Real Estate - What you need to know
Estimating
Real Estate prices in contaminated areas
Estimating the impact of dioxin contamination on Real Estate sales and value is not a simple process
as some would have us believe.
Traditional appraisal processes used to evaluate a single property are
limited in their ability to accurately determine the impact on a properties value when
many properties in the area are contaminated.
What homes sell for in relation to
the asking price is interesting, but if the asking prices are less than they
would be without the contamination,
then the survey results are
essentially meaningless. A few telephone calls and
selected property records combined with self-serving comments of real-estate
agents do not paint a fair picture of the market along the Tittabawassee or the impact of the contamination on
our property values.
All of this is especially true when you have a Fortune 50 company in your midst
spending millions of PR dollars with who knows who to cloud the issue. A local wealthy individual
making false promises and
throwing good money after bad combined with
real-estate agents
downplaying the hazards of dioxin may have created the illusion for some
that home sales and property values are unaffected.
Is this why people buy homes in areas with dioxin
contamination at levels that scientists of the EPA, WHO, CDC, ATSDR, MDEQ, MDCH
and almost every other respected health agency in the world consider hazardous
to the health of humans, especially their children? A recent
MSU
study found 71% of local residents consider dioxin in the flood plain to be
a moderate to high risk to their health. The
MDEQ recently announced that people who
do not try to reduce their exposure to flood plain soils and fish consumption
can increase their dioxin levels by up to 3,900%.
We wonder if the local reporters called on residents who attempted to sell their
property but took them off the market after fruitless attempts to sell. We
wonder how many others attempted to get a representative of the local tycoon to
make an offer on their property and where
either ignored or never received a
call back after the initial encounter. Both are examples of actual
experiences and represent the true reality "reality" in the Tittabawassee flood
plain.
Viable, science based, peer reviewed processes for contaminated property
appraisals have been available for years. The methods used by a
local news paper do not appear on anyone's list of approved protocols and are
misleading. Licensed Real Estate agents should be familiar with the
UNIFORM STANDARDS OF PROFESSIONAL APPRAISAL PRACTICE, specifically the
Advisory Opinion 9, "The
Appraisal of Real Property That May Be Impacted by Environmental Contamination".
Evidently our local bunch have chosen to ignore them.
Fortunately, experts in the field of contaminated property appraisals can be
found at companies such as Greenfield Advisors.
GA has published many papers on the subject. Visit their web site and
check out the "Publications" page for all the details. Below are a few
excerpts:
 
"Facility"
and responsibility to disclose dioxin contamination.
Anyone supporting the movement to remove the
"facilities" label from contaminated properties in Midland and the Tittabawassee
flood plain need to consider all of it's implications. The following is NOT
legal advise, just some opinions. As always, when buying or selling property,
consult your own attorney.
 | Review the Seller's Disclosure form for
Michigan. The key provision is paragraph 10, which requires the seller to disclose
environmental issues, including contaminated soil. Thus, the form itself would
require that a seller notify the buyer of dioxin contamination, regardless of whether or
not the property is designated a facility. |
| One possible scenario of a successful removal of the "facility" label and
supporting "resolutions" and petitions.
 | "Under Michigan law, you must disclose any material defect to a potential buyer.
