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Proposed Standards Alter Brownfield Cost Equation Downturn Complicates Timing of Enhanced Environmental Vigilance
March, 2009
By Barbara Carss
Many more redevelopment sites will require a specialized, costlier and more time-consuming cleanup approach if the Ontario government adopts proposed new standards for allowable levels of contaminants in soil and groundwater. Critics suggest this could ultimately undermine goals to improve public health and safety, foster urban intensification and manage growth since developers will be less likely to take on the challenge of returning derelict land to an environmentally sound, economically viable state.
“It’s going to become expensive to the point where people will not clean up their properties. It will just not be feasible,” predicts Jeff Usher, Vice President, Land Development with Terrasan Corporation, an environmental services and development company that has undertaken several redevelopment projects on former industrial sites. “This may not be the economy to be introducing this type of stricter regime.”
The proposed scientific standards are part of a package of amendments to regulations under Ontario’s Brownfields Act (O.Reg.153/04) also aimed at streamlining administration, and ensuring standardized processes and quality control for environmental site assessments and other procedures relating to site remediation.
“You can break it into process-related issues versus technical issues,” advises Luciano Piccioni, President of RCI Consulting, a planning firm specializing in brownfield redevelopment. “On the process side, some increased costs would be associated with doing a better, more detailed study and hiring people who are more qualified. Whereas with proposed changes to the technical standards, the question is how much additional benefit do we get, and what is it going to cost in terms of lost development opportunities?”
It’s estimated that more than half of the properties currently deemed ready for redevelopment (or already redeveloped) would not qualify under the proposed new rules. Yet, existing requirements for environmental vigilance are already rigorous.
INVESTIGATIVE & COST TRIGGERS
Developers contemplating any project defined as a more sensitive land use – i.e. transforming an industrial site for commercial and/or residential purposes – must file a record of site condition (RSC) on the provincial Brownfield Environmental Site Registry. That’s a document summarizing a site’s environmental condition and demonstrating that it meets Ministry of the Environment (MOE) criteria to allow for redevelopment for new land uses.
To do so, development proponents begin with a Phase One environmental site assessment (ESA), which is a site inspection and document review to determine if any of the previous activities on the property could have caused soil and/or groundwater contamination. If this is the finding – which is likely on former industrial land or properties that accommodated an underground fuel storage tank – property owners would then carry out a Phase Two ESA to test the soil and groundwater and identify the types and volume of contaminants present. A Qualified Professional (QP) – typically an engineer or a hydrogeologist – with the proven credentials to make the required scientific determinations must oversee the work and sign off on the results.
Results of the Phase Two ESA determine how easily redevelopment can proceed. If the level of contaminants on the site falls within the acceptable limits set by MOE, an RSC can be filed immediately. If the level of contaminants exceeds MOE’s standards, property owners still have options to prepare the site for development, but they will need to make further investments before they can move forward.
As proposed, the new standards would significantly reduce the level of some contaminants that would trigger this requirement for greater upfront capital investment. These include chemicals and volatile organic compounds such as trichloroethylene, vinyl chloride, selenium, petroleum hydrocarbons and benzene.
“Proposed soil and groundwater standards used in non-potable groundwater situations that apply to most urban areas have dropped about three orders of magnitude for benzene – a chemical that is ubiquitous in the environment,” notes Jeanette Southwood, an engineer and Qualified Professional who heads the brownfields group with the consulting firm Golder Associates.
To some extent, the proposed standards simply reflect an evolving scientific capacity to detect ever smaller traces of chemicals, and critics maintain that there is no clear evidence the proposed new allowable limits will greatly improve public health and safety. There are also proposed requirements for restoring ecosystems that are arguably inconsistent with the original condition – prior to contamination – of many urban sites.
“They haven’t looked closely at urban settings versus rural settings or small communities. In downtown Toronto, for example, if they’re worried about a certain species of bird – it may never have existed in the area to begin with,” Usher contends. “The science says that this should be the standard, but I don’t know that they really have a good handle on what the science is.”
REMEDIATION OPTIONS
Development proponents have three options when Phase Two ESAs indicate that site remediation is required. They can clean up the property to the MOE’s generic standards, they can seek approval for an alternative standard through a process known as risk assessment, or they can leave the land idle.
“The proposed new standards mean that more contaminated soil at a site may have to be remediated or the site will have to go through the risk assessment process,” Piccioni says. “There’s a good possibility in some cases that the additional cost of meeting the standard would make the project not worth pursuing.”
A generic cleanup entails removing contaminated soil – the so-called dig-and-dump method – and replacing it with clean fill, or using on-site remediation technologies including biologically based approaches to neutralize contaminants.
A risk assessment makes a scientific case for different standards on a specific property, perhaps in tandem with on-site engineering to manage contaminants rather than remove or neutralize them. For example, a risk assessment might allow development proponents to seal the contaminated soil with a cap to prevent it from migrating from a contained area. (This is the case in the West Don Lands precinct in Toronto.
Risk assessments are somewhat analogous to the compliance alternatives under the Ontario Building Code when structural impediments or impracticalities make more common engineering solutions difficult to apply. Developers and their designers can incorporate compensating safety measures to achieve an equivalent level of safety in a different way, but the alternative measures are often costly, while obtaining approval can be a prolonged and complicated process.
Similarly, risk assessments typically require more resources, extra costs for consultants and expertise, a longer period for securing approvals, and potentially greater costs to implement the identified solutions. Each submission a proponent makes to the MOE has a minimum eight week turnaround before a decision is received, and a risk assessment often involves more than one submission.
“This can be challenging for a property owner with a short timeline and with interest accumulating on financing,” Southwood says.
The proposed new amendments do recognize and attempt to address this issue by setting out a tiered approach to the risk assessment process. The MOE has promised to develop a generic risk assessment model and an associated web based modeling tool that brownfield practitioners can use. Beyond that, there would still be flexibility for site specific risk assessment.
ECONOMIC SENSITIVITIES
However, potential development proponents remain wary until they see more details of how the system will work – particularly given the history of long delays in obtaining Ministry approvals.
“If the standards are going to be more stringent and more properties are pushed into risk assessment, then the risk assessment process has to be more efficient,” Southwood stresses. “Generally people support efforts of the Ministry to streamline and update the process, but people do have questions whether the process will be sufficiently streamlined and implemented to move the deals and development along.”
The economic case for remediating and redeveloping brownfield sites can be precarious even in vibrant real estate markets. Indeed, Ontario’s Brownfield Act was enacted largely to deal with that reality. So analysts caution against added financial barriers in the current downturn.
At the same time, Ontario’s Growth Plan mandates that at least 40% of new residential construction in municipalities in the sweeping area known as the Greater Golden Horseshoe must be accommodated within existing built-up areas beginning in 2015. Reclaimed brownfield sites are considered a key component of achieving this target.
“This is a really interesting situation in that we have science clashing with planning policy and economics,” Piccioni reflects. “Good science says we should do this, but nobody has done a cost/benefits analysis of what we are really gaining.”
The comment period for the proposed amendments to Ontario Regulation 153/04 closed in February 2008, but the document can be found on the Ontario government’s environmental registry at www.ebr.gov.on.ca under Registry # 010-4642.
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