advice needed, commercial property

[carterbeauford]

posted in the wrong forum, please move

this could turn into a long story, I'll keep it short. family owned a trucking company. it went bankrupt in 2007. bankruptcy is being finalized, the trustee could not dispose of the property, so we got it back. about 9 acres with an approx 70x300' shop/office building. my poor grandmother has been paying taxes and insurance on the place. it's not on the market due to being caught up in environmental survey, some diesel fuel leaked into the ground over the last 50 years and it's apparently a huge deal.

I am cleaning one of the bays in the good part of the building to paint tractors in, the good part of the building being about 1990 construction 70x100 steel building with 12x12 and 12x14 doors and a nice concrete floor. about 1/3 of the rest of the building needs demolished, and the other 1/3 needs roof repairs but could be salvaged. the electrical service is a mess, there are at least a dozen panels, some dating back to the 1960s. all the wiring in the panels was cut. aside from these issues, the place really just needs cleaned up, weeds pulled, grass cut, and garage doors painted, and it could be used as light industrial space.

I'd hate to lose access to the place, being sentimental, and a good place to do heavier/more messy work that I want to do in my garage. I offered to pay the taxes on the place and was planning on having the electrical turned on until I saw water pouring into the main panel. I'd like to clean it up, divide it into parcels, form an LLC and lease out the acreage/shop space. if someone is leasing rather than buying, they'd be less concerned with the environmental stuff. I've been around this place since I was a kid and just can't let it go, the idea of one day starting something back up there is what keeps me holding on. am I in for a huge headache?

 

[03protege]

Maybe I am just "ignant" but unless you are on well water I couldn't give the smallest damn about diesel in the ground.

 

[Charles (in GA)]

Maybe I am just "ignant" but unless you are on well water I couldn't give the smallest damn about diesel in the ground.

You might not but the gubernment does and with the environmental dictator and chief in office its going to get worse. EPA gets stupid about this stuff. You might have to dig a hole to China to get all the "contaminated" dirt out of there and "proper" disposal would be a dirt burning facility and that is expensive, plus hauling in EPA approved trucks, etc.

I had a friend who had a very difficult time selling his old family dry cleaning facility because of the "potential" of a percaethylene spill, and that was the label the EPA had tacked on it, scared everyone off. He finally found a buyer and drillings showed no contamination, but it took him years to sell it.

Charles

 

[Zeke]

I'd say if you can get 9 acres with buildings for taxes and insurance, do it. I'm sure there's income potential there somewhere.

One of the weirdest things I have seen is storage places out in the middle of nowhere. The storage business has the highest occupancy rate of any rental properties. If you can get the place secure and dry, I'd say storage is an option.

I think I'd rather have my stuff indoors rather out in the PA winter.

 

[Vegaman_Dan]

RV and boat owners would pay well for dry covered storage. If it was temperature controlled to prevent freezing, then that becomes even more valuable.

It would likely be possible to rent out 3/4 of the space for such storage and use the income to pay for taxes/insurance and give you the rest of the space to use as you wanted.

 

[carterbeauford]

Maybe I am just "ignant" but unless you are on well water I couldn't give the smallest damn about diesel in the ground.

it's city water but the water is so bad I'd rather drink whatever contamination came out of a well. PA DEP disagrees and says this is a huge, super serious deal. I think it's a conspiracy to make the environmental companies rich.

I got the newer building 75% cleaned out last night, in a week I should have about an 18x70' bay with 15' celing and a nice concrete floor as my new shop. all the wiring was stolen so I'll have to run new wiring in the conduits and install a new service, till then it's generator power.

 

[FunkyfullWidth]

This could turn into a huge mess. A guy I know just went through something with a building he was trying to purchase. It took him almost a year to finally move in and be given the go ahead to do anything with it. it can cost alot of money just in testing never mind the actual removal of contaminated soil. think live load trailers that have to travel half way around the country to dump it.

