Todd Paris, Attorney and Candidate for Salisbury City Council
♦ The following photo shows where a dry cleaning business operated from 1930 to 1960 in the rear of the property known as the “Empire Hotel”:
The above photo reminded me that old dry cleaners often used chemical solvents that leached into the ground or were discarded outside on the grounds, causing soil, groundwater, and indoor air to be laden with unhealthy residues harmful to humans.
A Chicago Tribune article on the toxic legacy of old dry cleaners may be found at this link:
http://articles.chicagotribune.com/2009-07-26/news/0907250254_1_dry-cleaners-perc-state-cleanup-list
Thanks to Steve Mensing’s public records fulfillment from the City of Salisbury, back when city hall still responded to such requests without a court order, I was able to review a Phase I ESA environmental report dated June 29, 2007 from ESC Carolinas (engineering firm) addressed to banker Brian Miller. On page 31 of the pdf file attached (labeled page 26 of the report), you will see that “a dry cleaning business was located on the northwestern corner of the site from at least 1910 until sometime prior to 1966. This dry cleaning business is a potential recognized environmental condition of the site.”
https://app.box.com/s/33uqwen5i96xp37lgav4kev0m6ruyg6y
The potential recognized environmental condition associated with the former dry cleaning business at the Empire Hotel resurfaced again in mid-2013, during the discussion of incentives for Integro. Part of the public records retrieved by the Rowan Free Press include an email from former city manager, Doug Paris, on Tuesday, July 23, 2013 11:45 AM, in which he revealed the following relevant information to the incumbent council members:
“After discovering during the Integro incentive discussion that the Empire property did not have a clean Phase I, I have been working with DSI President Mark Lewis on resolving this issue. Alan Griffith, our contract geologist who assisted us on getting the green light with DENR on both 300 Block projects, recommended that we proceed with a Phase II assessment.
This proposal was presented to the DSI Board this morning and was met with resistance from banker Bill Greene and banker Paul Fisher. The resistance was mainly centered on if the Phase II found anything, that it would require cleanup. DSI does not have the cash reserve to fund a cleanup and so the DSI board would then have to come to the city. There was concern about public support for this.
Obviously, if the city didn’t pick up the costs then the banks would be left with a mess – essentially a million dollar note on a building worth maybe half that with 500k worth of asbestos abatement and then a dry cleaning/petroleum cleanup on top of it all. The dynamic is the asset could rapidly deteriorate into a large liability.
The board decided to delay two months on the decision to proceed on the Phase II. I do want to share Mr. Lewis has been great to work with on this item and I couldn’t ask for better collaboration. This one is a tough issue, and one that will not go away without tackling it as a team with all partners on board.”
https://app.box.com/s/33uqwen5i96xp37lgav4kev0m6ruyg6y
When a Phase I ESA determines the presence of a potential hazardous condition on a property, the responsible thing to do is to order a Phase II ESA to be conducted, to assess the extent of such potential hazardous condition, and how to go about abating or mitigating the risks, in order to be able to proceed with renovation or sale of the property. As part of a Phase II ESA, soil borings and indoor air sampling would determine the nature of the conditions, and the methods required to achieve an environmental cleanup, so that future owners, tenants, workers and occupants do not suffer from exposure to hazardous conditions.
If chemicals like carbon tetrachloride were found to pose an indoor air hazard or a groundwater contamination hazard, mitigation would be required as part of adaptive reuse/renovation of the project. That could include something as simple as a vapor barrier and a gas evacuation system similar to those used for removal of radon gas under a home; or it could include spending hundreds of thousands, if not millions, of dollars to pump neutralizing chemical agents like hydrogen peroxide into the soil containing hazardous chemicals, and retrieving the residual sludge from test wells, hauling the contaminated liquids and soil to a special facility that separates the chemicals and discards the mitigated waste into special landfills or to be disposed of in hazardous waste incinerators.
Even though the ESA Phase I report was used by ESC engineering to estimate a $550,000 to abate asbestos and lead-based paint from the Empire (in a February 2008 letter to Brian Miller). Yet, with the full knowledge of the potential hazardous condition of the former dry cleaning business, on 12-02-2013, DSI President Mark Lewis, sent out a draft contract proposal that he expected to be signed by Tartan Residential, Inc. of Charlotte, to purchase the Empire Hotel for $1.2 million.
