Environmental Concerns – Protected Species Impacts and Mitigation

I know – the time between my blogs is way too long and inexcusable.  I can expect to build up a consistent following when I don’t post very often!  My only excuse is that my blog is informational and educational not a commentary on what is happening in my life.  So I apologize to the following that I have that it has been so long again!

This blog is a continuation of the topic of mitigation.  In my last blog I discussed options for mitigating for wetland impacts.  For this one I will outline the types of compensation commonly used to offset impacts to threatened and endangered wildlife species.  My November 2009 blog discussed threatened and endangered species and outlined the types of activities that typically constitute impacts. 

Threatened and Endangered Species and Mitigation

The trick with protected species is to avoid “taking” them.

The determination of whether an impact has occurred to protected species is relatively more straightforward than that for wetlands – if you take down a tree containing a bald eagle nest you have impacted that eagle or if you bulldoze over the top of a gopher tortoise burrow you have impacted that tortoise.  If a site development proposes activities that may “incidentally” impact threatened and endangered species as a result of otherwise lawful activities permits allowing those impacts may be issued by regulatory agencies.  If permits are issued they typically come with the provision that compensation must be completed to offset those impacts.

Compensation Alternatives

In general there are three techniques that can be used to mitigate for impacts to protected species.   They are:  On-site preservation/buffers, Off-site purchase of land, and relocation.

On-site preservation/buffers:  On-site Preservation is mostly used for species that are sedentary and that need large tracts of very specific types of plant communities such as Florida Scrub Jays.  If there are scrub jays on a property, it might be necessary to set aside the entire portion of the property that is inhabited by scrub jays that is then maintained in its natural state and periodically managed to make sure that the conditions stay suitable for that species.

An on-site buffer might be used if you have a species that can be particularly sensitive to human disturbance such as bald eagles.  For example if there is a bald eagle nest on the property, buffers restricting development of up to 1500 feet from the nest could be required. 

Often on-site preservation is a component of buffers (as with the land in the 1500 foot buffer around a bald eagle nest) but buffers can be required beyond the boundaries of actual inhabited boundaries, such as with a gopher tortoise.

Off-site purchase of land:  This method would include the purchase of land away from the development site that either already provides habitat and resident protected species similar to that on the development site or that could be enhanced or restored through management to create suitable habitat for species that are proposed for impact.

Relocation: This is the removal of a species from the development tract and transporting it to an appropriate recipient site away from the development.  This can include a portion of the property that is not slated for development or land off-site that has been set aside as a conservation area.  Most people are familiar with the concept of relocating gopher tortoises off a property being developed.  This currently is the mitigation method being pushed by the state.  A number of approved relocation tracts have been established and the tortoises are excavated from their burrows and transported to one of these recipient sites.  An example of the cost for that could be $800 to $1000/tortoise to the owner of the recipient site and another $300 to the state to be used for land management in addition to the cost of the permit itself.

Real Estate and Threatened and Endangered Species

As with wetlands, there is no size limit on a property that can be occupied by protected species and; therefore, be subject to permitting and possibly the need to complete mitigation.  

How much actual land is buildable (not inhabited by protected species), whether you can obtain a permit to impact occupied habitat to open up more land for development, and the cost of mitigation may all contribute to the value that can be put on the land if you are a Seller.   Just like with wetlands, the Seller has the choice of addressing some or all of these issues prior to the sale of the property or of leaving it up to the buyer to deal with.  If the Seller does some of the work sometimes they can recoup at least a portion of the money laid out for those activities within the sales price.

Remember “Buyer Beware”?  That applies here again.  Buyers need to be sure to build plenty of due diligence time into the contract for purchase so that they can determine if the site is occupied by any threatened or endangered species and to coordinate with regulatory agencies to determine if developing the property is even feasible and; consequently, what mitigation might be required. 

