A New Redevelopment Framework

Steve Perusits, owner of Toronto-based Wally Clayson’s Master Mechanic Auto Service, recently moved his service centre from its long-time Mount Pleasant Road and Eglinton Area location to one a short distance away.

“Our 99-year lease on the land was ending and we had only found out about it within two years of closing,” says Perusits, “And we only knew of it through the word-of-mouth of our customers. So we were in a crunch to stay in the area and find a new facility.”

Fortunately, they were able to purchase a Master Mechanic franchise less than a kilometer away on Laird Drive. What’s even more astonishing is they were able to complete the move in only two days, basically hauling the equipment from one site to the other. So how were they able to move so quickly? The developer who purchased the land was building a high-rise condominium on the property, easily offsetting any possible remediation costs to follow.

If a service centre owner one day decides to sell his property or retire, you might be surprised to learn that it may not be just a matter of a simple land transaction and hauling the equipment out the door. You might also be surprised to learn that unless the property owner decides to find new management to run the existing service centre, the cost of remediating the land can outweigh the current value of the property should the land be redeveloped in the near future.

Land remediation is simply providing a remedy to the land. Environmental remediation deals with the removal of pollution or contaminants from environmental media such as soil, groundwater, sediment, or surface water for the general protection of human health and the environment, or for a site intended for redevelopment. If your service station has been prone to either oil spills or leaks in the past, or has fuel pumps to sell gasoline, then it’s likely to require some sort of remediation. This involves digging up any underground storage tanks or pipes and completely replacing the soil so that it is once again free of contaminants.

In Canada, most standards for remediation are set by the provinces individually, but the Canadian Council of Ministers of the Environment provides guidance at a federal level in the form of the Canadian Environmental Quality Guidelines and the Canada-Wide Standard for Petroleum Hydrocarbons in Soil.

So how does this relate to you, the service centre owner thinking about selling the property in a few years time? The reality is unless your property sits on a prime piece of real estate (such as the example with Steve Perusits) most developers will not cover the costs of an environmental assessment. In most cases, all associated costs regarding remediation falls upon the shoulders of the current property owner, not the future developer.

In recent months, the province of Ontario, alongside the Ontario Centre for Environmental Technology Advancement (OCETA), and the Canadian Petroleum Products Institute (CPPI) have developed a set of guidelines designed to help garage and service centres owners get a better idea of what’s expected of them (and their municipality) should remediation, and eventually redevelopment, take place.

The “Redevelopment Framework for Former Service Stations” ( www.aboutremediation.com/servicestations/)is an online decision tool meant to aid, not just the property owners of these sites, but also municipalities, developers, and other stakeholders who have a hand in the land or property. In instances where a garage owner wants to close shop or retire, selling the property land can become a lofty burden as the cost of remediation (that is the cost of cleaning up these sites for potential reuse) outweighs the current property value if, for example, gas fuel pumps had been previously installed on the land and now have to be removed along with underground fuel storage tanks, and the land reclaimed.

To municipalities these strips of land are referred to as “brownfield sites” and often redevelopment of a property is hindered by either real or perceived environmental contaminations. These contaminants can range anywhere from solvents, pesticides, and hydrocarbon spillages, and asbestos, to heavy metals that can be found in paints and other oil-based products. While there is potential for reuse once these lands are cleaned up, the reality is gas/service stations are among the most common brownfield sites in Canada.

“We wanted to figure out what the current practices were, whether they were mandatory (such as regulations) or whether they were simply best practices or suggestions. And then from there we looked at some of the possible solutions to breaking these barriers,” says Tammy Lomas-Jylha, vice-president of Remediation and Brownfield Services for OCETA. “What we did was we set up a stakeholder group, experts from all different areas … we wanted to make sure we had developers, we wanted municipalities at the table, we wanted provincial staff that worked on the frontlines of district offices but also had those that were developing standards, guidance pieces, and regulations.”

It’s safe to say that the standards for fuel tank storage and underground insulation weren’t as rigorous in the past as they are today. Older tanks periodically leaked from excessive corrosion and rust and, as a result, eventually impacted the surrounding land. It’s also worth noting that prior to the introduction of automatic overflow shutoffs for fuel pumps, oil would often run into nearby soil or into sewer grates.

Is your shop a brownfield site?

What qualifies as a service centre according to this new framework?

