All Forum Posts by: Ian C.

@Harutyun Kagoyan I have a lot of experience with site remediation. If you are continuing to pursue this, I’d suggest having an attorney experienced in environmental issues assist you in the negotiation and due diligence. There may be several options for remediation depending on the state and applicable regulatory context. The main health issue is typically direct contact with the PCBs so it may be feasible to cap or isolate the contaminated areas and reduce exposure to occupants. However, getting from simple Phase I/II due diligence to developing a remedial plan can be a large and complex process and costs would have a wide range until more is known. I agree with Chris in questioning why the seller hasn’t pushed the nearby print shop to address the issue and get the property remediated by them.

@Rich Hupper I know that brownfields tax credits are used in MA to get some cost recovery. Cleanup grants are usually for municipalities to cleanup abandoned properties. Here's a link to the tax credit info:  https://www.mass.gov/info-details/massachusetts-brownfields-tax-credit-btc#:~:text=The%20BTC%20may%20be%20available,of%20Environmental%20Protection%20(DEP)

@Rich Thomas Others have made some great points. I'll add that yes, there is a specific standard it's ASTM E1527-13 and it's probably useful for you to understand that or be working with an attorney who does when looking at commercial properties. There is a lot that is up to the opinion of your environmental professional who signs the Phase I ESA. There are some options to reduce costs and do an initial screening prior to buying a full Phase I ESA. You may be able to get a copy of a prior Phase I from the current owner as part of your due diligence which you, your attorney or your consultant may be able to review and get some insight from. You could also have an environmental professional perform an initial screening to look at some of the historic records but avoid costs of a site visit and preparation of a full report. However, I agree with others that even if there are prior Phase I ESAs available or if the screening suggests no issues, you'll want your own Phase I ESA to protect you prior to buying the property. It's also important to remember that even if you have a "clean" Phase I ESA that may not hold much water if the state/federal regulators find that a release happened in the area and track the source back to your property. On the other hand if a Phase II is warranted a good consultant would adequately evaluate the property and give you solid answers that would better protect you.

@Marlen Weber

I wish I had found BP, or some similar resource, before investing in my first property. I could have learned about how to evaluate purchase price and maybe wouldn't have bought at the peak of the market in 2006. Also, at that time I had considered a duplex for my first home, which is now known as a house hack, and knowing more about how successful that type of purchase can be may have pushed me to pursue that.

Investment Info:

Townhouse other investment in Worcester.

Sale price: $148,000

Chose to keep and rent out a Townhouse in MA when I relocated to NY rather than attempt to sell in the depressed market at the time. Successfully managed the rental remotely for 7 years and through 2 tenant turnovers. Finally decided to sell the unit in late 2019 and move on to future opportunities in Rochester, NY.

What made you interested in investing in this type of deal?

I had been interested in real estate investing for years and decided to give this a try rather than loose money due to the depressed market at the time.

How did you find this deal and how did you negotiate it?

This unit was my personal residence from 2006 to 2012. It was originally purchased using a real estate agent.

How did you finance this deal?

FHA loan

What was the outcome?

I sold because I decided to focus on investments closer to my current location

Lessons learned? Challenges?

I learned my lesson about purchasing assets at the peak of a market and that housing prices can and will occasionally go down. Being a long-distance landlord had some challenges but was easier than I anticipated. I also learned that the market for townhouses does not recover from the housing crash as quickly as single-family homes.

Hi Brandon,

Interesting thread. You may have this on your radar already, but you should consider potential laws that provide brownfields liability protection for a new landowner or adjacent landowners. Not sure how it works in Canada, but in the US these laws provide liability relief for entities that own brownfields but had nothing to do with causing the contamination in the first place, or that are located adjacent to brownfields and may have been impacted by historic contamination from the brownfield. This may be something to consider when structuring a Joint Venture with other involved entities, or segregating the brownfield parcel out as @Scott Mac suggested. These laws may also may be a source of funding for the cleanup.

Also, I wouldn't leave it up to a construction contractor to determine the nature and level of effort for the cleanup that would be required. Get with an environmental consultant/engineer and carefully plan out what's needed and get costs before proceeding. The more you can demonstrate to the other entities you have a plan the better the chance for success. 

Good luck, it sounds like a great development! I've been to Toronto and love some of their waterfront areas where I'm sure they've done similar things.

If the property is non-residential you should consider a Phase I Environmental Site Assessment to provide some potential liability protection associated with past uses such as oil tanks or use of solvents, etc. I also agree that a residential home inspector may not be the right person to properly inspect a commercial building.

This may be way too late, but I agree with Larry,  the designation of small quantity generator is an EPA term, but a generator designation alone doesn't mean that a release of hazardous waste has occurred at the adjacent property. If your target property is a current or former commercial property a Phase I should be done to protect yourself, both from past activities at your target property as well as other properties in the vicinity.

@James T. I'd be interested in what you've found regarding insurance, there may be insurance available but the insurer may require additional assessment before issuing the policy. Also, if your property isn't the source of the contamination I wouldn't think you'd be responsible for ongoing monitoring; however, if you'll have tenants in your building you may want to keep tabs on potential impacts like indoor air or drinking water.