Mold, Moisture and Property Transactions Andrew A. Tony Havics, CIH, PE ph2, LLC Avon, IN

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1 Mold, Moisture and Property Transactions Andrew A. Tony Havics, CIH, PE ph2, LLC Avon, IN Midwestern States Environmental Consultants Association Environmental Solutions Related to Real Estate Seminar Indianapolis, IN September 29th, A. Havics, CIH, PE 1 Outline 1. What is Mold? 2. What aspects of Moisture Relate to a Building & Mold Growth 3. Aspects of Transactions Via Case Studies 4. Questions Time permitting: 5. Economics 6. Possible Scenarios 2016 A. Havics, CIH, PE 2 1. What is Mold? Is it a plant? Is it an animal? Is a transplanted alien? 2016 A. Havics, CIH, PE 3 1

2 What is Mold? Doesn t have chlorophyll so not a plant Doesn t have an organ for food intake Fungal cells encased in carbohydrates so not an animal It therefore has its own Kingdom Fungi 2016 A. Havics, CIH, PE 4 Mold Background Mold is the microscopic variety of filamentous fungi Fungi include a variety of reproducing organisms, about 6,000 genera and at least 70,000 species 2016 A. Havics, CIH, PE 5 Fungi 2016 A. Havics, CIH, PE 6 2

3 How does it Live and Grow Food source (substrate of carbon and specific nutrients) Good Temperature range Moisture (minimum water activity) 2016 A. Havics, CIH, PE 7 The retort What is Toxic Mold? A. Havics, CIH, PE 8 Tony s Current Definition of Toxic Mold 2016 A. Havics, CIH, PE 9 3

4 Mold, Steps Toward Clarity June, 2005 Why is mold a concern for lenders and servicers in commercial real estate? and thus a consultants concern. Direct damage to building or contents Loss of use/loss of rental value Stigma damages Third party liability Alleman, Breaking the Mold, Mortgage Banking., 66, 10, 92 96, July A. Havics, CIH, PE 10 Risk Direct damage to building or contents Mold or dampness can damage building materials and contents requiring the owner or manager to expend funds for repairs and remediation. If these sums are substantial, a borrower s ability to repay a loan and the collateral value of the structure may be negatively affected. Loss of use/loss of rental value Areas affected by significant amounts of mold or dampness may become unusable, unfit for rental, or rentable only at a reduced rate. Unaffected sections of a building may have to be closed off to effect repairs. This loss of income can have a negative impact on cash flow in addition to costs associated with remediation A. Havics, CIH, PE 11 Risk Stigma damages 2, 64 64, 2006 Even after a successful remediation, the stigma associated with a prior mold outbreak (picture remediation contractors going in and out of a building in moonsuits ) may reduce the market value of or ability to rent space in an affected property, with direct negative effects on collateral value or cash flow a possible result. In multifamily residential units, residents may break leases with increased frequency or demand other concessions. Third party liability Occupants and users of an affected building may sue for indirect harm or injuries they believe were caused by mold. Workers compensation claims have also been filed by occupants for exposure to mold. While these suits may not ultimately result in large awards, an owner s or manager s costs to defend them are likely to be high enough to have a negative impact on income. Fieg, Toxic Mold Is Nothing to Sneeze At, Lenders Find as Complaints Multiply, Community Banker, 15, 2016 A. Havics, CIH, PE 12 4

5 2. What aspects of Moisture Relate to a Building & Mold Growth? Direct entry Indirect Entry Internal Sources HVAC Related 2016 A. Havics, CIH, PE 13 Moisture & Mold Marriage Direct entry Wind Driven Flooding Drainage Related soil against wall, gutters, drain blockage High water table Snow melt Envelope Failures roof, flashing, hail damage, gap) 2016 A. Havics, CIH, PE 14 Indirect Entry Windows open No vapor barrier Concrete water vapor Condensation planes insulation differences, thermal bridging, poor circulation 2016 A. Havics, CIH, PE 15 5

6 Moisture & Mold Marriage Internal Sources Plumbing Leaks Fountains, spas, pools, cooking, people Bathrooms Fire Suppression Spills & Overflows Laundry (hospitals & hotels) Potted plants & Grow ops Cleaning 2016 A. Havics, CIH, PE 16 HVAC Related Oversized Units Drip Pan/Condensate Drainage Coil Carry over Humidification 2016 A. Havics, CIH, PE 17 ASTM E Baseline Survey Process (BSP)* Purpose: define good commercial and customary practice in the United States of America for conducting a baseline survey for readily observable mold and conditions conducive to mold in a commercial building related to a commercial real estate transaction. *withdrawn A. Havics, CIH, PE 18 6

