Strange Actions In Environmental Consulting

I was speaking with a client the other day. He had recently become the victim of what often happens in a down real estate economy. An environmental consultant conducted a Phase I for a client of his. The Phase I made recommendations. A larger than necessary Phase II was conducted, but was not well designed, so another Phase II was recommended. The consultant got a regulator involved and the work became mandatory. Then the regulator required a health risk assessment and 7 monitoring wells. The owner of the Property is now out almost $100,000 with closure no where in site. The Property is a marina in the Sacramento River delta. There is a loss of water from the delta to the island, meaning the continuing spills from boats refueling at the docks migrates to the soil and the non-usable groundwater. It is likely that a well worded Phase I could have solved the problem and saved the owner about $97,500. But the owner is still spending, because he will be monitoring this groundwater for a long time. Every time the country gets into these economic situations, consultants start bleeding their clients. It is how the environmental consulting industry got such a bad reputation in the early 90s, and it was deserved. So this is just a word to the wise, if you pay a consultant to have a Phase I conducted these days and recommendations are made for further work, make absolutely sure that those recommendations are necessary. If you have an issue like this and want to call me, I will give you an hour of my time for free - no matter where you are (888 875-4468). My industry does not need to further sully its reputation.

1031 Exchange

I just had a conversation with Wayne Gregori who has recently been experiencing great growth for his website 1031Exchange.net. I think that it would be very beneficial for many of those who read this blog to take a look at this site. If you are in the commercial real estate business you should check it out, it is a place to post your listings to help get momentum to make your sale. But the site is not just for commercial real estate brokers, it is for everyone who works in the commercial real estate industry in California. Wayne will help you set up a profile and promote your business. He did not even ask for money. And of course, if you need or know of somebody interested in a 1031 Exchange, Wayne's company (the 1031 Exchange and Services Group) has been doing that kind of work for a long time and they are the experts.

Can You Actually Buy or Not

The Federal government has infused the stable banks with some lending capital. So now there is money available to borrow. The selling market is get poised to sell, if only the buyers would be ready to buy. There a lot of strange issues at play in the commercial real estate market. But based on the environmental awareness of permitting agencies it is a really good time to consider buying distressed properties, especially if they are deeply discounted. There are grants, and low-interest loans galore from state and federal agencies that will help with the environmental cleanup of urban properties. The money is available to governments, non-profits, and for profit companies. We can help guide you through some potential sources of capital infusion.

Experts Talk About Real Estate

I have been out listening to experts talk about commercial real estate and the international financial "crisis' (I really don't like that term) that we find ourselves in. Both talks eventually came down to the same point of view, and that was the value of the government "bail out" of certain financial institutions. The first talk was by congressman Dan Lungren (R-Sacramento), who was re-elected by a slim margin yesterday. The congressman was mostly self-promotional but did speak to his perspective that we are nearing the bottom of the crisis and although real estate prices are not going to soar for a while, at least we should see them leveling out (thanks, of course, to the Republican leadership in the House).

The other talk was by Ray Davis (president of Umpqua Bank). Ray praised the bailout, but insisted that it was not really a bailout at all. He said that Congress was really investing in deeply discounted and troubled properties, that they would sale in a few years for a large profit that would benefit the taxpayer. He also said that the government was investing in the banks that are strong (not those that are faltering) by infusing large amounts of cash (Umpqua got $214M) in exchange for preferred stock with dividends (interest). The interest starts out to be very cheap and then gets very expensive if the infusion is not paid back in five years. Of course, the plan is for the banks to make this money available to their communities for new mortgages of all kinds. Ray is convinced that we are near the bottom of the financial crisis, as is Dan Lungren. From the perspective of a company (Ceres Associates) that makes a good portion of its living off the commercial real estate, I certainly hope they are right and not just optimistic.

Erin Brockovich

The celebrity environmental investigator, Erin Brockovich, is looking into an apparent anomaly of brain tumors in Cameron, Missouri. The US EPA and the Missouri Department of Natural Resources has been investigating, although in a light kind of way, and has found nothing of significance so far. Oh, well they have found a lot of heavy metals in groundwater, but they say there is so much sediment in the water that it cannot be used for drinking. The members of the community are scared, and rightfully so. There has not been nearly enough investigation done to this point to make any real determinations and that is a shame because it is the health of citizens that we should be trying to protect. Any good environmental consultant with a reasonable budget could find the "smoking gun" in a small community of 10,000 people within a few short months. The government should hire this project out to those who do such things for a living and have to work within budgets. But in the meantime we all hope and pray that the people in Cameron, Missouri remain cancer free. Cameron is about 50 miles north of Kansas City, if you want to look it up.

