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An objective and thorough analysis would have produced a much more limited scope of work recommendation, and a dramatically lower cost estimate.
On July 28, the general contracting firm Kitchell, along with other consultants, provided the city a building condition assessment for 101 Ash St. The report’s central conclusion was that approximately $115 million in asbestos abatement, renovations, repairs and systems replacements were needed.
Based largely on this assessment, the 101 Ash St. property has become a public relations nightmare for the city, and a political football for elected officials. Kitchell’s $115 million estimate has been taken at face value by many, including the San Diego Union-Tribune editorial board, which wrote that the building “requires at least $115 million in improvements to occupy.”
This is not true. Having owned the 101 Ash St. building for 24 years, I have some insights on Kitchell’s deeply flawed assessment, and its significantly overblown estimate of what needs to be done. In my opinion, the Kitchell report dramatically overstates how much it will cost to make the building useful, and how long it will take.
The assessment concluded the city needs to remove almost all the asbestos in the building (except some limited areas around enclosed columns) and thereafter replace most of the building’s major systems, at an estimated cost of $115 million. These conclusions are largely based on unfounded assumptions – rather than actual detailed inspections, physical analysis or testing of any of the building systems. Rather than conducting thorough assessments of physical conditions of the building or even reviewing the thousands of pages of Sempra’s asbestos operations and monitoring reports going back 24 years (which the city received during its due diligence), Kitchell reviewed some of the relevant documents, did a walk-through, then summarily concluded that almost all of the building’s asbestos required abatement, and most of the building’s systems should be replaced. An objective and thorough analysis would have produced a much more limited scope of work recommendation, and a dramatically lower cost estimate. To be frank, the Kitchell report is worth little more than the paper it is printed on. The city should get a second opinion.
Kitchell admits in the report that it did not test the condition of the asbestos in the building “due to the risk of disturbing ACM and the release of asbestos fibers during assessment above the ceiling system and the need for properly trained and medically cleared personnel.”
Kitchell also acknowledged that it did not review the thousands of pages of Sempra’s asbestos monitoring reports and Sempra’s asbestos operations and maintenance plan, which the city possesses.
Kitchell’s failure to obtain these documents from the city, and its failure to analyze them despite the fact that they show the actual asbestos conditions over the last 24 years, undermines the report’s conclusions and renders them questionable at best.
Nevertheless, Kitchell goes on to recommend a massively expensive abatement project that is not based on a thorough inspection of building conditions, or a complete analysis of available documents. This recommendation is based largely on assumptions about the character of the asbestos – as a result of the city’s dislodging of some of it during its extensive remodeling work after it acquired the building, and the building’s age.
The report summarily rejected the idea of repair and maintenance of the asbestos by encapsulation of areas disturbed by the city’s remodeling work. And rather than recommending a more limited approach of monitoring and containing the asbestos based on a floor-by-floor empirical analysis, Kitchell justified the requirement to remove the asbestos based on something else entirely: public perception. As the report states (emphasis added):
Without a detailed, floor-by-floor assessment of the current condition of the fireproofing, this option (spot encapsulation) is not viable. Even if an assessment of that kind had been or is performed, the public perception related to the hazards of ACM in the building would likely not support this option.
How can one give an objective, professional opinion concerning the condition of asbestos or building systems without floor-by-floor observations and testing? In my view, one can’t, and Kitchell didn’t. Instead, Kitchell made an astronomically expensive recommendation based on politics, i.e., “public perception.” This is especially disconcerting in light of the findings by Kitchell’s consultants that all air samples were safer than mandated by the EPA, OSHA and the city.
Even though all of Kitchell’s air sampling showed air quality at 101 Ash to be within the limits of all governmental safety standards, and despite Kitchell’s acknowledgment that it did not physically test the asbestos or review all of the available conditions reports from the past 24 years, Kitchell made the assumption that all of the asbestos in the building is in poor or failing condition.
It is in this mistaken assumption that the remainder of the report falls apart.
As to the building systems, Kitchell recommended replacement of the major systems based on a conclusory comparison of the age of those systems to the reported remaining useful life of similar building components in buildings of similar age. Beyond observing the systems in action, no actual testing or detailed physical inspections of the components was performed, much less any analysis of whether those systems had been properly maintained, upgraded and rebuilt (as was the case for the major components in the building). Kitchell’s unsupported conclusion that all the major systems need replacing is contrary to the conclusions of an independent engineering firm that evaluated the building for a lender that extended $30 million in financing in 2014, as well as the 2014 testimony of Sempra’s James Seifert to the Public Utilities Commission, in which he estimated that only $3 million would be needed to maintain the building over the next 10 years.
As for the seismic condition of the building, Kitchell acknowledged the building performs well and meets the current earthquake codes for a building of its age. The building will withstand a 275-year earthquake event, as current safety codes require. Kitchell concluded, however, that if one wants to minimize damage in the unlikely event of a rare 975-year quake, earthquake dampers should be installed at a projected multimillion-dollar cost. Here, Kitchell based its recommendation on actual inspection and analysis, but recommended the most expensive option possible, which is not required by current codes or justified by reasonable safety concerns.
I understand that asbestos particles were found on the floor and in building perimeter cooling coils as a result of falling through the ceiling air slots, and that this was caused by the city’s failure to properly remediate asbestos during its remodeling work. This construction-related damage should not necessitate a complete abatement project in areas unaffected by the city’s work. In my view, a thorough analysis of the current conditions at 101 Ash will reveal that three things should be done to make the building occupiable and safe:
Given the lack of thorough physical inspections and asbestos adhesion testing by Kitchell, and in light of its recommendations that the city pursue the most expensive construction options possible, one wonders why the city spent its money on this report. Did someone at the city direct Kitchell to generate a “worst-case, highest price possible” cost estimate in order to try to generate negotiating leverage against Cisterra and the bondholders? Or to deflect attention from the city’s responsibility for dislodging the asbestos during a poorly executed remodeling effort? Or to discredit those who supported the lease-purchase transaction or had some involvement with it?
Whatever the motivation behind this deeply flawed assessment, it would behoove the city and benefit taxpayers to get a second opinion on what really needs to be done to repair the damage caused by the city at 101 Ash, and to devise a sensible and cost-effective plan for doing that work. That second opinion should give the city more sensible recommendations on how to safely and quickly ready the building for full occupancy, for far less than the $115 million Kitchell recommends spending.
Sandor Shapery is owner of Shapery Enterprises, and a former owner of the 101 Ash St. building.