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Old Land for New Growth:
Environmentalists Reflexively Fight, but CBIA Reforms Would
Spark 'Smart' Development of Brownfields
September/October 2003
By Brian White
CBIA Legislative Advocate
What do San Francisco, San Diego, and Los Angeles have in
common? All of these major California cities have a strong
demand for housing and a short supply of developable land.
Indeed, according to UC Berkeley Professor John Landis, Los
Angeles and other urban counties "lack sufficient suburban
land to accommodate projected household growth through 2010."
In order to achieve a sense of balance, Landis says California
must recognize infill housing as a means to expand the supply
of housing while revitalizing job-rich urban areas.
But the traditional definition of "developable" is changing
as California homebuilders more and more are prospecting for
land in urban markets. In fact Landis, once a skeptic of infill
development, now has more than doubled his projection of how
much housing can be built in these areas. In his recent study
of infill development opportunities in the nine-county Bay
Area, Landis says that more than a third of the region's housing
needs can be met by infill and "refill" development strategies
- if the right public policies are put in place.
One reason for this optimism is the slowly but steadily increasing
interest in so-called "brownfield" sites. These tracts of
land, typically found in previously developed areas - particularly
in urban centers - were once industrial sites whose economic
value for that use has diminished or disappeared. Some of
these sites remain in some use but most are abandoned and
contaminated, blighting their neighborhoods and leaving local
(and State) government with residual clean-up obligations.
Unfortunately, as a matter of public policy, California has
done little to embrace brownfields as potentially productive
tracts of land. Ironically, so-called "smart growth" enthusiasts
- whose mantra is "build everything downtown" - have been
virtually mute on the prospect of reusing brownfields.
At the same time, an old guard of environmental purists -
custodians of tired and outdated environmental laws and deeply
imbedded in the power structure of the State Capitol - have
kept reform-minded housing and economic development advocates
at bay.
Progress in the East Meanwhile, progressive brownfield clean-up
and development policies are being enacted in the Midwest,
Middle Atlantic region, and New England as lawmakers have
discovered not only the housing opportunities these sites
offer but also the economic and fiscal benefits of bringing
blighted land back into productive use.
States such as Maryland, Massachusetts, Michigan, New Jersey,
and Pennsylvania have enacted successful brownfield programs
that include liability protection or reductions for developers
- the sort of policy that California homebuilders have been
pursuing in recent years.
In addition, these and other states have integrated brownfields
cleanup and redevelopment objectives into state growth planning
with an emphasis on protecting public health and promoting
economic development.
In Pennsylvania, for example, the state's brownfields reforms
helped attract private investment in dormant steel mill properties
in Pittsburgh, serving to help realign the local economy while
cleaning up blighted areas. Symbolic of the city's efforts
to create "assets out of liabilities" is the Frick Park development,
710 single-family and multifamily homes serving a wide range
of incomes and housing needs. Frick Park is just one of 1,000
brownfield sites cleaned up under Pennsylvania's Land Recycling
and Environmental Remediation Standards Act.
Federal reforms To complement these state programs, Congress
has been changing federal law, a move that could help stimulate
the use of brownfields nationwide. For several years, Congress
has debated the impact of the federal hazardous waste cleanup
law, also known as Superfund, and its impacts on innocent
parties willing to risk private capital to clean up and redevelop
brownfield sites.
At the heart of the debate is the liability issue - that is,
who is responsible for potential public health problems arising
from the development and use of previously contaminated tracts
of land. The uncertainty created by this deficient public
policy has had a chilling effect on the interest of investors
in and developers of housing and other economic enterprises.
Enacted in 1980, the Superfund law imposes "joint and several"
liability on anyone involved in the chain of title of any
contaminated property, even for relatively low-risk sites
which may pose little or no threat to the environment. This
ultimately means that someone could become a "potentially
responsible party" simply by virtue of ownership - even if
they played no role in causing the contamination.
Investors' reluctance to assume this liability, coupled with
lenders' concerns about the collateral value of a contaminated
property, stranded many brownfields as unmarketable properties.
But recognizing the impacts of the federal law on innocent
parties, Congress took a bold step in 2001 by enacting legislation
to provide liability protections for qualified purchasers
of most contaminated properties, except for petroleum-contaminated
sites.
HR 2869 - the Small Business Liability Relief and Brownfields
Revitalization Act - protects purchasers of contaminated sites
from future federal action if they meet specific criteria
for purchasing, maintaining, cleaning up, and preventing future
threats or contamination on the land. Doing so qualifies them
as "bona fide purchasers" (BFPs).