Knowing that additional monies will have to be laid out for complex permitting and mitigation may allow a buyer to negotiate a better price for the property, leaving them with the funds to complete the development even with the protected species permitting challenges and costs that they may face.  So let’s say you are thinking of buying a piece of property that is occupied by gopher tortoises, you will need to know how much the property is listed for but also how much money might have to be budgeted for environmental studies, permitting, and mitigation such as relocation – all before any other construction costs are considered.  The price offer to the seller might deduct some or all of these projected costs from the asking price of the property.

So as with my other blogs, my advice is hire an environmental consultant to make sure you are aware of environmental issues that you will be dealing with regardless if you are the Seller or the Buyer.  Remember KNOWLEDGE IS POWER!

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Bald Eagles Are No Longer Endangered, This is a Good Thing, Right? Wrong!

Normally, we would consider that the removal (or delisting) of a wildlife species, such as the Bald Eagle, from its status as protected would be a good thing for property owners since they will no longer have to worry about developing land inhabited by the species.  WRONG! 

The delisting of  a protected wildlife species can still negatively affect the value of your property!  How can that be? 

In an earlier blog I told you that protected wildlife species fall into one of three categories: Endangered, Threatened, or Species of Special Concern.  Over time as population levels change the state and/or federal government regulatory agencies may decide that a particular species no longer falls into the class to which it was assigned. 

For instance, after significant research into a species’ population level, applicable regulatory agencies may decide that a species has recovered in sufficient number to be down-listed or even delisted (taken off of the list of protected species).  This is an exciting phenomenon because it means that the previously given protection received  has allowed the population levels of that species to recover enough that it no longer needs intervention from those regulatory agencies to maintain its viability.

You should note; however, that not everything is at it seems at first glance.  In some cases, even if a species has been down-listed or delisted in its protected status it still may be protected in other ways.  A perfect example of this is the Bald Eagle.  In June 2007 the bald eagle was removed from the list of Threatened and Endangered species protected under the Federal Endangered Species Act (ESA); it was delisted.  In other words, it was no longer considered to be an endangered species and; therefore, protected under that act.  This might have seemed like a happy occasion initially and was definitely great PR for the U.S. Fish and Wildlife Service (FWS); however, this event may actually have muddied the waters for land owners and developers as it is not widely known that bald eagles are still protected under two other Federal laws (The Migratory Bird  and Treaty Act [1918] and The Bald and Golden Eagle Protection Act [1940]).  

For many years, while protected under ESA, landowners and developers were able to work with regulatory agencies to move forward with development even if there was an active Bald Eagle nest on their property.  This was accomplished through extensive coordination with FWS and by using a permitting process that was implemented under ESA.  It was a process that had been used enough over the years that it typically went fairly smoothly.  Unlike ESA, The Migratory Bird Treaty Act and The Bald and Golden Eagle Protection Act do not have any provisions for permitting that would allow incidental impacts or “take” of bald eagles.  This means that all the previous methodology and the guidelines used to permit development in the vicinity of an active bald eagle nest while the species was protected under ESA no longer applied.  There was no longer an avenue by which to obtain that permit.  So instead of making life easier because bald eagles are no longer considered to be an endangered species, the situation become more complex and landowners and developers are spending more time and money to develop land with resident bald eagles. 

There is hope; however, in April 2009 nearly two years after its delisting under ESA, FWS finalized an Environmental Assessment Proposal to Permit Take Under the Bald and Golden Eagle Protection Act.  Now this “Proposal” on how permitting could take place has to be used to develop actual rules and regulations to put the process into place.  FWS intends to pursue the development of regulations that would authorize, under limited circumstances, the use of permits if “take” of an eagle is anticipated but unavoidable.  However, it could take several more years for that to happen!  In the meantime, development proposed on land occupied by bald eagles is considered on a case-by-case basis by FWS.  FWS appears predominantly to be recommending that landowners and developers follow the  May 2007 “National Bald Eagle Management Guidelines” to figure out what protection needs to be in place.  They are relying on these guidelines being put in place by the owners and developers in order to minimize disturbance to eagles and avoid any “taking” of eagles, their parts, eggs, or nests.  This places a lot of responsibility and risk on a landowner or developer that likely is inexperienced in dealing with these matters. 

