DATE:
November 1, 2022
TO:
Adam Politzer, Interim City Manger
FROM:
Charles S. Bryant, Community Development Director
SUBJECT:
Resolution Of The City Council Of The City Of Emeryville Authorizing The City Manager To Execute A Closeout Agreement By And Between The United States Environmental Protection Agency And The City Of Emeryville For The Purpose Of Managing Program Income From The Brownfield Revolving Loan Fund Recommendation
Staff recommends that the City Council adopt the above-entitled resolution authorizing the City Manager to execute a Closeout Agreement with the United States Environmental Protection Agency (US EPA) to manage the retained program income from the City’s Brownfield Revolving Loan Program (Fund 247).
Background
The City of Emeryville has received multiple Brownfield Revolving Loan grants from the US EPA from which loans were made to the Emeryville Redevelopment Agency and various private entities for the remediation of contaminated properties. These loans were repaid in full and the grants were closed out under an approved Closeout Agreement with US EPA (the “Original Closeout Agreement”) dated September 27, 2010.
The remaining funds total $3,219,592 and, as a requirement of the Original Closeout Agreement, are held by the City in a distinct fund (Fund 247). None of the funds have been loaned, granted or expended since the execution of the Original Closeout Agreement; however, staff anticipates that the funds could potentially be used to support the future development of the Christie Avenue Sites and/or Site B.
Through the Original Closeout Agreement, US EPA encourages the City to use the funds primarily for Brownfield cleanup loans. In addition, the Original Closeout Agreement provides that the funds may be used for:
a. Cleanup Subgrant agreements;
b. Phase I and Phase II Environmental Site Assessments in accordance with federal Superfund Law (“Comprehensive Environmental Response, Compensation, and Liability Act” or CERCLA); or c. Programmatic costs to manage and oversee work under this grant.
Discussion
In 2022, staff contacted US EPA to discuss the potential use of the funds to support the City’s upcoming development projects. US EPA staff indicated that a new closeout agreement template is being implemented that allows greater flexibility in the use of retained program income. US EPA also said that its policy regarding the Original Closeout Agreement would require separate financial tracking of separate grants. Because the City has multiple grant awards, each award would need a separate account, if the City were to continue administering the funds under the Original Closeout Agreement. This requirement does not apply to funds subject to the new closeout agreement template. Because the City did not segregate the individual grants in its financial system and transactions using these funds date back more than ten years, segregation of the funds now may require extraordinary effort.
The new closeout agreement template is attached as Exhibit A to the Draft Resolution. The new terms would allow the City several additional eligible uses for the funds including:
a. Cleanup subgrants to eligible entities under CERCLA Section 104(k)(1) and other nonprofit organizations (other than lobbying organizations exempt from taxation under Section 501(c)(4) of the Internal Revenue Code) for allowable activities; b. Direct cleanup of sites by the City at the request of a property owner when the City has the necessary legal authority under state, tribal, or local law and the property owner is an eligible entity under CERCLA Section 104(k)(1) or another nonprofit organization; the property can be owned by the City provided the City is not potentially liable under CERCLA Section 107, but cannot be owned by a private, for-profit; c. Health monitoring of vulnerable populations near sites cleaned up or assessed; d. Monitoring of institutional controls and engineering controls to ensure continued protection of public health; e. Phase I Environmental Site Assessments at brownfield sites performed in accordance with EPA All Appropriate Inquiries Final Rule or ASTM E1527-21 and, as applicable, state voluntary cleanup program requirements; f. Phase II Environmental Site Assessments and cleanup planning activities at brownfield sites; g. Area-wide planning for the assessment, cleanup and/or re-use of brownfield sites (e.g., developing a reuse vision for a brownfield site or area; conducting a site reuse assessment, market evaluation/feasibility assessment, infrastructure evaluation, and/or land use assessment; and developing a site disposition strategy and resource roadmap); h. Programmatic costs to manage and oversee the work being performed; and i. Cost sharing requirements of another US EPA Brownfields grant, only if using program income generated from interest and fees, not principal repayments.
Sites eligible for use of funds must meet the US EPA’s site eligibility criteria. Typically, US EPA staff is consulted to determine this, and the Christie Sites have been deemed eligible by US EPA staff.
If the City executes the new closeout agreement, on September 30th three years after the effective date of the agreement, US EPA will assess whether the City has utilized the funds. If the City holds more than $500,000 in program income for five years, there is a risk that the funds will be required to be returned to US EPA.
Fiscal Impact
The new Closeout Agreement allows additional flexibility of funds currently held by the City that may support the costs of remediation of development sites.
Staff Communication with the Public
There has been no staff communication with the public on this item.
Conflict of Interest
None.
Conclusion
Staff recommends that the City Council adopt the attached resolution authorizing the execution of the new Closeout Agreement by and Between the City of Emeryville and the United States Environmental Protection Agency for the Brownfield Revolving Loan Program to increase flexibility for the use of these funds for critical brownfield redevelopment projects.
PREPARED BY: Amber Evans, Community & Economic Development Coordinator II REVIEWED BY: Chadrick Smalley, Deputy Community Development Director Approved and Forwarded to the
City Council of the City of Emeryville:
Adam Politzer, Interim City Manager
Attachments
Draft Resolution, including Exhibit A – Form of Agreement By and Between the City of Emeryville and the US EPA US EPA Closeout Agreement for Brownfield Revolving Loans City Council Meeting | November 1, 2022
City of Emeryville
CALIFORNIA
MEMORANDUM