Fitzpatrick, who chairs The Real Estate Roundtable's Environmental Policy Advisory Committee, urged policymakers to enact the "Brownfields Revitalization and Environmental Restoration Act of 2000" (S. 2700). The bill was the subject of today's hearing by the Senate Environment Subcommittee on Superfund, Waste Control and Risk Assessment. Without the liability changes envisioned by S. 2700, the threat of Superfund liability remains a "real deal-killer" for real estate owners and investors, Fitzpatrick concluded.

Experts estimate there are approximately 400,000 mildly contaminated brownfield sites throughout the U.S. that could be returned to productive, economic use if the underlying environmental issues were addressed in ways that make recovery efforts cost-effective. Given the liability risks associated with brownfield redevelopment, 70 percent to 96 percent of new real estate development in this country occurs on previously undeveloped "greenfield" sites in outer suburbs. 

"We have done a good job in this country of encouraging recycling in the area of consumer goods, such as plastics, bottles, and paper. In our view, it's time we made the same national commitment to recycling our nation's blighted urban and rural brownfield properties," Fitzpatrick said. His firm has global experience with a range of real estate ownership and financing issues, including the specific challenges associated with brownfield redevelopment. 

Fitzpatrick said the brownfields that blight communities and contribute to sprawl across the country are easy to spot. "We know them when we see them," he said. "The hulking warehouses, dormant smokestacks and abandoned shells of industrial plants that still line some of the nation's inland waterways and railroads stand as monuments to the 'old economy.' With the help of the economic and regulatory incentives included in S.2700, many of these properties can be recycled to serve the commercial, residential, retail, and recreation needs of the information age and its so-called 'new' economy," he said.

S. 2700 was recently unveiled by the chairman and ranking Democrat of the Senate Superfund Subcommittee - Lincoln Chafee (R-RI) and Frank Lautenberg (D- NJ), respectively; and the chairman and ranking Democrat of the full Senate Environment and Public Works Committee - Robert C. Smith (R-NH) and Max Baucus (D-MT).

The bill would reassure potential brownfield redevelopers that voluntary, state-approved cleanup efforts would not, in most cases, be "second guessed" by federal officials. This "finality" assurance is crucial not only to potential buyers and sellers of brownfield properties but also to their financial partners, Fitzpatrick explained.

Additionally, S.2700 would codify administrative reforms to the Superfund program implemented in recent years by the Environmental Protection Agency (EPA). In 1995 policy guidance on "adjacent landowners," for example, EPA indicated it would not take punitive action against owners whose land is contaminated by pollution that migrates from a neighboring property via underground water sources. Fitzpatrick said these reforms have been valuable in specific circumstances, but "do not carry the full force and effect of law and the Agency remains free to take action 'at variance' with them at any time."

AIG Global Real Estate Investment Corp. is part of AIG, Inc. (www.aig.com), the leading U.S.-based international insurance and financial services organization and the largest underwriter of commercial and industrial insurance in the nation. The Real Estate Roundtable has testified repeatedly before Congress to urge reform of real estate owner and prospective purchaser liability under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), or Superfund. 

The Real Estate Roundtable is America's leading public policy advocate for the commercial real estate industry on major technology, tax, capital and credit and environmental issues in Washington. Its members are senior principals from every spectrum of commercial real estate and the leaders of major national real estate trade associations.

NOTE: Copies of Mr. Fitzpatrick's testimony are available on request by calling (202) 639-8400.

SOURCE: Real Estate Roundtable

CO: Real Estate Rondtable; AIG Global Real Estate Investment Corp.; AIG, Inc.