Does anyone have experience negotiating price for commercial property owned by there local town (local government)?
My father and I out of dumb luck found a very large property owned by our local town that they are looking to unload.

The property is commercial, specifically industrial, and has roughly 30 acres of land. Roughly 20 acres is wetlands, and 10 contains abandoned structures from the town and an abandoned parking lot.

According to the town attorney the property has environmental issues based on the fact that the town does not want to do an environmental phase 1 or 2 test.

The town has requested that we follow there RFP process and write down what our plans are for the property and also write down a proposed price we are willing to pay.

We see value in the property the way it is, however we are unsure even where to start on an offer price. We plan to get an appraiser to look at the property.

My question to the group:

1) Does anyone have experience buying a commercial property that is looking to be unloaded by 
there local town?
2) Since the town is looking for no environmental phase tests, is it best to start at a very low price offer? Although it’s 30 acres the property is vacant land and contains shells of buildings no longer in use.
3) Are property taxes able to be negotiated since they did not exist previously?

For reference this property is in Nassau county, Long Island.
[{"id": "ghpypnx", "text": "Any idea of what the environmental issue is? There are environmental issues that are so bad and expensive that a seller would have to pay me to take some them so tread very carefully.", "replies": [{"id": "ghpz7xs", "text": "The property used to have a sewage treatment plant on the property back in the day I\u2019m sure dumping was a lot less strict in the past, and a creek runs into the wetlands of the property.\n\nWe are definitely a bit worried about the environmental issues, however our plan is to donate a majority of the land back to the town that is considered wetlands since it is useless at least for our purposes.\n\nThe town made it clear though they do not want us doing any environmental tests.", "replies": [{"id": "ghq4gxv", "text": "Something doesn\u2019t sound right. \nYou want to buy land then donate some back to the town. \n\nWhy wouldn\u2019t the town keep the wetlands and put the rest up for sale?\n\nIMHO they know there\u2019s issues, and if they test for it the issues become public record,  and the land becomes stigmatized. \n\nThey\u2019re taking a \u201cbury our heads in the sand\u201d approach and are looking to unload the land because they know cleanup costs will be substantial.", "replies": [{"id": "ghq504i", "text": "They want to sell the full property as is. We asked if they are willing to subdivide it but they do not want to do that.\n\nYup I 100% agree. We see value in the existing uses. The abandoned parking lot used to be car storage and there is also an auto impound lot on the property.\n\nAlthough there are clearly issues we think that dealerships would definitely be looking for additional land to store inventory.", "replies": [{"id": "ghq6rw7", "text": "If they don\u2019t want to subdivide it now, then what makes you think you can subdivide it then donate it back to them after purchase?\n\nIf they wanted any part of this land, they\u2019d keep it. \n\nThem demanding \u201cno environments report\u201d is extremely suspect at best. \n\nWithout knowing the extent of these issues, it would be a hard pass from me. \n\nYou could be dealing with a massive cleanup that costs more than the value of the land...potentially significantly more.", "replies": [{"id": "ghq7g3z", "text": "Agreed there is definitely a huge risk in the environmental portion.\n\nWell I think that would definitely be something we should try and propose if possible, but I definitely see your point there.\n\nAppreciate the input", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "ghq7mt9", "text": "That sounds like they know you would open a pandora box and they will have to pay an insane amount of money on liabilities.", "replies": [{"id": "ghq8rzt", "text": "Agreed that\u2019s why they are not interested in environmental. We \u201cbelieve\u201d we have the cash to purchase the property the only issue we have is what is a reasonable price to make an offer to the town? Anything is a plus to them we are just wondering if they would put a significant discount considering the issues. And this would be a net benefit to us owning the land behind us for purposes such as car storage. There is an adjacent property currently leasing it looks like to a keep dealership and there are roughly 200 cars on there property which is around 2 acres. I know it\u2019s not good to compare but it\u2019s an interesting opportunity.", "replies": [{"id": "ghq94a1", "text": "Sometimes the best you can do is pass on a deal. It is not worth it. They want to pass the liability to you. I would even leave that town if they are so scared of what is in that land. Who knows if there are people dying due to what's there.", "replies": [{"id": "ghq9n0v", "text": "Yup you\u2019re absolutely right just to give u some color we would definitely be doing a cash offer, no mortgage would be done since the banks will definitely require an environmental.\n\nWe have no plans to develop the property and our main concerns on what the proposed taxes would be on it as well as expectations around price which they are giving us no indication on.