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Abstract
The so-called “Forever Chemicals,” i.e. PFAS or PFCs, are emerging environmental contaminants. They refer to a family of carbon-fluorine chemicals that were initially developed in the commercial and industrial sectors around the time of WWII. As the term PFAS is a catch-all, there are many individual compounds, including C8, PFOA, PFOS, AFFF, PFNA, PFHxS, and GenX. Until the late 1990s/early 2000s, the health risks of PFAS compounds were largely unknown to the general public. But with the increasing ability to detect and monitor these compounds in humans and the environment, information is now more widely available. Health advisories are being developed at federal and state levels as to the adverse human health effects associated with PFAS are becoming clearer. As public awareness and the ability to detect PFAS compounds evolve, so must real estate valuations. Real estate valuation professionals are facing assignments that require an evaluation of the impact, if any, of PFAS on property values, in particular, properties with tainted household water. This article outlines the fundamental characteristics of PFAS compounds and sets forth valuation methodologies, such as mass appraisal methodologies, that can be used to determine the impact, if any, PFAS have on real estate values. Appraisal literature and textbooks have established the use of regression for mass appraisal assignments. The profession has also developed numerous well-accepted methodologies that can also be used to address mass appraisal assignments. This article addresses the use of regression as a real estate valuation methodology, the use of sale/resale as a mass appraisal technique, and the use of a case study approach in environmental contamination assignments related to PFAS.
Notes
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2 US EPA, “Drinking Water Health Advisory for Perfluorooctanoic Acid (PFOA),” May 2016, 9.
3 US FDA, “Per and Polyfluoroalkyl Substances (PFAS),” October 31, 2019, https://www.fda.gov/food/chemicals/and-polyfluoroalkyl-substances-pfas.
4 “PEATT Pilot Project Final Report April 29, 2019,” accessed December 5, 2019, https://www.health.pa.gov/topics/Documents/Environmental%20Health/PEATT%20Pilot%20Project%20Final%20Report%20April%2029%202019.pdf.
5 Biopersistance meaning that it does not break down easily.
6 Bioaccumulation, meaning that it can accumulate over time.
7 US EPA, “Basic Information on PFAS - Overviews and Factsheets," December 6, 2018, https://www.epa.gov/pfas/basic-information-pfas.
8 Interstate Technology Regulatory Council, “History and Use of Per- and Polyfluoroalkyl Substances (PFAS),” November 13, 2017, https://pfas-1.itrcweb.org/wp-content/uploads/2017/11/pfas_fact_sheet_history_and_use__11_13_17.pdf.
9 Interstate Technology Regulatory Council, “History and Use of Per- and Polyfluoroalkyl Substances (PFAS),” November 13, 2017, https://pfas-1.itrcweb.org/wp-content/uploads/2017/11/pfas_fact_sheet_history_and_use__11_13_17.pdf.
10 Minnesota Pollution Control Agency, “PFCs and Class B Firefighting Foam,” January 2009.
11 Buck, Franklin, Berger, Conder, Cousins, Voogt, Jensen, Kannan, Mabury, and van Leeuwen, “Perfluoroalkyl and Polyfluoroalkyl Substances in the Environment: Terminology, Classification, and Origins,” International Environmental Assessment and Management 7, no. 4 (2011): 513–541.
12 US EPA, “PFAS Laws and Regulation,” accessed January 30, 2020, https://www.epa.gov/pfas/pfas-laws-and-regulations.
13 US EPA, “PFAS Laws and Regulation,” accessed January 30, 2020, https://www.epa.gov/pfas/pfas-laws-and-regulations.
14 US EPA, “PFAS Laws and Regulation,” accessed January 30, 2020, https://www.epa.gov/pfas/pfas-laws-and-regulations.
15 US EPA, “Announcement of Final Regulatory Determinations for Contaminants on the Fourth Drinking Water Contaminant Candidate List – Pre-Publication Version,” February 22, 2021, https://www.epa.gov/sites/production/files/2021-01/documents/10019.70.ow_ccl_reg_det_4.final_web.pdf.
16 Frisbee, Brooks, Maher, Flensborg, Arnold, Fletcher, Steenland, Shankar, Knox, Pollard, Halverson, Vieira, Jin, Leyden, and Ducatman, “The C8 Health Project: Design, Methods, and Participants,” Environmental Health Perspectives 117, no. 12 (December 2009): 1873-1882.
