For those in the commercial real estate industry, our business has been changed by recent amendments to Ontario’s "Brownfield" legislation.
When I do presentations I often get asked: “How does the new law impact me and my clients?”
Over the next two posts I will present my list of - What you need to know about Ontario’s new environmental regulations. While this is not an exhaustive list, it is my goal to highlight the changes and implications of new regulations so you will be able to respond appropriately to any environmental situation.
1. Phase I ESA's will take longer and cost more.
The new regulations require investigating the complete historical uses of all properties within 250 metres (instead of the old CSA standard of investigating just the immediate neighbours). Result: Better quality reports industry-wide, but plan on 3 – 4 weeks and $3000 - $4000 on per report. Beware: a $2000 Phase 1 will probably not meet the new MOE standards.
2. More Phase II ESA's will be required.
The inclusion of Potentially Contaminating Activities (PCA) in the new regulations mean that if an industrial activity has ever occurred at the subject property, the soil and groundwater will likely have to be tested for contamination. (See my blog on May 4, 2011 for the complete list of PCA’s).
Result: More properties will fail for contamination by virtue of more Phase II’s being completed. In addition if the Phase II is a condition for a transaction (purchase or refinance), remember it will take 4 – 6 weeks and will cost $8,000 - $10,000 on average.
3. Property owners receive a copy of Phase I & II ESA reports.
Result: Regardless of who orders the report(s) this amendment means property owners will have to be more forthcoming about the environmental conditions of their site(s).
4. More stringent guidelines for 65% of pollutants.
Included in this list are common contaminants related to gas stations, automotive repair and dry cleaning activities.
Result: For some properties these new numbers will be very difficult, if not impossible, to achieve. For those sites only option for obtaining a Record of Site Condition from the MOE will be through a Risk Assessment. (Remember: a Record of Site Condition is required by most banks as evidence that a site is “clean”)If you are going the Risk Assessment route be aware they can take many months to complete (forget the 90-day close), and there are no guarantees the MOE will accept a Record of Site Condition based on a Risk Assessment.
Although we are only a weeks into the new regulatory regime, this could prove to be a real bottle-neck for one of the Ministry of Environment’s stated goals for the new regulations: streamlining processes related to remediating contaminated sites.
More on Risk Assessments and other important regulatory changes in next week’s blog.