\n\nThe value we see if car storage on the auto impound lot which is relatively large (~300-400 cars could go there). There is an adjacent property currently leasing to keep. Again this is all hopeful thinking by us on what we could potentially do.", "replies": [{"id": "ghrwihn", "text": "Just to reiterate some very valid points by other posters;\n\nIt seems like you need guidance on:\n1. Price\n2. Feasibility of your plans\n\n1. Well, generally any publicly owned lands have to go through an RFP process, some sort of fair market valuation, etc. so there are no concerns about impropriety. You\u2019re hoping you can forego a Phase 1/2, but you\u2019re also hoping you\u2019ll get a discount on the land based on implied environmental issues. You can\u2019t really have both, here. If you want to ignore the environmental issues (and for the sake of your proposed purpose, I can understand why you\u2019d think that would fly), then it\u2019ll be very difficult to justify a cheap price. If you want to leverage the diminished value due to contamination... well... you\u2019ll have to investigate what the extent of the liability is. \n\n2. Depending on your jurisdiction, you\u2019ll probably need some sort of approval to make sure the site is suitable for your proposed use. Even in your best case scenario (everyone just plays dumb about environmental stuff), and you can park cars on the land... you\u2019ll still own the land (and have likely acquired all liability in the purchase, I\u2019m certain the town would ensure they are fully indemnified). Which means... at some point the other shoe is gonna drop. If you try and sell the land, 99% of buyers are going to want to make sure the land is feasible. Which requires a study to investigate the extent of the environmental issues. If you plan on never selling it, just getting a return on your initial investment and just holding onto it in an LLC in perpetuity... What happens if some apartment complex discovers the groundwater has been contaminated by your site and they sue you... Sure, it\u2019s all hypothetical IF the issue is bad, but you\u2019re not even going to care to see how bad the issue is before you buy?\n\nThis is a limited upside, infinitely unlimited liability opportunity...", "replies": [], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}, {"id": "ghrnptr", "text": "How can you improve and resell the property without first remediating it? If the town is selling it to you they dont want it back. They want tax revenue.", "replies": [{"id": "ghrq3ua", "text": "Well everything is hypothetical at the moment and yes I\u2019m sure you\u2019re right.\n\nThe property is not something if we were to get it that we would plan on selling. We want to take advantage of the existing usage that the town was utilizing the property for.\n\nThe deal would be a cash deal, the one thing we are struggling with is a proposal price for the property", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ghq428l", "text": "I'm sorry to tell you this: You should walk away.\n\nI work with old industrial sites. Not scared away by ugly sites or environmental issues. You can scope/define &amp; paper over many environmental issues, others need minor remediation, others still require expensive remediation beyond the clean value of the site, and the worst bring off-site liability with them on top of that.\n\nSo, you have to be able to define the risks up front. They're straight up telling you it has problems. If that last risk above doesn't concern you, consider that you will never be able to finance the property or its development, without remediation, if anything bad shows up in the future Phase II work. You may also not be able to sell it.\n\nI do not know NY state or local environmental rules wrt development. Even if you're thinking to convert to a mini-storage use, would local permitting or NPDES federal permitting (wetlands, over 2 acres disturbance?) require soils testing or effluent testing? I don't know those answers or if its even relevant to your plans.\n\nIf you do move forward:\n\n1. I've done both buy and sell side. It usually moves slow. Everyone will act like the municipality is doing you a giant favor and you're trying to pull a fast one on them. There is no guarantee that the elected officials that have to sign off will approve it even if staff approves a price and advances it to them.\n2. They will likely require an appraisal and can only (or will only want to) transact at that price. It'll be hard for the appraiser to appropriately adjust for enviro. That has been my experience, maybe others have seen differently.\n3. I doubt you can negotiate the future tax value beyond the purchase price or local comps, unless they have a process for tax abatement/reduced value for redevelopment.\n\nMake sure you get a wetlands deliniation(sp) as well!\n\nETA: With sea levels rising and storm events increasing, I'd also think about how usable this site will be in the future, if you're at sea level on Long Island. I'll stop beating up on this now, Happy New Year!", "replies": [{"id": "ghq5l3z", "text": "Thanks for the advice. We are not looking to do any development of any sort. The existing usage by the town included an auto impound lot and there is an abandoned parking lot. We see a lot of value in using the land for car storage. ( area has a lot of dealerships). \n\nBut yes you\u2019re absolutely right I am sure they will try to get the maximum price possible on the appraisal.", "replies": [{"id": "ghq7vpz", "text": "Gotcha. If you can do an all-cash purchase and be careful to wall-off the buying entity for future liability in case something comes up, and buy at a low basis so the ROI on lot rental looks good given the enviro risk, I could see that. \n\nI would try to lock in an agreement that they'll support the subdivision and would take back the wetlands. Since they're not allowing any enviro you should consider having them take on any future liability for off-site enviro issues related to prior use, or at least specific to wetlands you want to give back. Or at least consult with a NY real estate/environmental attorney who could better define the risk.", "replies": [{"id": "ghq99tn", "text": "Thanks and appreciate the advice. We would definitely be doing a cash offer if it made sense.