17 Frisbee, Brooks, Maher, Flensborg, Arnold, Fletcher, Steenland, Shankar, Knox, Pollard, Halverson, Vieira, Jin, Leyden, and Ducatman, “The C8 Health Project: Design, Methods, and Participants,” Environmental Health Perspectives 117, no. 12 (December 2009): 1874.
18 Letter to EPA from Robert Bilott, Esq., “Request for Immediate Governmental Action/Regulation Relating to DuPont’s C-8 Release in Wood County, West Virginia and Notice of Intent to Sue Under The Federal Clean Water Act, Toxic Substances Control Act, and Resource Conversion and Recovery Act – Note: For Inclusion in USEPA Docket No. OPPTS-50639A, Exhibit 124,” March 6, 2001.
19 West Virginia Circuit Court –- Wood County, Notice of Medical Monitoring Protocols, September 2, 2014, http://www.c-8medicalmonitoringprogram.com/docs/notice.pdf.
20 West Virginia Circuit Court –- Wood County, Notice of Medical Monitoring Protocols, September 2, 2014, http://www.c-8medicalmonitoringprogram.com/docs/notice.pdf.
21 Steenland, Jin, MacNeil, Lally, Ducatman, Vieira, and Fletcher, “Predictors of PFOA Levels in Community Surrounding a Chemical Plant,” Environmental Health Perspectives 117, no. 7 (July 2009): 1083–1088.
22 West Virginia Circuit Court –- Wood County, Notice of Medical Monitoring Protocols, September 2, 2014, http://www.c-8medicalmonitoringprogram.com/docs/notice.pdf.
23 C8 Science Panel, “The Science Panel Website,” January 4, 2017, http://www.c8sciencepanel.org/.
24 US EPA, “Human Exposure and Health: EPAs Report on the Environment (ROE),” published January 19, 2017, https://www.epa.gov/report-environment/human-exposure-and-health.
25 The Appraisal Institute, The Dictionary of Real Estate Appraisal, 6th Edition (Chicago, IL: Appraisal Institute, 2015).
26 Jackson and Bell, “The Analysis of Environmental Case Studies,” The Appraisal Journal (January 2002): 91.
27 Randall Bell, Real Estate Damages, 3rd Edition (Chicago, IL: Appraisal Institute, 2016): 207.
28 Uniform Standards of Profession Appraisal Practice 2020–2021, Advisory Opinion 9: 78.
29 Interstate Technology Regulatory Council, “Treatment Technologies and Methods for Per- and Polyfluoroalkyl Substances (PFAS),” August 2020, https://pfas-1.itrcweb.org/wp-content/uploads/2020/10/treatment_tech_508_Aug-2020-Final.pdf.
30 “PFAS Fact Sheet Remediation 3-15-18,” accessed December 6, 2019, https://pfas-1.itrcweb.org/wp-content/uploads/2018/03/pfas_fact_sheet_remediation_3_15_18.pdf.
31 Interstate Technology Regulatory Council, “Treatment Technologies and Methods for Per- and Polyfluoroalkyl Substances (PFAS),” August 2020, https://pfas-1.itrcweb.org/wp-content/uploads/2020/10/treatment_tech_508_Aug-2020-Final.pdf.
32 Interstate Technology Regulatory Council, “Treatment Technologies and Methods for Per- and Polyfluoroalkyl Substances (PFAS),” August 2020, https://pfas-1.itrcweb.org/wp-content/uploads/2020/10/treatment_tech_508_Aug-2020-Final.pdf.
33 US EPA, “PFAS Laws and Regulations,” accessed January 30, 2020, https://www.epa.gov/pfas/pfas-laws-and-regulations.
34 US EPA, “Drinking Water Health Advisories for PFOA and PFOS - Fact Sheet,” 2016.
35 US EPA, “Lifetime Health Advisories and Health Effects Support Documents for Perfluorooctanoic Acid and Perfluorooctanoic Sulfonate,” Federal Register 81, no. 101 (May 25, 2016).
36 US EPA, “Lifetime Health Advisories and Health Effects Support Documents for Perfluorooctanoic Acid and Perfluorooctanoic Sulfonate,” Federal Register 81, no. 101 (May 25, 2016).
37 US EPA, “Announcement of Final Regulatory Determinations for Contaminants on the Fourth Drinking Water Contaminant Candidate List – Pre-Publication Version,” February 22, 2021, https://www.epa.gov/sites/production/files/2021-01/documents/10019.70.ow_ccl_reg_det_4.final_web.pdf.
