Posted by chicago on March 21, 2007 at 13:15:18:
Ray, thanks for your reply. It does make me feel better. 
The more I thinkk about it, the more I like the idea of “new construction.”
underground oil tanks? - Posted by chicago
Posted by chicago on March 20, 2007 at 12:53:19:
I am in the process of rehabbing an old commercial building. There is one above ground oil tank (300 gallons or so) in the basement I will be removing. There are also lots of pipes in various places in the building going under the basement slab in the furnace room. These pipes are all mangled, and do not connect to anything.
Now, I am starting to get paranoid about the possibility of an underground oil tank. I am not personally aware of one, but the thought worries me. Honestly, I don’t think I want to know, either way.
How do you folks deal with issues like this? If there were a tank under the basement slab, what might that cost to remove. I am worried that someone will want to buy the building, and the inspector will mention the possibility of an oil tank…then what? Rip up the basement?! I am loosing sleep over this…
The property was sold to me as is (was abandoned, vacant for 20 years).
Any help appreciated.
Re: underground oil tanks? - Posted by ray@lcorn
Posted by ray@lcorn on March 20, 2007 at 21:03:49:
chicago,
The bottom line is that if you plan to (re)finance or sell the building as an exit strategy you will have to address the issue to accomplish it. But it may not be as bad as you think… I’ve been through the same situation with an old car dealership property.
We owned the property for years and leased it to a series of tenants, all automotive, including a body shop in the back. We had never had the property inspected, but it was obvious there were problems with old gas and oil tanks, floor drains, chemical drums, etc.
When we decided to sell the property we knew the environmental uncertainty would hurt the value tremendously. We planned to sell it at auction, and for that the more uncertainty you can remove from the equation prior to the sale the better.
So we ordered a Phase 1 inspection (about $1500 nowdays), which recommended Phase 2 testing to determine the extent of the spillage and whether the tanks had leaked. (They had.) The testing and Phase 2 report cost about $3000, but the good news was the plume of contamination was relatively small. And since the tanks pre-dated the federal EPA and state DEQ regulations and the original owner (a defunct corporation) couldn’t be found, the Phase 3 remediation measures (removal of tanks and soil) were eligible for reimbursement from a state fund for that purpose. The removal cost about $15,000, and we were reimbursed for everything except the inspection costs.
When the work was complete we got an “NFA” (No Further Action) letter from the engineering firm who handled the testing, and went to sale with a clean report. I can’t quantify it, but I know it made a significant difference to our favor in the final bid at the sale because the buyer used borrowed funds and the lender would not have funded the deal without a clean report.
I’d suggest that you quit losing sleep and find out what you’re dealing with. Call and engineering firm who specializes in enviro matters. They’ll know if your state has a similar program and how to best handle the inspection. Whatever it costs you’ll likley get it back in raising the value of the property.
ray
p.s. Now you realize the importance of getting a Phase 1 before taking title to a commercial property, yes?