What are Environmental Concerns? The Mystery of Wetlands

So I realized after completing and posting my last two blogs that I had assumed that everyone would know what I was talking about when I used the phrase “Environmental Concerns” and I am sure that most people do.  However, I thought it would be worth it to be a little more detailed and to spend a bit more time on explaining how these conditons relate to real estate.

Environmental Concerns generally fall into three categories: Wetlands, Threatened and Endangered Species, and Hazardous Waste (or as an old boss used to call it the “ooey gooyies”). For this post I am going to concentrate on wetlands.

What is a wetland?

The U.S Army Corps of of Engineers (Corps) and the US Environmental Protection Agency define wetlands as follows: “Those areas that are inundated or saturated by surface or ground water at a frequency and duration sufficient to support, and that under normal circumstances do support, a prevalence of vegetation typically adapted for life in saturated soil conditions.  Wetlands are areas that are covered by water or have waterlogged soils for long periods (14-21 days) during the growing season. “Wetlands are areas that generally include swamps, marshes, bogs, and similar areas. 

I bet that’s as clear as… well… MUD!

When we say WETLAND it tends to conjure up visions of big trees dripping with Spanish moss, deep dark-colored water that you can’t see into and gators resting on banks. Or maybe you picture a sea of grass that looks like you can walk across it but when you step off of dry ground you find yourself ankle deep in muck and ooze.

These areas most certainly are wetlands; however, some wetlands are not as easily recognized, often because they are dry during part of the growing season or “they just don’t look very wet” from the roadside.  I am simplifying this a bit, but an area could potentially be a wetland if the water table is within only 12″ of the surface for a “significant period”, which could be as little as 14 days.  And, if that isn’t an eye opener, you should know that it is possible to have standing water in an area during the growing season and it not be a wetland.

Why is it necessary to consider whether an area is a wetland?

Section 404 of the Clean Water Act requires that anyone interested in depositing dredged or fill material into “waters of the United States, including wetlands,” must receive authorization for such activities.”

Activities in wetlands for which permits may be required include, but are not limited to:

• Placement of fill material
• Ditching activities when the excavated material is sidecast
• Levee and dike construction
• Mechanized land clearing
• Land leveling
• Most road construction
• Dam construction

Authorization for these activities is provided throught a permitting process with the Corps and also, in Florida, with the state Water Management Districts (WMD).  Often, if these activities are authorized, mitigation or restitution for impacting the wetland will be required.

Wetlands and Real Estate

Considerations that are important include:

• Presence or absence of wetlands and, if present, their extent (how much of the property) and location on the site (e.g., if a wetland is present in the middle of a property it will have a different impact on site design than if it covers a corner of the parcel).
• What is the actual buildable area on the property- this would be the portion of the property that is not wetlands.
• If there are wetlands, can more buildable area be created by obtaining authorization to impact or eliminate them; this will mean dealing with the agencies that regulate wetlands such as the Corps and WMDs.
• If impacts to wetlands are permitted, is mitigation going to be required and how much will that cost.
• Underlying soil type – Is muck present and if yes, will demucking and/or fill be required and how much will that cost.

How much actual land is buildable (this assumes that the wetlands are excluded), whether you have to add fill, and the cost of mitigation may all contribute to the value you can put on the land if you are selling it.

For a Buyer, these conditions and costs are good negotiation points to use to reduce a price if you are trying to purchase land that has wetlands.   So lets say you are thinking of buying a piece of property with wetlands, you will need to know not only how much the property is listed for but also how much money you might have to budget for environmental studies, demucking, fill, engineering & permitting costs, and mitigation – all before you add in the rest of the construction costs – and will want to offer a price to the seller that deducts some or all of these costs from the asking price of the property.

I hope that now you are starting to see the relevance of my last two blogs.  

From a real estate perspective, many sellers may not want to have too much detail on environmental issues associated with their property and may just want to put it up for sale for as much as can, or what market conditions will support. 

Very, very important to know is that Commercial Real Estate is sold as “Buyer Beware”; owners do not have any legal responsibility to inform a buyer of issues such as wetlands or gopher tortoises that might be associated with the property.  It is up to the buyer to know what they are buying.  It is imperative to build due diligence time into any contract so you can complete necessary studies and learn what you might have to deal with.  It is common for the buyer to foot the bill for any studies done during their due diligence.  The results of the studies may dictate if the buyer ever closes on the property or if they are going to try to renegotiate the price.  If there is a chance that the value of the land may be greatly affected by the outcome of any studies, many buyers will find it worth it to do preliminary work on the property before even making an offer.  Remember KNOWLEDGE IS POWER!

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