38 Association of State Drinking Water Administrators (ASDWA), “Per-and Polyfluoroalkyl Substances (PFAS) State Drinking Water Program Challenges,” accessed January 20, 2020, https://www.asdwa.org/pfas/.
39 American Water Works Association, “Per-and Polyfluoroalkyl Substances (PFAS): Summary of State Regulation to Protect Drinking Water,” July 1, 2019, https://www.awwa.org/Portals/0/AWWA/Government/SummaryofStateRegulationtoProtectDrinkingWater.pdf.
40 Office of Environmental Health Hazard Assessment, “Notification Level Recommendations for Perfluorooctanoic Acid and Perfluorooctane Sulfonate in Drinking Water,” California Environmental Protection Agency (August 2019): 45.
41 Department of Environmental Protection, “Affirming National Leadership Role, New Jersey Publishes Formal Stringent Drinking Water Standards for PFOA and PFOS,” June 1, 2020, https://www.nj.gov/dep/newsrel/2020/20_0025.htm#:∼:text=Under%20rules%20published%20today%20in,parts%20per%20trillion%20for%20PFOS.&text=PFOA%20and%20PFOS%20belong%20to,and%20polyfluoroalkyl%20substances%2C%20or%20PFAS.
42 US EPA, “Fact Sheet: Draft Toxicity Assessment for GenX Chemicals and PFBS,” November 2018, https://www.epa.gov/sites/production/files/2018-11/documents/factsheet_pfbs-genx-toxicity_values_11.14.2018.pdf.
43 The Appraisal Institute, The Appraisal of Real Estate, 15th Edition (Chicago, IL: Appraisal Institute, 2020): 188.
44 Randall Bell, Real Estate Damages, 3rd Edition (Chicago, IL: Appraisal Institute, 2016).
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48 Parli and Miller, “Market Equilibrium Analysis,” The Appraisal Journal (Fall 2017): 307–316.
49 Man and Mok, “An Empirical Study of the Impacts of an Express Rail Link on Property Prices – Hong Kong Evidence,” The Appraisal Journal (Summer 2016): 259–268.
50 Scott Frayn, “Forecasting Commercial Real Estate Appreciation with Commercial Land Sales,” The Appraisal Journal (Spring 2014): 133–137.
51 Bottemiller and Wolverton, “The Price Effects of HTVLs on Abutting Homes,” The Appraisal Journal (Winter 2013): 45–62.
52 Winson-Geideman and Jourdan, “The Impact of Historic Façade Easements on Condominium Value,” The Appraisal Journal (Fall 2009): 329–337.
53 Thomas O. Jackson, “Real Property Valuation Issues in Environmental Class Actions,” The Appraisal Journal (Spring 2010): 149.
54 The Appraisal Institute, The Appraisal of Real Estate, 15th Edition (Chicago, IL: Appraisal Institute, 2020): 268.
55 Thomas O. Jackson, “The Effect of Previous Environmental Contamination on Industrial Real Estate Prices,” The Appraisal Journal (April 2001): 204.
56 Jackson and Yost-Bremm, “Environmental Risk Premiums and Price Effects in Commercial Real Estate Transactions,” The Appraisal Journal (Winter 2018).
57 The Appraisal Institute, Quantitative Analysis (Chicago, IL: Appraisal Institute, 2018): Part 3–46.
58 The Appraisal Institute, The Appraisal of Real Estate, 15th Edition (Chicago, IL: Appraisal Institute, 2020): 250.
59 The Appraisal Institute, The Appraisal of Real Estate, 15th Edition (Chicago, IL: Appraisal Institute, 2020): 249.
60 S&P Dow Jones Indices, “S&P CoreLogic Case-Shiller Home Price Indices Methodology,” April 2019, https://us.spindices.com/documents/methodologies/methodology-sp-corelogic-cs-home-price-indices.pdf.
61 Bailey, Muth, and Nourse, “A Regression Model for Real Estate Price Index Construction,” The Journal of the American Statistical Association, no. 58, 304 (1963): 933–942.
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63 Case and Shiller, “The Efficiency of the Market for Single-family homes,” American Economic Review No. 79, 1 (1989): 125–137.
64 Case and Shiller, “Forecasting Prices and Excess Returns in the Housing Market,” AREUEA Journal no. 18, 3 (1990): 253–273.
