Over the past several years, the costs of new construction and the environmental movement have been key drivers in the redevelopment of downtown Main Streets and their equivalents all across America. These projects can be attractive and ultimately beneficial to develop and complete.
Acquisition of the property and building can be as low as free but, depending on the market, it is not uncommon to see costs for environmentally challenged buildings to be as low as $10 per square foot. Even, if remediation and demolition costs are twice that, as they sometimes have been, getting “shell space” at or below $25 per square is extremely compelling. Add the potential for EPA brownfield loans, grants and historic tax credits and the math becomes even more exciting.
Redevelopments also have environmental benefits. Naturally, eliminating downtown areas of hazards such as asbestos in abandoned buildings is good. But reusing the existing infrastructure of the building can save thousands of tons of carbon emissions just by avoiding the manufacturing/recycling of the infrastructure that exists. There is also the impact of revitalizing downtowns, requiring far less commuter transportation, which offers tremendous ongoing environmental benefits.
Hiring the Right Partners
Saving money by hiring the cheapest environmental investigator can be a bad move that results in huge surprises for the building owner and finance team. Often, these surprises can jeopardize the entire project with seven-figure change-orders because not enough due diligence was done on the team doing the environmental assessment of a property before it was acquired. Although there are times when engaging the lowest bid makes good business sense, a cheap environmental assessment can be the most expensive thousand bucks ever saved.
The solution to managing environmental assessments can be two-fold. One option is to check references of these firms. Ask for and call their last five clients. Then specifically ask those former clients if there were surprises that went undiscovered in the assessment phase. Usually a pattern emerges.
The second, and really powerful option is to get the remediation contractor to accept the risk for all environmental challenges within the building. Depending on the scope of the project and the risk involved this might be an expensive solution but that should serve as an excellent barometer for the risk that may exist but no one is talking about. However, should a reputable environmental contractor accept the risk, then the team sleeps well at night knowing the risk has sufficiently been transferred. No change-orders to worry about and capped environmental exposure can be, and has been many times, the difference-maker in getting a project to move forward.
Once the environmental risks have been identified, consider having the abatement team also perform the interior demolition. When scraping ceilings, removing floor tile, pipe insulation or even dealing with lead-based paint, it can be much faster to have the abatement team knock down all the interior walls before active remediation begins. If surprises are found, it is usually at the stage when carpet is removed or when walls and ceiling tiles are dropped.
However these challenges are dealt with, please remember the fundamentals when dealing with such firms. In the past, barriers to entry were very high for environmental assessment and remediation firms. State laws required excellent insurance and financials, leaving only very solid firms to choose from. Some states are not as tough on environmental insurance as they once were, leaving the contractors and owners with the need to do excellent due diligence. Bid bonds, performance bonds, a thorough review of insurance, very clearly defined and agreed upon scopes of work are important for any subcontractor.
Managing the Variables
With the environmental risks identified and priced, another key component to successful redevelopments involving environmental challenges is a third-party clearance. Ten years after the project and when a neighbor uncovers a respiratory issue, the best insurance every team member can have is solid documentation from a third-party consultant who monitored the job, agreed it was done properly absent “open emissions” and has the documentation to prove it.
Naturally, there can be a ton of variables to manage in these projects, but if those identified herein are properly managed, the chances for success in the redevelopment of Main Street greatly improve. And, revitalizing Main Street America is good for us all, both economically and environmentally.
Joe Carter is the CEO of Snyder Environmental in North Little Rock, Ark. He can be contacted at email@example.com.