However it's one of those things that can bite you in the *** even in the future if not taken care of. I'd say hire a private company to do testing, whatever you do don't just brush something like this aside. Not sure if it's true or not, but i've heard that in some places they can go after all the previous land owners to pay for removal and such. I wish you luck, but you may want to look into if you even can do any work to the place, or rent it out knowing that it could possibly have contaminants.

 

[osu69]

If it hasn't been done already, you, your grandmother, and anyone else with an ownership connection to the property need to consult with a lawyer specializing in environmental law. This problem will not go away and could mean years of financial heartache.If there are environmental issues with the property, the tax assessment needs appealing since the property may have a negative value. As painful as it may be, confronting difficult problems and dealing with them is the best course of action.

 

[Stuart in MN]

it's city water but the water is so bad I'd rather drink whatever contamination came out of a well.

When I was a kid, the gas station down the street had a leak in underground tanks which leached into our well. It was pretty bad. That's the trouble with this sort of thing; it doesn't just affect your property, once it gets into the water table it can affect everyone around you.

 

[RKA]

Without understanding the full extent of the contamination and what the EPA can and can not make you do, you're flying blind. As stated, it has the potential to contaminate the water table today and for years to come. This affects everyone in the area and if there is a body of water nearby that towns use for their water supply, it's an even bigger problem. Think of it like an iceberg. What you see above the surface is a fraction of the real problem. Know exactly what you're getting into before you entangle yourself in this. This property could be a noose around your neck for life.

 

[Strouty]

There is a local paint shop that had some serious issues with DEP and I believe DEP came in and cleaned it up for them. They were allowed to continue business under heavy scrutiny but if they ever want to sell DEP owns the land (probably a lien). They paid fines, but could not afford actual cleanup, but it had to be done. This is second hand, so I am sure most of my info is skewed.

 

[carterbeauford]

I was wondering more about the financial gamble of assuming the property, not as concerned with the environmental BS, it will be wrapped up in 6 months or a year.

There is a local paint shop that had some serious issues with DEP and I believe DEP came in and cleaned it up for them. They were allowed to continue business under heavy scrutiny but if they ever want to sell DEP owns the land (probably a lien). They paid fines, but could not afford actual cleanup, but it had to be done. This is second hand, so I am sure most of my info is skewed.

PA DEP has been working with us, not against us, no fines. they maintain a superfund which paid to take out the fuel tank and oil tank.

Without understanding the full extent of the contamination and what the EPA can and can not make you do, you're flying blind. As stated, it has the potential to contaminate the water table today and for years to come. This affects everyone in the area and if there is a body of water nearby that towns use for their water supply, it's an even bigger problem. Think of it like an iceberg. What you see above the surface is a fraction of the real problem. Know exactly what you're getting into before you entangle yourself in this. This property could be a noose around your neck for life.

it wasn't even a known issue until a potential buyer commissioned an environmental survey. the fuel didn't leak anywhere near a water supply, it's contained to a 1 or 2 acre area. the whole property is build on foundry sand and fill.

 

[Ray916MN]

I would talk to the municipality where the building is located. You need to find out what they think of the property. If they think it is an eyesore, they can either be thinking they want the site abated and demolished or they can be thinking they want the site redeveloped. They may have grant funds or TIFF which you can get which will help you redevelop the property. Make sure you understand the zoning for the property, so you understand what businesses you can lease to and what the property requirements are for leasing to these businesses (eg. restrooms, fire access/egress/alarms and suppression). In my area, they may get in the way of a business operating in a property which is unsafe or not up to code. You'll also find that leasing liability insurance is necessary if you begin leasing the property and you can't buy liability insurance for an unsafe property, nor a portion of a property. Once you begin leasing space, prepare for your property taxes to go up. You need to make sure you understand what liabilities you are in for if you start to use the property again before you start using it. Once you start using a property, most municipalities understand that you are getting income off the property and have no hesitancy in demanding different things to get a property to be a bigger asset to a community. Your best bargaining position with a municipality is before you take an eyesore and start to improve it or start to generate income.

