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.