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Municipalities often find themselves on the receiving
end of donated property. City and town councils are often eager to accept these
gifts, which are couched as free. When considered through the risk management lens,
though, these freebies look expensive.
For a municipality to protect itself against premises liability
claims, it must be able to demonstrate that it exercised reasonable care to
protect individuals from harm resulting from conditions of which the city
either had knowledge, or should have had knowledge. Municipalities must therefore
perform due diligence to determine the condition of any properties they own or
may receive as a donation.
Keeping complete documentation of all inspections and
maintenance records that prove what was done is as important as doing it in the
first place. The SC Municipal Insurance and Risk Financing Fund has guidelines
for its members concerning regular property inspections, including simple
checklists to help members focus on key areas such as housekeeping, fire
alarm/detection systems, means of egress, hazard identification, and general
property condition.
Cities should establish a property donation acceptance
procedure which includes criteria regarding accepting the donation. This will
ensure consistency, determine immediate and ongoing costs, and evaluate the
suitability of the property for city use. Include the city’s risk coordinator
and attorney in the process from the outset to help identify and address
liability concerns early.
When faced with a donation, cities should also contact
SCMIRF to discuss how the property addition may impact coverage or premiums
before deciding whether to accept the donation.
Common concerns about donated properties include whether
the property is vacant, and whether it has environmental hazards such as
asbestos and underground storage tanks. Many donated buildings are either
vacant or partially occupied, which poses increased risks of damage caused by
fire, natural elements, vandalism because of a lack of maintenance, a lack of
utilities and a lack of security.
Although cities may want to accept a donation with
plans to modify the property, 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. Although many uses of
asbestos have been banned under Environmental Protection Agency and Consumer
Product Safety Commission regulations, some materials remain legal for sale and
use. The materials that were not banned included materials where asbestos
fibers are generally well bound in the material.
Many flooring, insulation, and roofing products
containing asbestos have not been banned. Officials should avoid assuming that a
donated property, regardless of age or condition, is free of asbestos. Contact the
SC Department of Health and Environmental Control for its list of certified
property inspectors.
Contamination from
underground storage tanks may also increase the municipality’s liability
exposure. Conduct an assessment to determine if underground storage tanks are
present, and if removal or cleanup is required. Cleanup must be done by
companies that are certified by DHEC. Underground storage tank liability
coverage is not part of the SCMIRF coverage contract. The municipality would
need to purchase a separate policy, which adds to the donation’s true cost.