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And you thought Detroit was screwy?

21 Sep 2012

Would you add 40 tons of garbage to this?

From the City of Brotherly Love comes this story of a man who cleaned up 40 tons of garbage from the vacant lot next to him and then improving it at his own expense!  You’d think he’d get the key to the City. Instead, the City is threatening prosecution and demanding “restoration.”

The concept of a property owner taking over a neighboring vacant lot (a sort of adverse possession) has its own new name, “blotting” (vs squatting).  Detroit’s Mayor Dave Bing even began his own program of selling vacant lots to neighboring owners for $200 – no questions asked.

However, in Philadelphia, the coffee shop owner, entrepreneur and good Samaritan made the mistake of first asking the City if he could clean the lot – the City had said no – making him an arguable trespasser and proving the old adage that it is easier to ask forgiveness than permission.

A bit about Asbestos

26 Jul 2012

An asbestos evaluation is beyond the scope of most phase I environmental site assessments as they focus on soil and groundwater contamination.   However, you should not ignore asbestos as an issue during acquisitions.  Most environmental consultants will comment on apparently asbestos containing materials (which include such things as insulation, floor tiles, mastic, and roofing materials) including their age and condition.  This is important because under federal regulations, if materials are suspected to contain asbestos, the owner and operator of the building will need to take precautions and typically have an operations and maintenance plan to inspect and maintain the asbestos materials.  Asbestos has been linked to many cancers and that is why this is so serious.

When will materials be suspected to contain asbestos?  Typically, anything built before 1981 is assumed to contain asbestos.  HUD assumes any building built before 1978 contains asbestos and requires an asbestos survey of such buildings and will not fund without a baseline survey and will require a mix of asbestos abatement and an asbestos O&M Plan.

OSHA takes it a bit further, assuming that thermal system insulation and surfacing materials (unless proven otherwise) from a building built before 1981 contain asbestos. and imposing employee protective measures.

EPA takes it one big step further and when conducting demolitions or renovations to buildings other than residential buildings with 4 or fewer units, it requires an evaluation no matter when the building was built to determine what sorts of protective and disposal measures must be taken.

In typical phase I ESAs that deal with asbestos, they often say something like “sampling should be considered prior to a renovation” – while sampling is not necessarily required, a thorough evaluation is before demolition or renovation, or the property owner may face serious consequences.  Yesterday, the Detroit News reported that a project manager faced criminal penalties for improper asbestos removal.  It is possible that others may face civil penalties as well.

State incentive programs slowly begin to roll out but will they work?

9 Apr 2012

I’ve blogged before about Governor Snyder’s replacements for the Brownfield MBT, historic property tax and MEGA credit programs.   Last August, the Michigan Economic Development Corporation (MEDC) announced that, effective October 1, 2011, those old programs were recast as the: (1) Michigan Business Development Program; and (2) the Michigan Community Revitalization Program.  This was the Governor’s effort at focusing on “business gardening” – ostensibly

These programs are just now being rolled out – a delay of some 7 months.  Thus far, not a single project has been approved (but to be fair, I’m not sure anyone has applied). The rigor that the Michigan Strategic Fund is going to put applicants through is severe. For example the return on the developer’s investment will be evaluated.  Here is some of what they are looking for (as applicable) before funding grants or loans under the Community Revitalization Program:

1. Projects that revitalize regional urban areas get preference;

2. Only projects within a downtown or traditional commercial center and only projects that primarily promote the desired revitalization of urban areas;

3. The amount of local community and financial support for the project;

4. The applicant’s financial need for the incentive and whether the project is financially and economically sound;

5. The extent of contamination and reuse of vacant buildings and historical buildings and redevelopment of blighted property;

6. Whether the project increases area density and promotes mixed-use development and walkable communities;

7. Whether the project promotes sustainable development; and

8. Whether the project will compete with or affect existing Michigan businesses.

Despite the “no picking winners/losers” mantra – clearly this program has a specific focus and asks for much more than the old programs did.  Some developers might not want their finances looked into this deeply   This is different from the Business Development Program which last month approved 5 incentive packages for five business expansion projects.  That Program is clearly focused on jobs and provides:

•  No support for any retail projects;
•  No support for any retention projects;
•  Consideration given to out-of-state competition;
•  Net-positive return to Michigan;
•  Level of investment made by business;
•  Shovel-ready projects with funding support;
•  Business diversification;
•  Re-use of existing facilities;
•  Near-term job creation;
•  Wage levels for those new jobs;
•  Employer provided benefits;
•  Strong links to Michigan suppliers; and
•  Whether the project is in a distressed or targeted community.

There was a pot of $100 million for incentives, which can be grants of up to $1Million; or loans or other economic assistance of up to a total of $10 million per recipient.

The best energy dollar is one you never spend. More insulation?

