Chapter 3
Environmental Review It’s been said that no man is an “island” … and the same is true in terms of how we must look at the implications of a project funded in part of RF resources. Many development projects effect not only the chosen development site but the surrounding area as well.
Why do we have to comply with NEPA ?
Federal CDBG funds are annually provided by HUD to the State of Illinois (DCEO)
DCEO uses such federal funds to offer the CDAP program grants to nonmetropolitan local governments like yours
A CDAP economic development grant award was what originally enabled you to establish your local Revolving Fund
Simply stated … The funds that originally enabled your local government to establish your locally controlled Revolving Fund came from an allocation of “federal” funds (known as Community Development Block Grant or CDBG) and no matter how long ago they were awarded, they still retain their “federal identity”. As a result, any project assisted with RF resources must conduct an environmental review in order to document local compliance with the National Environmental Protection Act (NEPA).
How might our loan affect the area ?
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The use of the public dollars that constitute the Revolving Fund (RF), in concert with the borrower’s equity injection and other related project financing to support the total project in question can often directly or indirectly impact: surrounding land use patterns and development densities; surface water run-off amounts and patterns; traffic volumes, patterns and the character of the vehicles; the future demand for public utilities, facilities and services; local air quality levels (by really large developments); the future quality of nearby streams and sensitive wetlands; future pressure for the sale and conversion of prime farmlands; and the natural habitats of endangered species and plants; and/or the ability to preserve historically or architecturally significant sites and structures.
What we are after … Simply stated we are after an “environmental clearance” for the project. Understand, that before the local government can provide financial assistance to the private sector investor (via an actual loan closing) that will allow the project to proceed, we must obtain the written concurrence of the state funding source (DCEO) in extending the RF resources. To obtain the environmental “sign-off letter” from DCEO, the RF Administrator must complete what is known as an “Environmental Review Record” (ERR).
The first step for environmental review … When conducting the required environmental review of the probable implication of the RF-assisted project, the local government must: •
Notify the following four state agencies in writing about the nature, location and scope of the project and afford them an opportunity to sign-off or object to the use of local RF resources: – Illinois Department of Agriculture ( for farmland preservation); – Illinois Historic Preservation Agency (historic sites and structures); – Illinois Environmental Protection Agency (for hazardous wastes and local violating facilities); – Illinois Department of Natural Resources* (for known wetlands and endangered species habitats) * IDNR utilizes the State’s “EcoCAT” software to quickly reach a determination of wetlands and habitat compliance. Typical state agency sign-off takes from 2 to 4 weeks to secure, so start as early as possible.
The “local” level environmental review …
The RF Administrator sends early alert letters about the project to the four state reviewing agencies to start the process
The four state reviewing agencies issue a sign-off letter or request additional information to concur
The RF Administrator publishes a “finding” of the project’s impact in the local newspaper (e.g., FONSI and its Notice of Intent to Request the Release of RF Funds)
Anticipate the timing required … Depending upon the level of project environmental review required, the process will typically require from 45 to 60 days to complete. Therefore, it is wise (whenever possible) to locally initiate the environmental review process as soon as you have determined that you have a worthwhile project so the time required to complete the environmental clearance process will not delay your future plans for loan closing. The most common type of finding is known as a “FONSI” (Finding of No Significant Impact) and after publishing your finding and Notice of Intent to Request the Release of Funds, such information must be shared with DCEO Springfield in order to clear the way for RF Loan closing and the actual release of local loan funds.
The “state” level environmental review …
DCEO receives the four sign-off letters, the RF Administrator’s ERR Checklist and combined local Notice of Intent and FONSI
DCEO’s Environmental Officer waits 15 days for final comments from other agencies regarding the proposed project
DCEO issues and the RF Administrator receives DCEO’s environmental project sign-off letter (leveraged funds can now be expended)
Reviews come in multiple flavors … The local environmental review process associated with clearing a RF loan closing can range from a fairly straight forward to a down right challenging process depending upon the scale and complexity of the proposed project and exactly how the RF loan funds will be used and secured. NEPA regulations provide for four levels of project environmental reviews: • Exempt Activities: which include planning and design engineering activities, environmental studies, administrative and management costs, along with RF loans that support working capital or inventory financing, the purchase of equipment that does not require special installation and the acquisition (but not the renovation of expansion) of real estate and/or an existing building. Local Action: New!! Forward early alert letters. Secure agency sign-offs. Forward letters and Environmental Status Checklist to DCEO and wait for state clearance letter.
Reviews come in multiple flavors … • Categorically Excluded Activities: which include instances where the project’s facilities are all in place and will not be changed in size or capacity by more than 20 percent, will not result in a change in the current land use of the project site and when RF loan resources will support “general operating costs” for maintenance, security or office furnishings and equipment, consumable supplies or staff training, etc. Local Action: Secure and forward the early alert letters, publish Notice of Intent to Request the Release of Funds in local newspaper, then after 7 days send letters, evidence of notice publication and Environmental Status Checklist to DCEO and then wait for state sign-off letter before closing your RF loan. Note: Possible Eight-step Flood Plain Review ?
Reviews come in multiple flavors … • Categorically Excluded – Exempt Activities: which include projects where RF loan resources will exclusively support “general operating costs” for maintenance, security, utility payments or office furnishings and equipment, consumable supplies or staff training, etc. and the project site is not located in a known 100 year flood plain, won’t adversely affect a historic property or site and is situated away from identifiable wetlands, and the habitats of endangered species, etc. Local Action: NEW!! Forward early alert letters. Secure agency sign-offs. Forward letters and Environmental Status Checklist to DCEO and wait for state clearance before closing your RF loan.
Reviews come in multiple flavors … Environmental Assessment Activities: which include all instances of RF supported loans where the project cannot be classified in any of the three preceding categories. Such projects typically include or involve the use of RF resources to support: new construction (including renovation, expansion or modernization) on vacant site and structures along with other construction-related activities that would logically be expected to have a direct or indirect effect or implication upon the surrounding environment. Local Action: Secure and forward the early alert letters, publish FONSI and Notice of Intent to Request the Release of Funds (and HUD Form 7015) in local newspaper, then after 7 days send letters, evidence of notice publication and Environmental Status Checklist to DCEO and then wait for state sign-off letter before closing your RF loan. Note: Possible Eight-Step Flood Plain Review ?
The Environmental Impact Statement … Beyond the four previously discussed NEPA levels of environmental review lies a fifth possibility, one you should hope your never encounter the need for. It is known as an “Environmental Impact Statement” (or EIS). Environmental Impact Statements are typically needed only in connection with very large scale, complex development projects and involve the preparation of a very detailed, thorough and lengthy technical study which comprehensively addresses a wide range of the proposed project’s probable environmental implications. Such studies can often require from 6 to 18 months to complete by consultants and are normally rather expensive. Note: Because of the cost, complexity and time required to complete an EIS, it is possible that the need for such environmental measures could be a “deal killer”.
Projects in a Flood Plain … Projects that will be implemented within an identifiable 100 year flood plain must also complete an eight-step review process as part of the completion of the local Environmental Review Record (ERR). Specifically, both Categorically Excluded and Environmental Assessment level environmental reviews may involve projects located within a flood plain and have to complete the eight-step process. Note: To save time, we will not examine each of the eight steps in the flood plain review process as part of this presentation. A summary of the steps is depicted in Chapter 3 (Appendix 3-3-E) and additional detailed information is also provided in Chapter 2, Section 1 of your CD.
