If you are a real estate management or brokerage professional, it is important to recognize how environmental liabilities and the presence of hazardous construction materials can affect the value of a property, as well as, the cost of development or renovation.

Proper due diligence requires a purchaser to make “all appropriate inquiry into the previous ownership and uses of the property consistent with good commercial or customary practice”. To achieve this goal, the buyer should have an assessment performed in accordance with standard practices set forth in American Society for Testing and Materials (ASTM) Standard Practice E 1527-00. The overall intent of the standard is to ensure the quality of a Phase I Environmental Site Assessment (ESA).

Performing a ESA is important prior to property purchase for a number of reasons: (1) to satisfy lender guidelines, (2) identify potential environmental concerns about a property, and (3) identify potential environmental concerns regarding adjacent properties. The primary purpose is to prevent the buyer from unknowingly purchasing a property that requires cleanup.

Additional Concerns

In addition to recognized environmental concerns, ASTM provides a list of additional issues which may be included in a Phase I ESA.

These include:
• asbestos containing materials
• lead-based paint and lead in drinking water
• protected wetlands
• regulatory compliance
• health and safety of building occupants
• ecological resources and endangered species
• indoor air quality
• high voltage powerlines

The standard cookie-cutter approach may not work because every property has a different set of site-specific issues. The environmental consultant and the parties involved in the transaction should work together to determine
which of these issues need to be investigated. In addition, the costs associated with remedial activities need to be estimated to determine a fair price for the property.

Are California’s Schools Making Kids Sick?

Environmental health and government organizations agree that Indoor Air Quality (IAQ) is one of the top environmental risks to public health. The EPA estimates that indoor levels of pollutants may be 2 to 5 times and sometimes as much as 100 times higher than outside air.

California School Statistics

In addition, people spend up to 90% of their time indoors. California School Statistics California’s schools have some of the highest percentages of poor IAQ in the nation. California’s schools rank 50th in the quality of school construction and facilities maintenance, a concern because the majority of IAQ problems are related to building defects and poor maintenance. In addition, as many as 2 million California children are placed in the state’s 85,000 portable classrooms, structures recognized to have significant indoor
air quality problems.

Recent studies conclude that:

• Overcrowded, poorly ventilated classrooms contribute to infectious diseases, such as colds and influenza.

• Poorly maintained carpets, dirty air ducts, and water damaged materials are prime breeding grounds for a wide variety of substances that can trigger asthma attacks, sensitize allergy-prone children, and cause sinus and respiratory infections.

• Chronic irritation by airborne chemical and biological contaminants can cause irreversible lung damage and respiratory illness.

• Exposure to asbestos, volatile organic compounds (VOC) and leadbased paint can cause cancer and damage to the central nervous system.

• Protecting children from poor IAQ is extremely important because children are still physically developing and are greatly affected by pollutants. In addition, poor IAQ can lead to drowsiness, headaches, and lack of concentration, all of which affect learning.

The Good News

The good news is that most IAQ problems are preventable and can be
solved if school administrators take action. The EPA’s Tools for Schools Program, along with many other studies and documents provide excellent
guidance on how to determine if schools have IAQ problems, and provide no and low cost solutions.

Accidental Asbestos Disturbances Prove Costly for Contractors
and Owners

ACC Environmental Consultants Inc., has been involved in several costly asbestos cleanup projects because asbestos was accidentally disturbed during construction activities. This has become a common and costly problem. Depending upon various factors, the owner or contractor or both can be found to be responsible for regulatory fines, cleanup costs, personal
injury claims and even incarceration.

Two True Stories

During a recent renovation, a general contractors crew inadvertently demolished a small area (90 square feet) of ceiling plaster that contained asbestos. Once the incident was discovered, the contractor notified regulatory agencies as required by law. Since the location of the asbestos was identified on the contract documents, the general contractor was found to be liable for the disturbance. The cost for decontamination of the site, OSHA fines, EPA fines, and legal expenses cost the construction
company over $300,000. On another project, a building owner hired an asbestos contractor to remove all known asbestos. The asbestos had been identified during a limited asbestos survey performed as part of the due diligence phase of the building acquisition. The building owner then turned the site over to the general contractor who assumed all

How to Avoid Accidental Asbestos Exposure

Prior to construction activities, under OSHA regulations, the building owner or manager is responsible for performing a survey and identifying all asbestos containing construction materials in the renovation area. This information must be communicated to the contractors when they bid on work and again when they commence work. The building owner or their representative is required by OSHA and EPA to hire a certified asbestos consultant to perform a survey. If an existing report is available, it is wise to have the report reviewed and work site inspected to ensure all asbestos has been properly identified and the contractor has been notified.

The asbestos consultant can also develop a removal scope of work, obtain bids on the owner’s behalf from licensed removal contractors and manage the abatement process. Only after the asbestos is removed should the general contractor commence construction work.

Mold Proves Toxic for Building Owners, Builders and Brokers

Mold is spreading trouble everywhere according to a San Francisco Business Times article (March 15, 2002), and it’s goading insurers, real-estate professionals, lawyers, lawmakers, and interest groups into action. The number of mold claims are staggering. California has the second highest number of mold insurance claims, behind only Texas. California leads the country with 80% of the lawsuits.

What About Insurance?

To make matters worse, insurers are now excluding mold from general liability and other coverage, forcing contractors and building owners to purchase expensive pollution policies or operate without coverage. The cost of pollution insurance is $25,000 to $50,000 per $1 million in coverage. In the Bay Area, several major construction projects have turned into multi-million dollar disasters because builders were required to replace mold infested building
materials before construction was even completed. Contractors are blaming architects and owners are blaming both, which is sending everyone into court.

Health Effects

A major problem is that health effects vary according to people’s sensitivity to mold. A level of exposure that’s harmless to one person may cause severe allergic reactions in another. As a result, there are no current standards for what constitutes a mold hazard. The lack of standards leave building owners, contractors, and architects vulnerable to litigation and liability.

What to Do About Mold?

To thrive, mold needs two things: food (such as wood, paper, or dirt) and moisture. So the key to controlling mold is to prevent water intrusion and control moisture levels.

Contractors: Should do everything they can to prevent water intrusion during construction, using vapor barriers properly, and making sure to routinely test building materials for moisture. Trapped moisture provides a prime breeding ground for mold. There are instruments available that provide instantaneous moisture readings.

Real Estate Brokers: Should inspect properties for mold or moisture problems. If present, they should recommend an inspection by a trained professional who can take appropriate tests and, if a problem exists, provide solutions.