No where does Michigan law link the definition of a material defect to the
definition of a facility. Whether an existing situation constitutes a material
defect is often decided on a case by case basis, with a jury being the trier of fact as to
whether the condition constitutes a material defect. Thus, the existence of a toxic
substance such as dioxin on a property could well be considered a material defect,
regardless of whether the state has designated the property a "facility" for
regulatory purposes. In fact, there is nothing that says that the presence on a property
of a toxic substance, even in amounts below state action levels, does not constitute a
material defect. That would be a question for a court and jury to answer on a case
by case basis." |
| "In this instance, the resolution
proposed by some individuals in the township does not, and cannot, under Michigan law,
protect sellers from failing to disclose the presence or likely presence of dioxin on
their properties. In some ways, it actually works against sellers, because an
argument could be made that sellers recognized the potential significance of the presence
of dioxin on their properties, but took affirmative steps, not only not to disclose, but
to actively hide that fact by demanding that a state agency remove a facility label from
their property. This action alone lends strong evidence to an argument that the sellers
knew about the defect, and that such a failure to disclose was not an accident, but was
willful. Thus, it is possible that the resolution could become an exhibit for the purpose
of proving not just a failure to disclose, but affirmative fraud and punitive
damages." |
|
Michigan's Part 201: Environmental
Remediation
Part 201 is a small section of Michigan's Act 451 of 1994
which addresses Environmental Remediation of contaminated sites. The rules of Part 201
are used to regulate Dow's remediation plan for it's dioxin contamination of
Tittabawassee 100 year flood plain. The
same rules now apply to private property in the frequently flooded areas of the 100 year
flood plain now considered extensions of the Midland Dow Facility for regulatory purposes.
The following sections of Act 451 apply to all owners of property in the 100 year flood
plain
| Disclosure that property is a facility: Section 324.20116 of the NREPA requires that a person who has
knowledge
or information that his or her property is a facility must disclose to any person
acquiring an interest in the property the general
nature and extent of contamination. Click here to view
law in it's entirety as posted on Michigan Legislature web site. |
| "Due Care" responsibilities: Section 324.20107a of the NREPA imposes certain responsibilities on
persons who own
or operate contaminated property in order to assure that the use of that property occurs
in a manner that protects public health
and safety. Click here to
view law in it's entirety as posted on Michigan Legislature web site. |
| Restrictions on relocation of contaminated soil: Section 324.120c. See
DEQ Soil Movement Advisory for details on these regulatory requirements. Click here to view law
in it's entirety as posted on Michigan Legislature web site |
Many other laws are contained in Part 201. The Micigan Legislature web site for
Part 201 is the best way to view all of the regulations. It's organized and provides
a brief abstract of each part.
Click
here to visit the Michigan Legislatures Part 201 web site.
| July 2005. MDEQ sends residents a
newsletter clarifying the word 'facility' and how it applies to property
owners affected by migrating dioxin contamination |
WARNING:
Real Estate Agents may deceive buyers and sellers
Sources indicate some local Saginaw Real Estate agents are advising potential sellers
of flood plain property to NOT disclose dioxin contamination to potential buyer.
This advise is in direct violation of Michigan's Act 451, part 201 rules which require
disclosure by the owner. If you receive this advise, get the Realtor to put in in
writing and check with your lawyer. Following this advise may set you up for
future lawsuits when the new owners discovers they where deceived.
This is a terrible situation for all flood plain property owners. Many of us are
in a state of denial and think if we ignore it, it will go away. Unfortunately, the
genie is out of the bottle. The MDEQ has classified your land as an extension
of Dow's Facility for Regulation purposes and you are obligated to follow the rules.
Please take the time to learn more about the laws that now affect you. Contact your
lawyer before doing anything connected with selling or buying flood plain property.
If this situation makes you angry, you are in good company. Channel your anger in
the proper direction, click here to learn more.
Tax
Relief due to dioxin contamination?
A recent news story in the Midland
Daily News stated an "appraisal submitted in
The Dow Chemical Co.'s property tax appeal against the City of Midland indicates dioxin
contamination at its corporate headquarters has a negative impact on its property
value."
Dow, welcome to the club! Regardless of how you
attempt to spin these facts, the evidence is clear. Your own appraisers state what
we have been saying for years: the property damage to the owners of dioxin contaminated
flood plain property is real.
In the article, Dow goes on to say that home sales
and property values in the affected areas are not impacted by Dow's dioxin contamination.
The fact that we disagree should not surprise anyone, that's why a lawsuit was
filed. Unfortunately, Dow is doing everything in it's power to avoid the truth and
it's day in court.
There are many aspects to understanding the real estate
value of chemically tainted property. The fact that houses sell for a while after
the announcement of the contamination is true, what happens later is the crux ot the
matter. This phenomenon is well researched and documented in other
contamination cases.
