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WILLMS & SHIER    MUNICIPAL REPORT
FALL  2000
GOVERNMENT SPOTLIGHTS "BROWNFIELD" DEVELOPMENT
		process, the municipality can enter into a contract with the developer that makes proper clean-up and delivery of an acknowledged RSC conditions of approval. No building permits will be granted until clean-up and RSC delivery are complete. Unfortunately, the model appears deceptively simple. Small municipalities beware - it requires considerable planning and legal structure in place to make it work. Four important issues must be dealt with. First, the model relies on flagging of potentially contaminated sites. This requires some systematic approach. Second, the municipality needs appropriate planning policies to give the process legal effect. Third, knowing that the MOE does not review most RSCs, can the municipality blindly trust an acknowledged RSC? Is the receipt of an acknowledged RSC adequate protection for community health and safety and environmental protection? Fourth, without having expert review of the RSC, can a municipality avoid liability for improper or inadequate clean-ups? Call John Willms, Jim Renick or Doug Petrie if you need legal advice on finalizing your municipal contaminated site development approval process. Municipal Financial Tools For Planning and Development As part of the Brownfields Showcase suite, the MMAH published a pamphlet entitled Municipal Financial Tools For Planning and Development. It highlights creative work done by a number of municipalities including Cambridge, Kitchener, London, Thunder Bay and Hamilton City and Region (Hamilton-Wentworth). The tools include grants, loans, tax increment equivalent grants and loans, special fee and charge exemptions and some other tools. The tools can be applied with creative use of the Municipal Act, the Planning Act, the Ontario Heritage Act and the Development Charges Act, 1977 It is impressive to find that these municipalities have crafted workable programs despite the Byzantine and paternalistic legislative tools they have had to work with (or around). The pamphlet clearly indicates that most of the ideas are coming from municipalities - and that new ideas will come from "municipalities that have test-driven some of the less commonly used financial tools." For example, tax increment financing (TIF) is a well-established statutory financial tool in most U.S. states. It allows municipalities to subsidize redevelopment of contaminated sites using tax		incentives based on the increased taxes to be derived from the redeveloped site. In Ontario, municipalities must work around the strictures of the legislation by utilizing, for example, the community improvement provisions of s. 28 of the Planning Act. The "bonusing" rule in Ontario requires ministerial approval for financial assistance  to commercial or industrial developers. The pamphlet describes the programs employed by various municipalities using these tools to encourage redevelopment of contaminated sites, as well as to stimulate residential and commercial development in downtown areas. Meanwhile, Minister Tony Clement announced at the AMO conference in August that his Ministry is continuing to work and consult towards a new Municipal Act. Perhaps the government should take a leaf from the U.S. and get busy on amendments to permit tax incentive financing now, while the development market is hot, rather than waiting years for a comprehensive new Municipal Act. We understand the Ministers have requested a report from the panel this fall. We look forward to the results.
Adopts Creative Work Of Leading Municipalities After years of leaving municipalities to forge their own solutions, the Ministries of Municipal Affairs and Housing (MAH) and Environment (MOE) are taking the stage together to promote redevelopment of contaminated sites. The added presence of the Ministry of Economic Development and Trade (MEDT) on the bandstand underlines the government's recognition of the economic value to municipalities of remediating and intensifying use of these sites. Accompanied by the typical fanfare, the new Brownfields Showcase and appointment of a high-profile Advisory Panel put new wrapping on processes and solutions that the same municipalities, development industry and other stakeholders have sweated through for the last four years. The new Advisory Panel is supposed to give fast-track advice to the government on Brownfield development policy. What was wrong with the old panels that were working with the MOE tying to hash out clear policies on liability, lending and planning process? Nothing, except that the MOE was too poor and stressed out, and lacked political backing. We understand the Ministers have requested recommendations from the panel this fall.  We look forward to a quick government response. Well-drafted changes to the legislation would be particularly welcome. Here are the highlights of the Brownfields Showcase. For links to the documents discussed below, visit the Willms & Shier Web Site (www.willmsshier.com) and click "Latest News". Deceptively Simple Planning Model Municipal Affairs published a Process Model For Contaminated Sites for municipalities to use in the development approval process. Initiated by the Regional Planning Commissioners of Ontario, the process has been workshopped with private developers, as well as the MMAH, and the MOE. It has been "field-tested" in Hamilton, Kitchener, Waterloo and Toronto. The bottom line is that municipalities will not issue final building approval until after receipt of a Record of Site Condition (RSC) "acknowledged" by the MOE. This requirement will apply to all known or suspected contaminated sites flagged by the municipality. The process recognizes the need for developers to obtain planning approvals in order to finance the clean-up. Under the