7 ASTM E2418: Applicability identify observable mold Identify physical deficiencies conducive to mold as a result of moisture and water infiltration through the commercial building s envelope or substructure, or generated within the building as a result of processes or mechanical systems, 2016 A. Havics, CIH, PE 19 ASTM E2418: Applicability 2 not designed to serve as comprehensive survey for the presence of observable mold or physical deficiencies conducive to mold in all or most areas in a commercial building. It is not intended to reduce the risk of the presence of observable mold and physical deficiencies conducive to mold nor is it to eliminate the risk that observable mold and physical deficiencies conducive to mold may pose to the building or its occupants Sampling for mold growth is a non scope consideration under this guide A. Havics, CIH, PE 20 ASTM E2418: Basic Aspects Walk through survey Document reviews, and Interviews Report 2016 A. Havics, CIH, PE 21 7

8 If more detail then: D Standard Guide for Assessment Of Fungal Growth in Buildings 2016 A. Havics, CIH, PE 22 Also, for a corollary PCA See: ASTM E Standard Guide for Property Condition Assessments: Baseline Property Condition Assessment Process 2016 A. Havics, CIH, PE Case Studies: Considerations Occupancy Hazard Communication Discreteness Logistics Time = ($) 3 Economics Accounting & Taxes Level of Effort Level of Verification Methods of Investigation Appropriateness for Risk Quality, Reliability, Usefulness Time Constraints Appearance 2016 A. Havics, CIH, PE 24 8

9 Risk or Not To Risk? 2016 A. Havics, CIH, PE 25 Risk Management Level of Investigation Required Risk of Harm Risk of Greater Cost to Refurb., Rem., Decommission Risk of Greater Hazards 2016 A. Havics, CIH, PE 26 Case A. Defunct Hospital 2016 A. Havics, CIH, PE 27 9

10 Mold & Moisture Concerns 2016 A. Havics, CIH, PE 28 Case A A. Havics, CIH, PE 29 Findings Summarized: Mold & Moisture Mostly exterior walls. Around many windows. Behind a lot of the vinyl wall paper & vinyl panels. At building inner wall to exterior wall interfaces. Toxigenic species are presently, and likely others not identified (due to limited sampling) also present Some interior locations reveal mold at: Possibly roof leaks Localized condensation Likely carpet problems beyond the obvious staining that would need removing & replacement There is likely mold inside the exterior wall cavity on the wings where there is a cavity separating the building skin from the interior wall. There is likely mold inside the exterior wall cavity in the admin areas behind paneling at spots. There is mold behind vinyl panels along the exterior wall cavity, 2016 A. Havics, CIH, PE 30 10

11 Findings Summarized: environmental control problems The exterior wall with efflorescence from exterior water penetration (effl. was on the inside). Moisture intrusion through the exterior wall below the drop ceiling where paint and wallpaper act as vapor barriers and trap water at inner wall source (causing efflorescence). Moisture intrusion through the exterior wall above the drop ceiling (where no interior surfacing is present) dumping moisture into the interior space Moisture condensation above the ceiling in very cold areas where some but not all the ceiling tile is covered with insulation. There may be significant moisture from slab vapor emission The HVAC system in not operating in a manner to present condensation problems. Two of these are: Heating in some areas with simultaneous cooling in others and insufficient building positive pressurization to minimize moisture intrusion in air gaps. Condensation at thermal bridging locations interior wall connections to exterior walls. Moisture from water leaks (cafeteria area from roof or piping; windows as noted on the top side with saltation deposits running down the sides). There is likely moisture trapped inside (at certain times of the year) the exterior wall cavity on the wings where there is a cavity separating the building skin from the interior wall. There is likely moisture trapped inside the exterior wall cavity (at certain times of the year) in the admin areas behind paneling at spots. There is mold behind vinyl panels along the exterior wall cavity (at certain times of the year). Rust at diffusers in locations indicate thermal control problems with regard to differentials A. Havics, CIH, PE 31 Recommendations 1. Fix roof repairs. 2. Remediate mold and damaged building material in cafeteria area. Remediate any visible mold (ex. corners of exterior walls where the contact interior walls) 3. Remove all vinyl wallpaper as contaminated with mold. Remove vinyl panels as mold contaminated. When replacing, do not use low permeable layers (no vinyl wallpaper, vinyl panels or low permeable paint). 4. Scrub walls of mold & bacteria suing biocide, e.g., Beaucoup. Dry walls to <10% MC, wood to <20% MC. 5. Remove carpet as contaminated. Clean floor with biocide. Dry floor. 6. Open and probe the far exterior walls on the wings where there appears to be an added wall cavity. Evaluate and remediate mold as necessary 7. Test and verify any remediation A. Havics, CIH, PE 32 Recommendations 8. Test the concrete floor for water vapor emission per ASTM method (but not as many samples). Seal as necessary (e.g., Floorseal vapor retarder) to prevent excessive moisture and to prevent new flooring (tile) damage. 9. Add appropriately conditioned outside air to assist in positively pressurizing the building to minimize air infiltration. The unit must be adequately sized and the air properly dehumidified to work as desired. 10. Remove and replace Unit ventilators. If possible replace with a non unit system. If not, devise an O&M and management plan to control possible local condensation problems. 11. Clean coils, drip pans, etc. for HVAC [remove any internal fiberglass linings] 12. Evaluate the possibility of adding a lower permeability coating to the exterior to reduce (but not act as a vapor barrier desired to have a quasi forgiving wall system). 13. Long term. Reevaluate and redo building envelope. Keep a watch on potential thermal bridging between exterior and interior walls 2016 A. Havics, CIH, PE 33 11

