OSCA: Money for assessment prior to purchase

The Orphan Site Cleanup Account (OSCA) is a unique funding mechanism for LUST sites that are without financially viable RPs.

In fact, a key provision of the OSCA is that, where the site is otherwise eligible for reimbursement, the applicant need not already own the Property. That’s right, you don’t have to own the Property to get paid for the assessment of the site.

Here’s how that works: First an applicant (be it a developer, investor, or other) finds a LUST site that has not yet been adequately assessed and does not have a financially viable RP. Then, the applicant enters into a purchase agreement for the site, contingent upon the remediation costs being estimated within the cap of the OSCA. Once the agreement is in place, the applicant can get funds from the OSCA to do the assessment work on the site, which will allow the consultant to posit the anticipated remediation costs (with a margin of error). If the costs fall reasonably within the remaining OSCA funding limit, then the purchase moves forward. If not, the applicant walks away.

The beauty is that the applicant isn’t out of pocket for assessment expenses and has the potential to pick up a site that has a depressed price (due to the environmental contamination). The OSCA will pay for the remediation (up to their $1.5 million cap per site for assessment + remediation) once the applicant becomes the owner in fee.

It sounds like a scam, but it’s not. The OSCA represents the State of California, who has an interest in seeing orphan sites cleaned up. Such efforts protect groundwater resources and inevitably lead to economic development (through the eventual redevelopment of the site). In this sense all parties to the transaction win.