Six years ago, the transmission went out in my aging GMC Yukon. It had about a billion miles on it and The Blue Book Value was around $2.75. It made no sense to fix it as it was not worth the cost. So I moved on and found another used GMC Yukon. After six hard years and multiple crossings of the continent, the head gasket blew on my second GMC Yukon. It is in such rough shape that my wife refers to it as the “GMC Titanic.” Six years ago I would have scuttled the old war horse, but the value of used cars has climbed so high, that the equation has changed. It is now worth fixing the problem.
The same is true of mobile home parks. The value of parks has climbed so much, that communities which previously were passed up due to environmental problems are now often worth fixing.
Several months ago we performed a Phase I Environmental Assessment on a park in the central portion of the country which revealed a problem that most would consider a “Deal Killer.” The park was attractive, well maintained, in a rural setting and had a high degree of occupancy. It was hard to imagine that there was anything wrong with it. During the Phase I, my associate, Eric (a geochemist) advised me about the potential for lead to be present. Sure enough, the Phase I unearthed evidence that lead was likely present. Some follow up soil sampling revealed that the surface soil contained significantly elevated levels of lead. This is a particularly concerning issue on residential properties.
Mobile home parks are environmentally sensitive settings, especially when it comes to heavy metal contamination in soil. Unlike urban apartment complexes, park residents have free access to the land and often do things like plant gardens or dig holes, and children play in the dirt. Additionally, the wind picks up small soil particles and moves it as dust which gets inhaled and sometimes accumulates in homes. Mobile home parks generally include some of the most vulnerable portions of the population: elderly citizens, young children and individuals with health issues. As a result, this was not an environmental problem that could be left unaddressed. New owner or current owner, the clean up needed to happen. Although no regulatory agency was involved, there was the looming potential for a “Toxic Tort” claim by any resident and it would be also very difficult to sell the park unless it was cleaned up.
As geologists, we are not qualified to offer anyone business advice but we try to apply the same “Standard of Care” we would for our own family members. After I shared the lab results with the client I asked “Isn’t there a better park to buy?” I was truly concerned about the liability the client may be taking on. Like Eric, the geochemist, the client is wickedly smart. He in fact is a chemical engineer as well as a brilliant investor. He considered the situation carefully.
No one knew the park was contaminated before we pulled samples. We do not share information with anyone but our clients; however, the client passed along our findings to the owner. Now the owner knew the park had a problem. Selling it would be a challenge - so would be keeping the park. However, because the park was such a valuable piece of real estate, remediation was feasible. The cost of clean up would be far below its “Blue Book Value.”
The client worked out an arrangement where the owner would pay for the clean up but it would be performed under the supervision and control of the client. The process was straight forward. First collect samples of soil in a grid pattern from all over the property. The samples were collected at different depths at each location so that we would know both the aerial extent of impacted soil as well as its depth. The impacted soil was then removed and the excavated areas were re-sampled to make sure all of the impacted1 soil had been removed. Clean soil was brought in to replace the impacted soil that was removed. Fortunately no homes had to be moved. The final project report documented how the extent of contamination was determined, how it was removed and proof that it was removed. Additionally, the county signed off on the clean-up. This “Completion Report” was the client’s “Golden Ticket.”
Because the park was so valuable, it was financially viable to fix the problem. As a result, the seller resolved a critical issue and was able sell the park. The client, in turn, was able to buy a park in which the numbers worked well for him. A decade ago, this project would not have been possible.
There was another bonus. The park was in an area where lead contamination of soil was wide spread. It is not the only park in the area which has been impacted by lead. When it comes time to sell, this gives the client a significant advantage.