Episode 5: Environmental Implications of Adaptive Reuse

Environmental attorney Howard Nelson walks through the unique environmental aspects of adaptive reuse projects. They offer a big picture overview of the issues involved and legislative developments while also delving into specific types of adaptive reuse projects in South Florida, such as golf course conversions. What follows is a transcript of the discussion.

 Transcript:

CHIBBARO: Hello everyone, I'm John Chibbaro, an attorney with Bilzin Sumberg’s Environmental Practice Group. I'd like to welcome you to Bilzin Sumberg's interview series, Old Structures, New Purpose: Mastering the Practice of Adaptive Reuse. In this series, we explore timely and salient issues as they relate to adaptive reuse from both a business and a legal perspective.

Today, I have the pleasure of introducing Mr. Howard Nelson, head of Bilzin Sumberg's Environmental Practice Group. We're going to speak about the environmental aspects of adaptive reuse. Specifically, their creative reuse of urban development and the transition of former agricultural and golf course sites. Adaptive reuse has steadily been gaining traction among owners and developers in many major American cities and metropolitan areas.

But the onset of COVID-19 dramatically heightened discussion of adaptive reuse as the virus reshaped real estate and the economy. Among the many issues unique to adaptive reuse developments, and possibly the most complex and sensitive, is environmental compliance and diligence. Based on our extensive experience in counseling clients on environmental matters, Howard and I help owners and developers understand the key strategic legal points in this area as they undertake adaptive reuse projects.

Howard, thank you very much for joining me. And I'd like to start off with this question:

Florida is a high growth state, and yet it's also home to many environmentally sensitive areas. How is the state balancing growth and environmental protection, and how does adaptive reuse factor into that mix?

NELSON: That's a great question because Florida has a long history of trying to coalesce or find a coexistence between natural resource protection and use of the property to accommodate the growth that comes into the state going back to the first environmental laws- the first ALMS ACT and the first DRI process and comprehensive planning process.

But in large part through again, a history starting in the late seventies, early eighties, Florida's sought to use those areas within urban cores, protecting natural vital natural resources, but also reuse those underused or inappropriately used natural areas. For instance, a good phase of the history of Florida's growth saw the development of an enormous number of golf course communities. Golf course communities were almost everything that was built by major developers. You didn't see a new development that didn't have nine, 18 or 36 holes built into the community, but golf is of course a waning sport. And you now have all of these 50, 100, and 150 acre parcels of land that are green that are perfect for reuse, provided you can get past the environmental hurdles. And in that way you stop the outward growth towards the urban development boundaries and concentrate growth where it should be.

South Florida is a perfect example: Miami Dade and Broward, which are thought of as very, very urban counties still have an enormous portion. Two thirds of Broward County is never going to be developed, everything west of the Sawgrass expressway. So if you look for growth areas where new development can come, you're looking at either underutilized, low density areas, remaining agricultural areas or golf courses; same thing for Palm beach County, and same thing for a lot of Miami-Dade County.

CHIBBARO: So let's use the golf course example. What are specific issues when the developer or property owner who has a golf course is looking to develop it. What are some of the specific environmental implications of developing such a site?

NELSON: So they’re several, and you start with the non-environmental, but somewhat subjective ones: Interaction between adjoining property owners and a golf course developer because they're joining property owners have been looking at a clean, open green space, i.e. the golf course, for decades in many cases, and trying to find a site plan that accommodates their perceived park view versus the development rights of the golf course owner is a fine line, but there are other more environmental issues.

For instance, most golf courses actually act as part of a flood plain in the general area. You've got neighboring homes that have either by design or by happenstance, always drained into the golf course. And you've got to make sure that there's appropriate drainage when you redevelop golf courses. Golf courses and agricultural sites are two of the major uses that have routinely worked through the legal applications of pesticides, fungicides, rodenticides, fertilizers, to keep the golf course green, to keep agricultural sites productive. And the application of those chemicals while legal for the golf course does present an issue for the golf course or the post agricultural developer in making sure that soils are handled appropriately to make sure that the site is safe for future residents.

And also that the process of cleaning the site is done in a way to make sure that it is safe for adjoining property owners.

