Liability

Engaging Real Estate Lenders in Brownfields Redevelopment Projects

Financing can make or break a redevelopment project; however, lenders are often wary of the environmental liabilities associated with brownfields redevelopments. In order to encourage lenders to finance these projects, Wisconsin state law exempts lenders from environmental liabilities for a range of lending activities, if they meet certain statutory conditions.

In its 2015 report, Investing in Wisconsin, the Brownfields Study Group (BSG) recognized that Wisconsin’s liability exemption for lenders had recently turned 20 years old, and noted that the lending industry had evolved significantly over those two decades. The BSG recommended that a subset of the group meet with stakeholders to examine whether the exemption remains useful and relevant in light of current lending practices and regulations.

Between May 2016 and April 2017, a group of Wisconsin DNR personnel, lenders, attorneys, and trade organizations met five times to discuss, in a public forum, the various components of the state’s lender liability exemption and analyze whether the current exemption meets the needs of lenders and the public. In April 2017, this group of professionals formed a list of recommendations for the BSG, which will consider the proposed items at an upcoming public meeting.

During this effort, the Wisconsin DNR renewed its outreach efforts and strengthened partnerships with the lending community. The Wisconsin DNR reviewed its lender factsheets and updated and republished several guidance documents. The Wisconsin Bankers Association helped the Wisconsin DNR reach the WBA members by authoring informational articles in its membership publications and by distributing Wisconsin DNR’s guidance at its compliance forums, and including information in teaching materials for its compliance courses. Wisconsin DNR staff continue to reach out to bankers and lenders at statewide conferences and via Green Team meetings.

Updated Off-Site Liability Exemption Publication Now Available

The RR Program recently updated a fact sheet on the state’s off-site environmental liability exemptions, When Contamination Crosses a Property Line: The Off-Site Environmental Liability Exemption – Wis. Stat. §§ 292.12 and 292.13, Rights and Responsibilities of Off-site, Affected Property Owners, RR-589 Please recycle old versions of this DNR document and reference to the updated document moving forward.

The update also includes content from and  replaces, a publication titled, What Homeowners, Lenders and Realtors should know about Off-site Contamination, RR-927. More information about the off-site exemption, and RR Program contacts, are available on the DNR’s  web page, Off-site contamination – contamination that crosses property lines.

Updates to Wisconsin Spill Law Help Promote Land Recycling

Last November, the Governor signed 2017 Act 70, which modified Wis. Stat. ch. 292 (Wisconsin’s “Spill Law”) to help encourage brownfield cleanup and redevelopment. The Act was based on recommendations made by the Brownfields Study Group in its 2015 report, Investing in Wisconsin.

Modifications to the Spill Law include:

  • Clarification that the off-site liability exemption applies if there is vapor intrusion impacting an off-site property (Wis. Stat. § 292.13(1m))
  • Changing the definition of “property” as it is used for Voluntary Party Liability Exemption (VPLE). The new definition is “…an area of real property that is included in an application to obtain an exemption under this section, made up of a legally identifiable parcel or legally identifiable contiguous parcels created in compliance with applicable laws.” (Wis. Stat. § 292.15(1)(c))
  • Specifying the process for changing the footprint for the VPLE “property” after an application has been submitted if the “property” is subdivided, combined with other properties or otherwise changed. (Wis. Stat. § 292.15(2)(at))

The DNR’s Remediation and Redevelopment Program’s role with brownfields redevelopment is not directly affected by many of the other provisions in the Act, such as changes to tax incremental districts (TID) requirements for environmental remediation; expansion of the property-assessed clean energy (PACE) financing option to include brownfield revitalization projects; expanded options to address tax delinquent brownfields and other provisions.

Program staff will make necessary changes to VPLE documents and webpages and work with the program’s Land Recycling Team to identify other actions needed to implement the changes.

More information on the bill, including descriptions of the provisions in the Act, can be found in Senate Bill 173.

Updated VPLE Insurance Fees

The Voluntary Party Liability Exemption (VPLE) Insurance fee schedule (RR-661) is now updated and available on the DNR website. The VPLE program allows anyone to conduct an assessment and remedial action of an entire property with DNR oversight to obtain a liability exemption. Insurance is required for VPLE sites where groundwater contamination levels are above enforcement standards and the DNR determines that natural attenuation will restore groundwater quality.

The new insurance fees have gone down slightly and will be in effect until November 1, 2018. The application form, process, and the former use categories (commercial, light industrial, etc.) remain the same.

VPLE insurance is now provided through Ironshore Insurance Services. Any questions about this insurance requirement should be directed to Michael Prager, (608) 261-4927.