Environmental Impact Study on Dry Cleaners & Washateria?

[Belinda Lopez]

I looked at two potential wholesale deals yesterday; one an old washateria with the equipment removed, the 2nd an old washateria with a working dry cleaning business next door. I'm pretty sure an environmental impact study would be needed on the Dry Cleaners but what about the other just old washateria? Buildings are about 4000 sq. ft.- any idea of costs for that type of report?

The Dry Cleaners would probably stay in operation as it is making money and I would convert the old washateria part to offices. The other just old washateria building is in pretty bad shape and I would just wholesale.

[Oren K.]

I am currently looking at a property and have solicited proposals from a couple of firms for both Phase 1 & Phase 2 work.

For anyone who is not familiar with them;

Phase 1 is mostly a paper study of the property by looking at the history of the business on and AROUND the property in question. This involves simple things like checking old phone books for business listed at the address, checking with various agencies regarding any known issues to more complicated such as understanding the type of soil under the property and topography to tell which way contamination is likely to flow.

If the Phase 1 is 'clean', a Phase 2 is not generally needed. Also, Phase 2 is in part dependent on Phase 1. Whether a property has a chemical plant on it or a parking lot going back over the past 50 years, raises, obviously, different concerns. But generally speaking, a Phase 2 will drill a number of boar holes down to the water table and test each sample for different contaminates. The drilling and testing drive the cost of the Phase 2.

The property I am looking at, a 65K sq ft light industrial zoned site with retail frontage and residential all around it, has a history of automotive usage (e.g. repair, storage) but so far no known underground storage tanks (big warning flag) or body work / painting (another warning flag) or industrial manufacturing. The proposals for the Phase 1 have come in between 2-3K. No one, understandably, will give a firm quote on the Phase 2 until the Phase 1 is done but the range is likely to be 8-12K.

If the Phase 2 comes back with contamination, that is where the fun starts. I believe (not certain) it must be reported to the EPA.

EPA has a reputation of making sure it gets dealt with; Tracing it to the source (it may not be on the property investigated) and having it cleaned up by the owner of the source of the contamination. This may affect multiple properties cost much more then the property is worth or insurance coverage. They find the deep pocket or get as much as they can.

This is why every institutional lender I know of and most private lenders want a clean bill of environmental health as part of the loan terms. Leaving aside the value of the property itself, they don't want to be the ones responsible for any 'cleaning' that needs to be done.

Hope this helps.