Ross Marshall of CBRE Victoria speaks with Harm Gross of NEXT Environmental about the land remediation industry. Citified.ca
Ten on the 10th: Land remediation Q&A with Harm Gross of NEXT Environmental
Ten on the 10th
Published August 10, 2019
Citified's Ten on the 10th is a monthly question-and-answer segment connecting our readers with the insight and knowledge of Victoria's top real-estate and business professionals.
August's Ten on the 10th features Harm Gross, Founder and President of Next Environmental, a British Columbia-based land remediation firm with offices in Victoria, Vancouver and Burnaby.
Asking the questions is Ross Marshall, Senior Vice President of the Victoria offices of commercial real-estate brokerage CBRE. As a leader in facilitating large-scale commercial real-estate transactions throughout the Capital Region – which include apartment complexes, industrial retail and office properties, and land/development opportunities – Ross and his team are at the forefront of market-leading real-estate transactions on Vancouver Island.
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For those who aren’t aware of Next Environmental, can you share a bit about the company?
NEXT entered the industry 20+ years ago as a business-forward real estate service, and a focus on bridging the gap between business and science. Our first project shaved literally millions of dollars off previous remediation cost estimates for a 64 acre brownfield; now Harbourside Business Park. Today, we provide all stages of investigation and remediation for various industries and developments. With of a team of ~40 and growing, we love helping people navigate the often challenging regulations that the Ministry of Environment sets out. Our steady growth can be attributed largely in part to our unique business model consisting of fixed pricing and industry leading turnaround times. For example, we guarantee our Stage 1 reports in 5 business days anywhere in BC.
You recently opened an office in Victoria. Is there something about Victoria and Vancouver Island that made you decide it was important to have a stronger presence here?
Vancouver Island has a long rich history of industrial activity, historically mills and ports which lined the coast. Due to this we have always served the Island, but underestimated the demand for our business model, as well as the incredible local flavour of the island community. Lesson learned. Islander in place. We're here now, and can be significantly more competitive.
How have you seen contaminated sites change over the years from a regulatory perspective?
The proliferation of regulations has been tremendous, from a few pages in the mid-90's to over 10,000 double-sided pages today and growing. Fast. This creates a learning problem, as new industry entrants struggle to learn enough under the widespread apprenticeship model of our industry. We adapted by developing advanced training modules that enable our team to stay continually ahead of the curve. As a result, our Approved Professionals (“APs”) can process high volumes of Certificate of Compliance (“COC”) submissions annually.
What is a Brownfield redevelopment?
A true Brownfield is a contaminated site for which there is no evident commercially feasible remediation solution. The term, however, is loosely used in our industry when referencing any undeveloped land which has contamination. Teamwork between developers and expert consultants is necessary to overcome presumed obstacles. I say presumed because common hurdles are preconceived ideas, investigative errors, hearsay and often unfounded assumptions. Interestingly enough, we have actually found that Brownfields can provide some hidden opportunities to investors.
Interesting you say that, as there are no shortage of Brownfield sites in the Capital Regional District. As an expert in this field, what are some of the hidden Brownfield opportunities that perhaps many are unaware of?
In our experience, among the best opportunities are stigmatized sites which others shy away from for various reasons. Hearsay is a powerful deterrent, and is rarely challenged. Think of large (or small) vacant or under-utilized sites which are rumoured to be highly contaminated. Would that site be of interest were it not contaminated? Your competitors are likely to shun it, often giving you a great opportunity to negotiate a good deal from the vendor with little outside interference.
If you like a contaminated property for its real estate merits, we recommend casting aside premature doubts and digging deeper. You may be surprised at the many ways an acceptable deal can be structured, allowing you to capitalize on misconceptions.
What are some of the most important questions people should ask when dealing with a contaminated site?
As you have to rely on a consultant, you should start with asking yourself whether the focus is on technical issues, or is it on your plans for the site? A contaminated site requires a high level of business sense from your advisor, a top-down mentality, because the most economical route to a COC from the Ministry of Environment starts with a detailed understanding of your end goal.
Second, would you buy this site if it were not contaminated? Chances are very good that there is a commercially feasible way to deal with the contamination. Many people don't realize there are multiple ways to deal with it, just as there are multiple ways to develop a site; and the way chosen can often depend on how the development unfolds.
The perception is that obtaining financing for a contaminated site is difficult or impossible. What would you say to that?
Obtaining financing for the purchase or development of contaminated sites is not as difficult as many people believe. But it does require bridging the communication gap between technically oriented consultants and business people; and that gap can be enormous for many specialists in our field. Lenders want to lend money; but they need to understand their risk. Providing a remediation cost "guesstimate" with a list of assumptions and exclusions is no way to earn confidence in the consultants plan. That's why purchasers and lenders normally multiply the guesstimate by 2 or 3 times, which often prevents a deal from proceeding. Lenders know there is no downside to the consultant if their estimate is wrong; so who takes that risk? Lenders also learn who they can rely on, and those opportunities do receive financing.
How does an Environmental Consultant such as Next help developers through the rezoning/subdividing/permitting process in situations where remediation is required?
The process for obtaining Releases from the Ministry are well established, and therefore straightforward, although consultants do need to read the fine print. Many people don't realize that Releases for rezoning and subdivision can be obtained with little or no environmental work provided that subsequent approvals (i.e. Development Permits) cannot be obtained without full investigation and an opinion from an AP, and that the remediation plan is feasible and would result in a COC if needed. Thus the Ministry puts the onus and risk on APs to do things properly. Turnaround time for Releases is quick, usually a matter of a couple of weeks. NEXT obtain Releases on a regular basis, including in support of property transactions. For instance, we obtained a Release for Rezoning for a large developer as a precondition to removing subjects prior to purchase. The developer did not want to purchase the site if the municipality would deny Rezoning.
Share a success story when you have helped a developer effectively coordinate onsite environmental cleanup or remediation?
Perhaps one of the best examples is our remediation and receipt of multiple COCs for the staged build out of BC's largest shipyard. The 100+ year history of contamination was varied in nature, widespread and had migrated onto neighboring properties, into the sensitive marine foreshore habitat of Burrard Inlet, and onto Vancouver Port Authority lands. To add to all this the client was on a tight development schedule, which among other things required issuance of a COC for each parcel before construction. Needless to say, coordination between environmental, geotechnical and contractor teams was required at all times, with no room for error. Remedial work was often conducted round-the-clock as work had to be timed with the tidal cycle. A number of "regulatory firsts" were obtained by NEXT, without which development would have frozen at significant project expense.
What’s “NEXT” for your company?
We are so excited to continue to grow deeper roots here in Victoria. Vancouver Island has a rich history as I previously mentioned with no two projects being the same and we are happy to be here. As for future plans, we are just working out our newest location in Kelowna and hope to have a location further up the Island so stay tuned for that.
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