Dow downplays appraiser's dioxin comment
By Kathie Marchlewski
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.
The information is found on the first page of the appraisal Dow submitted to the Michigan Tax Tribunal in July.
"Not included in the scope of this appraisal is the impact on value due to the presence of dioxin in the subject's soil," reads the note from the Pickering Valuation Group, which performed the appraisal. "Nor has the impact on value due to being located in close proximity to a large, 100-year-old chemical manufacturing plant been quantified or reflected in the value reported therein. Thus, this is a hypothetical condition of the estimated values contained herein. If this hypothetical condition were not invoked, my estimate of value would be lower."
Dow officials say the information does not contradict the company's defense in a lawsuit brought by Tittabawassee River flood plain residents.
Dow tax manager Mark Recker said the statement is a disclaimer required by appraisers to comply with the Uniform Standards of Professional Appraisal Practice for properties known to have environmental issues. "His intention was not to say there should be a deduction because of dioxin," he said. "It's an unknown at this point. The sales prove maybe there is no effect."
Bruce Pickering, who performed the appraisal, agrees that the impact is unknown, but says contamination is a negative influencer. "That's common sense. You would pay less for a corporate headquarters that is contaminated," he said.
Dow officials say that's not been the case for residential property.
"We're looking at very different situations," spokesman Scot Wheeler said. "The hypothetical does not translate directly to properties on the flood plain. (Pickering) does not have direct data here."
Dow, on the other hand, has studied the market for residential property on the Tittabawassee River and found dioxin had no ill effect on sales or value, Wheeler said.
In February, the company submitted to Saginaw County Circuit Court a study of the housing market within the Tittabawassee River flood plain. The report was compiled for defense in a potential class-action lawsuit in which residents of the flood plain are asking to be compensated for the value of their homes, which they believe have been devalued by dioxin contamination. The plaintiffs seek to represent 2,200 pieces of property totaling 13,000 acres along a 22-mile stretch of the river.
Dow-hired Chicago-based appraiser Richard J. Roddewig found that of 53 homes sold since February 2002 -- when the Michigan Department of Environmental Quality first cautioned residents about the presence of dioxin within the flood plain -- many have sold at or above asking price.
Sales studied in a portion of the flood plain near Shields Elementary School showed nine homes selling at 83 to 90 percent of the asking price, 29 at 90 to 99 percent of the asking price and 15 at or above the asking price.
There are many variables in determining contamination's effect on property values, and it's something Pickering said he wasn't asked to do as part of the appraisal.
"To try to quantify the impact on value would require a tremendous amount of research and investigation," he said.
While the flood plain lawsuit doesn't extend to Midland, the possibility that dioxin could affect city property values, cast a stigma on the community and hinder new business investment have been concerns of residents.
City Manager Karl Tomion said the city believes dioxin contamination could contribute to lower property values.
"We are very concerned about the effect of dioxin on our community," he said.
Plaintiffs' attorneys had not obtained a copy of the Dow appraisal as of Friday and could not comment.
Reporter Kathie Marchlewski can be reached at Kathie@mdn.net or 839-4233.
©Midland Daily News 2004
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