Time is Money
Environmental Compliance Can Come at a Steep PriceMassachusetts has adopted numerous laws and regulations to protect the quality of its natural resources. These laws provide a baseline of protection and are bolstered by municipal regulations that provide supplemental protection to state laws.
I think we all agree that environmental protection is paramount. However, this protection often comes at a significant monetary cost. Why? Compliance with environmental laws and regulations can require a significant outlay of capital and time and is reflected in the price of land. It is the role of the land-development consultant to address these laws and regulations and assist developers through the permitting process.
This article is not meant to suggest that environmental laws should not be levied or provide less protection, and does not provide a comprehensive outline of environmental regulations. It should provide, however, a basic primer on typical environmental-development constraints and their respective roles in driving up land-development costs.
Let’s consider a theoretical parcel of land purchased by XYZ Land Development. XYZ believed it could save money and decided not to hire a land-development consultant prior to purchasing its parcel. XYZ purchased an exceptional parcel encumbered by a slew of environmentally related development issues. The parcel is interspersed with wetlands, located within an area identified by the Commonwealth as containing rare species, located predominantly within the 100-year flood plain of a nearby river, and is downgradient from a gasoline-storage facility. If we consider an identical parcel of land without these issues, you will see how these constraints drive up the development costs for this parcel.
Wetlands in Massachusetts are protected under the state’s Wetlands Protection Act and, in many cases, by additional municipal bylaws. Municipal bylaws are more restrictive and often impose no-build zones and/or additional requirements beyond the Wetlands Protection Act. Let’s assume our parcel is also subject to a municipal wetland bylaw that stipulates a 50-foot no-build zone from wetland boundaries.
By the time XYZ hired a consultant to identify wetlands on the property, leaves had fallen, and most vegetation was dead. Let’s assume it’s late November. Although a competent wetland scientist can identify the edge of most wetlands in late November, most conservation commissions require wetland boundaries to be verified when vegetation is actively growing. It should be noted, however, that certain types of wetland boundaries cannot be accurately identified without vegetation. And yes, you guessed it: the wetlands on our parcel can’t be accurately identified without vegetation.
Because identifying accurate wetland boundaries is one of the first critical steps in developing the parcel, XYZ must now wait at least five months before an accurate and defensible wetland boundary can be determined. Wetland issues (assuming the regulating agencies have no other concerns) have cost XYZ at least an additional five months of wait time, carrying costs, and potential lost revenue.
Concurrent with preliminary identification of wetland boundaries, the consultant filed an information request with the Mass. Natural Heritage Program (NHESP), the state agency tasked with enforcing the Massachusetts Endangered Species Act. A response letter from NHESP typically takes 30 days and provides only basic information on the identity of the species thought and/or known to occur on the parcel.
To provide a response, NHESP must understand the major components of the proposed development to determine if impacts to rare species may occur. This response requires the consultant to prepare a site plan illustrating, at a minimum, the proposed development, development limits, and other major site improvements. Upon initial review of the site plan, NHESP may request additional information, including the type of soils on the parcel, forest type, and other environmental characteristics.
A formal investigation of the parcel, called a Habitat Assessment, may also be required. For the sake of discussion, say a rare turtle and rare plant species occur on the parcel. It’s late November, and the turtle is snuggled down in the ground, and the plant is dormant for the winter and unidentifiable. Rare-species issues have cost XYZ a minimum of five months and up to one year of additional wait time, resulting in increased carrying costs and potential lost revenue.
Although the parcel is not immediately adjacent to a river, more than 95% is located entirely within the 100-year flood plain. In Massachusetts, work within the 100-year flood plain has specific regulations and requires that the flood plain not be filled in. Generally speaking, fill within the flood plain, from grading, site work, and construction, results in displacement of floodwaters (at altered elevations) downstream at those same elevations.
This is a difficult concept to grasp. But let’s think of our flood plain as a cup of water. Imagine the cup is two-thirds full before you pour in a half-cup of sand. The water will overflow because it is displaced by the sand. A flood plain is no different. If you fill it in, its capacity to store a given volume of flood water is decreased.
This issue can be addressed more easily when a parcel has areas located outside (upgradient of) the flood plain. To meet the regulatory criteria for working within the 100-year flood plain, ‘compensatory storage’ must be provided. If you fill in 100 cubic yards of a flood plain, you need to offset this by providing 100 cubic yards of storage. This is accomplished by digging a hole at the same elevation to create what is referred to as compensatory storage.
The XYZ parcel does not have sufficient land located outside the 100-year flood plain to provide compensatory storage, and, unfortunately, the proposed development will require significant amounts of fill to be placed within the flood plain. If compensatory storage cannot be provided on the parcel, it must be provided at the same elevations on an adjacent parcel. To locate compensatory storage on an adjacent parcel requires additional surveying, engineering, and, obviously, landowner approval. Obtaining off-site compensatory storage cost XYZ six months.
XYZ did not perform correct due diligence when purchasing its parcel, and decided to finance the sale privately. An environmental site assessment was not conducted, and XYZ assumed that, because the parcel was never developed, there would not be any hazardous-waste-related issues. XYZ did not consider the possibility that underground storage tanks on the adjacent, upgradient gasoline-storage facility may have leaked.
Well, guess what? They leaked. A lot. The extent of the leak was determined by installing a test well, sampling soil and groundwater, and performing laboratory analysis for contaminants. A significant volume of contaminated soil had to be removed, and long-term monitoring systems had to be installed to meet regulatory criteria. The legal costs of coordination with the owners of the storage facility cost tens of thousands of dollars and took almost a year. Disposal of contaminated soils was also expensive due to a particular type of contaminant.
This example clearly illustrates that compliance with environmental regulations can result in significant outlays of capital and time. I should note that the XYZ property actually exists and was successfully permitted. The names have been changed to protect the innocent.
John Prenosil is a land-development consultant with more than 14 years of experience. His company, JMP Environmental Consulting Inc., provides an array of land-development services throughout Massachusetts; (413) 272-0111; www.jmpec.net