Ontario's new environmental legislation: Implications for Commercial Real Estate Professionals from Toronto to Thunder Bay

On July 1st Ontario's new environmental legislation, Ontario Regulation 153/04, Records of Site Condition, will become law.

So what is the impact for commercial real estate professionals?

At first glance it would seem 'not much', but changes to the legislation could significantly impact both the cost and time it takes to close even a simple commercial deal.  Whether you are redeveloping a Brownfield site in Kitchener, selling an industrial building in Toronto or just getting refinancing on commercial office condo in Ottawa, the new environmental regulations will effect your deal. 

Over the next month, leading up to July 1^st, I will cut through the 147-page O. Reg 153/04 and highlight important changes, so you can be better prepared to advise your clients. Today we will look at changes to the Phase 1 Environmental Site Assessment (ESA).

First we need to clarify some terminology which should be familiar to most readers but is still very important.

A Phase 1 ESA is a report prepared by a “Qualified Person” (QP), typically an engineer, which investigates a property to determine the “likelihood” of environmental contamination. No analytical testing is done for the Phase 1.

The current accepted Phase 1 ESA standard is the CSA Z768-01, however after July 1, 2011, if you require a “Record of Site Condition” to be filed the new O. Reg. 153/04 standard must be used.

A Record of Site Condition (RSC), is a legal a statement filed by a QP to protect property owners from environmental cleanup orders and it must be filed whenever a property changes to a ‘more sensitive use’.  An example of ‘sensitive use’ is redeveloping a former gas station site for a condominium. The QP uses a Phase 1 and (often) a Phase 2 ESA to support the filing of the RSC.

So what if you site is not changing its use and do not require a RSC? Eg. A sale or refinance of a commercial / industrial building with no plans for redevelopment.

Are you legally required to use the new Phase 1 standard? No.

Will a lender require you to use the new standard? Maybe.

We all know banks and lenders have their own underwriting policies, so don’t be surprised if they require the Phase 1 ESA for your site be done to the new O. Reg. 153/04 standard.

However if your client’s property is not being redeveloped, the question you should ask the lender is “Will you accept the CSA standard for a Phase 1?”.  If the answer is “No”, ask them “Why not?”.

The worst they can say is “No, use the new regulations”. But if they say “Yes, use the CSA standard” you may save your client thousands of dollars and at least two weeks in time to prepare a Phase 1 ESA.  

Next Blog: Why the new regulations will mean Phase 1 ESA’s will take longer and will cost more.

Mould Control in Toronto, GTA and all of Ontario

Microscopic Mould

Gone are the days when Mould (or Mold - both spellings are acceptable) was simply the ‘nasty black stuff’ growing on a wall that was cleaned up with some bleach.  Today we are more aware of indoor air quality and that exposure to mould can cause a wide variety of illnesses. Symptoms such as allergenic reactions or asthma attacks, can progress into severe and chronic ailments with prolonged exposure. 

It doesn't matter where you live: Mississauga, Waterloo or Barrie, mould is everywhere. It’s in the air we breathe and grows on virtually any surface. In fact there are over 1,000 species of mold in Canada. So what can you do to protect yourself from mould and maintain reasonable indoor air quality?

'Black' Mould in house in Toronto

Control the Moisture, Control the Mould.

Mould requires water to grow, so it is important to prevent moisture problems in buildings. When poor ventilation is mixed with high humidity, often caused by leaking roofs and basements, the right environment for mould growth is created. Under these conditions visible mould can appear in 24 hours and will flourish, if left unchecked, eventually becoming airborne spores. 



"Grow Op" home in Markham

 What do you do if you see or suspect you have mould? It is recommended you get a qualified mold inspector to do an assessment. Many home owners have unwittingly made their mould situation worst by attempt to remedy the problem themselves.  

The inspector will test and safely remove the mould, while keeping everything outside the contamination area free from spores.  Indoor air quality testing performed before and after the clean-up, will confirm the mould has been effectively removed.

Thanks to Ross Sullivan of Mold.ca for contributing to this blog.  Mold.ca is Canada's leading mold inspection and removal firm.

What are "Potentially Contaminating Activities" for Phase I Environmental Site Assessments, Ontario?

Ontario Ministry of Environment's new Brownfield legislation becomes law July 1, 2011.  Of interest is the section called "Potentially Contaminating Activities" (PCA). PCA's refer to a use or activity "that is occurring or has occurred" at the "Phase 1 Property" or within the greater "Phase 1 Study Area" (250 metre radius from the Phase 1 site).

Phase 1 Study Area. Source: Ministry of Environment

Simply put a PCA is an activity which is more likely to cause soil and groundwater contamination (ie. gas station), vs more benign activities (office).

 If a PCA is found to have occured at the Phase 1 Property, during a Phase 1 Environmental Site Assessment, then the report must recommend a Phase II ESA be conducted (ie. testing of the soil and groundwater). This will undoubtably mean more time, more money for a Phase 1 ESA. This coupled with stricter guidelines for most (65%) contaminants, means there will be a higher probability of a site being found to be contaminated during the Phase II Environmental Site Assessment investigation.