CHIBBARO: You talk about a number of issues related to golf courses and they have a wide breadth. How would you propose to develop the strategy behind diligence when approaching these sites?

NELSON: Well, with any site, whether it's actually strict adaptive reuse, the reuse of a building in an urban setting, or this kind of urban reuse of underutilized sites starts with due diligence. You've got to know beyond the traditional phase one environmental audit what the soil groundwater and contaminant load of that property is.

It's not a secret to anybody that the prior user, the golf course user or the agricultural user have routinely legally applied chemicals on that property for years, and those leave a signature. Without appropriate due diligence, without appropriate analysis, you walk into the redevelopment somewhat at a loss.

You don't know what your soil handling is going to be. You don't know what process you are going to go through to ensure both from a regulatory point of view and from a safety to your buyers, your reputation as a home builder or a commercial builder, what you're going to need to do to ensure they're safe.

And therefore you can't cost out that process. So you don't know what your redevelopment costs are. And you don't know what your drainage costs are. So there's the traditional due diligence, environmental due diligence, and then am I going to look at contaminant load in soil, in groundwater, in vapor issues and leach ability issues? There's also the soil structural stability issues.

Golf courses are generally very organic in nature. They've been putting fertilizers on a green area for years. You've got to figure out what you're doing with that non-structural very organic soil. You've got to figure out how to deal with a storm water load and a fill requirement for an area that may be several feet lower in certain areas than the adjoining development.

How do you go through that? So, so there's the traditional due diligence and then there's the other aspects. What do I have to do for drainage that's special for here? What do I have to do for storm water management? What do I have to do to get utilities to a site that may be surrounded by development?

And those are all part of the mix of accurately forecasting, not only the redevelopment ability of a golf course or an agricultural site, but the cost of redevelopment.

And if we play off this idea of traditional diligence, how important is it for the developer coming in to be aware of the different ways in which the different localities counties in South Florida approach each aspect of analysis?

Florida is an interesting state and it's got a phenomenal regulatory scheme and a lot of great tools for reuse of urban areas, reuse of impacted areas, both at a state and local level, but it's also a very complex system. And those rules change greatly depending on where you are. Florida Department of Environmental Protection covers basically the entire state with a set of regulations.

But when you go to some of the more urban counties, Miami-Dade, Broward for instance, they have their own delegated and code-based regulatory process for site assessment and site remediation and they differ widely. So for a redevelopment project that takes place in Palm Beach under DEP’s guidance, the assessment requirements and the remedial strategy could vary greatly by hundreds of thousands of dollars of costs from an assessment and remediation take undertaken in Miami-Dade County. Miami-Dade County is I think the most complex regulatory assessment and remedial process in the state. That said it is also the most flexible in using innovative means to both assess risk and make sure that risk is handled.

It's a system that the state had originally looked at for petroleum sites called risk-based corrective action. You take a look at what the user risk is. Is this going to be a warehouse? Is this going to be single family detached houses where little kids could be playing in the background or in the backyard unsupervised and based upon that risk, you get to determine, or the regulators get to determine what remediation is appropriate.

So while the state started it in petroleum sites, Miami-Dade County in the early nineties, as I recall, started the first County-based risk-based corrective action. It is remarkably successful, remarkably complicated, but also very flexible. So it depends on where you're at geographically, but also depends on the type of outcome you're looking for. Are you looking for something where you're redeveloping so that there are no restrictions on site? No restrictions on moving the soil around? No restrictions on accessing groundwater because that's one remedial path and one set of expenses? Or are you willing to take some restriction on use? Palm Beach County has an entire section of the County where they are prohibited from using groundwater for irrigation. And therefore it really should be no problem looking at a property and redeveloping property where you're willing to restrict the use of groundwater for irrigation purposes.

