Rural Resource Guides

Environmental Concerns in Choosing a Site for Rural Housing Development

Developers of rural housing must comply with a variety of environment-related requirements and be aware of a number of environmental issues in order to protect themselves and their financing sources from potential legal liability and to protect the future occupants of their housing from health hazards. In considering a potential site for rural housing development, a prudent developer will have three objectives in selecting and developing property:

  • causing the least possible negative effect on the natural environment.
  • avoiding unwarranted expense and liability to the developer for clean-up of toxic wastes or hazardous substances caused or abandoned by others. Legal and economic liability for an environmental problem is not necessarily tied to actual causation of the problem.
  • negating as much as possible the effects of man-made and natural contamination and thereby protecting the long-term health and safety of the tenants or home purchasers.

All three of these objectives must be evaluated before becoming in any way obligated to a real estate transaction. While it may appear to be complex or expensive, or both, to investigate some of the environmental factors discussed below, the consequences of ignorance can be far worse.


The developer must look for at least the following man-made or naturally occurring substances:

  • Hazardous wastes include hundreds of materials ranging from petroleum hydrocarbons (such as motor oil, diesel fuel, gasoline and home heating oil), paint, and solvents to heavy metals and radioactive wastes. Dangerous wastes may be present if a site and/or neighboring properties have been used, legally or illegally, for industrial or storage purposes. (including manufacturing, mining, dry cleaning, photo processing, printing, and others); repair of automobiles or machinery; or dumping (including legal dumping), or as a landfill. A former orchard might be contaminated with arsenic or lead, once components of agricultural pesticides. Since a number of these materials can be carried by groundwater from one area to another, professional tests of water and soil samples may be advisable even if a site was not used for any of these purposes. Testing costs may be significantly less than the cost of removing waste if one unknowingly purchases a contaminated site. Mitigation generally must be done by professionals.
  • Lead poisoning has serious adverse health effects on children including nervous and reproductive disorders, slowed physical development, cognitive and behavioral changes and hypertension. Major lead sources of concern to rural housing developers are lead-based paint and lead pipes, or the lead solder used to join or repair copper pipes. Water may test positive for lead due to groundwater contamination as well. Removal of lead-based paint or the repair or replacement of a water supply system is costly and time-consuming.
  • Pesticides may leave a chemical residue in the soil of sites previously used as farmland, orchards or vineyards that can last years after the original application. In most cases, pesticide contamination can be mitigated or reduced by exposing the soil to the sun, mixing uncontaminated soil with the contaminated soil, or removing the contaminated soil. A site’s water source may also be contaminated by pesticides, particularly if the source is a local well. In such a case, it may be necessary to dig another well.
  • Asbestos was commonly used until the 1970s in thermal insulation and spray-applied fireproofing and in building materials such as floor coverings, ceiling tiles and paper pipe wrap. Professional assistance is necessary in dealing with asbestos: a qualified laboratory is needed to analyze materials samples and determine whether asbestos is present, and removal work should be done by trained asbestos contractors because removal itself is hazardous.
  • Formaldehyde is a colorless organic chemical used in manufacturing many construction materials and consumer products such as pressed wood building materials (including those used in manufactured homes), draperies, carpeting, and insulation. Materials containing formaldehyde tend to emit the chemical as a gas that can cause skin irritation, asthmatic reactions, or irritation to the eyes, nose and mucous membranes. Formaldehyde’s presence can be detected by relatively simple tests. The difficulty of removing formaldehyde depends on its source, and may range from increasing ventilation to replacing materials.
  • Polychlorinated biphenyls (PCBs) can cause reproductive problems, gastric disorders, nausea, bronchitis, chloracne, skin lesions, and cancer. They can be inhaled, ingested, or absorbed through the skin. They can build up in the body over time, and can be passed upward through the food chain while retaining their toxicity — for example, from plants to fish to humans. Any structure built before 1978 may contain PCBs in its electrical systems. including fluorescent light ballasts, as may any electrical transformer located along railroad tracks, even if built after 1978. If PCBs have leaked into the environment, removal and disposal by experts is necessary.
  • Radon is a colorless, odorless, tasteless gas that occurs naturally in the atmosphere and in soils around the world as a byproduct of the natural decay of uranium present in the earth. Radon at high levels within the home can cause lung cancer. Relatively inexpensive radon detectors are commercially available for testing indoor radon levels. It is possible to mitigate or abate the effects of radon relatively inexpensively. Various construction techniques can help mitigate its effects in a new structure, and reduction techniques can be used in existing structures with high levels of radon.
  • Underground storage tanks (USTs) in rural areas are found primarily on sites that were used as rural homesteads, gas stations, motor vehicle pools, airports, farms, marinas and at large public institutions, such as schools and hospitals. Due to corrosion in the tank or pipes an UST may leak its contents, typically substances containing petroleum hydrocarbons, into the surrounding area, ultimately contaminating groundwater. If a site has evidence of spills or stains on the ground, further investigation is called for, which may include laboratory testing to determine the type and extent of contamination. By federal law, the soil containing the contamination must be removed and disposed of in an approved landfill. State and local regulations may require additional remediation.
  • A nonprofit developer can assess the environmental health of a site informally before hiring a professional consultant. Four major steps in the informal environmental review process are inspecting the site, compiling a land use history, reviewing state environmental agency records, and determining which federal, state and local and/or lender requirements may affect the site. If, during the course of an informal assessment, there are signs of possible contamination or other environmental problems, the evaluator still has the option of hiring a professional environmental engineering firm to assess the situation thoroughly. For example, if an informal assessment finds an underground storage tank, there may be reason to hire a professional consultant to undertake a thorough environmental review and make recommendations for solutions, mitigation or cleanup and estimate the cost in dollars as well as time.Lenders often require an environmental audit prior to making a loan commitment. Generally, these required audits are limited to environmental issues covered by CERCLA (“Superfund”) legislation and petroleum products. However, a lender or a nonprofit developer can ask for a broader audit.

