Greenfields become Brownfields. Increased Costs for Real Estate development in Toronto, GTA and Ontario.

If you have read any of my recent articles on amendments to Ontario's environmental legislation, O. Reg. 153/04, you know that the due diligence process for Phase 1 environmental site assessments will become more complicated on July 1st.

Phase 1 ESA’s will now investigate at larger 'Phase 1 Study Area', and consider more activities that could contaminate the subject property. This is going to result in more Phase 2 environmental site assessments being recommended, to test the soil and groundwater for environmental contamination. While this will cost property owners more time and money, of greater concern is whether the property will pass or fail the lab tests.

In the commercial real estate world timelines can be, and often are, adjusted. And an extra $10,000 or $15,000 in fees usually won't upset a multi-million dollar transaction. But if the site is found to be contaminated this is usually a 'deal killer'.

Environmental contamination is a ‘Deal Killer’

One of the goals of the new legislation is to recognize developments in science regarding the impacts of pollutants on humans and the surrounding ecology. 65% of pollutants will thus have more stringent numbers in the new regs. And some of the most common offenders – chlorinated solvents, oils and gas - will see significant reductions in their limits.

Therefore after July 1st we will see many more properties being tested, and more properties failing, under the new stricter guidelines. Whether you live in Oshawa, Kitchener, Peterborough, Barrie, or Mississauga - it's assured you will have more contaminated sites.

There is however hope for some contaminated sites, often referred to as ‘Brownfields’. The Ministry of Environment has introduced a new "Modified Generic Risk Assessment" (MGRA) model, which will allow some contaminated sites to be deemed acceptable for redevelopment (which is one of the stated goals of the new legislation: streamlining the process for redeveloping Brownfield sites).


Next week: Are Risk Assessments risky?