Common use of Environmental Restrictions Clause in Contracts

Environmental Restrictions. The Phase I environmental site assessment required in connection with loan origination identified a recognized environmental condition (“REC”) associated with prior on-site manufacturing uses, historical fill material and possible on-site underground storage tanks. A Phase II investigation was conducted and recommended site-wide institutional controls to address historical fill material, including the filing of a site-wide deed notice, issuance of a NJ Department of Environmental Protection Remedial Action Plan for soils and filing of a virtual site-wide Classified Exception Area for groundwater. Engineering controls would include a site-wide protective cap that eliminates exposure to contaminated soils. Since the existing building slab acts as a protective site-wide cap, the required remedial actions are principally administrative in nature. The loan documents provide for an up-front reserve of $69,925 (125% of the estimated cost of the contingencies identified in the Phase II investigation) and the borrower’s covenant to obtain a Remedial Action Outcome with supporting documentation within 18 months of the loan origination (subject to extension with lender approval).