Environmental concerns fall on buyer
Date: August 9, 2013
Teresa Tramposch of Core Environmental Consultants talks about a restaurant owner she knew who paid cash for an adjacent corner lot to be used for extra parking. The vacant lot, she said, had once been home to a gas station. The cash deal meant that financing was unnecessary, which eliminated the need for environmental tests.
“I wouldn’t have done that,” Tramposch said. “I would never advise anyone to buy any property that has unknown environmental liabilities because you are buying the environmental problem that somebody else may have created.”
If property is bought with cash, it’s the responsibility of the new owner to determine if a site may be contaminated. Banks and other lenders, however, will not finance a deal without a thorough environmental review.
That’s because there’s a long list of unknowns when buying a property where many chemicals, gasoline or environmental hazards were housed. For example, sites that once housed gas stations, lube, oil and filter shops or dry cleaners are rife with environmentally unfriendly chemicals.
Tramposch’s Buffalo engineering firm tests soil for commercial property owners to determine if there are contaminants that must be dealt with before a deal closes.
“Dry cleaners, gas stations, oil and lube-type places all present red flags,” she said. “You want to advise the person buying the building, or as an owner to make sure what their liability might be.”
First-phase environmental investigations are standard document searches: records of previous owners that provide perspective on the land’s historic use. In phase two, more physical work is performed, and that’s where companies such as Core Environmental and Nature’s Way Environmental Consultants & Contractors Inc. are hired to test and remediate soil.
Nicole Savage, who owns Nature’s Way in Crittenden, said this includes using an earth-probe truck to drill underground and get soil samples. A meter detects volatile compounds that show up at the site.
Every job is different, she said. But when it comes to gas stations and other sites, it’s generally understood that a phase two test will be conducted.
“If we find that there’s an excess of organic compounds, we’ll pull samples and send them out for analysis,” Savage said. “The more samples we pull can add to the cost.”
In addition to finding contaminants in the soil, there’s also a strong possibility that the structure will need work.
Susanne Kelley runs Sienna Environmental Technologies LLC in Buffalo. She said that most times when dealing with a gas station, lead-based paint, asbestos or both will need to be addressed.
Older gas tanks buried underground are made of steel that can corrode and leak into the soil over time, Savage said. As tanks corrode, large holes appear in them.
“Steel tanks, when you pull them out of the ground, look like Swiss cheese,” she said.
An investigation can continue until all contaminants are gone. Both parties – buyer and seller – wait for results until finalizing the transaction. Staff geologists will take physical data from a site and determine where contaminants are located and how much.
To remediate contaminated soil, bioremediation is an option. The process adds a type of bacteria that consumes the compounds and cleans soil without digging it up. Otherwise, soil is dug up and transported to a landfill to be dealt with at another time. When the bacteria runs out of contaminants to eat away at, it dies.
Tramposch’s company has many contracts in the New York City area. She said remediation systems can cost $100,000 to $1 million, a price that includes installing wells with sophisticated oxidation systems or vapor extraction systems. Locally, costs can equal the cost of the property and potentially sink a deal, she said.