By Tai T. Hubbard, LPG, Hydrogeology, Inc.
The old man might be gone, but the smell of the old gasoline service station lingers. Based on location the property could list for $500K, but the apparent environmental concerns bring in a contingent offer at half of the market value. The financial slap in the face causes the current property owner to either hold off or reconsider selling at all.
Over the past 17 years I’ve see the above scenario play out multiple times. Whether it’s the corner gas station, former industrial/commercial facility, or existing manufacturing plant, or vacant railroad property, redevelopment hits a dead-end due to the fear of contamination. This is a huge problem for both the property owner and the community as the real estate is eventually abandoned or rented out to the lowest bidder.
I have developed a process that greatly increases the likelihood of redevelopment success. Prior to even listing a property with suspected (let alone known) environmental conditions, the following steps must be taken:
- Step 1 – Educate the Property Owner
The environmental process and the governing regulations must be thoroughly explained to the property owner. This must include a personal approach revealing the site specific concerns of the property in relation to the potential and real liabilities affecting the property. Most importantly there must be a since of urgency communicated. If the owner continues to “kick the can down the road”, this burden will either directly affect their current estate or be left to their family to deal with in the future. In my experience, this step generally takes more than one meeting at NO cost to the property owner.[Note: Mid-sized to the publicly traded global Environmental Consulting firms do not provide this proactive approach as they are unable/unwilling to view this as business development.]
- Step 2 – Identify a Funding Mechanism
Even if you make it through Step 1 and are able to convince the property owner that they have potentially large financial issue on their hands, you are going to be met with immediate resistance. Before they kick you off their property, you have to tell them that there are numerous ways to find funding depending on the former and current property use. It may involve a current or historic insurance policy, a state or local grant, or maybe a liability fund. Needless to say, where there is a will there is a way. Communicating a strategy and plan on how to fund the environmental investigation and potential remediation of the property is absolutely key to keeping the property owners attention.
Beyond Step 2, the scenarios become site specific. The basic idea after educating the property owner is to provide an approach on how to manage and control the environmental liabilities at hand. I started my business to improve the redevelopment process as the environmental industry as a whole does not assist with this process as stated without an unlimited budget and signed contract for their services. More importantly they do nothing to help protect Grandpa’s family inheritance. I believe that true business development begins with a personal relationship based on sound and real advice. If this is done correctly everyone wins!