In the draft contract provided by Mr. Lewis, paragraph 6.04(g) reads in relevant part, “To the best knowledge of Seller, no portion of the Property has been used for the storage or disposal of hazardous waste or other regulated materials.”
In the draft contract, 4.01(b) read, “Within five (5) days after the Effective Date of this Agreement, Seller shall, at its expense, deliver to Buyer true and accurate copies of the following, in Seller’s possession or reasonably available to Seller: All environmental reports (e.g., Phase I reports, Phase II reports, asbestos surveys, wetlands surveys, traffic studies, stormwater retention plans, etc.) with respect to the Property.”
https://app.box.com/s/8330pwhg0a9jj5wqw9dcsiyo9lqd57qd
The email of the draft contract from Mr. Lewis does not reveal whether that Phase I ESA was the ‘deal-breaker’, if and when Tartan had an opportunity to read it. But given the alarming reaction from two bankers in town to the former city manager’s recommendation that a Phase II ESA be conducted, it is not hard to imagine that any potential buyer would have come to the same conclusion about the potential liabilities of the property would vastly exceed the possible value of it. I think selling this property without a Phase II ESA and full disclosure of the site’s problems would just create a huge lawsuit from the buyer.
So, with the wonderful news of Governor Pat McCrory and Secretary of Cultural Resources Susan Kluttz’s success at reviving the NC Historic Preservation Tax Credits—all $8 million worth of tax credits statewide—wouldn’t it be a bit premature to celebrate that the Empire Hotel may now proceed with a purchaser who can restore it to its early 20th Century grandeur? It is my fear that DSI bought a pig in a poke in July 2007, despite Brian Miller’s knowledge of the potential hazardous condition proven over the long-term to render the property more a liability than an asset. It is further my fear that the City of Salisbury, already struggling with Fibrant’s hidden costs of safety code violations of part of its overhead fiber optic cables that could cost $4 million to fix, is not in a position to bail out the remaining banks who loaned the money for the Empire Hotel purchase.
DSI has one major asset, and that is the Empire Hotel. If it defaults on payments of that mortgage, the banks would have ownership of the property. Not good for the banks. If DSI declares bankruptcy and dissolves, another nonprofit corporation could arise from its ashes, unencumbered by the crushing debt payments on the Empire Hotel, and could be more effective at promoting the Downtown with the hard-earned Municipal Service District Tax that I and other small businesses are currently paying, in order to prop up a worthless asset. It is a huge payment we make, in order to protect big banks from writing off losses.
If the banks would ‘take one for the team,’ they could permit Downtown Salisbury Inc. to submit a “Deed In Lieu Of Foreclosure”. It would peaceably relinquish the mountain of debt that DSI owes, without forcing the organization into bankruptcy or dissolution. That would seem to be a ‘win-win’ situation for everyone, and it is not without a local precedent: In December 2013, city council member Karen Alexander and her husband, Henry Alexander, were able to peaceably walk away from a mountain of debt by surrendering the deeds to Spencer’s Park Plaza and two large warehouse projects they formerly rented to Rowan-Salisbury Schools, in a ‘Deed In Lieu of Foreclosure’ deal, which spared the Alexanders from much more formidable financial situations, and enabled them to prosper once again.
That deed is public record, attached to this article, and is filed at the Rowan County Register of Deeds at Book 1228, Page 777, for the detractors who are always asking me for ‘proof’. I will not make assertions that I cannot back up with documentary evidence.
So a DSI “Deed In Lieu Of Foreclosure” is my recommendation to ‘fix’ what can be fixed, and moving forward to rebuild our legacy as a vibrant downtown.
I do not expect City Staff or Incumbent Council to comment. I do not expect main-street media to ask them about it or report. As Pete Kennedy recognized in his own email response to the City Manager’s email on July 23, 2013, “This obviously could become a campaign issue that could harm the incumbents seeking re-election. By all means delay a decision on this.” Salisbury tax-payers deserve a City Council as good at solving problems as the last one has been at covering them up.