12 Case B. High Rise Anticipating Sale in Near Future >15 Story Building Approx. 100 year old Renovated < 25 years ago to modernize Building Size:.. Ca 450,000 SF Full Service Class A Environment 2016 A. Havics, CIH, PE 34 Case B. Owner looking to sell in next 3 5 years Forward thinking owner Good IAQ No Mold History other than limited rain events Plumbing leaks 2016 A. Havics, CIH, PE 35 Recommendation Baseline Bioaerosol Survey N=20 Spore Trap Samples N= 8 Culturable air samples, year 1 Walk Through Continuation for 2 years of Spore Traps & Particulate Inside Outside Year Mean Median Geometric Mean Mean Median Geometric Mean A. Havics, CIH, PE 36 12

13 Case C: Commercial Building being Sold with Remediation during Deal Negotiation <6 stories Office space Exterior envelopes failures Mold visible along exterior at limited locations 2016 A. Havics, CIH, PE 37 Investigation Hidden mold Still primarily along exterior No apparent impact on air quality yet 2016 A. Havics, CIH, PE 38 Remediation piecemeal 2016 A. Havics, CIH, PE 39 13

14 Issues to contend with Scheduling Re Construction Occupied while remediating Q: What to say Q: How to control Q: Where to exhaust air Q: How to determine readiness for reoccupancy 2016 A. Havics, CIH, PE 40 Case D. Meat Processing Facility Looking to sell business Recent flood sewer backup loss (not covered) Found some mold, suspect more 2016 A. Havics, CIH, PE 41 Investigation Mold hidden behind walls Stachybotrys sp. Not under insurance How to prep for sale FDA & health risk Q: Bacteria? Q: Disclosure during sale? Q: How to do accounting on remediation? 2016 A. Havics, CIH, PE 42 14

15 Case E: Hi Rise Condo Being sold after Storm Damage Multi Story Condo Water entered directly from Hurricane Charley in August A. Havics, CIH, PE 43 Investigation Physical Inspection Bulk & Air Sampling > 100,00 s/m 3 mold Damaged bldg. materials Continuing issue with exterior wall & windows 2016 A. Havics, CIH, PE 44 End Game Remediation & Litigation 5 years latter settled 2016 A. Havics, CIH, PE 45 15

16 Case F: Hotel, Construction in Progress Approximately 13 stories up (not complete) Temporary roof 6 in of rain in 1 hr Green board in all areas Drains away quickly Construction open to hot humid climate 2016 A. Havics, CIH, PE 46 Investigation? Bottom 3 stories develop mold randomly, but progressively; outward from elevator shafts Q: How to assess? Q: Do you continue and only remove spots; or all of bottom 3 floors; or more floors? Q: If you are the contractor, what do you do to inform the prospective owner Q: If you are the prospective owner, do you accept the hotel? If so, under what conditions? 2016 A. Havics, CIH, PE 47 Case G: High end Condo with Mold development before Sale 2016 A. Havics, CIH, PE 48 16

17 Case G. Investigation 2016 A. Havics, CIH, PE 49 Case G. Investigation HVAC & Thermodynamics 2016 A. Havics, CIH, PE 50 WUFI 2016 A. Havics, CIH, PE 51 17

18 Remediation & Follow up Inspection Air Sampling Surface Sampling Clearance Cert 2016 A. Havics, CIH, PE 52 Questions Andrew Anthony Tony Havics, CIH, PE Environmental, Health & Safety, Microscopy, Materials Science & Forensic Engineering ph2, LLC 5250 E US Highway 36, Suite 830 Avon, IN (317) Office (317) Fax (317) Cell aahavics@ph2llc.com A. Havics, PE 53 18