One of the main obstacles to completing a real estate transaction in urban areas is finding that a property has a Recognized Environmental Condition, or REC. A REC can be the result of improper use, storage, or disposal of a hazardous material at the Subject Property, years or even decades before the present owner purchased the property.
A REC may be evidence of contamination of groundwater, soil, or soil vapor (the air between the soil particles above the water table) by metals, volatile organic compounds (VOCs, such as petroleum hydrocarbons or chlorinated solvents), PCBs, or pesticides, to name a few. But cleaning up a site so that the concentration of contaminants is below federal and state regulatory limits can be expensive, sometimes costing hundreds of thousands of dollars – or more. Whether you are a prospective buyer or seller of such a property, how do you go about cleanup up the site so that it is economically viable to do so?
Vacant real estate adds nothing to the economy except for possibly local property taxes (which are going to be assessed low, because the property as it isn’t worth as much as it otherwise could be), and is not in the best interest of the federal, state, and local governments. Therefore, the City of Los Angeles, State of California, and even the United States federal government maintain a variety of grant and loan programs to assist present and prospective property owners to clean up contaminated sites. We summarize these opportunities for site environmental cleanups below.
City of Los Angeles:
The City of Los Angeles Sanitation’s Brownfields Program provides assistance to private property owners, community organizations, and agencies for development sites throughout the City. The Program provides various types of assistance including on-call technical assistance, assisting site owners in identifying government grant programs to pay for site assessment and remediation. In some cases the Program provides assessment and remediation services, and assistance in understanding assessment and remediation requirements. Sites must meet eligibility criteria and be located in a low income area within the City of Los Angeles.
State of California:
- The Air Resources Board maintains the Nontoxic Dry Cleaning Incentive Program (AB 998). Program provides grants to help eligible dry cleaners transition from machines using tetrachloroethylene (perchloroethylene, or “Perc”), a toxic, carcinogenic air contaminant, to CO2 cleaning systems that are water-based, non-toxic, and non-smog forming.
- The Department of Toxic Substances Control (DTSC) maintains the following two programs:
- The Brownfields Revolving Loan Fund Program (RLF) provides low-interest loans for financing cleanup of sites by eligible public or private property owners, including government and private property owners, as well as non-profits. RLF provides funding for a grant recipient to capitalize a revolving loan fund and to provide sub-awards to carry out cleanup activities at brownfield sites. These grants strengthen the marketplace and encourage stakeholders to leverage resources to clean up and redevelop brownfields. When loans are repaid, the loan amount is returned into the fund and re-lent to other borrowers, providing an ongoing source of capital within a community. An eligible RLF Grant applicant may apply as an individual entity or as a RLF Coalition comprised of two or more entities. A RLF Grant applicant may apply for up to $1,000,000 to address brownfield sites contaminated by hazardous substances, pollutants, contaminants (including hazardous substances co-mingled with petroleum), and/or petroleum.
- The Targeted Site Investigations program is a competitive grant program that provides environmental investigative services to public and private entities. DTSC oversees the investigation and develops a report at no cost to the applicant. Under the TSI Program, brownfields sites are selected to receive environmental services through a competitive application process. The DTSC TSI Program is funded by the United States Environmental Protection Agency. For the selected properties, DTSC provides assessment, investigation, or cleanup planning services at no cost to the applicant. DTSC’s goal is to facilitate the return of brownfields to safe and productive uses. Local government agencies, tribal governments, school districts, and non-profit organizations are eligible.
- The State Water Resources Control Board (SWRCB) maintains the following three programs.
- The Orphan Site Cleanup Fund provides grants to pay for the costs associated with the investigation and cleanup of sites with no financially viable responsible party.
- The Underground Storage Tank Cleanup Fund provides reimbursement for cleanup of leaking petroleum tanks for property owners.
- The Site Cleanup Subaccount Program (SCAP) is a non-competitive program that allows the SWRCB to issue grants for reasonable and necessary costs associated with projects that remediate the harm or threat of harm to human health, safety, or the environment caused by existing or threatened surface or groundwater contamination.
- The Pollution Control Financing Authority maintains the California Recycle Underutilized Sites (CALReUSE) Program. This program is designed to clean up contaminated lands and promote infill residential and mixed-use development. There are actually two programs: One is a loan program that covers site assessment. The other program covers site remediation. Grants and loans are available up to $500,000 for assessments and eligible remediation projects.
Federal Government: The United States Environmental Protection Agency’s Brownfields Program provides direct funding for brownfields assessment, cleanup, revolving loans, environmental job training, technical assistance, training, and research. However, only non-profits are eligible for these programs.
- Assessment Grants provide funding for a grant recipient to inventory, characterize, assess, conduct a range of planning activities, develop site-specific cleanup plans, and conduct community involvement related to brownfield sites. The performance period for these grants is three years. Site-specific assessment grants are appropriate when a specific site is identified and the applicant plans to spend grant funds on this one site only. An applicant may request up to $200,000 to assess a site contaminated by hazardous substances, pollutants, contaminants (including hazardous substances co-mingled with petroleum), and/or petroleum. An applicant may seek a waiver of the $200,000 limit and request up to $350,000 for a site contaminated by hazardous substances, pollutants, contaminants, and/or petroleum. Waiver requests must be based on the anticipated level of contamination, size, or status of ownership of the site.
- Cleanup Grants provide funding for eligible entities to carry out cleanup activities at brownfield sites. An applicant must own the site for which it is requesting funding. The performance period for these grants is three years. An applicant may request up to $500,000 to address one brownfield site, or multiple brownfield sites, contaminated by hazardous substances, pollutants, contaminants (including hazardous substances co-mingled with petroleum), and/or petroleum.
- Multipurpose Grants provide funding to carry out a range of eligible assessment and cleanup activities with a proposed target area, such as a neighborhood, a number of neighboring towns, a district, a corridor, a shared planning area or a census tract. The target area may not include communities that are located in distinctly different geographic areas. The performance period for these grants is five years. An applicant can apply for up to $800,000 and should demonstrate how grant funds will result in at least one Phase II Environmental Site Assessment and one Brownfield site cleanup.