Phase II cleanup guidance and case studies (DD on the site of an old factory with environmental clean up needed)
Long story short the on the deed it's designated as a landfill.  Bank is worried and I need case studies to help put the bank's mind at ease for the take down.  Phase II is \~2M to get the site back into form.  Any help finding old factory rehabs with something like this would be great and very much appreciated.
[{"id": "hzrgw5d", "text": "A) do your numbers still work putting in an extra $2 million at time zero because ain't nobody want to finance that work \n\nB) have you looked into environmental insurance for the benefit of your lender?\n\nC) are you already in chain of title on this thing?", "replies": [], "depth": 1}, {"id": "hzrn8a3", "text": "Just to clarify - you obtained a phase 2 and it is recommending $2M of remediation on the site?", "replies": [{"id": "hzrto21", "text": "Yes and only parts of the site that prohibits further development\u2026 the site has tenants and cash flow supports the loan\n, however without the phase 2 no further financing for development can be had", "replies": [{"id": "hzryph7", "text": "I highly recommend you talk to a lawyer about this. \n\nEven if you do get the bank to close, you'll want to make sure that you don't inadvertently end up with liability under applicable environmental laws for past, present or future contamination to this site or neighboring sites (likely the biggest risk). CERCLA and RCRA are both strict liability statutes that impose liability regardless of who originally caused it. There are ways around that liability for past contamination (look up bonafide purchaser defense), but that needs to be established and documented prior to taking title. These defenses are not similarly applicable to contamination during your ownership or even after you sell it (and the state and federal EPAs don't really care whether you've contracted away that liability or not, assuming you get a future buyer to indemnify you for it). \n\nIf this deal is as big as it sounds, it's probably worth it to spend a little money discussing with a lawyer the high level risks and whether those risks can be sufficiently mitigated to make the cash flow from the asset worth it. This applies to the regulatory risks along with any indemnities your seller is either requiring of you or agreeing to.", "replies": [{"id": "hzs1siv", "text": "you are a God send my brother, been researching for awhile and it\u2019s just so specific. thank you so much for the advice. reddit again undefeated on getting advice", "replies": [{"id": "hzsd280", "text": "Happy to help! Environmental issues can be scary shit.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "hzrw4ou", "text": "The closest thing to a case study I have is a 2 acre site that used to be a porta-potty company from the 1970's and they would  dig holes and dump literal shit into the earth.  \n\nThe buyer did a Prospective Purchaser Agreement.  It took over 1 year for him to do the paperwork but was able to close before the remediation was complete or even really began - if I recall correctly.  It's been a while.\n\nhttps://cfpub.epa.gov/compliance/resources/policies/cleanup/superfund/index.cfm?action=3&amp;sub_id=118", "replies": [], "depth": 1}, {"id": "i0ib63q", "text": "I know I came to this conversation late but this is a really serous situation. Please tell me you don't own the property yet?\n\n* Who did the phase I ESA and specifically who was the Phase I ESA address to?\n\nAll Phase I ESAs from anyone who's good have two things you need to read. The first is the limitation to liability for errors and omissions. It will describe how many dollars they are on the hook for should they screw up. The second is the contract will specifically state that the work the environmental consultant did is the property of the person named in the report and nobody else. So essentially if the EC screwed up but the \"user\" of the report handed it to you and you relied on it, even if it was massively wrong, you have no recourse. You can always sue but it's an uphill battle.\n\nIf you don't own the property yet, the cost of the Phase II needs to be born by the seller but you need to pick the environmental consultant. DON'T SKIMP on the environmental consultant, it would be like buying a cheap-o brain surgeon.  \n\n\nThe bank has every right to be concerned and depending on how bad it is you should think long and hard about walking away, if you don't already own the property.\n\nIf you still want to buy the property, you should take your good Phase I ESA with either a \"reliance letter\" stating you are the user or specifically addressed to you as the \"user\", get a good comprehensive Phase II ESA done in conjunction with a very good environmental consultant that can remediate the landfill and get you a \"No Further Remediation\" letter. You will need whoever does the Ph2 and the remediation to be the same company or to work very closely because you don't want to have to mobilize a second time. It costs more money.\n\nAt the end of the phase 2, get a good solid number on the landfill remediation, increase the number by a comfortable amount for the trouble you'll be going through, then subtract the enormous number from the cost of the land being sold. If you already own the land, you're looking at the number of the dollars  you just lost.\n\nYou can put in an offer to purchase the land for a high negotiated price, with the cost for all the environmental work held in escrow. If the work gets done for less money than the escrow, the seller makes a few dollars. If you use it all, seller gets no dollars.\n\nA bank with a higher risk tolerance will make that deal. As in the comments below, there is environmental insurance, not positive it will work but it's sold by AON. I got a guy in Chicago named Max West who would entertain a conversation about it.\n\nIf you want to talk further, call me.", "replies": [], "depth": 1}]