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WILLMS & SHIER    CORPORATE/INDUSTRY REPORT       FALL  2000           MOE SWAT TEAM LOOKING FOR HIGH-PROFILE TARGETS                 NAFTA ARBITRATION AWARD                 AIR EMISSIONS REPORTING REG.           Mexico Must Pay U.S. Company $17M For Denying Hazwaste Disposal Permit U.S. company Metalclad Corporation won a partial victory under NAFTA's investor protection provisions four years after one of its hazardous waste disposal facilities in Mexico was prevented from opening. An independent tribunal decided that the company was unfairly treated when a local municipality refused to issue a construction permit for its hazardous waste disposal site. Before purchasing the site and starting construction Metalclad had been assured that it had all required permits by the Mexican federal government. After the company started to build the facility, the state governor came out against the operation and the municipality stated that construction could not proceed without a "construction permit." According to Metalclad there was no administrative procedure for applying for or receiving such a permit, nor had one been required for a major project in the area for 100 years. It appears that Metalclad got into the middle of a turf war between the federal government and local authorities. The state governor ended the debate when, three days before retiring, he declared an ecological protection zone over an area that included the site - permanently prohibiting operations. Under the investor protection provisions of NAFTA, the tribunal, sitting in Vancouver, decided that the actions of the state and municipal governments had been unfair, and were tantamount to expropriation. The tribunal found that the Mexican federal government was responsible under NAFTA for the actions of local authorities. The arbitration was procedurally complex and time-consuming. Metalclad had claimed $90 million to compensate it for the potential lost profits of the enterprise. The tribunal reduced the award to $16.7 million to compensate the company for its expenses in purchasing the property, obtaining approvals and building the facility. Mexico has until November 20, 2000 to appeal the decision.           MOE To Implement Mandatory Reporting For Industry By Jan. 1 Ontario's MOE continues to assert that it will pass a regulation requiring industries to monitor and report on industrial (including fugitive) air emissions for more than 300 contaminants by January 1, 2001, and for 357 contaminants by 2002. Companies will have to keep records for seven years, file annual reports and provide reports to the public on request. Every five years companies will have to supply audited reports. Calculating and reporting emissions is rarely simple or exact. Choices of sampling frequencies, computer models and other variables may yield a wide range of results. Willms & Shier will work with your engineers on a privileged and confidential basis to ensure that you report results that comply with the regulations and are reasonable and defensible. See www.willmsshier.com draft regulation, lists of industries and contaminant thesholds, and a draft guide to calculating emissions on our website.         The announcement of an Environmental SWAT Team on September 21 by Environment Minister Dan Newman raises  issues of particular concern to managers of industrial facilities. It seems that the MOE intends to use its vast inspection powers to gather evidence to initiate prosecutions. The new 65 member SWAT team will focus solely on the investigation and prosecution of environmental infractions identified by the team's "compliance inspections". This confirms the MOE's fundamental change in direction from abatement (seeking compliance) to enforcement. This is consistent with the decreased emphasis by MOE on compliance requests and increased use of field orders that we have seen in the past months. Inspectors will demand admission to your plant and access to all facilities and filing cabinets. Plant managers need to understand the breadth and limits of the inspection and investigation powers and have a game plan. Training of front line personnel is essential. Plant managers should identify any compliance issues and establish a due diligence action plan before the SWAT team arrives. The identification of compliance issues should be privileged and confidential so that information is not available to SWAT team inspectors. Willms & Shier assists its clients to analyse compliance issues and to plan and train staff to respond to regulatory inspections and investigations. Services of environmental counsel will be more important to you now than ever before. For information on compliance inspections and planning for SWAT arrivals call John Willms at (416) 862-4821 or Doug Petrie at (416) 862-4835. To learn how the Willms & Shier Environmental Diligence Program can help your company meet its legal obligations call Donna Shier (416) 862-4822 or John Willms (416) 862-4821.                         ENGAGEMENTS OF NOTE             Email Subscriptions If you want to receive Willms & Shier's Environmental Law and Faxflashes,  please state your preference (hard copy, email, or both) when you fax a copy of your business card or email your name, title, and firm.