So how does this affect you and the value of your property?  

If you are lucky enough to be the owner or buyer of property that is inhabited by a wildlife species that has been down-listed or delisted and that is not protected under any other laws then, of course, the value of your property will increase or at least not decrease! 

If you are involved in the other situation, such as with bald eagles, then there will be an effect on the value of the property in the other direction.  As I discussed in one of my previous blogs on Threatened and Endangered Species, inhabitance on a site by protected wildlife species will effect how much of that property will be considered to be usable (developable); how much time and money it will take to conduct surveys, negotiate mitigation and complete permitting; and how much it will cost to do the mitigation.  (Refer to that blog for specifics on how sellers and buyers can be affected by protected wildlife species residing on their property.)  On properties that meet a situation such as I have outlined in this blog your efforts into developing a property, at a minimum, will be affected as outlined in that blog; however, it is likely that time taken and money spent could be even higher since both environmental consultants and regulatory agencies are still working their way through the process of how to deal with these situations.  In addition, if there is no means by which to turn land inhabited by protected species into usable or partially usable through permitting and mitigation then the value of the property could decrease further.  Consequently, the affect on the salability of the property could be more exaggerated.

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What are Environmental Concerns? The Mystery of Wetlands

So I realized after completing and posting my last two blogs that I had assumed that everyone would know what I was talking about when I used the phrase “Environmental Concerns” and I am sure that most people do.  However, I thought it would be worth it to be a little more detailed and to spend a bit more time on explaining how these conditons relate to real estate.

Environmental Concerns generally fall into three categories: Wetlands, Threatened and Endangered Species, and Hazardous Waste (or as an old boss used to call it the “ooey gooyies”). For this post I am going to concentrate on wetlands.

What is a wetland?

The U.S Army Corps of of Engineers (Corps) and the US Environmental Protection Agency define wetlands as follows: “Those areas that are inundated or saturated by surface or ground water at a frequency and duration sufficient to support, and that under normal circumstances do support, a prevalence of vegetation typically adapted for life in saturated soil conditions.  Wetlands are areas that are covered by water or have waterlogged soils for long periods (14-21 days) during the growing season. “Wetlands are areas that generally include swamps, marshes, bogs, and similar areas. 

I bet that’s as clear as… well… MUD!

When we say WETLAND it tends to conjure up visions of big trees dripping with Spanish moss, deep dark-colored water that you can’t see into and gators resting on banks. Or maybe you picture a sea of grass that looks like you can walk across it but when you step off of dry ground you find yourself ankle deep in muck and ooze.

These areas most certainly are wetlands; however, some wetlands are not as easily recognized, often because they are dry during part of the growing season or “they just don’t look very wet” from the roadside.  I am simplifying this a bit, but an area could potentially be a wetland if the water table is within only 12″ of the surface for a “significant period”, which could be as little as 14 days.  And, if that isn’t an eye opener, you should know that it is possible to have standing water in an area during the growing season and it not be a wetland.

Why is it necessary to consider whether an area is a wetland?

Section 404 of the Clean Water Act requires that anyone interested in depositing dredged or fill material into “waters of the United States, including wetlands,” must receive authorization for such activities.”

Activities in wetlands for which permits may be required include, but are not limited to:

• Placement of fill material
• Ditching activities when the excavated material is sidecast
• Levee and dike construction
• Mechanized land clearing
• Land leveling
• Most road construction
• Dam construction

Authorization for these activities is provided throught a permitting process with the Corps and also, in Florida, with the state Water Management Districts (WMD).  Often, if these activities are authorized, mitigation or restitution for impacting the wetland will be required.

Wetlands and Real Estate

Considerations that are important include:

• Presence or absence of wetlands and, if present, their extent (how much of the property) and location on the site (e.g., if a wetland is present in the middle of a property it will have a different impact on site design than if it covers a corner of the parcel).
• What is the actual buildable area on the property- this would be the portion of the property that is not wetlands.
• If there are wetlands, can more buildable area be created by obtaining authorization to impact or eliminate them; this will mean dealing with the agencies that regulate wetlands such as the Corps and WMDs.
• If impacts to wetlands are permitted, is mitigation going to be required and how much will that cost.
• Underlying soil type – Is muck present and if yes, will demucking and/or fill be required and how much will that cost.

