09-12-2007 Council Agenda - Laserfiche WebLink

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SZde Wanaea MAYOR Bill Blesener COUNCIL Rick Montour Barbara Allan John Keis Michael McGraw 515 Little Canada Road, Little Canada, MN 55117 -1600 ADMINISTRATOR (651) 766 -4029 / FAX: (651) 766 -4048 Joel R. Hanson www.ci.little-canada.mn.us MEMORANDUM TO: Mayor Blesener & Members of the City Council FROM: Joel R. Hanson, City Administrator DATE: September 7, 2007 RE: Oasis Contamination Issues/Release of Escrow As you will recall, we were aware of petroleum contamination on the Oasis site at the time of our purchase. As part of our agreement, Oasis was to remove the underground storage tanks and remediate any contamination to Minnesota Pollution Control Agency (MPCA) standards for the property's "continued use as a commercial /industrial property ". We escrowed funds at 150% of the estimated cost for tank removal for this work that totaled $30,729. (I have attached pertinent sections from our purchase agreement and the entire escrow agreement for your review.) Oasis did contract for tank removal. They also encountered new contamination during the removal of the tanks. However, they did not remediate the contamination, as MPCA did not require it pursuant to their tank removal standards. We were then provided with a "Site Closure Confirmation" letter from MPCA. However, it is my opinion that this letter does not meet the standards set forth in our purchase agreement or escrow agreement. The basis for my opinion is the letter does not state that MPCA "will require no further action with respect to remediation therefor" nor does it reference continued utilization of the site as a "commercial /industrial property ". In fact, the states "If future development of the site or the surrounding area is planned, it should be assumed that petroleum contamination is present. ... MPCA Petroleum Brownfields staff will review and approve and /or modify your plan for property development. If contamination is encountered during future development work, the MPCA staff should be notified immediately." As was the case with the Guerin property, a "closure letter" was issued by MPCA (copy attached). That does not mean no further remediation is necessary. Given the planned redevelopment of the site, it is highly likely that construction activity will encounter contaminated soils and additional remediation will be required. It is my opinion that Oasis bears that responsibility. In fact, that was specifically discussed with them (and their attorney's) during our acquisition negotiations. I was assured that they would be responsible for remediation with the tank and 20 foot buffer area and that is why the language regarding "continued use as commercial /industrial property" was included. (This can be readily confirmed by reviewing the various drafts of the purchase agreement before the 1