    There are two possible levels of professional audit. A Phase I assessment determines quickly, but to a greater depth and detail than an informal site review, whether information currently exists to evaluate clearly a property’s environmental status. The assessment involves a review of records, interviews with people knowledgeable about the property, and an inspection of the property, the buildings, its fenceline and adjoining properties. Phase II audits are often advisable (and are required by some funding sources) for many environmental conditions identified by the Phase I audit. A Phase II audit often involves soil testing and other analysis, and can be costly.


    The second set of environmental issues faced by rural housing developers concerns the potential impact of the proposed housing upon the environment itself. Developers must comply with several important federal laws and executive orders that are designed to protect our natural resources, as well as with any applicable state and local laws. Federal lending agencies, as well as the general public, must comply with these laws. Developers should be concerned with issues such as:

    • Wetlands
    • 100-year floodplains
    • Important farmlands, prime forest lands, and prime rangeland
    • Endangered species and critical habitats
    • Wild and scenic rivers
    • Barrier islands on the east and gulf coasts that are included in the Coastal Barriers Resources System
    • Approved Coastal Zone Management Areas
    • Historical and archeological properties

    Other environmental issues to be aware of include:

    • Noise sourcessuch as airports, railroads and major roadways
    • Sole source aquifer recharge areas,designated by the Environmental Protection Agency as areas important for the replenishment of the surface and underground water supplies.
    • State and local requirements and standards

    *The information presented in this fact sheet is discussed in greater detail in a technical manual entitled Environmental Concerns in Choosing a Site for Rural Housing Development, available for $4.00 from the Housing Assistance Council. Another HAC publication, Case Studies on Environmental Issues Affecting Rural Housing Development, examines ways specific developers handled environmental concerns arising during their development processes, and is also available for $4.00.

    This Information Sheet was prepared by the Housing Assistance Council. The work that provided the basis for this publication was supported by funding under Cooperative Agreement H-5971 CA with the U.S. Department of Housing and Urban Development. The substance and finding of that work are dedicated to the public. The publisher is solely responsible for the accuracy of the statements and interpretations contained in this publication and such interpretations do not necessarily reflect the views of the government.

  • Electromagnetic fields occur naturally in the earth and atmosphere, and also are generated by electric power stations, transmission lines, and appliances. Some studies indicate a greater incidence of human and animal health problems, including cancer, in areas near strong electromagnetic fields. Other studies have found no direct correlation. Therefore, while electromagnetic radiation apparently cannot presently be classified as a known environmental hazard, a developer may wish to think carefully before situating housing next to an electrical generating plant or under high voltage wires.