RACER

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RACERs Environmental Accounts and Cleanup
Responsibilities

• Open House
• Ypsilanti, MI
• (June 20, 2012)

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(No Transcript)
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Miscellaneous

• Buyers should be aware that
• Cleanup dollars available and committed (SA Att.
  A)
• RACER and Lead Agencies shall attempt to
  coordinate redevelopment with cleanup, and shall
  communicate with prospective purchaser and/or
  communities re. same (SA 74)
• Lead Agencies shall, upon request, provide a PPA,
  BFPP agreement, comfort letter, or equivalent (SA
  69)
• Settlement Agreement and template PSAs, etc. are
  on RACERs website.

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GM/MLC Environmental Response Trust a/k/a The
RACER Trust

• Contaminated or partially remediated property is
  placed in the Trust (89 properties in 14 States)
• Funding is conveyed to the Trust
• 499 million in cleanup funding
• 100 million in administrative funding
• 68 million in pooled Cushion Funding to deal
  with unforeseen conditions

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How the RACER Trust Was Created

• Federal and State environmental regulators used
  in-house and outside experts to determine
  necessary remedial and administrative costs for
  each site
• Largest environmental response trust in any
  bankruptcy case to date

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Why the States and the U.S. Entered Into the Trust

• Avoids unaddressed contamination and abandoned
  properties in bankruptcy
• Promotes property redevelopment and other
  economic and employment opportunities
• Returns property to municipal/city tax rolls
• Avoids community stigma
• Not Many Other Attractive Options.

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Other Environmental Response Trusts

• Asarco 1.79 billion
• Grace over 286 million
• Tronox 270 million an 88 share of the
  proceeds of a fraudulent conveyance action
• Lyondell 162 million 1.1B allowed claim
• Chemtura 29 million allowed claims for U.S.
  and certain States
• Caribbean Petroleum 8.2 million 12.5
  million work 18.72 million allowed claim

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How Does the RACER Trust Work?

• Purpose of the Trust To conduct comprehensive
  cleanup and put properties back to beneficial use
• Certain funding is held in segregated trust
  accounts for cleanup and administrative costs of
  each property
• Certain funding is held in segregated trust
  accounts (reserve and cushion) to address
  unforeseen circumstances.
• Federal and State governmental entities are Trust
  stakeholders and/or beneficiaries

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How Does the RACER Trust Work?

• Independent RACER Trustee was appointed by the
  bankruptcy court to implement the Trust after a
  collaborative State and Federal interview process
  and recommendation to the court.
• Independent chief operating officer was chosen to
  oversee Trust operations and implementation.

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How Does the RACER Trust Work?

• Trust retained cleanup managers to address Trust
  sites, including cleanup needs, sequence of
  remedial measures, budgets, day-to-day
  operations, etc.
• Trust retained redevelopment managers to market
  properties and work with developers and local
  communities toward sale and reuse.
• Trustee, COO, clean up and redevelopment managers
  attempt to serve many varied stakeholder
  interests, including those of governmental
  entities, community leaders, neighbors,
  redevelopers, and NGOs.

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How Does the RACER Trust Work?

• Lead Environmental Agency consults with Support
  Agency regarding remediation.
• Trustee proposes, and the Lead Agency approves,
  annual cleanup and administrative budgets for
  each Trust property.
• Trustee hires contractors to conduct cleanup
  activities in accordance with approved budgets,
  or reimburses Lead Agency for response costs,
  including oversight costs

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The Future of the Trust Sites

• Objectives Create economic opportunities and
  jobs through sale, redevelopment and reuse of
  Trust properties.
• Trustee may sell or transfer Trust property on
  notice to the U.S., the State, and local
  community and after considering potential reuse
  to create jobs, benefits to the State and local
  communities, among other factors.

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The Future of the Trust Sites

• Property may be sold during or after completion
  of cleanup activities.
• The Trust provides that the Trustee and Lead
  Agency will coordinate integration of
  redevelopment with on-going cleanup activities.
• We all need to make it work.

