10336 - Linstow Varner Retail

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Environmental Review Summary

Project Number

10336

Company Name

LINSTOW SIA

Date ERS Disclosed

May 1, 2001

Country

Latvia

Region

Europe

Environmental Category

B - Limited

Status

Completed

Previous Events

Approved : Jun 19, 2001
Signed : Jun 11, 2002
Invested : Jul 29, 2002

Sector

Retail (Including Supermarkets, Grocery Stores, etc.)

Industry

other

Department

Regional Industry MAS LAC & EUR

Project Description

The Project involves the expansion of Linstow Varner’s retail operations in Latvia through extensions to an existing retail center and the development of two new “retail park” concepts.

During the past 4 years, Linstow Varner purchased, renovated and started operating four retail centers in Riga (“Centrs”, “Dole”, “Mols” and “Purvciems”). In addition, the Company has acquired/leased two prime properties (“Alfa” and “Riga Railway Station”), which are being developed into retail parks and represent part of the Project. As of year-end 2000, the total value of the Company’s investments was around US$80 million, covering approximately 29,000 square meters of floor space. To improve the operations and competitiveness of the malls, the Company now plans to expand one of the smaller malls (Mols) to more efficient scale, and develop the two new properties (Alfa and the Riga Railway Station) with new retail concepts. The Project would create 100,000 square meter of new retail space within the next three years.

The rationale for investing in shopping centers in Latvia is based on the need for modernizing the retail sector in this transitioning economy. In particular, metropolitan Riga with a population of 900,000, does not have adequate retail floor space to serve the growing and the changing needs of the local shoppers. The long-term goal of Linstow Varner is to be a leading shopping center operator in the Baltic region. Riga is the largest and most centrally located city in the Baltic. It also represents a gateway to the East and LV believes that a strong market position in Latvia can be used as a starting platform for expansion into Lithuania and Estonia, as well as into Russia, Belarus, and Ukraine.

The Project involves redevelopment of an old and abandoned industrial site (the Alfa “Retail Park”), renovation of buildings within UNESCO World Heritage List area (the Riga Railway Station “Travel Mall”), promotion of public/private partnership in renovating and improving the old Riga Central Railway Station, and resolving traffic problems congesting the Railway Station square.

Environmental and Social

The sponsor has presented plans to address these impacts to ensure that the proposed project will, upon implementation of the specific measures agreed, comply with applicable host country laws and regulations and World Bank/IFC requirements. The information about how these potential impacts will be addressed by the sponsor/project is summarized in the paragraphs that follow.

Alfa Center Site Contamination. During Linstow Varner’s December 1999 environmental assessment of this former semi-conductor manufacturing site, some limited contamination was discovered, principally in the form of trichloroethylene pollution of groundwater. In coordination with, and approval from, the Riga environmental authorities, Linstow Varner implemented groundwater remediation via installation and operation of a “pump and treat” system. The system operated from March until September 2000, at which time the authorities determined remediation to be completed. In addition to the demolition of all former factory buildings, all remaining waste/hazardous materials/by-products (waste oils, process chemicals, refuse heaps, metal-containing by-products) were appropriately removed and disposed at licensed facilities with the approval of the Riga environmental authorities. All actions were carried out in accordance with Latvian laws and requirements.

Riga Railway Station Contamination. Recent geotechnical investigations of the Railway Station property uncovered petroleum oil contamination of soil and groundwater. In cooperation with the Latvian Ministry of Environmental Protection, Linstow Varner has developed a remediation plan for mitigating this environmental condition. The plan involves excavating and disposing the estimated 2,000 cubic meters of contaminated soil, as well as pumping and treating an estimated 4,000 cubic meters of contaminated groundwater at the same time that overall construction proceeds. Contaminated soil shall be transported and disposed at an appropriately licensed off-site facilty. Groundwater shall be treated in an oil/water separator and discharged to the stormwater drainage system. These specific remediation activities are being included in the project’s construction contract.

Construction impacts. Linstow Varner has plans for managing noise, dust, and traffic disturbance during construction. Noise generating construction activities will be limited to daytime hours. Construction contractors will regularly apply water to control dust at the sites. In the area surrounding the Railway Station, the facings of nearby buildings shall also be protected from dust by the construction contractor. Traffic disturbances shall be kept to a minimum. Finally, hazardous materials and wastes handled during construction shall be handled in a controlled manner.

Sewage and solid waste handling and disposal. In accordance with local requirements, sanitary wastewaters generated by the retail operations shall be discharged to the City’s sewerage network. Grease traps will be installed for food service wastewaters. Stormwater will be separately collected and discharged to the appropriate local stormwater drainage system. Solid wastes generated will be collected by licensed disposal contractors or municipal authorities and disposed in a licensed landfill facility. Paper, plastic, glass and other potentially recyclable waste materials will be recycled where practicable.

Hazardous materials management. No equipment containing PCBs will be installed or used. Refrigeration and cooling systems involving the use of CFCs will not be installed or used; the coolant R134a (HFC 134a) will be specified for all mechanical equipment.

Fire protection and life safety. All project structures are designed to incorporate Norwegian and relevant U.S. NFPA fire protection and life safety standards. Buildings will have automatic sprinkler systems, heat and smoke detection devices, and fire extinguishers installed. An audible central alarm system will be connected to the heat and smoke detection devices. Structures will be designed and constructed to permit prompt evacuation in case of emergency

Conclusion & Monitoring

IFC will evaluate the project''s compliance with the applicable environmental and social requirements during the lifetime of the project by reviewing the annual monitoring reports (AMRs) prepared for the project covering ongoing performance of project-specific environmental, health and safety activities as reflected in the results of periodic and quantitative sampling and measuring programs. Periodic site supervision visits will also be conducted.

This Environmental Review Summary (ERS) is prepared and distributed in advance of the IFC Board of Directors' consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board of Director’s decision. Any documentation that is attached to this ERS has been prepared by the project sponsor or in conjunction with the project sponsor and authorization has been given for public release. IFC has reviewed this documentation and considers that it is of adequate quality to be released to the public but does not endorse the content. The following ERS is disclosed in accordance with IFC's Disclosure of Information Policy that went into effect September 1998.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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