Plans reveal Hilco’s intent to reshape Philadelphia refinery landscape

The real estate development firm that bought the shuttered South Philadelphia refinery intends to literally reshape the landscape of the polluted 1,300-acre complex in the next few years, constructing a vast warren of giant warehouses after first leveling the soil on the site to lift most of it above flood levels.

A “conceptual master plan” filed with the city by Hilco Redevelopment Partners marks the first public visual representation of Hilco’s building plans. It shows that most of the Philadelphia Energy Solutions site now occupied by refinery towers and storage tanks would be replaced with nearly a dozen million-square-foot “logistics centers” that Hilco hopes eventually will employ 10,000 people.

The site’s soil management plan, approved in June by the Pennsylvania Department of Environmental Protection and also filed with the city, calls for polluted soil to be largely entombed beneath hundreds of acres of buildings, parking lots, and driveways.

“Based on the planned redevelopment of the site, most soils at the site will ultimately be located beneath a development component that will serve as an exposure barrier,” the plan says.

The DEP-approved soil management plan drew a skeptical response Wednesday from one environmental activist who has been closely following the refinery saga.

“Seriously contaminated soil should be removed, not just pushed together under buildings and parking lots,” said Peter Winslow, president of A SMART Collaboration LLC, a coalition of environmental groups. “Hilco seems to be opting for the cheapest remediation methods, not the best ones.”

If the plan’s goals are accomplished, it would put to rest a maxim of former PES workers that the site at the city’s southern gateway is so contaminated that it could only be used as an oil refinery.

The filings with the city Department of Records were made on July 9 as part of last month’s $225.5 million sale of the site to Hilco Redevelopment Partners of Chicago. HRP was the winning bidder for the property in a sale supervised by U.S. Bankruptcy Court and said it had no intention of restarting the refinery.

Philadelphia Energy Solutions filed for bankruptcy last year after a devastating fire shut down the refinery, ending 150 years of oil processing in South Philadelphia. The property was actually two adjacent refineries, the former Girard Point refinery founded by Gulf Oil in 1926, and the Point Breeze facility founded by Atlantic Refining Co. around 1870.

The papers filed with the Recorder’s Office are included in a consent order that spells out the removal of deed restrictions that were put in place by Sunoco Inc., which owned the refining complex before 2012 and is responsible for remediating the contaminated property. The restrictive covenants limited the ability of a potential buyer to reuse the property for a nonrefining use. Hilco made the removal of those provisions a condition of the sale.

The soil management plan and a new consent order formalize the complex relationship between Hilco, state environmental regulators, and Sunoco over coordinating demolition, remediation, and redevelopment of the property. Hilco says its approach introduces an opportunity to integrate cleanup activities with redevelopment of the site.

The plan sets a deadline of Dec. 31, 2030, to achieve cleanup standards to comply with the state’s Land Recycling Program, known as Act 2.

“Although additional time for the remediation has been built into this new agreement, more thorough testing, sampling, and other remediation activities have been outlined to ensure that this site is remediated to an appropriate health standard suitable for the future use of the site,” Virginia Cain, a spokesperson for DEP, said in an email.

Under terms of ownership and the remediation standards, the property can only be developed for nonresidential use. Hilco has said that demolition is likely to take about three years before redevelopment can begin.

A host of hazardous chemicals, including cancer-causing benzene, lurk beneath the refinery. The state says the new agreements remove obstacles that may have slowed or prevented cleanup or redevelopment. Aside from the “obvious public health and environmental benefits” of closing the refinery, the agreements “provide a clear road map of how the remediation will work with the redevelopment and vice versa,” Cain said.

The plan requires Hilco to take soil samples as demolition exposes new areas. If contamination is discovered in areas where old storage tanks once held leaded gasoline, for example, Hilco must notify Sunoco and its remediation partner, Evergreen Resources Group LLC, before any soil can be moved.

A “key element” of Hilco’s redevelopment plan involves raising the ground surface elevations east of the Schuylkill above “base flood elevations.” Hilco intends to move soils from locations with higher elevations to fill in areas below flood levels. All parking lots will be above base flood elevation, and all building floor slabs will be more than four feet above flood level, which the plan says is above the 500-year flood plain.

None of the soils that are moved will be placed in areas below the groundwater table, the plan says. Surface soils in accessible areas, such as landscaped features, will consist only of clean fill material imported to the site, or soils that have been identified as “appropriate.”

Hilco has said that it intends to recycle about 160,000 tons of scrap metal from the site, much of which would be removed by barge. It also plans to recycle 125,000 tons of concrete on site as part of the project to fill in some low-lying areas.

Winslow, the environmental activist, said the plan is silent about remediation of underground benzene plumes other than to say that Hilco will avoid disturbing the subsurface contamination. He also said that Hilco’s plans to redevelop the Girard Point section conflict with a vision embraced by environmentalists to create a wetland at that location near the confluence of the Schuylkill and Delaware Rivers to accommodate the natural flood cycles of the rivers.

“Hilco is taking a brute force approach to taming nature,” he said. “Hilco is not adequately preparing for the effects of climate disruption — sea level rise, flooding, and storm surge. Constricting the estuary will create flooding vulnerability elsewhere on the Schuylkill River.”

The “conceptual master plan” for redeveloping the site, which was attached to the environmental filings, is a broad sketch that does not confront issues about traffic management and design that the company will need to address as the project takes form. The plan does not include an interchange on the Schuylkill Expressway that Hilco says it envisions for the site but that would require approval from the Pennsylvania Department of Transportation.

Hilco says it intends to redevelop the site into a “state-of-the-art, multimodal industrial park with ancillary rail infrastructure, energy infrastructure, marine capabilities and commercial uses.” Hilco’s plans are similar to what it and its partners accomplished near Baltimore, where Hilco bought a bankrupt steel mill in 2012 that is being redeveloped into a multiuse logistics center called Tradepoint Atlantic.

At the Philadelphia location, Hilco plans to retain the Schuylkill Tank Farm, which occupies about 170 acres on the western side of the river. It also intends to retain two rail yards, one on the southern side of the property that abuts Schuylkill wharves, and the larger North Yard, which the refinery opened in 2014 to receive shipments of North American crude oil.

The tank farm and the rail yards can be put into immediate use, generating revenue while demolition and cleanup take place on other parts of the site, said Roberto Perez, the chief executive of Hilco Redevelopment Partners.

“At the rail yard, you unload lumber, you can unload cars, you can unload anything,” Perez said in an interview. “It’s an unbelievable asset.”

Hilco roughly plans to clean up and redevelop the site starting from the area around the North Yard, and then extending to the tank farms along 26th Street. The sites that contain the refinery equipment would come later.

“Our sequence given what we believe is going to be the path of least resistance from the remediation perspective and demolition is going to be from north to south,” said Perez. But if a customer needs to be located elsewhere on the property, such as a riverfront site, the developers will accommodate them.