Ill. Curbs Lender Liability for Polluted 'Brownfields.'(liability for Environmental Damages to Industrial property)(Brief Article)
Bronstein, Barbara F., American Banker
Illinois recently became the first state to pass legislation that limits lender liability concerning the cleanup of contaminated industrial sites.
The change is likely to spur increased financing of businesses secured by such properties, commonly known as brownfields. It is hoped that the change will boost redevelopment projects in urban markets, according to bankers and observers.
"It's a large step in the right direction." said John H. Hurwith, chairman and chief executive of $130 million-asset First Commercial Bank of Chicago, which has a number of petroleum-related contaminated sites in its market.
Brownfields are an issue across the nation and have many implications for lenders considering financing new development on them. Somewhere between 130,000 and 450,000 brownfield sites exist nationwide, with potential cleanup costs of $650 billion, according to the General Accounting Office.
The Chicago area has Illinois' largest concentration of brownfields, with about 2,000 sites totaling more than 1,500 acres, according to the Chicago Brownfields Forum, a coalition that has developed model lending policies and procedures for financing such properties.
Last month, the Illinois General Assembly addressed the liability issue, passing legislation that replaces strict joint and several liability, in which an owner, including a secured creditor, could be held liable for all cleanup costs regardless of contribution to the contamination. The new legislation provides for proportionate-share liability, in which parties are responsible only for the contamination they have caused.
Illinois Gov. …