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Real Estate - What you need to know

bulletEstimating Real Estate sales in contaminated areas
bulletLiving in flood plain and consuming T.River fish can increase your dioxin levels 3,900%
bulletStudy finds floodplain residents homes, properties, and bodies have increased dioxin levels
bullet MDEQ FAQ for owners of property affected by migrating dioxin contamination July 2005
bullet"Facility" label and property owners disclosure obligations
bulletEnvironmental Remediation: Part 201 Rules and property owners obligations
bulletWarning: Property owners and potential buyers may be deceived by Real Estate agents
bulletShaheen property buy out just smoke and mirrors?
bulletShaheen land deal limited June 2005
bullet Purchasing real-estate in the floodplain, one citizens experience, January 2005
bulletTax relief due to dioxin contamination: Dow thinks so.
bulletThe science behind Michigan's 90 ppt Dioxin Residential Direct Contact Criteria
bulletAct 451 Natural Resources & Environmental Protection Act of 1994
bulletAdministrative rules for Part 201 rules

 

 

 

 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.

bulletReview 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. 
bulletOne possible scenario of a successful removal of the "facility" label and supporting "resolutions" and petitions.
bullet"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."
bullet"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

bulletDisclosure 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.
bullet"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.
bulletRestrictions 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.

bulletJuly 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:

bulletReal estate evaluation methods in contaminated areas
bulletDetermine impaired values
bulletThe "stigma" phenomena
bulletThe risk of holding contaminated property
bulletThe market phases of real-estate sales in a contaminated area
bulletPre-announcement phase
bulletDiscovery phase
bulletAnnouncement phase
bulletCleanup identified phase

The Science behind Michigan's 90 ppt RDCC for dioxin

bullet

"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

bullet

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)

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A re-evaluation of the cancer potency value.

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An evaluation of noncancer toxicity.

bullet

An appropriate animal-dose to human-dose conversion to account for differences between species.

bullet

Selection of the most sensitive toxicity endpoint.

bullet

Identification of an appropriate relative source contribution factor (which accounts for the fact that a significant source of dioxin exposure is from the diet).

bullet

Incorporation of the updated generic exposure assumptions (i.e., the exposure assumptions used in the Part 201 Administrative Rules).

bullet

The 90 ppt calculation simplified

bullet

Part 201 Generic Soil Direct Contact Criteria

bullet

Carcinogenicity Slope Factor

bullet

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.  

bulletJuly 2005. MDEQ sends residents a newsletter clarifying the word 'facility' and how it applies to property owners affected by migrating dioxin contamination
bulletJuly 15, 2005. The MDEQ released "Facility status under Part 201 #09-009" which clarifies what is a facility.
bulletAdministrative 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.
bullet Click here to view a "Quick Link" of the rules as posted on MDEQ website 1/2/06.
bulletParts 1-4
bulletParts 5-6
bulletRules 701-710
bulletRules 711-712
bulletRules 713-714
bulletRules 715-720
bulletRules 721-742
bulletRule 744
bulletRule 744 table
bulletRule 746
bulletRule 746 table  Soil: Dioxin Residential Direct Cleanup Criteria of 90 ppt
bulletRule 748
bulletRule 748 table
bulletRule 750 (Click on the yellow highlight to open Footnote {G} - Make sure you see a pointing finger before double clicking)
bulletRule 752
bulletRule 752 table
bulletPart 8
bulletPart 9
bulletPart 10

Act 451 Natural Resources & Environmental Protection Act of 1994

 Act 451 of 1994 is a huge law of which part 201 is a small part.   Links to the rules pertaining to part 201 are listed above.  To view the original Act 451 (1994), click here (1125 page pdf). 

NATURAL RESOURCES AND ENVIRONMENTAL PROTECTION ACT
Act 451 of 1994
AN ACT to protect the environment and natural resources of the state; to codify, revise, consolidate, and classify laws relating to the environment and natural resources of the state; to regulate the discharge of certain substances into the environment; to regulate the use of certain lands, waters, and other natural resources of the state; to prescribe the powers and duties of certain state and local agencies and officials; to provide for certain charges, fees, and assessments; to provide certain appropriations; to prescribe penalties and provide remedies; to repeal certain parts of this act on a specific date; and to repeal certain acts and parts of acts.

Note: This law has been modified many times, go to http://www.legislature.mi.gov to view changes by searching for public act number 451 of 1994 using the Basic MCL Search feature found in the Law section: 

As of 5/20/05: Document - NATURAL RESOURCES AND ENVIRONMENTAL PROTECTION ACT (324.101 - 324.90106) ***** MCL 324.4011a, AS ADDED BY ACT 66 OF 1999, WAS REPEALED BY ACT 191 OF 2004, EFF. DEC. 31, 2004; IT WAS SUBSEQUENTLY AMENDED BY ACT 537 OF 2004, EFF. JAN. 3, 2005, WITH A SUNSET PROVISION EFFECTIVE JANUARY 1, 2010 ***** ***** 324.301.amended THIS AMENDED SECTION IS EFFECTIVE UPON HOUSE JOINT RESOLUTION Z OF THE 92nd LEGISLATURE BECOMING A PART OF THE STATE CONSTITUTION OF 1963 AS PROVIDED IN SECTION 1 OF ARTICLE XII OF THE STATE CONSTITUTION OF 1963 ***** ***** 324.301 THIS SECTION IS AMENDED EFFECTIVE UPON HOUSE JOINT RESOLUTION Z OF THE 92nd LEGISLATURE BECOMING A PART OF THE STATE CONSTITUTION OF 1963 AS PROVIDED IN SECTION 1 OF ARTICLE XII OF THE STATE CONSTITUTION OF 1963: See 324.301.amended *****


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