How much actual land is buildable (this assumes that the wetlands are excluded), whether you have to add fill, and the cost of mitigation may all contribute to the value you can put on the land if you are selling it.

For a Buyer, these conditions and costs are good negotiation points to use to reduce a price if you are trying to purchase land that has wetlands.   So lets say you are thinking of buying a piece of property with wetlands, you will need to know not only how much the property is listed for but also how much money you might have to budget for environmental studies, demucking, fill, engineering & permitting costs, and mitigation – all before you add in the rest of the construction costs – and will want to offer a price to the seller that deducts some or all of these costs from the asking price of the property.

I hope that now you are starting to see the relevance of my last two blogs.  

From a real estate perspective, many sellers may not want to have too much detail on environmental issues associated with their property and may just want to put it up for sale for as much as can, or what market conditions will support. 

Very, very important to know is that Commercial Real Estate is sold as “Buyer Beware”; owners do not have any legal responsibility to inform a buyer of issues such as wetlands or gopher tortoises that might be associated with the property.  It is up to the buyer to know what they are buying.  It is imperative to build due diligence time into any contract so you can complete necessary studies and learn what you might have to deal with.  It is common for the buyer to foot the bill for any studies done during their due diligence.  The results of the studies may dictate if the buyer ever closes on the property or if they are going to try to renegotiate the price.  If there is a chance that the value of the land may be greatly affected by the outcome of any studies, many buyers will find it worth it to do preliminary work on the property before even making an offer.  Remember KNOWLEDGE IS POWER!

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Environmental Problems – What Should a Buyer Know?

In my first blog I concentrated on the Seller’s perspective of a property with potential environmental concerns, specifically what the pros and cons would be for a Seller to have knowledge of the existing conditions of their property. 

Since most commercial sales move forward with the premise of “Buyer Beware”, in this blog I want to explore what I think a Buyer should be aware of prior to purchasing a property that may have environmental issues associated with it.  While most of the issues typically arise when a vacant parcel is the subject of interest, some concerns will also apply to developed property.

Prior to buying property a Buyer should ask themselves these questions before they make an offer:

•  What are the environmental concerns associated with this property? (There is nearly always something so you can assume you will have to ask this question.)
•  How much of the property is usable/buildable in its current condition?
•  What costs will be associated with addressing environmental issues in order to increase the usable/buildable area and to develop this property?
•  What price am I willing to pay for the property knowing that I will have additional costs associated with addressing the environmental concerns?
•  Are clean-up costs already covered under a liability program so that as the new Owner I will not be responsible for past discharges?

 In order to answer these questions studies on the property have to be completed.  Studies might include: 

• Biological studies to determine the presence/absence of wetlands and threatened and endangered species of plants and animals;
• Tree Survey;
•  Topographic Survey;
• Soil Survey; and
• Phase I Hazardous Waste Assessment

 The results of these studies could dictate such things as:

•  Whether there are areas of the property that will need to be left natural to protect certain resources (e.g., wetlands or Florida Scrub Jay habitat);
• If buffers will be required adjacent to certain areas of the property;
• If demucking and/or fill will be needed and how much;
• What kind of permitting and mitigation may need to be completed;
• If there is clean-up that has to be done; and
• Ultimately, how much it could cost to develop the property as desired.

Prior to initiating any work on the property the Buyer should request that the Seller provide them with any applicable studies, any coordination that may have been conducted with local, state, and/or federal regulatory agencies, and any entitlements such as permits, site plans, and mitigation.

But my current theme of KNOWLEDGE IS POWER applies here.  It is ultimately the Buyer’s responsibility to know what they are buying.  The Buyer should include sufficient due diligence time in any contract to find out more about the property.  In addition, the Buyer should use the information that they find to negotiate a better price on the property; one that takes into consideration how much money they may have to lay out to address environmental concerns.

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