Understanding the role and timing of cleanup technology at a brownfield site is a little like the often-used analogy of peeling an onion. This analogy is pertinent to the two Mantua properties called the Route 55 Redevelopment Area.

Harvesting the Onion
When you first harvest an onion, the outside looks a little dirty. Brush off the dirt and you may discover a perfectly good onion. Conducting a Phase 1 Environmental Site Assessment (ESA) is like brushing off this dirt [ASTM E 1527 (05)], though sometimes you uncover a soft spot or bruise (i.e., a “recognized environmental condition” in the parlance of the Phase 1 ESA). A Phase 2 site investigation is like peeling off the outer layer to see if the onion is inherently OK or whether the bruise is serious. If the bruise is deeper, you may need to extend to a Phase 3 site assessment or beyond. (Under New Jersey regulations, the Phase 1 ESA must meet the requirements for a Preliminary Assessment [PA]. Similarly, under New Jersey regulations, the Phase 2 document must meet the requirements for a Site Investigation [SI].)

The focus of this article is to work through the technology issues that impact the decision to purchase and/or sell a property. In this context, the term “technology” refers to the environmental investigations and remediation techniques necessary to define and estimate costs for cleanup of a brownfield property.

Here is what we know about the two Route 55 Redevelopment properties:

Struthers-Dunn property

• Built after 1950 as a 94,000 sq. ft. single-story facility for the manufacture of electrical relays for missiles.
• Degreasers containing trichloroethylene (TCE) and tetrachloroethylene (PCE) were used until 1978.
• Phase 1 (PA) was completed through the New Jersey Department of Environmental Protection (NJDEP) in February 2006.
• A Phase 2 (SI) Report from the NJDEP (125 samples) is slated for issue in November 2006.
• Two contaminated groundwater zones were identified.
• Limited other soil contamination and other issues were also identified.
• The property may contain possible wetlands.

Lambs Road property

• Mostly vacant with a prior commercial building.
• Groundwater contamination likely emanating from the adjacent Struthers-Dunn property.

Buying the Onion
When is the best time to purchase the onion? The Township of Mantua does not currently own the properties, but is considering the acquisition. Acquiring the properties may mean that you acquire the environmental liabilities, which, based upon the known information, are real but not clearly defined. For now, it seems prudent to wait until the Phase 2 (SI) report is issued before making an acquisition decision.

Technology has already played a role in the decision to buy or not buy property in the Route 55 Redevelopment Area. The due diligence assessment performed by the developer looking to buy the Lambs Road property in 1989 (which was made prior to the current, widely accepted ASTM Phase 1 ESA guidance), aborted the deal.

This early lesson highlights the balance between technology and the cost related to clean up a property versus the value of redevelopment. Sometimes the balance is skewed way to one side of the scale or the other. For example, it is frequently said by a developer of a major initiative in a hot market area that the cost of cleanup is just a blip on the screen and barely enters the decision-making process. Conversely, properties with low real estate value, but subject to the same amount of cleanup costs, may not be viable. Is there a formula for success? There is probably not an exacting one, but there are some good lessons and examples that may apply directly to the Mantua project.

Each subsequent phase of environmental investigation peels the next layer off the onion and provides a more thorough understanding of site conditions and issues. Therefore, better information is available by which to base buy/sell decisions. The key is to continue to investigate until a reasonable cost estimate for cleanup can be achieved.

Selling the Onion
The magnitude and costs of cleanup may not be clear enough after the Phase 2 (SI) to create an accurate business case pro forma. The dilemma at this stage then becomes one of ‘do I continue to spend money on an investigation process with no clear end in sight, or do I toss the bruised onion to the developer.’

The decision here is based partly on long-term management of the site’s environmental liabilities. Usually, if the original owner does not need to provide long-term environmental management of the property, then passing the cleanup responsibility to the developer may make sense. Conversely, if the original owner feels that it is necessary to provide long-term environmental management (i.e., the original owner with “deep pockets” may potentially be subject to future litigation irrespective of the finality of cleanup and regulatory closure), then letting the investigation and regulatory closure process run its course is potentially the most feasible path. In the Struthers-Dunn case, the original owner is not involved in the cleanup; the state is doing the initial work at both parcels designated as the Route 55 Redevelopment Area.

Most developers need to find some level of comfort in the knowledge that remediation costs can “reasonably” be quantified before they enter into a buy/sell transaction. With a “reasonably” quantified cost number, they can finish their development pro forma and make their decisions about deal viability. Many times, although the full extent of contamination is not fully known, there is enough information at the Phase 2 (SI) stage for a developer to take a risk because of the development potential. As the property owner, expect to receive less for the value of the property since the developer is taking a risk and will expect compensation.  

So why would a developer want the not-fully quantified environmental liability? For some third party risk transfer companies, this is their core business. They understand the issues and how to work through those issues with regulatory agencies and constructors. Also, they may apply state-of-the-practice, more cost-effective technologies to reduce their cleanup costs. Additional techniques that protect human health and the environment while also reducing cleanup costs may be to use the developed structures to provide risk-mitigation barriers to the residual contamination (e.g., using a pavement to restrict contact with the underlying contaminated soil). Savvy developers and consultants know how to apply these techniques.

Eating the Onion
The consequent role of technology, then, is to help identify the quality of the onion and remove the bruised spots so that the rest of the onion can be enjoyed. So, that little bit of dirt on the outside may serve to camouflage the treasure within.

Ken Kastman is a vice president and senior principal engineer at URS Corporation in Chicago.