City Was Warned of Asbestos at Sears Site : Extent of Presence Not Determined Before Purchase of Hillcrest Store

City officials were warned in April, 1986, about the possible presence of asbestos in the former Hillcrest Sears site, but apparently did not determine before purchasing the site how much of the known carcinogen was used in the building or how costly its removal would be.

Twenty months later, that lack of information could hamper the city’s plans to recoup its $10-million investment in the 12-acre parcel on Cleveland Avenue, which the city bought in September, 1986, originally with the idea of building a new central library.

Developers interested in buying the store expressed severe reservations about the asbestos situation in a meeting with city officials Thursday, arguing that demolition of the cavernous 35-year-old building could be prohibitively expensive if they have to remove and haul away large amounts of asbestos.

In an analysis of the site completed April 11, 1986, the architectural firm of Mosher, Drew, Watson & Ferguson warned the city about “the removal of any hazardous material, such as asbestos and materials of a similar nature.”

Costs Unknown

“Until a detailed inspection and document review of the existing facility has been completed, these costs will remain unknown,” the report said. “Estimates to remove these materials in projects of a similar size have been substantial.”

The follow-up review apparently was never conducted, Deputy City Manager Maureen Stapleton said.

“My understanding is that there was not a subsequent full evaluation of the building and the hazardous materials,” said Stapleton, who is overseeing the sale for the city manager’s office. “We purchased the building knowing there were some hazardous materials in it. But we didn’t know the extent of the hazardous materials.”

Some of those involved in the deal said Friday that it may have been important for the city to determine the extent of asbestos use and the cost of removing it before deciding to spend $9 million for the store.

Handled Sears Project

“If the purchase price that someone else is willing to pay the city is going to be diminished” by the costs of asbestos clean-up, “the price we paid for the site should have been discounted,” said Deputy City Manager Coleman Conrad, who handled the Sears project at the time of the purchase.

“I would think that before you could make a decision as to the real value of the building, you would need to know what the extent of the asbestos was and how much it was going to cost you to deal with the problem,” said Barry McComic, head of R.B. McComic Inc., one of the developers interested in the site.

“I would be surprised that they didn’t have some reasonable suggestion from an expert as to what it was going to cost to deal with the problems,” McComic said.

But others pointed out that it is still unclear how much asbestos is in the building and some suggested that developers will be able to include the clean-up costs in their development proposals unless those costs are exorbitant.

Enough Reason for Decision

Stapleton said that just the knowledge that asbestos was present--and not its extent--probably was enough to make a decision on the purchase.

“I am not certain that the extent of the asbestos--how much there was in the building-- would have been a significant factor in making the final decision to purchase the building,” Stapleton said. The city bought the building for $9 million and has incurred about $1 million in costs holding the site.

The city is now seeking to hire a consultant to conduct that detailed investigation in order to help developers ascertain the true costs of demolishing the building. Herb Lemmons, project administrator in the city’s property department, said Friday that he hopes to hire a consultant next week and have the investigation completed by Christmas.

In addition to the architectural study, employees of the city’s building division who toured the closed department store just before the sale closed escrow to study the site’s maintenance needs noted areas where they assumed asbestos would be present. The material was widely used for insulation and fireproofing in the 1950s but is now known to cause cancer and a lung disease called asbestosis.

Found Several Locations

“We found several locations where we’re fairly well assured based on experience and practical knowledge that it will test as asbestos-containing material,” said Catherine Hofmann, deputy director of the buildings division. In addition, it is widely assumed that buildings built in that era contain asbestos, she said.

Hofmann’s division did not report its findings to the property division because the presence of asbestos had been noted, she said.

Dave Grimm, supervising property agent for the city’s property department, said that he handles the financial end of property purchases and did not check to see if the building had been inspected before completing the deal.

“I was directed by the City Council to go buy it,” Grimm said. “I have to follow their orders and that’s what I did.”

Library Plan Rejected

At the urging of Councilman Bill Cleator, the council decided to buy the site for a new central library despite a recommendation against it by the city manager’s office. The council later rejected the idea of putting a library on the site, and is now trying to sell it to developers interested in putting up housing and a retail center.

Cleator two weeks ago asked James Spotts, the city’s property director, to investigate whether legal action could be taken against Sears for not disclosing the presence of asbestos in the 265,000-square-foot department store. Spotts has not reported back on that question, Cleator said Friday.

But Cleator stood by the purchase, saying that, once information on the asbestos situation is determined, it can be made part of the developers’ proposals. “It’s my guess that we’ll probably make two or three million dollars on” the ultimate sale of the site to developers, Cleator said.