65 Wang and Zorn, “Estimating House Price with Repeat Sales Data: What’s the Aim Game?,” Journal of Housing Economics, no. 6, 2 (1997): 93–118.
66 Palmquist, Raymond B., “Measuring Environmental Effects on Property Values without Hedonic Regressions,” Journal of Urban Economics, no. 11 (1982): 333–347.
67 Palmquist, Raymond B., “Measuring Environmental Effects on Property Values without Hedonic Regressions,” Journal of Urban Economics, no. 11 (1982): 335.
68 Palmquist, Raymond B., “Measuring Environmental Effects on Property Values without Hedonic Regressions,” Journal of Urban Economics, no. 11 (1982): 335.
69 Palmquist, Raymond B., “Measuring Environmental Effects on Property Values without Hedonic Regressions,” Journal of Urban Economics, no. 11 (1982): 335.
70 Bill Mundy, “Valuing Brownfields,” in Brownfields: A Comprehensive Guide to Redeveloping Contaminated Property, 2nd Edition, ed. Todd S. Davis (United States: Section of Environment, Energy, and Resources, American Bar Association, 2001): 92.
71 Jackson and Bell, “The Analysis of Environmental Case Studies,” The Appraisal Journal (January 2002): 86.
72 The Appraisal Institute, The Appraisal of Real Estate, 15th Edition (Chicago, IL: Appraisal Institute, 2020).
73 Jackson and Bell, “The Analysis of Environmental Case Studies,” The Appraisal Journal (January 2002): 86.
74 Michael V. Sanders, “Post-Repair Diminution in Value from Geotechnical Problems,” The Appraisal Journal (January 1996): 61.
75 A similar sales comparison approach is illustrated in Thomas O. Jackson, “The Effects of Previous Environmental Contamination on Individual Real Estate Prices,” The Appraisal Journal (April 2001): 200–210.
76 Uniform Standards of Profession Appraisal Practice 2020–2021, Advisory Opinion 9.
77 Uniform Standards of Profession Appraisal Practice 2020–2021, Advisory Opinion 9: 78.
78 Uniform Standards of Profession Appraisal Practice 2020–2021, Advisory Opinion 9: 78.
79 The Appraisal Institute, The Appraisal of Real Estate, 15th Edition (Chicago, IL: Appraisal Institute, 2020): 188.
80 Randall Bell, Real Estate Damages, 3rd Edition (Chicago, IL: Appraisal Institute, 2016).
81 The Appraisal Institute, The Appraisal of Real Estate, 15th Edition (Chicago, IL: Appraisal Institute, 2020): 188.
82 EWG, “PFAS Contamination in the U.S. Map,” January 2021, https://www.ewg.org/interactive-maps/2019_pfas_contamination/map/.
Additional information
Notes on contributors
Randall Bell
Randall Bell, PhD, MAI, is the author of Real Estate Damages, 3rd Edition, which is published by the Appraisal Institute. He specializes in damage economics and valuation, including environmental, geotechnical, construction defects, natural disasters and eminent domain issues. He has testified as an expert in multiple courts. Dr. Bell founded the Landmark Research Group, LLC and led the real estate damages practice at PricewaterhouseCoopers. Bell consulted on the World Trade Center; the Flight 93 crash site; Hurricane Katrina; the BP oil spill; the Bikini Atoll nuclear test sites; the Sargent Yokoi cave in Guam; the San Bruno pipeline explosion; the Anniston, Alabama spill; the Heaven’s Gate mansion; the Canadian Government UXO site; the O. J. Simpson crime scene; and many others. His career has been profiled widely, ranging from The Wall Street Journal to People magazine, Rolling Stone and every major television network.
Michael Tachovsky
Michael Tachovsky is a principal partner at Landmark Research Group, LLC, a Certified General Real Estate Appraiser and PhD candidate who specializes in real estate damage valuation; this includes environmental contamination, natural disasters, eminent domain, crime scenes, construction defects, and other conditions involving a wide variety of property types. His professional experience includes complex valuation and diminution-in-value studies; including damage issues for government agencies, major corporations, oil and utility companies, developers, and property owners. He has researched disasters such as the Sandy Hook shooting, Uravan Colorado radioactive Superfund site, Chernobyl, and the Love Canal. He has been featured in Forbes and presented real estate damage seminars for Appraisal Institute chapters, the Urban Land Institute, and tax assessors.