If a PCA is found off the site but within the 250 meter Phase 1 Study Area, the investigator (known as "Qualified Person" or "QP") still has the discretion to recommend a Phase II, but it is not required.


So what are these "Potentially Contaminating Activities"? The new regulations identify 71 PCA's, which are unfortunately buried within the lengthy Ontario Regulation 153/04 Records of Site Conditions - Part XV.1 of the Act. For ease of reference I have post the list below.


Remember just because a property has or had a PCA does NOT mean it is contaminated. But a Phase II Environmental Site Assessment will have to be conducted before a lender will sign-off on financing.


I've highlighted the "common offenders" for ease of reference.

1	Abrasive blasting	24	Plastics (including Fibreglass) Manufacturing, Processing, Storage and Disposal	48	Mining, Smelting or Refining; Ore Processing; Tailings Storage
2	Airstrips or Hangars Operation	25	Rubber Manufacturing or Processing	49	Mining of Coal
3	Antifreeze Manufacturing, Processing, Use, Bulk Storage, Handling, Disposal or Recycling	26	Soap or Detergent Manufacturing, Processing or Bulk Storage	50	Military Exercises
4	Laboratory or Chemical Analysis	27	Solvent Manufacturing, Processing, Use, Storage, Handling or Disposal	51	Ordnance Use, Demolition or Disposal
5	Asphalt or Bitumen Manufacture or Bulk Storage	28	Drum and Barrel or Tank Reconditioning or Recycling	52	De-icing and Antifreeze Agent Manufacturing, Processing, Use, Storage, Handling or Disposal
6	Battery Manufacturing, Recycling or Disposal	29	Dry Cleaning (where chemicals are used)	53	Salt Manufacturing, Processing, Use, Storage, Handling or Disposal
7	Boat Building and Maintenance	30	Electrical Equipment or Transformer Manufacturing, Processing, or Use	54	Oil or Gas Refining and Storage
8	Concrete, Cement or Lime Manufacturing	31	Electricity Generation or Transformation or Power Stations	55	Oil Production
9	Putrescible Materials Handling, Disposal or Recycling Cemeteries	32	Electronic or Computer Equipment Manufacturing or Reconditioning	56	Discharge of Brine
9	Putrescible Materials Handling, Disposal or Recycling	33	Explosives or Ammunition Manufacturing, Production, Use, Bulk Storage, Demolition or Disposal	57	Heating Oil Manufacturing, Processing, Use, Storage, Handling or Disposal
10	Chemical Manufacturing, Processing, Use, Storage, Handling or Disposal	34	Fire Training	58	Motor Vehicle Operation or Maintenance
11	Acid or Alkali Manufacturing, Processing, Use, Storage, Handling or Disposal	35	Fire Retardant Manufacturing, Processing, Use, Storage, Handling or Disposal	59	Port Activities, including Operation and Maintenance of Wharves and Docks
12	Adhesives or Resins Manufacturing, Processing, Use, Storage, Handling or Disposal	36	Foundry Operations	60	Printing and Duplicating
13	Cosmetics Manufacturing, Processing, Use, Bulk Storage, Handling or Disposal	37	Fuel Storage and Dispensing	61	Pulp, Paper and Paperboard Manufacturing and Processing
14	Dye Manufacturing, Processing, Use, Storage, Handling or Disposal	38	Coal Gasification	62	Salvage or Junk Yard Operation or both
15	Fertilizer Manufacturing, Processing, Use, Bulk Storage, Handling or Disposal	39	Gas Manufacturing, Processing and Storage	63	Scrap Metal Recovery and Auto Wrecking
16	Flocculants Manufacturing, Processing, Use, Storage, Handling or Disposal	40	Ink Manufacturing, Processing or Storage	64	Sewage Treatment
17	Foam or Expanded Foam Manufacturing or Processing	41	Iron and Steel Manufacturing or Processing	65	Tanning (and associated trades activities)
18	Glass Manufacturing	42	Coke Oven Operation	66	Textile Manufacturing or Processing
19	Landfilling	43	Incinerating or other Thermal Processing	67	Wood Treating, Preservation and Storage
20	Paint Manufacturing, Processing, Use, Bulk Storage, Handling or Disposal	44	Machine Maintenance and Operation, Metal Fabrication	68	Automotive Repair or Maintenance; Autobody Shop Operation; Vehicle Maintenance and Repair Garages (Auto, bus, truck, railcar, marine, aviation vehicles, etc.)
21	Pesticides (including Herbicides, Fungicides and Anti-Fouling Agents) Manufacturing, Processing, Use, Storage, Handling or Disposal	45	Metal Treatment or Coating	69	Vehicle Manufacturing and Associated Activities
22	Pharmaceutical Manufacturing, Processing or Storage	46	Metal Plating or Finishing	70	Waste Disposal or Waste Management — other than the use of biosolids as soil conditioners
23	Photographic Processing	47	Metal Fabrication	71	Importation of Fill Material of Unknown Quality