\n\nWe were also thinking that the wetlands could be a potential TDR opportunity that we could put in negotiation with the town. Developers are constantly looking to by up land to \u201cdonate\u201d back to the town for additional lots to build residential properties we are actually in the process of doing this with another one of our properties we are subdividing to build houses.\n\nIt\u2019s kind of an odd ball property but it seems like there are some use cases. Again everything is just \u201chopeful opportunities\u201d with no guarantee of success.", "replies": [{"id": "ghr4kz1", "text": "You should offer to take it for the cost of cleanup.", "replies": [{"id": "ghr4qw4", "text": "That\u2019s the thing not sure what the damages would be", "replies": [{"id": "ghr6vyw", "text": "They should pay YOU.  What state?  Is it on the brownfield list? Envirostar?", "replies": [], "depth": 7}], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "ghqlpvo", "text": "I agree with this analysis and especially with item #1. Even if you can reach an agreement with the present municipality, that agreement will have to be reviewed and ratified by the elected city council (or whatever they call it in Nassau). That vote and what it will take to get an outcome in your favor is apt to add significant time and costs to your venture. Add that there is no phase 1 or phase 2 environment report and the problems associated with partial wetlands means many future headache (fines?) . If you do get it, how will you comply with the environmental rules about leakage and contamination from the stored vehicles (more fines?). And when you go to sell at some later, all these headaches and more will be yours. Too complicated, too many obvious red flag. Keep  looking.", "replies": [], "depth": 2}, {"id": "ghqvejb", "text": "The only reason I can imagine the city doesn't want a buyer to do environmental study is because  if the Phase 1 looks bad, and the buyer walks away, now the city would have to disclose that to all other buyers.  In which case, if it's really bad, there will be no other buyers.  So of course, the city would vastly prefer that somebody comes along and takes this off their hands before contamination can be shown.  Whether there is contamination or whether the current city folks know anything about contamination, we don't know, but obviously the city would prefer someone else take the risk off their hands and just buy it.\n\nu/necati123456, my feedback is this:  It'd be extremely unusual for a regular 30 acre industrial site (with wetland) to change hands without at least a phase 1 study.  This doesn't stop the city from trying to make it happen.  But keep in mind--- the city is trying to cover its ass on this, and they don't care if your asses end up hanging in the wind later because you took this problem off their hands.  You could get really really screwed on this.  I would also say it's nearly impossible you are the only people who know about this property, and the fact that no one else has moved on it by now should tell us a lot about the risk involved.\n\nAnyway, good luck and be careful with it!", "replies": [{"id": "ghqwl84", "text": "Agree with you 100% it is not new in fact this was something they tried to offload back in 2019 with no luck. Fast forward to 2020... there are some parties interested and I\u2019m sure everyone has there bright ideas.\n\nJust to be clear though we would want to come in as a cash buyer by passing the idea of doing an environmental phase 1/2 test. \n\nAppreciate the feedback though", "replies": [], "depth": 3}, {"id": "ghr4dyp", "text": "Aren't there bonds put up for cleanups from former and current owners?", "replies": [{"id": "ghr5wiv", "text": "Possibly-- OP hasn't mentioned if there are in this case.", "replies": [], "depth": 4}, {"id": "ghrhaoi", "text": "No bonds to our knowledge just in the rfp phase. The property has been in the possession of the town for quite some time still doing research though.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "ghq9q3k", "text": "You\u2019ve received a lot of awesome advice here. I would just add, be ready to pay cash. No lender is going to finance a purchase for this.", "replies": [{"id": "ghqa3fg", "text": "100% agree. And yes we would definitely be doing an all cash offer on the property we have no plans to get lending. We don\u2019t have a choice in this case but we definitely see some upside depending on the price \ud83d\ude00", "replies": [], "depth": 2}], "depth": 1}, {"id": "ghql4ov", "text": "Their*", "replies": [], "depth": 1}, {"id": "ghr70mg", "text": "Ny what are those sites?", "replies": [], "depth": 1}, {"id": "ghrk4vd", "text": "Advice on grammar: their*", "replies": [{"id": "ghrq7rp", "text": "Noted \ud83d\ude05", "replies": [], "depth": 2}], "depth": 1}]