Resolution Trust

The world of residential real estate lending has almost brought the economy of the world to its knees, if that is what you chose to to believe. The US Federal government has sent out a "rescue bill", which most people have a hard time understanding, but many of us do understand that whatever the final amount of billions involved in the bail out, it is all coming out of our pockets. It is a part of the same idea that got us into this problem in the first place. We are mortgaging our national future without the proper vetting of our ability to repay - as a country. 

If we can hold the savings and loan problem of the late 1980s as an example there is a solution to the current fiscal "crisis", and that solution once again has to belong with the Federal government. After all that is where the neo-natal aspects of this crisis started, it might as well be where it ends. The Resolution Trust Corporation of the late 1980s and early 1990s was a profitable endeavor that the government took on. What a concept! Congress needs to act quickly and the problem will be over quickly. Organize a new RTC now, and let's get back to business as usual.

Waste To Energy

The concept of using our most discarded materials to generate electricity has been around for a long time. We generate an incredible amount of waste every year, commercially and in municipalities. The technology now exists to turn this waste into a renewable energy source. The costs of energy and the technology are now good enough to start mining waste, instead of drilling for oil. 

There has been a lot of resistance to waste to energy (WTE) systems from environmental groups because of the older technologies which fundamentally burned the trash and used to heat to boil water, the steam then generated electricity. New technology no longer burns the waste, but gasifies it. Heat in the absence of oxygen gasifies what is inside. The gases are used as a fuel for the production of electricity. The technology is simple and available. Emissions are within standards of federal and local regulations, but there is still a reluctance to implement. So the opportunities are going overseas.

Ceres Associates is promoting the concept of WTE as best we can. We have generated some interest in the US, but permitting moves very slowly here, and any such projects will be quite a while in coming. However, in other countries the demand for WTE systems is starting to crescendo.

It is a green-house gas eliminating process. Methane is generated from landfills, and methane is one of the most dangerous of green house gases. Methane is consumed in most gasification systems. Landfill space is saved, groundwater is saved, air quality is enhanced - a lot of good happens when WTE systems are employed - not the least of which is energy generated reducing the impact of petroleum products on the environment.

One more thing, most WTE systems are very effective at destroying most hazardous wastes. This is one other small benefit.

Sustaining Environments Worldwide

The tag line for Ceres Associates is "Sustaining Environments Worldwide." We have been doing that in a small way for several years now with our waste management and recycling efforts in the Middle East. Now we are taking the effort to a whole new level. 

Waste to energy technology is coming down in price and the price of energy is going up. Using municipal waste to generate energy is a concept that has arrived with the push of many state governments toward using renewable energy sources. Ceres Associates has partnered with a firm that has a pyrolysis technology that reduces municipal waste volume by over 90 percent, and electricity is produced out the back end.

If you read this blog, you know about the e-waste destruction technology that we represent. What is even more interesting is the same technology can be converted to recycle tires in the most efficient way possible. Thirty percent of a tire (by weight) is petroleum. This technology recovers all of the petroleum in the tire, which is more or less equivalent to bunker fuel. The technology also recovers the metals in the tires. The rest of the material is gasified and the gasses are destroyed. There is very little residual waste material. A 300 ton per day plant will be operational in the US by the end of the year. Waste tires are a problem all over the world. This technology can solve that problem, while generating a significant profit for the owner.

Additional technologies we are looking at will take the particulates out of the smoke released by fire places, greatly reducing air pollution in colder locales. There is a new foam that has been produced that will greatly aide the ease of mitigating asbestos in building materials and ships. It is all very exciting to know that we can have an impact on reducing human impact on the climate.

More Recycling News

A few months ago we published a blog about a new e-waste recycling technology and were very impressed with the technology and the potential return on investment. After a couple of trips to speak with the inventors and see the technology in action, we are definitely even more amazed than previously. The technology is versatile. That is it can be used for e-waste, then go through a short cleaning period and then recycle waste tires. But this team of inventors have many amazing recycling and other environmental technologies to share. I am scheduled to visit again this month and will write on this blog more in the future about what we have discovered.

