Environmental Risk Practice: Getting the Deal Done
TOLEDO, Ohio - June 26, 2012 - In 2011, the Hylant Environmental Risk Management unit enjoyed a record year structuring environmental insurance for Brownfield Redevelopment Projects. Hylant Environmental Risk structured environmental insurance programs for a wide range of projects in California, Florida, New Jersey, New York, Ohio, Nevada and Florida.
Each project presented a unique set of business “drivers” for which environmental insurance provided a critical response to help "get the deal done."
Project Summary: Sale of Shopping Center with Active Remediation
Hylant Environmental Risk Management has coordinated environmental insurance placements for a developer in Los Angeles, California on a number of projects. These projects have all been interesting and complicated redevelopment transactions involving an appealing niche - the rehabilitation of commercial properties in densely populated neighborhoods to create infill revitalization opportunities.
This developer identified and was pursuing the acquisition of a commercial property in Las Vegas, Nevada. A prior dry cleaner operation had contaminated the surrounding soil and ground water. The seller was successfully implementing a state-approved voluntary cleanup of the historical contamination. The transaction details were well developed including the seller agreeing to provide an escrow to fund the ongoing remediation to completion.
The "Play" for Environmental Insurance
Most of the pieces of the deal had been negotiated and assembled. The buyer had lingering concern regarding its exposure to potential liability relating to pre-existing environmental conditions once they became the owner. A typical buyer concern prior to closing a transaction with historical environment site contamination is the potential for third-party claims against the new owner. Hylant was contacted to design an environmental insurance program to address the buyer concerns. The seller had some early exploration with environmental insurance. Ultimately, both buyer and seller agreed to work with Hylant on a shared structure for the environmental insurance program.
The environmental insurance coverage was successfully negotiated. A ten-year program provided insured status for both buyer and seller and included coverage for third party claims, even those arising from the former dry cleaning operation. The coverage for the remediation costs for the ongoing cleanup was initially excluded until completion. Upon the receipt of a No Further Action Letter (NFA) from the regulatory authority, cleanup coverage will be restored to provide "re-opener" response in the event of the implementation of a more stringent cleanup standard in the future. Additionally, the seller's indemnity and escrow agreements became insured contracts under the policy, recognizing the buyer's expanded liability once the remediation was completed.
The deal closed and the environmental insurance helped GET THE DEAL DONE.
Hylant's Environmental Risk Practice & Insurance Specialists
Hylant maintains a dedicated Environmental Risk Management (ERM) practice specialty. For the last 12 years Hylant ERM has had the good fortune to participate in the structuring of hundreds of environmental insurance programs ranging from $40 million Superfund liability transfers to routine Pollution Legal Liability (PLL) programs for transactions and commercial operations. Hylant ERM, located in Cleveland, Ohio, has developed a rich resume of experience having a dedicated professional staff of five with a combined environmental industry experience of over 75 years.
Please visit our website at hylantenvironmental.com for additional information. To discuss your project, please contact Bruce W. Kranz from Hylant's Environmental Risk Practice.