20 Jan 2012

The siding is down for the injection of insulating foam

Many articles that I’ve read say that the best energy dollar is the dollar not spent. Given that the overall trend in energy prices is up, and that our house has some very cold rooms, we thought that it was time to revisit our home’s insulation.

This week, we had USA Insulation add insulation to our attic and inject foam insulation into the walls of our home. Most interesting to me was when I learned that the many recessed lights in the ceiling act like chimneys venting air out of the house – air I had been paying to heat or cool!  The insulators have boxed in those lights, so that has stopped.  We also learned that despite insulation we added 4 years ago, our attic barely met current standards and the walls in our house had little insulation.

USA Insulation told us that we should see roughly a 30% energy savings from this insulation. My daughter has announced that she thinks our home office (which is hot in the summer and glacial in the winter) already seems less cold – and given our recent single digit temperatures, I was pleasantly surprised to agree.

I will be closely reviewing my utility bills, as this was not cheap to do. There are some utility and federal incentives and financing is available, but it’s still a pricey investment.  As we plan to be in the house for 15+ years, I’m hoping to recoup that cost and come out well ahead (I’m hoping for a 4 year or less payback) while saving energy and reducing our carbon footprint as well.

Shake up at MDEQ?

30 Nov 2011

Rumor has it that the MDEQ has announced two major staff changes. Randall Gross, MDEQ’s Director of Policy and Legislative Affairs, is reportedly leaving in mid-December.  Randy was previously director of Environmental and Regulatory Policy at Michigan Manufacturers Association as well as Deputy Legal Counsel/Policy Advisor at the Michigan House of Representatives.  MDEQ is recruiting a replacement.  Randy’s loss is big as he brought the regulated community’s perspective to the agency.

Perhaps even more significant, I have learned that Lynelle Marolf, Chief of MDEQ’s Remediation Division (“RD”), is leaving that role effective next week.  Senior Policy Advisor Anne Couture, who only recently rejoined the agency, is reported to be serving as interim division chief while MDEQ looks for a permanent replacement.

Lynelle’s departure from a major role she has held for a number of years may be quite significant as the Remediation Division has been viewed by many as inordinately conservative when reviewing requests for closures of sites that have been cleaned up.  The RD has been roundly criticized as far more conservative than its counterparts in most other states.  Whether this signals a “sea change” in the agency’s approach, allowing brownfields to be put back into beneficial uses more easily than before remains to be seen.

A “smart” window better than a Thermos?

30 Nov 2011

Cool technology of the future?

The evolution of windows from single pane to double pane, to coated, to windows with argon gas between the double panes (low emissivity or low e) has been fairly well known.   It used to be that windows would let heat and light in regardless of the time of year.  Thus far, windows have evolved until they are sort of  “thermos like”  – they now let light in and keep heat out (or in).  It’s like that old joke, a themos keeps cold things cold and hot things hot but … how does it know?  

There are scientists working on something even better.  A window coating that, when active, would let heat in in the winter but not in the summer. In short, it would allow natural heat to help heat your home in the winter but not let it run up your AC costs in the summer.   Given that buildings account for 40% of our energy use and windows account for 10-25% of our heating bills, this kind of technological advance could be huge.  While solar, wind, nuclear, oil, gas and geothermal technologies get debated ad nauseum, the smart money knows that the best energy dollar is one saved rather than one spent.

Buyer beware: new Court decision may change residential due diligence in Michigan

26 Oct 2011

Kevin blogged last year about a Michigan Court decision that held that if someone owns property and has knowledge that it is contaminated, he must disclose this information in the lease or purchase agreement and describe the general nature and extent of the contamination.  Otherwise, there is a risk having your transaction voided by the courts.  This was based on Michigan statute requiring this disclosure.   There is also a requirement that if an owner or operator of property has a Baseline Environmental Assessment (BEA), that BEA must also be disclosed to transferees. 

Now, the Michigan Court of Appeals has handed down a new decision that further muddies the obligations of buyers and sellers.  This new case involved a developer gone bust, a replacement seller and its agent.  The litigation was between somewhat sophisticated buyers of a condo in a former industrial building and the seller’s agents. 

At trial, the jury found the agents liable for failing to disclose information that they had regarding the contamination of the property by the solvent TCE (as reported in a video from WWMT TV), after they had distributed sales information that the property had been cleaned up.  Interestingly, the Court held that the agents owed the buyers a duty of truthfulness because the buyers had made direct inquiries about the property’s condition and the MDEQ had advised that the sales brochures were not accurate.

Where it gets interesting is in the Court’s discussion of the jury apportioning 35% of the responsibility (and reducing the agent’s liability by that same percent) because the plaintiffs did not obtain an environmental inspection and they signed a purchase agreement that said that defendants knew nothing about the environmental conditions.

Frankly, environmental inspections on residential properties are almost unheard of!  This seems contrary to conventional wisdom that the buyer should be able to rely on what he or she is told by the seller.