Article by: William D. Brown, Esq.

The Redevelopment Agency for the City of Chula Vista has recently enjoyed success in passing on the cost of environmental clean-up. Chula Vista is the first redevelopment agency to benefit from important provisions of the Polanco Act. Under an agreement with the State Water Board, Chula Vista has issued corrective action notices to parties responsible for polluting redevelopment properties. The noticed parties have assumed responsibility for the clean-up.

The Chula Vista project is significant because the Agency has found a better way to address pollution at a redevelopment site. Instead of absorbing the cost of site clean-up and then seeking to regain the cost from another party through litigation, the Agency has directly passed on the costs. Chula Vista works with the State Water Board to identify the responsible parties. Chula Vista then takes the place of the Water Board in issuing corrective action notices and obtaining compliance. The program eases the administrative burden on the Water Board and effectively cuts Chula Vista’s litigation and remediation costs. The noticed parties are persuaded to comply because failure to comply exposes the parties to sanctions of up to $5000 a day. Also, the Redevelopment Agency may recover its attorney’s fees in a civil suit filed against the responsible parties. In practice, litigation has not been necessary.

The benefits of the Polanco Act, AB 3193 (1991), as implemented by Chula Vista are potentially far reaching. Redevelopment agencies typically buy or condemn blighted property and the danger of acquiring a contaminated property is always present. Even the most thorough environmental audits will not necessarily discover all the problems that are discovered during redevelopment. Redevelopment agencies are frequently identified as responsible parties in abatement orders issued by environmental agencies. Unfortunately, redevelopment agencies are prime targets because they are easy to locate and are a potential “deep pocket.”

Prior to the Polanco Act, redevelopment agencies had only three options when identified as a potential responsible party. Redevelopment agencies could (1) battle the environmental regulators, (2) pay for expensive clean-up, or (3) sue other potentially responsible parties to obtain contribution. Environmental costs threatened to inhibit redevelopment in areas most needy of redevelopment. Now, environmental regulators and redevelopment agencies can pool their resources to achieve clean up on environmentally blighted areas.

An additional benefit of the Polanco Act is that clean-up is conducted pursuant to a preapproved plan. Clean-up costs can be fixed in advance. An immunity attaches to land cleaned up under a pre-approved plan. Because the immunity can be transferred to the buyer, lenders and developers may be more interested in purchasing property that is being cleaned up under the Polanco Act.

Redevelopment agencies seeking to use the Polanco Act should be aware of certain limitations. The State Water Board requires any party who wishes to use the Polanco Act to enter into a written agreement with the Water Board. Corrective action notices must be carefully drafted and potentially responsible parties must be appropriately identified. The Polanco Act provisions will work effectively only when the Water Board and the redevelopment agency work together.

The Polanco Act is scheduled to expire January 1, 1994. Any approved project initiated in 1993 will benefit from the Act. The Legislature will determine this year whether the Polanco Act will be extended past 1993. The potential advantages to redevelopment agencies are enormous and all redevelopment agencies should evaluate whether they have any properties which can benefit from the use of the Polanco Act. An effort to extend the Polanco Act through 1999 is under way (AB 175 Polanco), but now is the time for redevelopment agencies to take advantage of the Act’s provisions.

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