In today’s economic condition, an abundance of commercial and industrial properties have been surfacing in the marketplace. While the list of availability grows, the environmental stigma associated with past business at these facilities has continued to rise and continues to be one of the largest deterrents for perspective buyers.  It seems unless the property is “clean”, no one wants to assume “the environmental skeletons” that may reside in the property’s proverbial closet. But “How clean is ‘clean’?” remains the underlying question.   

The advent of risk-based closures has helped define “clean” and the ultimate goal of any cleanup program is a “No Further Action” (NFA) status letter. While this has helped alleviate some buyers’ concerns, unless the words “No Further Action” were uttered by a regulator, the presence of contamination still added a stigma to a property causing most investors, developers and bankers to shy away.

The Ohio Voluntary Action Program (VAP), created in the mid to late 1990s, allows buyers to investigate possible environmental contamination and receive a regulatory NFA status. The VAP maximizes resources and expertise in the private sector by utilizing qualified, experienced professionals, who are certified by Ohio Environmental Protection Agency (Ohio EPA). These Certified Professionals (CPs) are responsible for verifying properties are cleaned to required levels and preparing the NFA letter.

The VAP has given the real estate market a tool for answering the question “How clean is ‘clean’?”, but the buyer still needs to beware. There are plenty of people with misconceptions and misunderstandings of how the VAP standards are to be used. If you are considering a VAP-like project to help move along a property transaction, there are some key points to consider to ensure your project stays on track.

The preliminary investigation is the most important steps of the process and is critical to ensure a seamless transition through the program. Any data collection and remediation activity must be predicated by a complete and well documented background check on the property. Typically this background check is completed through a VAP compliant Phase I Environmental Site Assessment (ESA). The ESA is the foundation on which all future work is conducted.

When evaluating contaminates, do not fall into the trap of referencing only detected concentrations to the VAP action level tables. The VAP rules have valuable tables of chemical standards for soil and groundwater. The tables are often misused. A cleanup must take into consideration all means of exposure, potential impact to uncontaminated portions of the property, off-site impacts, soil and groundwater classifications as well as the presence of multiple chemicals. None of these can be resolved with the look-up tables.

Plan for the environmental work early. Too often, the environmental due diligence is not initiated until a closing date for the transaction is set. This only puts the buyer, seller and environmental consultant in a bad situation. The environmental information may be an important part of the deal and should be included as early as possible.

Prepare for disappointment. Many times, a seller will see his property through rose-colored glasses. When contamination is found, he then goes into varying states of panic, denial and accusation before realizing (particularly for older properties) no one at the table could be responsible for the contamination; however, if the deal is to proceed, the contamination must be addressed.