By Bill French, Cushman & Wakefield
Complexities associated with environmental legislation have compounded over the years and must be thoroughly contemplated when developing or purchasing commercial property. Environmental law and legislation means many things to many people however I will endeavor to touch on two topics for your consideration.
Banks and lenders at a minimum require a Phase I environmental Assessment prior to purchase or construction loan funding. The Phase I is an excellent depiction of the current property status but also looks into the rear-view mirror at former property uses and surrounding properties which might have an impact on your targeted property. In many instances, your property may have been impacted by activities of a drycleaner or gas station next door or down the street. This Phase I will provide you a good snapshot to evaluate the environmental risks associated with the property and for you to base your investment decision. Conversely, it is wise if you are going to sell property to have a Phase I completed prior to your marketing efforts in order to assess the environmental situation and avoid future complications once a purchaser is found.
The Phase II portion of environmental assessment deals with physical inspections; including testing of building materials, soils and the groundwater located beneath. This probing and testing is essential should the Phase I implicate contamination is likely. This work can be expensive and timely but is a wise investment if there are any questions. Don’t talk yourself into a short cut by eliminating Phase I & II investigations.
New rulings by the Environmental Protection Agency (“EPA”) and other governing bodies have recently implemented Waters of the United States (“WOTUS”). I had always envisioned WOTUS being the Great Lakes, the Mississippi River and other navigable waterways; however the interpretation is dramatically different. For example, if you notice construction along SR 37 which shall shortly be I-69 south of Martinsville you will see a tremendous amount of orange fencing surrounding small parcels and drainage areas with notifications indicating WOTUS. In the past I would have considered these to be drainage ditches designed to handle the stormwater flow from State Road 37’s road beds. To my surprise, even these small and man-made areas are considered to be WOTUS. Agriculturally many farmers are finding areas they have actually farmed for years on a regular basis are now considered to be within the confines of WOTUS. This is a big shock to many in the agricultural industry and is an indicator that past and present uses may not apply to the future use.
Protecting our waterways, marshlands and wetlands is essential to preservation of the environment; however when you are looking to acquire property make sure you have done your research to determine if you have wetlands and/or WOTUS which impact your property. Just because that field had been farmed for the last 50 years does not mean it is exempt from these rules and regulations. Given the state of regulation that exists make sure you do your homework as the rule of caveat emptor (buyer beware) applies.