Florida Brownfield Development Bill Raising Concerns About Coverage, Litigation
Amid the last-minute scramble to move legislation before the non-budgetary session was set to end last week, Florida lawmakers quietly approved a bill that could open up more contaminated “brownfield” areas in south Florida to housing development.
But the bill, if signed into law by Gov. Ron DeSantis, could also lead to frustration and litigation from homeowners and builders who may be denied insurance coverage or claims for structures built on once-polluted lands, attorneys and insurance agents said.
“This legislation is likely to generate several categories of litigation, includinginsurance coverage disputes, construction defect/toxicexposure claims, mass tort litigation, andgovernment preemption challenges,” said John Riordan, an insurance defense lawyer with the Kelley Kronenberg firm in West Palm Beach.
Senate Bill 1434 was passed by the Senate March 5 with no “nay” votes, then was quickly endorsed in the House by a vote of 87-24. The measure, which received little news coverage, is dubbed the “Infill Redevelopment Act.” It was sponsored by state Sen. Alexis Calatayud, R-Miami, who has made job creation and environmental protection—as well as lowered home insurance costs—key planks in her election platform.
The bill would apply only to counties with more than 1.4 million people, and with at least 15 municipalities in the county. That leaves only Miami-Dade, Broward and Palm Beach, three of Florida’s most-populated and developed counties, parts of which have seen a rise in flooding in recent years.
“The Legislature finds that this state’s urban areas lack sufficient land for the development of additional residential uses, which has led to a shortage of supply,” the bill reads.
The measure would preempt some local land development regulations and could make it easier for developers to build new housing tracts on land that was once considered polluted, also known as “brownfields,” according to a legislative staff analysis of the bill. Many of those brownfield parcels have sat vacant for years. The bill would not apply to city-owned park lands, agricultural lands, utility property, or areas near military installations.
While the bill would limit some local control over development in the areas, it may open the door for state agencies to promote housing there, Calatayud seemed to suggest at a Senate committee meeting in January.
“This is another strategy the state can look at on environmentally impacted or contaminated lands and create a pathway for those to be part of the housing stock,” the senator said.
In response to a question about the risk to residents on the land, Calatayud said her bill would not remove any existing requirements that brownfield lands must meet before being developed. It would only streamline certain zoning requirements, lowering costs for developers and easing the cost of new homes in those sections, she said. She could not immediately be reached for further comment Monday.
Environmentally impacted land is defined in the bill as “any portion of which a contaminant or pollutant has been detected above the applicable local, state, or federal residential cleanup target levels from Phase II environmental site assessment activities,” or any “portion of which is located in a brownfield area” as designated by state law.
Federal law already allows some tax incentives for development in “qualified opportunity zones,” or distressed urban areas, many of which include whole or parts of brownfield areas. But SB 1434 appears to expand the development to many more areas, especially in Miami and south to Homestead. (See map.)
The bill would limit the density of housing development in the sections and would require a buffer zone between new and existing neighborhoods. Local governments would have to “administratively approve” subdivisions but could not object if the plans meet other requirements in state law.
“A local government may not adopt or enforce a local law, an ordinance, or a regulation that restricts, prohibits, or otherwise limits the development of a qualifying parcel in accordance with this section,” the bill reads.
Riordan and south Florida insurance agents said the measure may have the Florida housing crunch in mind, but it will likely open a can of worms that could end up limiting development before it ever gets started.
“Insurance is not going to cover damage to a home because of pollution. It’s just not,” said Dulce Suarez-Resnick, an agent and vice president at Acentria Insurance in Miami.
And homebuilders may also find it difficult or expensive to find adequate builder’s risk insurance for homes to be sited on spoiled land, she noted. Builders often have to undertake extensive soil and water testing before construction. If testing shows problems, many carriers may decline coverage, Suarez-Resnick said.
Robert Norberg, an agent and president of Arden Insurance Associates in south Florida, said builders or homeowners would probably have to turn to surplus lines insurers, driving up the cost of coverage.
Excess and surplus carriers “can always craft something,” said Bill Turgeon, executive vice president of Bass Underwriters.
Another concern: Local governments have historically led the way on requirements and restrictions for contaminated lands, and insurers and agents have relied on that, Suarez-Resnick said. If the Calatayud bill overrides local rules, what does that mean for safety and liability?
“Is the state going to take responsibility? Can the state be sued if someone gets sick?” Suarez-Resnick asked.
Representatives with the Florida Association of Counties and the Florida League of Cities spoke in opposition to the bill at the January Senate hearing, arguing that it would supersede local authority in fundamental and detrimental ways.
Many questions remain about the legislation, and disputes will inevitably arise.
“The interaction between brownfield redevelopment and pollution exclusions in insurance policies is particularly fertile ground for litigation,” said Riordan, the insurance attorney. “Claims are likely to be denied under broad ‘pollution exclusions’ that typically exclude damages from toxic substances, hazardous chemical, coil contamination, vapor intrusion and groundwater contamination.”
Gov. DeSantis has not announced if he plans to sign the bill into law. If he does, the measure will take effect as soon as the ink is dry.
Related: What to Know About Construction and Environmental Liability
Top photo: AdobeStock image.