just process: spending enough money, being patient enough, working closely with regulatory agencies to come up with a solutions and going out and executing those solutions,” Kane said. “It’s all manageable stuff, but it adds time and money.”
