GZA is involved in environmental remediation. Does this work become less popular in bad economic times? Are businesses just passing on developing on properties with problems?
“Popular” is not an adjective I’ve heard used to describe remedial costs in good economic times or bad. Dollars spent on remediation come off of someone’s bottom line whether they are being used to clean up a recent accident or a historical lack of knowledge. Unlike a decade ago, contaminated properties do present astute developers both challenges and opportunities beginning with the old real estate mantra; “Location, location, location.” These properties are impaired because they were in use and they were in use because they were in prime locations, often associated with a water resource. Contamination may have kept them from being redeveloped in the past but with more regulatory flexibility, growing awareness of the indirect costs of sprawl and availability of funding incentives to “go green” their opportunities are coming into balance with their challenges. Today projects with a remedial component are in relative parity with clean sites and development of both goes up and down with the economy.
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Your company’s website says when it comes to contaminated soil, GZA can helps companies manage many exorbitant taxes and fees that capture up to 30 percent of the total disposal costs. What sort of taxes and fees are associated with contaminated soil and why? Are these the kind of charges that can be levied against previous owners if you’re a new property owner?
Most states impose a tax on the generation of hazardous waste and some of these include remediation wastes such as “dirt dirt”. The person that generates the waste, whether he happens to be the original owner or a subsequent owner, pays this tax and if there is some cost allocation between these private parties, that is no concern of the government. Like all tax laws, these change through time. Similarly the fees charged by a treatment or disposal facility reflect the technologies they employ, how efficient they are, operational decisions they have made to maintain older equipment versus investing in new, how they amortize new technology costs they do assume or are forced to install by regulators and bigger market factors, notably  the cost of fuel/power. The point is soil disposal costs are dynamic.
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Your company is involved in property condition assessments (PCAs). What are some of the major areas that companies overlook in investment properties that become potential liabilities? It seems like money not spent on can be a major financial burden down the road.
It is very different for each property and property type. While our PCAs tend to focus on “big ticket” items such as roofing, pavement, facades and [heating, ventilation and air conditioning] systems, often unexpected conditions create the greatest costs. Detailed interviews and reviews of maintenance records provide clues to what’s really going on at a property. We recently completed a PCA where we observed concrete patchwork in a parking garage. Interviews uncovered a history of chronic problems. Ultimately, we recommended a $3 million repair budget. On another recent project we found nearly $10,000 in issues related to [Americans With Disabilities Act], even though a certificate of occupancy had been issued for the building only weeks before. PCAs shouldn’t be misconstrued as insurance, but they do provide independent perspectives for an investor to consider.
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Mold problems kind of strike us like peanut allergies. Obviously we’ve had both for decades yet the focus seems to have intensified on them in the last 20 years. Why has mold become a problem like it never seemed to be? Has it intensified in strength? Are buildings not designed properly?
Mold concerns are not new, but the awareness of the population at large to the relationship of mold to various adverse physical anomalies in sensitive people is. In recent years the medical community has estimated that 21 percent of the United States population is afflicted with allergies or asthma, doubling a decade ago. Responding to this increase the search for causative agents that exacerbate these conditions identified mold as a significant one. Mold sensitivity is compounded by the modern era of building methods and materials. Reduction of energy consumption in new buildings has lead to “tighter” building envelopes which trap water and humidity encouraging mold growth particularly on today’s building materials many of which are cellulose based composites which provide a wonderful source of food, at least if you are a mold. The coupling of increased mold-related health effects with these construction methods spawned a “perfect storm.” While no doubt some spurious legal actions have occurred, today mold is a real concern for a large segment of the population.