And then you do not have to undertake the assessment and costs related with cleaning up all of that ground water. I remember while we're looking at golf courses, these three counties and an enormous amount of the state of Florida have a long agricultural history. So when you look at a golf course site, it's not just a golf course you're looking at. You're looking at the impacts from this golf course, that may have been the last 20, 30, 40 years, but you're also looking at what might be 80, 50, 60 years of prior agriculture in that entire general area. I looked at a site not too long ago for a client where the golf course impacts just didn't make sense. They didn't relate to what you would expect from a golf course. And through a lot of research with my consultant, we realized that this site was a small portion of a much larger historic dairy operation that occurred on this site, and dairy operations in Florida have a very long history of the use of arsenicals to make sure that cattle were safe from cattle ticks.

And as you looked at this site, you realize you weren't really looking at golf course impacts. You were looking at the prior dairy use impacts throughout the property. So it depends on geographically where you're at, but also what type of outcome do you want? Do you want a site free from restrictions or are you willing to take some reasonable restrictions as part of the redevelopment process?

CHIBBARO: So I'd like to pivot off this idea. We just spoke about local regulatory impacts. Let's spin up to the recent state and federal regulatory changes. Specifically in the context of wetlands, there've been some major developments at the federal and state level.

NELSON: At the Federal level, we have a new waters of the United States, the navigable waters protection rule, which has implications for the size and identification of wetlands. And the state has recently been delegated authority to identify those wetlands and to regulatory process permit applications. But we start with that by saying this: both of those regulatory processes are currently in litigation. So we're not sure where the final answer lies, but as we sit here today, there is a new waters of the United States rule, which drastically reduces the scope of what becomes a federal water, a water of the United States. And that's important from a federal permitting point of view, because while you may have a wetland in all shape and form, if it doesn't somehow attach to a water of United States, there is no federal regulatory jurisdiction.

Now, while that's important, it's important in some areas and less important in others. And Florida is one of those others. Florida is probably the state where it is least affected by change in the waters of the United States rule.

And, I say least affected because Florida has an incredibly robust state permitting process. And the fact that you may not be getting a federal permit doesn't mean that there won't be substantial review and scrutiny of the impacts and substantial mitigation paid for any impacts, just like you would in the federal process.

As a matter of fact, they are very similar processes with a couple of small exceptions with respect to avoidance and minimization, but really largely replicated in the state process. The different piece, however, is the second half of this, which is the delegation and assumption of that federal permitting process by the state DEP; this is only the third state to have ever gotten delegation.

You've got Michigan, New Jersey, and now Florida. And while I think the program works well in Michigan and New Jersey, there's a lot more scrutiny on the delegation and assumption by DEP of that federal power, just because Florida has so much of a wetland path or a wetland focus in the path of potential development.

There are large areas of Florida that are jurisdictionally wetlands. They may or may not be federally jurisdictional under the new WOTUS rule, but there's a large percentage of the state that is jurisdictionally wetlands, especially around the coast. And as you move to the western portion of the coastal counties, you see a lot of wetlands, and that delegation plays to the state almost getting a second bite of the apple.

So there's still a state permit process. And a federal permit process that runs independently of it. So there are winners and losers in this process, but in this process, I think it's interesting because there are winners and losers on certain aspects on both sides of the scale. For environmental NGOs, non-governmental organizations or organizations whose main goal is protection of the environment, they've got some big losses in this and the fact that they don't have the federal process and the federal courts to go to as an appeal process, but on the other hand DEP has never been hesitant to listen to NGOs, to environmental groups in their permitting process. And the entry point on appeals under the state assumed that the federal permitting process is much easier. Florida has phenomenally wide basis of standing to appeal permits, which are issued by DEP and are very comfortable for environmental advocacy groups.

Same thing with the development community. There's a little bit of problematic shuffle going on right now, but I think the development community believes that. And I think there they're absolutely correct. The delegation and assumption brings it closer to the experience that Florida always had with the EPA regulation, which again, I think is robust, but it is fast acting. You got relatively quick and reliable decisions.

And I'm not saying that the Army Corps of Engineers wasn't reliable. I think they're very consistent, but as a federal process, they have been incredibly slow in the permitting process historically. And I think the development community gets the benefit of what could be a more timely process.

CHIBBARO: Howard,thank you very much, and we thank everyone for joining us in this latest episode of Bilzin Sumberg’s series. We look forward to bringing you the next episode of Old Structures, New Purpose: Mastering the Practice of Adaptive Reuse.