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FROM DIRT TO DELIVERY: ENVIRONMENTAL AND CONDEMNATION PITFALLS IN CORRIDOR PROJECTS. CASSIE B. STINSON Partner, ANDREWS KURTH LLP. BASIC CONCEPTS. A. Acquisition Concepts 1. Standard Approach Survey & Title Appraisal Environmental Phase 1 Make Offers Condemnation.
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FROM DIRT TO DELIVERY:ENVIRONMENTAL AND CONDEMNATION PITFALLS IN CORRIDOR PROJECTS CASSIE B. STINSON Partner, ANDREWS KURTH LLP
BASICCONCEPTS A. Acquisition Concepts 1. Standard Approach • Survey & Title • Appraisal • Environmental Phase 1 • Make Offers • Condemnation
2.Major Objectives • Project Schedule • Project Costs
B.Environmental Concepts • Environmental Site Assessments (ESAs) • ESA Phase I: non-invasive; identifies Recognized Environmental Concerns (RECs) • ESA Phase 2: involves sampling; identifies Chemicals of Concern (COCs) • ESA Phase 3: more tests to delineate extent of COCs; generate Environmental Cost Estimate (ECE)
Remediation Standards • TRRP—residential • TRRP—commercial/industrial • UST rules • Groundwater • MSD • PMZ • Pump and Treat
C. Appraisal Considerations for Contaminated Property • USPAP AO-9 and Env’l Terms: Contaminant constituents: • COCs (Chemicals of Concern) • Pathways of exposure • Institutional controls • Remediation standards • ECE (Environmental Cost Estimate) Contamination conveyance: Limitations on use: Highest and best use: Cost and timing ofsite remediation plan:
II. SOURCES OF CONTAMINATION A. Leaking Petroleum Storage Tanks (LPSTs)
ADVANCED CONCEPTS • Modified Takes • Requires input and approval from Project engineering group • Must use modified take consistently for entire Project
1. 3D Easements—A Slice of the Vertical Column of Property • Air rights (e.g., minimum elevation = 24 ft.) • Upward limitation to surface rights (e.g., max. elevation = 24 ft.) • Surface level (at grade? sea level?) • Downward limitation of surface rights (e.g., max. depth = 10 ft.) • Subsurface rights (e.g., minimum depth = 10 ft.) pipe gunk
2. Bisected and Excluded Improvements • describe specifically • pay for fuel system components, but don’t title 3. Get a Temporary Easement on remainder • area needed • time needed
Partial Take at Gas Station Ofc & C-Store PumpIsland Tanks Pump Island Sign
Plan Ahead on Impaired Property • Identify Impaired Property Early Current uses having RECs: • Gas stations (currently operating, abandoned) • Small industrial: auto repair, machine shop, paint shop, battery shop, car wash • Dry cleaners • Former rail yards • Landfills • Old improvements (pre-1978): friable asbestos, lead
Environmental: Order ESA Ph. 1 and 2 at same time Define RECs asap and inform Appraiser Appraiser: Plan for initial appraisal “as if clean” and supplemental appraisal “as is” Define Highest and Best Use asap and inform Environmental 2. Coordinate Team Work Tip: Schedule early site visit with FULL Team
Standard Documents Don’t Work for Non-Standard Property 1. No such thing as a “standard” contaminated property – every case is unique!
Use Your Documents as Tools • You can negotiate special terms in voluntary acquisitions that are not available in eminent domain • If it’s not in writing, you don’t have a deal • Get legal help on non-standard docs
3. Special Provisions in Offers and Purchase Agreements • Bisected or excluded improvements (don’t forget the TCE!) • Environmental escrow agreement • Seller’s post-closing obligations
Standard language: The tract or parcel of land, together with all improvements situated thereon, …. 4. Deed (Fee Simple) Special Provisions: • Include bisected improvements • Exclude title to certain improvements
5. Grant of Easement Standard language: “... a strip of land, 20 feet wide, more particularly described in Exhibit A, …” Special provision: 3D Easement
Condemnation Concepts • Acquire Only “Interests in Real Property” NO: • Escrow agreements • Env’l Right of entry • Post-closing Seller obligations (duty to interrupt operations) YES: • Fee simple • Permanent easement • Temporary easement • Improvements in take area • Bisected improvements
2.Consistency: special provisions in thefinal offer must be reflected in pleadings: • right to demolish certain improvements but not take title • bisected improvements outside “take area” • TCE (temporary construction easement)
“Woodshed” the witnesses before the hearing: • Appraiser • Environmental Consultant • Right of Way Agent
Laws Protecting Parks, Open Space, Bugs and Bogs • FEDERAL: • Section 4(f), NEPA • US Fish & Wildlife • US Army Corps of Engineers • STATE • Chapter 26, Texas Parks & Wildlife Code • COMMON LAW RE REAL PROPERTY RIGHTS: • Restrictions and reversionary rights • Park amenities
No feasible alternative Locally preferred alternative Fun with public hearings –NOT! • State Law Tests
Private/Real Property Law Issues • Loss of property tax exemption • Restrictive covenants • Reversionary rights
Deed Restrictions for Park Use Only Reversionary rights: • Acquire park interest from public entity (appraise as park, no income potential) • Acquire reversionary rights from donor’s heirs (appraise at highest and best use other than park, but subject to current right to use as park) Enforcement only: • Injunction to prohibit violation: Right to enforce restrictions is a property right • Inverse condemnation claim: damages for loss of value of benefited property
Reversionary Rights can be scary: If the donor died 100 years ago, who and where are the heirs now?
Thank you Cassie B. Stinson Andrews Kurth LLP 600 Travis St., Ste. 4200 Houston, TX 77002 713-220-4684 cstinson@andrewskurth.com 34