1. FROM DIRT TO DELIVERY: ENVIRONMENTAL AND CONDEMNATION PITFALLS IN CORRIDOR PROJECTS CASSIE B. STINSON Partner, ANDREWS KURTH LLP

2. 2 I.BASIC CONCEPTS A.Acquisition Concepts 1. Standard Approach –Survey & Title –Appraisal –Environmental Phase 1 –Make Offers –Condemnation

3. 3 2.Major Objectives –Project Schedule –Project Costs

4. 4 1.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) B. Environmental Concepts

5. 5 2.Remediation Standards TRRP—residential TRRP—commercial/industrial UST rules Groundwater ―MSD ―PMZ ―Pump and Treat

6. 6 C. Appraisal Considerations for Contaminated Property Contaminant constituents:COCs (Chemicals of Concern) Pathways of exposure Institutional controls Remediation standards ECE (Environmental Cost Estimate) 1.USPAP AO-9 and Env’l Terms: Contamination conveyance: Limitations on use: Highest and best use: Cost and timing of site remediation plan:

7. 7 2.Appraisals Are “Professional Opinions”

8. 8 II. SOURCES OF CONTAMINATION A. Leaking Petroleum Storage Tanks (LPSTs)

9. 9 Results of LPST

10. 10 Cessation of Operations Essential During Remediation

11. 11 B. Chlorinated Solvent Leaks

12. 12 Pump and Treat ( Just Shoot Me Now! )

13. 13 A.Modified Takes Requires input and approval from Project engineering group Must use modified take consistently for entire Project III.ADVANCED CONCEPTS

14. 14 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 1.3D Easements—A Slice of the Vertical Column of Property

15. 15 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

16. 16 Ofc & C-Store Pump Island Tanks Partial Take at Gas Station Sign

17. 17 1.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 B.Plan Ahead on Impaired Property

18. 18 2.Coordinate Team Work 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 Tip: Schedule early site visit with FULL Team

19. 19 1.No such thing as a “standard” contaminated property – every case is unique! C.Standard Documents Don’t Work for Non-Standard Property

20. 20 2.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

21. 21 Bisected or excluded improvements (don’t forget the TCE!) Environmental escrow agreement Seller’s post-closing obligations 3.Special Provisions in Offers and Purchase Agreements

22. 22 4. Deed (Fee Simple) Standard language : The tract or parcel of land, together with all improvements situated thereon, …. Special Provisions : Include bisected improvements Exclude title to certain improvements

23. 23 Standard language: “... a strip of land, 20 feet wide, more particularly described in Exhibit A, …” Special provision: 3D Easement 5.Grant of Easement

24. 24 YES: Fee simple Permanent easement Temporary easement Improvements in take area Bisected improvements NO: Escrow agreements Env’l Right of entry Post-closing Seller obligations (duty to interrupt operations) D.Condemnation Concepts 1.Acquire Only “Interests in Real Property”

25. 25 2.Consistency: special provisions in the final offer must be reflected in pleadings: right to demolish certain improvements but not take title bisected improvements outside “take area” TCE (temporary construction easement)

26. 26 3.“Woodshed” the witnesses before the hearing: Appraiser Environmental Consultant Right of Way Agent

27. 27 IV.CLEAN PROPERTY – BUT ENVIRONMENTALLY IMPAIRED

28. 28 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 A.Laws Protecting Parks, Open Space, Bugs and Bogs

29. 29 B.Federal Test: de Minimus Impact

30. 30 No feasible alternative Locally preferred alternative Fun with public hearings –NOT! C.State Law Tests

31. 31 Loss of property tax exemption Restrictive covenants Reversionary rights D.Private/Real Property Law Issues

32. 32 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: 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) 2.Deed Restrictions for Park Use Only

33. 33 3.Reversionary Rights can be scary: If the donor died 100 years ago, who and where are the heirs now?

34. 34 Cassie B. Stinson Andrews Kurth LLP 600 Travis St., Ste. 4200 Houston, TX 77002 713-220-4684 cstinson@andrewskurth.com Thank you 34