First Property Purchase under new Land Reuse and Redevelopment Provisions

Former Kuhlman Electric building. Photo credit: Shawn Cecil
Former Kuhlman Electric building.
Photo credit: Shawn Cecil

A new sign will be going up at the former Kuhlman Electric building in Versailles, Ky. The 27-acre site was recently purchased by Tim and Anna Cambron, co-owners of Ruggles
Sign Company
, as the new location for their successful Kentucky family-owned and operated business. Check out the recent Woodford Sun article by Bob

This is a monumental “first” in our state – this is the first property to change hands under the new provisions of House Bill 465, a bill signed into Kentucky law last year on April 11, 2012. The primary goal of the new provisions is to encourage property redevelopment by providing a mechanism for the state to work with prospective property owners to remove environmental liability obstacles and to increase certainty regarding future liability. The new law is found in Kentucky Revised Statute 224.01-415 with some additional effect on KRS 224.60-138(1) for underground storage tank (UST) cleanups.

The Cambrons and their consultant worked together with the Kentucky
Division of Waste Management
 to complete the purchase under the new provisions.

“My experience overall was very positive,” said Ruggles co-owner Tim Cambron. He said meeting with their consultant and the state helped him understand the process better and that the state was very timely in working with them in giving feedback and direction.

“We’re very proud to say that this legislation is something that KYDEP worked to get introduced, shaped, and passed,” said Shawn Cecil, of the KYDEP commissioner’s office. “We want to be proactive in looking for ways to encourage property reuse and all the good that comes with that. It’s a bit of a departure from the perception that environmental regulation means always curtailing private industry and economic opportunity. In this case, we are looking for ways to help bring industry and jobs to the Commonwealth.”

Under the new provisions, existing cleanup standards and corrective action requirements remain the same for those responsible. The different and exciting part is this: Innocent parties can purchase properties with environmental concerns and use or redevelop them with a new ‘peace of mind’ by having documented reassurance from the state; the parties that caused any environmental issues will remain responsible for those issues.

To reap the benefits and liability assurances, necessary steps must be completed prior to and after the sale. In brief, the purchaser must work with the state to ensure they meet eligibility requirements, the state must agree that the proposed land use is appropriate, and the purchaser must provide access if cleanup or monitoring actions are needed. If the conditions are met, the buyer will not be liable for investigating or correcting historical releases. The Commonwealth will provide additional assurance through the issuance of a letter that confirms the status under KRS 224.01-415.

Although the administrative regulations are still in development, prospective purchasers can participate now. The first step would be to contact the state as soon as intentions to purchase are known. It is anticipated that an interested party and their consultant will submit and certify a package that documents that the conditions have been met. At this stage, the package must include:
• Phase I Environmental Site Assessment,
• Certification that the necessary conditions were met in the purchase (found in KRS 224.01-415)
• A plan that will demonstrate the owner will take care in future use of the property to not put human health and the environment at risk, and
• Comply with need for access to allow those responsible or the Commonwealth to address any remaining contamination.

The importance of the new provisions is multi-fold. The Kentucky Division of Waste Management is host to several cleanup programs. There is some variability in cleanup criteria that is based on the nature of the release, i.e., UST releases are different in risk and character than those of an above-ground storage tank (AST). In the past, a letter documenting safe conditions for the Kentucky UST program may have been met with skepticism from a lending institution that was fearful of another division program directing additional cleanup. KRS 224.60-138(1) now clarifies that a site receiving a letter of No Further Action for a UST cleanup will not be subject to additional actions under Kentucky’s Superfund program, including its non-UST petroleum program. Additionally, KRS 224.01-415 gives the division the authority to provide a letter documenting that it will not require the buyer to perform characterization or cleanup activities.

“The provisions of HB 465 rely upon a Property Management Plan which serves as an agreement between the buyer and the division of what constitutes appropriate care, providing assurance that, if the plan is followed, the buyer will not have liability for cleanup of releases that occurred prior to purchase. The Property Management Plan may be amended to reflect changes in property use over time. In short, through the Property Management Plan the Commonwealth is asking that redevelopers take steps to manage any additional exposure caused by their activities,” said Cecil.

For the Commonwealth and its cities and counties, this improves the value of the property, gets fallow properties back onto tax rolls, has the potential to add jobs, and increases protectiveness by including another layer of protection (an attentive property owner) to ensure the protective use of the property.

“We just feel it’s a great building. It’s a great location. It’s utilizing something that’s already there rather than building from scratch,” Cambron told The Woodford Sun. He said the business presently employees about 70 people and over time, 10 to 20 jobs may be added.

If you are considering the purchase of a property under the new provisions of House Bill 465, or would like more information, contact:

Shawn Cecil
Commissioner’s Office
Kentucky Department for Environmental Protection
200 Fair Oaks Lane, 2nd Floor
Frankfort, KY 40601
Phone: 502-564-6716, ext. 4754