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Sunday, Jun 4, 2023

Bashing Bad Bills

Concerns over hazardous waste on the site of the proposed Belmont Learning Center has become the chief rallying cry of the project’s critics. The concerns have jeopardized the completion of the half-finished school, plunged the Los Angeles Unified School District deeper into controversy and produced a flurry of charges against persons involved in the project, including Orange County architect Ernie Vasquez.

Yet players in the real estate industry say that the hazardous problems posed at Belmont are, by LA standards, no big deal.

In fact, Los Angeles is dotted with examples of developments that have sprung up on property that required extensive environmental cleanup.

Subdivisions have been built on former oil fields in Signal Hill. The Citadel factory outlet center in Commerce is at a former tire manufacturing plant. Carson Town Center, which has a Kmart, sits atop a former oil refinery.

Developer Jerry Snyder spent millions on methane barriers for the Wilshire Courtyard office project, which is near the La Brea tar pits.

And among the projects under development: A high-tech business park at Taylor Yard, a vacated railroad maintenance area on the LA-Glendale border; a retail project planned for an 11-acre former dump in Monterey Park; and the former Lockheed plant in Burbank that is slated for office and retail.

For the most part, these “brownfields” are being built on with little of the outcry and politics surrounding Belmont. They range from defunct corner gas stations to vacated manufacturing facilities to pesticide-laden agricultural fields.

“There are more brownfield sites because there are fewer clean sites, fewer opportunities that are free and clear of the problems brownfields have,” said land-use consultant Larry Kosmont, president of Kosmont & Associates.

The comments appear to corroborate the assertion by Vasquez, in an interview in last week’s Orange County Business Journal, that the environmental problems at Belmont were being politicized. He said the pollution problem is not unlike those encountered at many construction sites in Los Angeles.

“Yes, we knew there were oil lines and old gas lines going through the project,” said Vasquez. “But there are technologies to clean it up. It’s not a situation that should stop construction of a school.”

Vasquez contended that the Hotel and Restaurant Workers Union has driven the Belmont controversy because they opposed the project’s non-union developer, Kajima Urban Development LLC; once the union raised the health issue, the environmental lobby entered the fray.

“The union politics made the environmental issue the big wedge,” he said.

With virgin land in LA County almost impossible to come by, dealing with contaminated land has become commonplace for today’s developers. There are hundreds of contaminated sites around the county that are being redeveloped, or have the potential to be.

“Over the years, people have become more accustomed to these issues and see them as steps in the process,” said Anthony Nelson, national account manager with environmental and engineering firm Arcadis Geraghty & Miller. “It’s a piece of doing business in the modern world.”

Some developers, including a joint venture associated with Newport Beach-based Koll Development Co., are even seeking out these sites. And loans and grants have become available in recent years to help develop brownfields.

“If you want pure land, you’ve got to continue to sprawl,” said Anthony Ciasulli, a real estate attorney at Morgan Lewis & Bockius in downtown LA “The reason brownfields are so popular is because of the fact that land is scarce, and land that is pristine is expensive.”

One question about Belmont that does emerge in the real industry, however, is this: Could private-sector developers have cleaned up the site for less money that the school district is paying? Many industry insiders say yes.

The Los Angeles Unified School District’s mitigation costs for the 35 acres at the corner of First Street and Beaudry Avenue in downtown Los Angeles have been estimated at anywhere from $20 million to $60 million.

Yet local environmental and land-use consultants say it generally costs between $10 and $15 per square foot to mitigate an oil field for commercial development — which translates to $15 million to $24 million for the Belmont site.

Experts stress that every property is unique. But private-sector developers are scratching their heads as they see the kind of money being spent by the school district.

“The accidental and sudden arrival of contaminants at a project invariably will cost more than if you knew about it in advance,” Nelson said. “If you have to retrofit or alleviate after the fact, you have to spend more money.”

Considering that the government requires developers to jump through various hoops long before starting to build on a contaminated site, many are surprised that a government agency was allowed to proceed without the same degree of due diligence.

However, there’s a key difference between a school and a private entity that wants to build something: To borrow money, a private entity needs to satisfy a lender, who won’t lend money with an environmental issue hanging out there to be resolved.

“We’ve got lenders to deal with. Banks won’t lend you dollar one until you’ve done testing and gotten approvals from government agencies,” Ciasulli said. “The private sector looks at (Belmont) as, ‘This never would have happened.'”

The school district’s due diligence process apparently broke down — the extent of the environmental problems was not communicated to the board and some top school officials. And it’s more expensive to mitigate problems retroactively, when there’s new construction in the way.

Belmont is being built over part of an oil field that generates methane gas. Experts have recommended such measures as collection pipes under buildings with pumps to extract methane and a cover over the field to prevent potential crude-oil seepage.

Petroleum contamination is actually considered relatively easy to mitigate. There are various methods for dealing with it, including “inoculating” soils with certain cultures, adding oxygen to help break down the hydrocarbons or removing soil.

“It would have to be swimming in oil not to be mitigatable,” Kosmont said.

Hayes is a staff reporter at the Los Angeles Business Journal. Murray Coleman also contributed to this story.

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