Click here to read an
excellent paper on the subject "Appraisal of Contaminated Property in the United
States" published in October 2003 by
Greenfield Advisors (formerly
Mundy Associates), a well respected expert in Economic, Market & Valuation Analysis.
The paper cites many other references to support it's position. Subjects
include:
| Real estate evaluation methods in contaminated areas |
| Determine impaired values |
| The "stigma" phenomena |
| The risk of holding contaminated property |
| The market phases of real-estate sales in a contaminated
area
| Pre-announcement phase |
| Discovery phase |
| Announcement phase |
| Cleanup identified phase |
|
The Science behind
Michigan's 90 ppt RDCC for dioxin
| " Cleanup criteria for environmental contamination are determined under Part 201,
Environmental Remediation, of the Natural Resources and Environmental Protection Act, 1994
PA 451, as amended (Act 451). The soil generic residential direct contact criterion (DCC)
for dioxin is 90 parts per trillion (ppt). That criterion was developed in 1995 using the
best information available at that time. The scientific information that has developed
since 1995 indicates that dioxin poses even more of a risk than considered in 1995. Recent
work conducted by the World Health Organization (WHO), the United Nations Food and
Agriculture Organization, the European Commission Scientific Committee on Food, and in the
United States Environmental Protection Agency’s (EPA’s) draft dioxin
reassessment supports standards even lower than those in effect in Michigan. The United
States Department of Health and Human Services, the National Institute for Occupational
Safety and Health and the WHO’s International Agency for Research on Cancer, as well
as the EPA, have concluded, based on literally hundreds of animal and human studies, that
2,3,7,8-TCDD is a potent human carcinogen." Source: MDEQ response to Midland 5/26 meeting
|
| The Part 201 DCC
of 90 ppt for dioxin is based on exposure assumptions and toxicity information available
in 1995. The toxicity of dioxin is currently being re-evaluated in a major reassessment
done by the EPA, including review by the National Academy of Sciences. When promulgating
the Part 201 cleanup criteria rules in 2002, the DEQ determined that it was more
scientifically defensible to continue to apply the 1995 DCC of 90 ppt than to update the
criterion before the results of the federal dioxin reassessment are available. It is
anticipated that revision of the dioxin DCC to reflect current science and risk assessment
would result in a generic residential soil DCC in the range of 10 to 70 ppt. An update of
the soil DCC for dioxin would require: (Source: MDEQ response to Midland 5/26 meeting)
| A re-evaluation of the cancer potency value.
|
| An evaluation of noncancer toxicity.
|
| An appropriate animal-dose to human-dose
conversion to account for differences between species.
|
| Selection of the most sensitive toxicity
endpoint.
|
| Identification of an appropriate relative
source contribution factor (which accounts for the fact that a significant source of
dioxin exposure is from the diet).
|
| Incorporation of the updated generic
exposure assumptions (i.e., the exposure assumptions used in the Part 201 Administrative
Rules).
|
|
| The 90 ppt calculation simplified
|
| Part 201 Generic Soil Direct Contact Criteria
|
| Carcinogenicity Slope Factor
|
| EPA Great Lakes Water Quality Criteria for protection of Human Health
|
MDEQ Administrative Rules for Part 201
The following documents are listed as presented on MDEQ website in no
particular order. They seem to be documents used by the MDEQ to research and
document contaminated sites. Many contain definitions of all the terms used.
All of the documents are PDF files, you must have Adobe Reader to load and view.
| July 2005. MDEQ sends residents a
newsletter clarifying the word 'facility' and how it applies to property
owners affected by migrating dioxin contamination |
| July 15, 2005. The MDEQ released
"Facility
status under Part 201 #09-009" which clarifies what is a facility. |
| Administrative Rules for Part 201, Environmental Remediation, of
the Natural Resources and Environmental Protection Act, 1994 PA 451, as amended and posted
on MDEQ website
as of 9/17/03. | |
Tittabawassee
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