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Despite dioxin contamination, the real estate market for property located within the Tittabawassee River flood plain is healthy, a Chicago-based analyst says.
A study of residential home sales since February 2002 – when the Michigan Department of Environmental Quality cautioned residents about toxic deposits – shows most homes are selling at or above asking price in listing times ranging from 21 to 334 days.
A survey of 53 home sales in a portion of the flood plain near Shields Elementary School shows nine homes selling at 83 to 90 percent of the property owner’s asking price, 29 at 90 to 99 percent of the asking price and 15 at or above the asking price.
"This is very comparable to properties outside the flood plain if not better," said Kathleen Lang, attorney for The Dow Chemical Co.
Plaintiffs in the class-action suit filed against Dow last March disagree, saying the contamination problem is in early stages of discovery and discussion and that the market "sometimes takes a while to catch up," their attorney said.
"The real estate values are crashing and the more that’s known about this problem, the faster they’re going to fall," said Jan Helder, lead counsel for 164 flood plain property owners suing Dow for the value of their property. They say their homes have been made worthless by dioxin contamination and the "hazardous waste facility" label the Michigan Department of Environmental Quality has given them as a result.
Dow’s study of sales was completed by Richard J. Roddewig to defend against class-certification of the suit. The suit seeks to represent 2,200 pieces of property totaling 13,000 acres along a 22-mile stretch of the river. If it’s not granted class status, litigants could proceed individually.
According to Roddewig’s report, the degree of potential property value loss varies significantly based on many factors, including where and how much dioxin exists and if and how it changes the way the property can be used. Losses also would vary depending on other market influencers such as location, age of the home and the likely group of buyers.
The variations are so many, according to Roddewig, that injury to value, if any, must be measured individually – not as a whole. Such a venture could not be addressed in the context of a class action suit, Dow attorneys say. They cite another problem with a class status for the suit: The class representatives – the 164 plaintiffs – own residential property. The majority of the flood plain land, 56 percent, is comprised of agricultural, government, office and industrial uses.
"None of the people representing the class represent the majority of the property," Lang said. She added that claims that the land is worthless are simply false. "They clearly have value."
Helder believes Dow’s efforts and study are misleading. The plaintiffs have held throughout the trial that because their property is contaminated with the same toxin by the same source, and because the levels of dioxin exceed the state residential cleanup standard of 90 parts per trillion, the property has no value.
"We know of a number of broken transactions that after the dioxin was revealed, the buyers walked away. It’s preposterous to say that real estate value has not been affected," Helder said. He added that sellers of flood plain property must disclose information about the contamination to potential buyers and that one recent instance when the buyer failed to mention it is likely to end up in court.
"It is not a safe place for a family to be, so the value is nothing and the market is moving in that direction," Helder said.
Plaintiffs’ expert appraiser, John A. Kilpatrick, disagrees with Dow’s survey, and notes that market price is not synonymous with market value. A misinformed or unknowledgeable buyer might pay a certain price for a piece of property, but that doesn’t mean the value is consistent with that price.
He believes the effects of dioxin on value would better be found by looking at the long-term picture in another community with a similar contamination problem. |