TIME: Almanac 1990/1990 Time Magazine Compact Almanac, The (1991)(Time).iso/time/020689/02068900.016

Text File | 1990-09-17 | 6KB | 103 lines

BUSINESS, Page 53

"Monster in the Closet"

The frantic campaign to remove asbestos could cost $100 billion

By Leslie Whitaker


    Almost immediately after layers of asbestos were discovered
between floors and ceilings in Houston's 13-story BancTexas
building, worried tenants started packing up and leaving. Now,
little more than a year later, the building is empty and its owners
are trying to sell it for $6.5 million, an asking price 30% to 50%
less than the building might fetch if it were asbestos-free. In
Manhattan the former J.C. Penney headquarters, a 45-story tower
that was sold last May to a real estate partnership for $352
million, stands vacant while workers remove asbestos from the
building. Estimated cost: $6 million.

    Asbestos, the cancer-causing mineral that is being scrubbed
from thousands of U.S. schools, is causing an epidemic of fear
among the owners and tenants of asbestos-ridden office towers,
shopping malls, industrial parks and apartment buildings. Even
though the substance poses only a minimal health risk in most work
environments, its widespread presence in the ceilings and walls of
commercial buildings is prompting a sharp drop in the value of
those structures. It is also spurring a crash cleanup effort that
may cost as much as $100 billion over the next 25 years. "Asbestos
is the monster in the closet," says Richard Jones, a Connecticut
attorney who represents mortgage lenders. "People's reaction is
visceral. It has a very chilling effect."

    Asbestos lurks in some of the most prominent and populated
structures: Manhattan's World Trade Center, Chicago's John Hancock
Building and Houston's Astrodome. But it can be found at many
ordinary addresses as well. More than 733,000 structures, or 20%
of U.S. commercial and public properties, are believed to contain
the mineral, according to the Environmental Protection Agency. In
about two-thirds of buildings with asbestos, some of the material
is in a friable state, which means it is crumbling into microscopic
fibers that can float through the air. (There has yet been no
federal survey of single-family homes, but a preliminary study
indicated that houses tend to have relatively low levels of
airborne asbestos.)

    Once regarded as a magic mineral for its fireproofing and
insulating properties, asbestos was severely restricted by the EPA
in 1973 after high doses of its fibers were found to scar the
lungs, causing cancer and other diseases. But by that time, 30
million tons had been wrapped around heating pipes and furnaces,
sprayed onto girders and mixed into tiles at a cost of 25 cents per
sq. ft. Now property owners are often spending 100 times that
amount to remove it, cover it with a sealant, or enclose it with
materials like Sheetrock.

    The anxiety surrounding asbestos is based on its deadliness in
massive doses, but many researchers contend that low levels of
exposure are not necessarily hazardous. Since the mineral occurs
naturally, trace amounts can often be found in fresh air and water.
Yet the EPA has said that the only guaranteed safe amount of
airborne asbestos is zero.

    Shrewd investors are picking up asbestos-containing buildings
on the cheap. Shuwa Corp., a Japanese real estate firm, bought Arco
Plaza in Los Angeles last year for $620 million, a $50 million
discount from the original asking price. In return, Shuwa agreed
to pay for asbestos removal, which eventually cost an estimated $20
million. But even price cuts will not entice some investors. Many
commercial tenants react the same way: IBM, AT&T and Northrup
refuse to rent space in buildings where the mineral is present.

    A primary reason corporations are so cautious is the fear of
lawsuits by tenants and workers. Many cases have been filed by
school systems and other building owners seeking to recover cleanup
costs from the manufacturers. But a handful of lawsuits have been
filed by tenants charging landlords -- and property buyers charging
sellers -- with concealing the presence of asbestos. Even owners
who have been up-front about the mineral's presence are worried.
They fear that  future suits will be brought by individuals linking
their asbestos-related illnesses, which have a 20-year latency
period, to buildings where they lived or worked. "The area is so
new that nobody really knows how far the liability will extend,"
says Daniel Sitomer, a Manhattan asbestos lawyer.

    The demand for asbestos-removal service vastly exceeds the
ability of the fledgling industry to supply it safely. The
industry's rapid growth, from an estimated $200 million in revenues
in 1983 to more than $2.7 billion last year, has produced many
so-called rip-and-skip artists, who spring up overnight and
disappear a few months later. Hundreds of cleanup jobs have been
botched by poorly trained and badly equipped workers who send
additional asbestos particles swirling through the air.

    Cleaning up the asbestos-abatement industry has become a high
priority for many state and local governments. Forty states have
created training and certification programs for asbestos removal.
The EPA is thinking of expanding to commercial and public buildings
the Asbestos Hazard Emergency Response Act, which requires all
schools to draw up a plan to control or remove asbestos, using
workers trained according to federal standards.

    In the belief that asbestos-cleanup costs are going to burden
them for at least two decades, real estate professionals have begun
to lobby the Government for financial assistance. Declares Robert
Shreve, president of the Institute of Real Estate Management: "We
feel tax credits are in order because (the asbestos problem) is
not anybody's fault." If Congress agrees, taxpayers may have to
help pay yet another multibillion-dollar cleanup bill.