When private residents, businesses and others offer to donate property to cities, local officials should first perform due diligence to determine if the benefits of ownership outweigh any risks.
To formalize this process, the city could establish a property donation acceptance procedure.
Creating and consistently adhering to set criteria for the acceptance or refusal of property protects the city from the significant liability that can result from owning a piece of property with environmental hazards. Those hazards can include both chemical contamination and physical structures, such as dangerous trees and structurally deficient buildings. The property donation acceptance procedure could also include a framework to determine if the property is appropriate for its proposed use.
It is prudent to involve the city attorney, the city's staff member responsible for risk management or liability claims, as well as the head of the department in which the property will be used to identify and address relevant concerns early.
Cities should also consult with their property and liability insurer to determine what coverage exclusions or limitations may apply.
For instance, it is common for donated properties to have been vacant for some time prior to the donation offer. This presents particular risks due to a lack of maintenance or lack of necessary utilities, which can mean undetected water leaks or other damage caused by extreme temperature fluctuations.
Vacant properties also face a higher risk of vandalism, so theft of copper wiring, for instance, may have occurred.
To reduce liability exposure, a public entity must demonstrate it exercised reasonable care to protect residents from harmful conditions the city did not know about or should have known about. The city is responsible for determining the condition of any property under consideration.
An environmental engineering consulting firm should conduct a Phase 1 Environmental Site Assessment before the city decides to accept the property. This assessment must be performed in general compliance with the American Society for Testing and Materials Standard E-1527-13. The Comprehensive Environmental Response, Compensation and Liability Act of 1980 prompted the development of ESAs to help determine liability regarding environmental contamination of real estate properties.
A Phase 1 ESA usually involves visual onsite inspection of the property and adjacent property, a review of state and federal agency database records, determination of historical property uses and ownership, analysis of potential environmental hazards, and interviews with people knowledgeable about the property, such as a superintendent, owner or plant manager. Depending on the findings, a Phase 2 ESA may be necessary. This would include taking samples of soil, water, paint or moisture readings.
The possible presence of asbestos is a particular consideration.
Cities may want to accept a donation with plans to modify the property. However, the renovation or demolition of most properties is subject to state and federal asbestos regulations as well as Occupational Safety and Health Administration standard 1926.1101, which regulates asbestos exposure for employees.
Beginning in 1973, the U.S. Environmental Protection Agency banned several types of asbestos-containing materials. But many flooring, insulation and roofing products that contain asbestos are still legal. These substances are called chrysotile or amosite, among other names. Therefore, it is not safe to assume that a donated property, regardless of its age or condition, is free of asbestos. The S.C. Department of Health and Environmental Control has a list of certified property inspectors, as well as information on possible exempt properties.
Taking these steps as part of a city's decision-making process to accept or decline a donation can prevent harm to residents and city staff and save the city effort, time and liability costs down the road.