Specifically, HR 2869 provides affirmative defenses to BFPs,
allowing them, as new buyers of a brownfield site, to avoid
Superfund liability even if they know of the contamination
when they take title to the property.
To qualify as a BFP, a buyer must demonstrate that there was
contamination before purchase, undertake hazard mitigation,
conduct appropriate inquiries about past use of the property,
comply with land use restrictions, and fully cooperate with
parties conducting a cleanup. Similar requirements apply to
"innocent purchasers" and "contiguous property owners" under
provisions of the new law.
HR 2869 is considered breakthrough legislation for expanding
infill housing and economic development opportunities and
won strong bipartisan support, including unanimous approval
in the U.S. Senate.
"This bill includes liability relief for innocent parties
. . . people who are interested in cleaning up brownfield
sites, but are afraid to get involved because they may become
liable for somebody else's mess," said Senator Barbara Boxer,
D-Calif., a principal advocate of HR 2869.
California slow to change
Despite recent changes to federal law, California regulatory
agencies continue to rely on the outdated joint-and-several
liability scheme or to use Band-Aid approaches to brownfields
reform.
California policy makers and regulators have made only half-hearted
attempts to remove barriers to brownfields redevelopment.
These efforts only nibble around the edges of the liability
issue, and as a result, little brownfield development has
occurred.
Since its inception, the CBIA-backed Job-Center Housing Coalition
has proposed several legislative efforts to provide incentives
for brownfields cleanup and redevelopment, arguing that these
sites can help address affordable housing needs, promote infill
development, and provide economic and environmental benefits
to communities.
Regrettably, the Coalition's efforts have turned back by the
environmental purists in the Legislature, including a veto
by Governor Davis of a bill to create an inventory of brownfield
sites. Ironically, the Sierra Club - which in principle promotes
infill development that brownfield reforms would help produce
- has stridently led the opposition.
With this sorry record of reform in California, it came as
little surprise that among the most ardent advocates of change
to federal law was Myrtle Walker, mayor of East Palo Alto,
a previously crime-ridden community which is now experiencing
a healthy social and economic transformation.
"The people of America…are saying, 'let's move the earth!'"
Mayor Walker said in testimony before Congress. "Let us take
these places that have been abandoned, and let us turn them
back to jobs and business and parks and homes. Let us show
that we can bring business people and environmental groups
and City Hall and the federal agencies together toward a common,
exciting goal…and let's do it now."
CBIA initiative In this spirit, in 2003, the Job-Center Housing
Coalition renewed its efforts to promote brownfield reform
legislation. This year, the Coalition sponsored SB 493 by
Senator Gil Cedillo, D-Los Angeles, a bill to essentially
adopt the new federal brownfields policy by providing conditional
liability protection to bona fide prospective purchasers,
innocent purchasers, and contiguous property owners as long
as they met the requirements specified under federal law.
The main difference is that these entities would also obtain
a defense in State law from all State and local agency response
costs, including investigation and cleanup costs, administrative
costs, and legal costs. Like the federal bill, the original
polluter of the property would remain on the hook for these
costs but it could shift to the new buyer if the new buyer
failed to comply with all of the requirements for maintaining
their liability protection.
"Meaningful liability relief for new purchasers is a critical
step in revitalizing urban neighborhoods," Cedillo said. "Without
this step, we are destined to underutilize existing land in
our urban core and miss the opportunity to create desperately
needed affordable housing and economic development."
In support of this effort, the Coalition and the California
Center for Land Recycling are leading a broad-based effort,
supported by such diverse organizations as the League of Women
Voters, the Latino Issues Forum, and FannieMae. As a result,
the bill overcame opposition in the Senate Judiciary Committee
from the trial lawyers and was approved by a vote of 5 to
0, which included the Committee's Chair, Senator Martha Escutia,
D-Whittier.
But again, the entrenched environmental lobby brought the
bill to a halt when it was to be heard by the Senate Environmental
Quality Committee. Committee Chairman Byron Sher, D-Stanford,
Committee staff, and the Sierra Club teamed up to block a
hearing on the bill while simultaneously attempting to craft
a nominal but meaningless reform measure.
CBIA and its coalition partners - backed by Senator Cedillo
- decided to hold firm for meaningful reform. Accordingly,
CBIA, together with its Job-Center Housing partners, will
be embarking on an aggressive public relations and grassroots
campaign during the fall, leading up to a much-awaited hearing
in the Senate Environmental Quality Committee in January.
If UC Professor Landis is right, reforming State law to promote
urban land recycling is just a matter of time. And with the
imperative for affordable housing as great as it is today,
now is the time for the Legislature to act. Brian White can
be reached at (916) 443-7933, extension 302, or by e-mail
at bwhite@cbia.org
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