Potential buyers of Tribune Media's 18.69-acre property in downtown Orlando shouldn't face liability for ongoing cleanup of contaminated soil underneath the site, a responsibility that will remain with the property's tenant, the Orlando Sentinel Communications Co.
But by letter of the law, state and federal agencies could hold a future property owner responsible for annual cleanup costs if the Sentinel ever backed out of its soil remediation agreement, which dates back to 1995. It's a small risk that can be countered by any buyer through a few key stipulations upon closing.
GrowthSpotter first reported on Jan. 28 that Tribune Media has designated its two blocks of land on N. Orange Avenue for sale, putting an end to redevelopment plans for the property that took form through 2014 and much of 2015.
In the week since that story, the main question raised by local property developers and commercial real estate brokers has been if responsibility for the long-term soil cleanup would transfer to future land owners.
"The state and (U.S.) EPA won't spend taxpayer dollars for cleanup if they can force a private party to do so. As long as the Sentinel company remains solvent, it would remain responsible for the cleanup program. But if the Sentinel company ever failed to complete the cleanup, the (FDEP or EPA) could pursue a new land owner," said Jonathan Huels, environmental partner at Lowndes, Drosdick, Doster, Kantor & Reed, P.A.
"I don't think the FDEP would go after a future owner of the land even if the Sentinel company backed out of its responsibility, but the risk exists," he continued. "In a real-world example, this would be handled through contractual indemnities or environmental insurance that protect the buyer from responsibility falling on them."
The Orlando Sentinel, owned by a separate company named Tribune Publishing, has a 10-year lease on the space it occupies on the 18.69 acres spread along N. Orange Avenue. The land owner, Tribune Real Estate Holdings, is a subsidiary of Tribune Media out of Chicago.
Sentinel publisher Nancy Meyer declined to comment for this story.
GROUND WATER HISTORY
In June 1994, Florida's Department of Environmental Protection identified the property then owned by Orlando Sentinel Communications Co. as the source of ground water pollution that had contaminated a large section of downtown, and threatened nearby Lake Concord, according to newspaper reports from the period.
A large plume of trichloroethene, or TCE, stretched from Sentinel property northwest to Interstate 4, near Garland Avenue and Marks Street. The contamination wouldn't threaten the region's drinking water, which was far below the surface in Florida's aquifer and protected by a layer of clay, but could enter lakes downtown.
TCE was used widely by printers, among other companies, as a solvent and degreaser through the 1980s, but has been strictly regulated since the 1990s. Solvents used by the Sentinel were flushed into the city sewer system, which was legal at the time.
In September 1995, the state, city and Orlando Sentinel agreed to a three-way settlement to clean up the groundwater pollution beneath 128 acres of downtown. The Sentinel agreed to pay for 60 percent of the total cleanup cost, estimated at the time to be $6.8 million.
The newspaper company paid $395,000 to reimburse the state for its past investigative costs on the site, and would be responsible for a minimum of $4 million toward the cleanup.
At least 10 wells were installed and have been operating since late 1997 to intercept and cleanse ground water coming from the Sentinel site, which remove any traces of TCE before it reaches nearby lakes. The system cost $1.2 million to design and build for the city, state and Orlando Sentinel.
The newspaper company has been responsible for annual operating costs of $250,000 since then, as well as annual reports to the state on its maintenance and cleanup progress.
"The remediation system is still going to this day, and we can't predict when the process will be complete," said Bret LeRoux, administrator for waste cleanup in Florida's Department of Environmental Protection-Central District. "It's a pump-and-treat system, for which we had recovery wells along Garland Avenue that have been relocated east of the railroad tracks since Garland began being impacted by I-4 expansion."
As of August 2015, the Orlando Sentinel Communications' latest annual report on the groundwater cleanup system was accepted by FDEP. The next annual groundwater sampling event is this month, with the annual report due May 31.
If a buyer acquires the land, the party responsible for cleanup (Orlando Sentinel Communications Co. and its parent, Tribune Publishing) will remain responsible for paying for the remediation program going forward, LeRoux affirmed.
Tribune's property occupied by the Orlando Sentinel is not a brownfield site, but does lie within a "brownfield area," which is a designation made by the city or county for properties with known or perceived contamination. The designation is used as a first step to gain economic incentives for site redevelopment.
The cost of unknown environmental issues can derail real estate transactions, but in this case the environmental remediation history and annual cost involved is well documented. It's only the length of time to finish the work that's unknown, said Huels of Lowndes.
"The purchaser can buy a policy for the property with the cost of premium reimbursed by the seller through proceeds of the sale to protect against future contamination responsibility, possibly for a 10-year term or longer," Huels said.
Tribune Media did not respond to requests for comment last week regarding a target price for the property. Current property sales downtown are running near $2 million per acre, putting Tribune's total property value near $40 million, Trevor Hall, director and land specialist at Colliers International in Orlando, told GrowthSpotter last week.
Future liability for the groundwater cleanup program could impact the property's perceived value, he added.