Selling a property with a history of environmental contamination can be challenging. Often, sales fall through because of the remediation cost or because the clean-up simply takes too long, and buyers walk.
It isn’t always the stereotypical old factory site, either. Realtors have had to deal with properties where chemicals from dry-cleaning businesses or pesticides at orchards have become an issue.
The state’s Transfer Act was enacted to place restrictions on the sale of properties with environmental pollution so that they could not simply be transferred unremediated from one owner to the next. The legislature recently made changes to it, and many in the real estate community who pushed for those changes would like to see more done to it.
On Friday, more than 100 area Realtors and others attended a Society of Industrial and Office Realtors (SIOR) Connecticut and Western Massachusetts chapter panel discussion on the Transfer Act and its impact on real estate transactions. The event took place at the Farms Country Club in Wallingford.
Moderator Garrett Sheehan, president and CEO of the Greater New Haven Chamber of Commerce said the law was built on good intentions — to clean up properties.
However, “There have been many horror stories about deals being killed,” because of it, according to Sheehan.
He noted how the state legislature recently made changes to it which are favorable to the real-estate industry.
“It is good we have had some movement on the Transfer Act,” Sheehan said. “Normally, we would be bemoaning it and all the deals it has killed. Now, we have had real change at the state legislature.”
According to the state Department of Energy & Environmental Protection (DEEP), the law requires the disclosure of environmental conditions when certain properties and/or businesses, or establishments, are transferred. Parties must complete and file various forms with DEEP. The law also requires that a party signing the Property Transfer Form certification “agrees to investigate the parcel and remediate pollution caused by any release of a hazardous waste or hazardous substance from the establishment,” according to DEEP’s website.
The legislature’s recent revisions to the law, “An Act Concerning the Transfer of Hazardous Waste Establishments,” went into effect on Oct. 1. Lawmakers made two major changes. First, the revised law compels DEEP’s commissioner to make an “audit or no audit” decision within one year of submittal of an LEP (licensed environmental professional) verification.
Also, the law’s wording has been changed to include a new exclusion from the definition of “establishment.” An “establishment” does not include any business operation where more than 100 kilograms of hazardous waste was generated in any one month solely as a result of certain circumstances. Examples include a one-time generation; remediation of polluted soil, groundwater or sediment; removal or abatement of building materials, removal of unused chemicals or materials as a result of emptying or clearing out a building, or the complete cessation of a business operation.
At the event, several panelists spoke about how the Transfer Act historically has impeded the sale of commercial properties.
Jan Michael Czeczotka, a panelist and DEEP’s Division Director, Bureau of Water Protection and Land Use, said the law has some benefits. According to Czeczotka, it helps address the problem of people buying and selling properties with significant environmental issues. It also provides an opportunity for DEEP to become aware of and address environmental pollution, he said.
“We want to get that balance between economics for Connecticut and protecting human health and the environment,” he said.
Todd Andrews, senior vice president, economic and strategic development for Goodwin College in East Hartford, was also a panelist. The college has been developing former brownfields, and its acquisition of properties has triggered the Transfer Act. The college has had to spend significant funds to clean the properties, according to Andrews.
“I’d encourage legislators to provide more funding for programs to address these [remediation] issues,” Andrews said.
When asked what property owners can do to manage costs, Andrews urged those in attendance to get to know their local economic-development officials, who know about various aid that is available. In the college’s case, it was able to take advantage of state programs and access federal Environmental Protection Agency funding for assessment and cleaning, he said.
“Develop good relationships with your local officials — there is help out there,” Andrews said.
Rachel Rosen, department manager, environmental services with Burns & McDonnell, a construction engineering company, said the legislature’s changes to the law have been helpful. Now, there is a working group to identify other potential changes, she said.
According to Rosen, they are trying to find solutions everyone can agree on.
Pam Elkow, an attorney with the law firm of Carmody, Torrance, Sandak & Hennessey in Stamford, said the goal of the Transfer Act was to identify high-risk sites. However, properties with a one-time generation of waste were also impacted.
According to Elkow, it isn’t just clean-up costs that kill real estate deals, but time and uncertainty.
“We need to continue to look at [the law] and improve it,” Elkow said.
The hope, she said, is to have a report back to the legislature in early 2020 with recommendations. She urged those in attendance to speak up if there is something about the Transfer Act that needs to be changed.
“We have different views about where the act should go,” she said.
Frank Hird, SIOR vice president and Commercial Real Estate Broker with OR&L Commercial, who is currently involved in five deals impacted by the Transfer Act, said SIOR has worked to educate lawmakers about the consequences of the law and its impact on commerce.
Contact Michelle Tuccitto Sullo at msullo@newhavenbiz.com