Government Funding Sources

I recently went to a conference put on by the Center for Creative Land Recycling in San Francisco called Creating Vibrant Communities: Redeveloping California’s Brownfields. There were some interesting things that I learned especially about grant and funding sources for dealing with contaminated properties. The City of Emeryville has a lot of brownfields sites, they hired Ignacio Dayritt to find them money to help ease the burden on taxpayers. You can check out some of these if they seem interesting:

Brownfield Tax Expensing Provision – This is an incentive for cleanup, maintaining, and monitoring costs. It enables developers to deduct environmental cleanup costs in the year they incur them.
Underground Storage Tank Cleanup Fund – If you are a reader of this blog, you have heard about this one. But it is a State fund that pays for cleanup from leaks in USTs containing fuel. There are restrictions, but it can cleanup up to $1.5M with a small deductible.
California Reuse Forgivable Loan Program – Provides low interest, forgivable loans up to $125,000 for environmental site assessments.
Targeted Site Investigation Program – The DTSC will provide municipalities upt to $100,000 in free site assessment.
US EPA Brownfield Grants – provides municipalities and non-profits various grants for Assessment, Revolving Loan Funds, and Cleanup Grants
HUD BEDI – Brownfield Economic Development Initiative targets grants for brownfields to housing redevelopment.
There are a host of funding opportunities, especially for government and non-profits. If you want more information, just give us a call.

Developers Beware of CERCLA Ruling

The United States District Court recently denied the innocent landowner defense to a developer because the developer moved contaminated soil. Lewis Operating Corporation purchased a property in Chino, California. Environmental due diligence was conducted by a reputable firm, and environmental concerns were not noted for the property. The land was purchased for the purposes of developing a mixed use commercial and residential project.

In 2003, during grading, a pile of munitions was uncovered and work was stopped to deal with the problem. It was found that in 1943 a US Army Air Force aircraft crashed at the site effecting about 3,000 square feet of the site. The crash site was to be “cut” soil, and the cut soil was then to be used as fill on another portion of the site. When the munitions were discovered the area was cordoned off immediately and local authorities were contacted. Visible ordnances were removed. Private contractors were then hired to remove the soil to another fill site which contained other fill material. The following month the developer contacted the Army Corps of Engineers to help clean up the crash site. The Corps assessed the developer’s eligibility for the Formerly Used Defense Sites Program and eventually declined to help. The developer then met with the California Department of Toxic Substances Control to discus cleanup. The DTSC approved a plan to remediate about 10,000 cubic yards of soil. The DTSC eventually removed all ordnances and explosives in the fill areas. Over 45,000 tons of soil were processed through a soil screening plant. In December 2004 the remediation was completed.

The developer sued the United States Department of the Army to recover about $3.2M in costs to clean up the crash site. The developer argued that the Army should bear all the clean up costs on the basis that the developer was not responsible because they were “innocent landowners” under a provision of the Comprehensive Environmental Response Compensation and Liability Act (CERCLA). The only question left for the court was to decide if the developer was an innocent landowner under CERCLA. The court found that the Army did not “solely” cause the “release” of hazardous materials on the property because the developer actively spread contaminated soil from a 3,000 square-foot test site to more than 16 acres of land (fill sites). Thus the developer did not qualify as an innocent landowner.

Who Enforces Environmental Laws in California

The following is taken directly from the State Water Resources Control Board website, and may serve some value to our clients.

California's environmental laws are enforced by a matrix of state and local agencies, each charged with enforcing the laws governing a specific media such as air, water, hazardous waste, solid waste, and pesticide laws.
AirAir Resources Board (ARB)Air Districts
WaterState Water Resources Control Board (SWRCB) (including underground tanks)State Regional Water Quality Control Boards Local waste water officials (see listing under county or city)State Department of Health Services, Office of Drinking Water
Hazardous WasteDepartment of Toxic Substances Control (DTSC)Certified Unified Program Agencies (CUPA)
Solid WasteIntegrated Waste Management Board (CIWMB)Local Enforcement Agencies (LEAs)
Carcinogens/reproductive ToxinsProp. 65 (OEHHA)
PesticideDepartment of Pesticide Regulation (DPR)County Agricultural Commissioner