For starters, the size and location of the site would have to leave a relatively small environmental footprint. It would have to account for less than 2,000 tons of impacted soil. The site would also have to be adjacent to major roadways, intersections or other service stations. In addition to this, there would have to be a source of contamination such as an underground storage tank (UST), waste oil tank, or some other type of distribution piping and dispensing system underground. However, it is the contaminants of concerns (COCs) that exclude many service stations from the ‘greenfield’ category. These include Petroleum Hydrocarbons (PHCs); Benzene, Toluene, Ethylbenzene, and Xylene (BTEX); and Polycyclic Aromatic Hydrocarbons (PAHs). Soil contamination is usually an issue as well.

Conventional petroleum hydrocarbon contamination cleanups (more commonly known as “dig and dumps”) can range in costs anywhere from $75,000-$125,000 while land values, especially in rural areas, can be as low as $25,000/ per hectare. It’s easy to see how the costs outweigh the gains. It’s also easy to see why 80 per cent of used service stations in Ontario are left not remediated and otherwise abandoned.

The basis for the Redevelopment Framework involves four stages: Setting the Stage, Evaluation and Planning, Implementation, and Management. These stages have been grouped into four streams of a Redevelopment Project. These include finance, technical, land use planning, and external communication.

The genesis for this framework came about four years ago when OCETA along with the Canadian Urban Institute, National Roundtable for the Environment and Economy (NRTEE), the Federation of Canadian Municipalities, FedNor and the Ontario Ministry of Municipal Affairs and Housing created the brownfield remediation toolkit, an online guide for the redevelopment of all types of brownfield sites. This was followed by four training sessions in 2006 where various municipalities came in and gave feedback to the remediation toolkit as well as said training sessions. What they really wanted was something specific for redevelopment of the most common type of brownfield site: service stations.

“The discussions around [the framework] really came from not only the barriers but also from t
he current brownfields redevelopment toolbox for Ontario municipalities. It was really helping get early starters in the brownfields game, an information source on how to get brownfields redeveloped based on some of the best practices,” continues Tammy Lomas-Jylha, vice-president of remediation and Brownfield Services for OCETA. “The idea was to create something specifically for service stations. We took the discussion to the province of Ontario and the Canadian Petroleum Products Institute and we went from there.”

Currently, the framework is only available for former service centres within Ontario. However, there are discussions in the works for other provinces (as well as the U. S. Environmental Protection Agency) to adopt similar design models. To date this framework remains the only remediation strategy specific to service stations in North America.

Aside from the assessment and remediation costs, experts say there’s no reason why former service stations couldn’t be as competitive as those natural greenfield sites.

It should be stressed that these are not mandatory legislative guidelines set forth by the government of Ontario, but rather timed-tested strategies collaborated by both public and private sectors to streamline working with municipalities. OCETA basically wanted to create a standardized approach that was clear, transparent, and above all user-friendly. In addition to the vast amount of information provided on its Web site ( www.aboutremediation.com/servicestations/)they also offer several case studies, flow charts, technical information, equipment contacts and other valuable resources to help reduce approval delays as well as misunderstandings between developers and municipalities.

“The plan gives a structure for everyone to follow so [remediation] is no longer a black box. It gives you a path. And before you had this path many things appeared to be very, very complex,” continues Vincent. “There are also auxiliary tools in there that talk about COCs, remediation technologies that are available, and alternatives depending on the economics of the site.”

For those even considering selling their service centre or retiring soon, do yourself a favour and go to the website. You’ll be glad you did.

SSGM

Special thanks to George Vincent, Chair of the National Contaminated Sites Committee for the Canadian Petroleum Products Institute, for his help on this article.

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Interim Use: An Alternative Measure

Even under the redevelopment framework, remediation, even at its most streamlined, can take years before it’s fully achieved. This presents a problem in urban centres where space is at a premium and land areas years away from being redeveloped are fenced in or otherwise barricaded to prevent access. One such alternative that is available for some during this latency period is called ‘interim use.’

“There are steps along the way of things that can be done and one of the suggestions that was brought forth was interim uses. Interim uses can be a successful tool or a step in the process to full redevelopment,” says Tammy Lomas-Jylha, vice-president of remediation and brown-field services for OCETA.

So what is an interim use?

It could be a parking lot. It could be a plant nursery. It could be a farmer’s market. It’s a piece of land used to benefit the community prior to it being redeveloped for another use. Contractors are hired to regularly maintain the site, performing grass and weed control, snow removal and other monitoring as required. Interim uses are usually determined by how well the site fits the needs of the community. They are also a mutually beneficial option for both the developer and the land owner.