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First Things First The Money

• New York is officially open for business
• NYS Consolidated Funding Application (CFA) for
  economic development funding
• Single entry point for NYS economic development
  funding applicants do not navigate multiple
  agencies and funding sources.
• Streamlines/expedites grant application process.
  Ensures less bureaucracy/greater efficiency to
  fulfill local economic development needs.
• Additional funding sources Recharge NY, NYSERDA
  Energy Efficiency Projects and ESD Excelsior Jobs
  Program.

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Next Steps Liability Protection

• Trust provides that States will work with
  prospective purchasers and the Trust to address
  liability concerns and provide needed
  protections.
• Statutory protection is available under CERCLA
  Section 107 and other applicable State laws.
• Additional protections provided under other
  mechanisms are also available (e.g., PP, BFP
  agreement no further action/comfort letter)

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Clean, Safe, and Ready

• Content

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Create a Team

• Racer Trust (Pam Bruce)
• Ohio Department of Development
• Ohio EPA
• Local County Elected Officials
• Local County Regional Economic Development
  Professionals
• Then involve the right people at the right time

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Communicate Cooperate

• Maintain informal and formal communication
• Develop mutually agreed upon timelines,
  milestones, and end points
• Understand the RACER funding structure and
  mission
• Try to have some early wins
• Be ready to jump if opportunity knocks

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Utilize the State VCP Program

• If a site is not under orders consider taking it
  through the states Voluntary Cleanup Program.
• Voluntary cleanups are quicker and can be less
  expensive.
• Voluntary cleanups produce sites which are safe
  and ready for new redevelopment opportunities.

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NFA trumps a Comfort Letter

• A No Further Action (NFA) letter or Covenant Not
  to Sue (CNS) is a document which shows that a
  property is investment ready.
• Financing costs decrease as environmental
  certainty increases.

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Parcel Off Enforcement Sites

• Can we remove clean portions of RCRA or CERCLA
  enforcement sites from the orders so that they
  can go through the state VCP program.
• This will get these areas back into productive
  reuse years earlier than if they stay with the
  original site.
• This will also ensure that staff time is focused
  on complex, contaminated portions of the site.

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Parcel Off Success Story
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RACER Cleanup Principles

• Extraordinary cooperation with lead agencies.
• Annual budget approval process.
• Work scope approval process.
• Resulting co-managed budgets.
• Streamlined RCRA documentation.
• E-mail work plan and budget amendment approval
  process.
• Comfort letter issued timely (Jose Cisneros -
  Region V).
• Developing model PPA.
• Agency willingness and availability to engage
  with users.

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Cleanup Mission

• Elliott Laws Purpose of TRUST is to help those
  communities hurt by the GM bankruptcy.
• We have a purpose greater than just completing
  cleanups.
• Local Buy we seek local contractors support
  in the community (Green Works.).
• Retain right of access post closing but will work
  with user to facilitate reuse.
• User must comply with deed restrictions
• User must comply with Due Care obligations
• All work and budgets require lead agency
  concurrence/approval

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Redevelopment Cleanup

• Strategic coordination of remedial activities
  with most likely reuse plan.
• Ability to reconfigure investigation and remedial
  schedules to facilitate reuse.
• MUST remain within overall budget resources.
• MUST obtain lead agency concurrence on scope and
  any budget adjustments if needed.
• Integrate remedial work with Redevelopment
  Managers priorities.
• Examples

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Build on Slabs
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Preparation for Reuse
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Accelerate Investigation
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Preparation for Reuse
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Green Works

• In Southeast Michigan RACER has offered assist
  with placement service for Goodwill/Green Works
  graduates
• Goodwill formed Green Works to recycle used
  equipment from DTE.
• As non-profit all proceeds support training, etc.
• Agency and Department of Corrections refer
  candidates to Goodwill/Green Works
• Green Works trains workers to recycle
  decommissioned equipment.
• RACER has bid work requiring winning contractor
  to hire Green Works personnel
• On site today

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Green Works