 

[smalltruck]

Sometimes you can pave over the top to "contain" the contaminated soil. A site was done here like that a few years ago here in Minneapolis that was the same situation. Trucking company lot for many years, more than 50 i believe, and had lots of oil and fuel spilled into the ground.

Hennepin county wanted it turned into office parks/strip malls so they paved it over to "contain" it. For the Minneapolis area people its the old Indianhead trucking company site on County road C between Snelling and 35W in Roseville

So maybe the best thing is start with the local planning commission and see what they want to have happen. But don't assume any liability for anything until you know whats going to happen because you could be in for a cradle to grave position of responsibility for any and all bills. You and (if your married) wife could have the financial future wrecked permanently, so tread very carefully.

 

[GarageEnvy]

Nobody can give you a definitive answer w/o knowing the full extent of the contamination and the laws of your area.

That being said, I just finished having a discussion about this with a farmer/lawyer who had a gas thief cause a leak on his property. The thief "took what he wanted and left the rest to leak out." The owner did not know the amount of fuel in the tank or that leaked out but $20,000 in dirt removal and testing was done. His insurance covered it. I had a previous case where two leaking older underground tanks were leaking. The removal and remediation bill was $45,000. That was 15 years ago and in California.

 

[RKA]

I was wondering more about the financial gamble of assuming the property, not as concerned with the environmental BS, it will be wrapped up in 6 months or a year.

Maybe I'm not understanding you clearly, but it would seem to me the two are inexorably linked, no?

 

[Roots]

Sometimes you can pave over the top to "contain" the contaminated soil. A site was done here like that a few years ago here in Minneapolis that was the same situation. Trucking company lot for many years, more than 50 i believe, and had lots of oil and fuel spilled into the ground.

Hennepin county wanted it turned into office parks/strip malls so they paved it over to "contain" it. For the Minneapolis area people its the old Indianhead trucking company site on County road C between Snelling and 35W in Roseville

I've never once heard of paving over and that wouldn't contain the spill, as the primary concern is it leaching below ground and spreading - particularly to water ways.

FWIW some family members of mine own an industrial environmental services and cleanup company, and lease rather than buy/build trucking lot and garages due to how costly this stuff can be to properly remedy.

 

[eljefino]

If the trucking company was a corporation, "corporations are people too" and the corp abandoned the land. If the bank/creditors didn't want it, they could be on to something.

If you pay for a utility or tax in your name, you could be on the hook as "owner", scary!

+3 on get a lawyer.

Wife did environmental cleanup. Superfund will go after anyone. Lots of corps do "phase one environmentals" when they think of buying or leasing property so they don't get attached to previous problems.

 

[firebox40dash5]

I was wondering more about the financial gamble of assuming the property, not as concerned with the environmental BS, it will be wrapped up in 6 months or a year.

Depending on who gets involved, and what they feel like pushing, you could be incredibly, totally, supremely ****ed. Or maybe not.

If the EPA felt like getting involved, they could go after whoever they could connect to the property to have them pay for remediation. If the family biz went out of business, and you're using the property in some way that could be proven to lead to you, that could mean you. If you lease the property out to someone else, that could be them. If you sold it to someone, it's likely it could still come back on you, even if you disclosed it, when "the rent comes due" so to speak... not that anyone would loan them money if it was disclosed. Worst case, you could sell it to someone, and only verbally disclose it, if that's even possible... they'd give you a fraction of what it's worth, and could conceivably sue for the costs of remediation.

I'd tread really, really carefully, and definitely get a good lawyer that knows their way around environmental and commercial real estate ****. The wrong agency gets involved, and you've got a 7+ figure ticking time bomb in your lap, depending on how well the ownership can be linked to you.