For too long, companies that owned environmentally contaminated property faced few options. Either they could incur the liability and expense of site cleanup, or the property could sit idle — a drain on the books and a waste of space.
The new Realty Restoration Gift Fund (RRGF), a qualified public charity based in Santa Fe, N.M., however, helps waste companies donate contaminated property for restoration and reduce their exposure to environmental liability.
There are six steps to RRGF's donation process:
The property owner contacts RRGF with a proposed real estate donation;
A third-party consultant evaluates the proposed donation;
A national environmental remediation company presents an environmental risk management plan to the donor;
The parties agree on the property value and remediation costs;
The donor transfers the title and funds for remediation to RRGF; and
Sale proceeds from the restored property are distributed to charitable organizations.
Shasheen Shah, director of development for RRGF, says that the program is geared toward companies that already are philanthropic and want to off-load problematic properties — sites where owners have “basically put a fence about the property and don't want to touch it,” he says.
“[RRGF] enables [companies] to effectively step out of the ownership role and we step in for them,” Shah explains. “Then they [have] the ability to advise us where the donations of the property will go.”
Furthermore, the environmental risk management process could be attractive to a waste company that is concerned about cleanup liability. This is because RRGF program donors are indemnified against financial consequences associated with a contaminated property. Instead, a partnering environmental services company accepts the liability in writing and provides the donor with an indemnification agreement. And this establishes that the company is no longer contractually responsible for the site's regulatory compliance.
Future liability and risk is further reduced because RRGF provides insurance coverage through its partnership with a national insurance company.
Ultimately, the charity offers companies the chance to meet corporate philanthropic goals, while realizing a tax deduction. And communities can boost their local economy by restoring usable property.
“Instead of writing a check this year, companies have the ability to take a non-core asset and turn it into corporate cash for themselves and also take a tax deduction,” Shah says. “It bridges the gap between environmental interests and corporate bottom-line economics. It's a vehicle that satisfies both ends of the spectrum.”
The Conservation Fund, Arlington, Va., a charitable organization with which RRGF works, also has engaged with the waste industry and associated industries on its own surplus property donation program. The Fund's Property Disposition Service allows landowners with surplus real estate assets, usually those with little or no environmental contamination, to donate properties. The proceeds from sold properties then go toward conservation programs.
In 1994, for example, Stamford, Conn.-based International Paper transferred more than 20,000 acres in upstate New York valued at more than $5 million to the Conservation Fund. A portion of the property was turned over to the state's environmental office for conservation management, and the Conservation Fund kept the majority of the property for sustainable forestry.
In the mid-1990s, Browning-Ferris Industries (BFI) donated four surplus properties valued in excess of $800,000 to the program. The company saved more money on taxes and site administrative costs than it would have if the property was sold in a market sale.