Camp properties and operations are bought and sold every year. For the aspiring camp professional, the allure of owning and operating "the whole show" can be almost irresistible. However, the breadth and depth of knowledge, experience, and insight necessary to launch and sustain a camp business are considerable. A thorough, well-prepared plan is the most likely to succeed. In addition to all the staffing, programs, supplies, and logistics, there's the camp property itself. Most camp professionals are credentialed and experienced in the ins and outs of many of the facets of camp, but few have ever been involved in the purchase of commercial real estate as complex as camp properties can be. Shopping for your camp's site can be very exciting. However, tracking the details can feel unfamiliar and seemingly removed from the heart and soul of camp. After all, a chunk of ground isn't camp without campers and programs, right? Improvements (no matter how sophisticated or primitive) to where the programs are delivered, though, are the largest durable investment in the whole plan. The land and its improvements are the common denominator that make it valuable leverage with investors. That is a business all to itself, so it should be no surprise that there are procedures and rules intended to protect both the buyer and the investors.
The developments on existing property and the improvements in place can be a head start to get the dream underway, but years of camp history can also be a mixed blessing to a new occupant or owner.
Environment Is More Than the Birds and the Bees
This is a broad category of items and issues with often very expensive implications. For example, many structures on older properties have buildings roofed, clad, tiled, or insulated in some way with asbestos. The "magic mineral" was a perfect fit for camps because it made common building materials last a long time under harsh use. Buildings that were fire resistant, held paint well, or had hard-wearing flooring were easily spotted long-run savings. Over time, though, we learned that along with the benefits of asbestos came a dangerous downside. Broken or fraying asbestos fibers could become airborne, creating a dust that if inhaled could cause a deadly form of lung cancer. Demolition or renovation projects usually left a layer of asbestos dust to be stirred up with every draft or gust of wind, making tearing up a cabin floor or replacing siding a dangerous proposition. Capturing and getting rid of asbestos is a technically involved and expensive process, and I'm familiar with few camp staffs who have the knowledge, equipment, or skill (are certified) to do that work. Today, specialized contractors, consultants, and waste haulers all must be well paid to ensure that this waste is gathered and disposed of properly.
To avoid those additional costs, many past camp leaders chose a different path. Instead of removing otherwise sound but aged siding, shingles, or floor tiles, new materials were simply installed atop of the old asbestos-containing materials (ACM). While it provided a fresh surface, it concealed the messy troubles beneath. Rather than testing for asbestos, some decision makers simply chose to cover old materials without knowing if they were ACM, so several layers of siding, flooring, or shingles don't guarantee that asbestos is present. Still others removed the offending material and buried it on site. A property with buildings and facilities constructed or improved through the early 1980s should be searched by skilled professionals for a host of potentially toxic conditions including ACMs and lead, among others.
Water in, Sewage out: As Environmental as Things Get!
Some other environmental items may seem much less exotic than ACMs or lead but are worth every bit as much consideration. Two of those are water supply and sewage disposal. If the property isn't served by a municipal water and sewage system, then it must have its own systems. Water systems at
camps are typically monitored by a health department (often county, but sometimes the state), which should have records on file that describe the condition of the system, inspection visits and findings, and corrective actions that have been required and implemented. Considered "transient, community water supplies" under the federal Safe Drinking Water Act, the health and history of these systems are supposed to be documented in publicly available records and deserve a careful review. Look for repeat comments or violations, or test results that required retesting or system disinfection. You may even discover that the camp has significant restrictions on its operation because of water quality issues. Documented ongoing issues should send up red flags that the system has not been cared for or operated properly and should make you think twice about keeping the prior licensed operator. Examine the water supply source itself (the wellhead) and decide whether it looks sanitary and isolated from contamination like surface runoff. Water pipes laying on the ground connected with hose clamps, and garden hoses distributing water into buildings are signs that the system has been cobbled together at best. A water supply crisis is serious. A water quality crisis could be deadly. The diligent buyer tracks these records down and studies them closely because safety comes first, and a professional investor or lender will need assurance.
The sewage collection, treatment, and disposal systems are also on the watchlist, though these are often more difficult to assess directly because the health department doesn't keep operational records on septic systems. Useful, relevant information often only exists in the current owner's records, so the buyer must ask for them as part of their offer. Anecdotal information, such as the annual costs to maintain and operate the systems, is great to know. At the same time though, "We pump every tank twice a summer" should be as big a red flag as "We haven't pumped a thing in 30 years and never had a problem." In the first case, it's likely that the system is failing and they're pumping the tank to prevent sewage from rising to the ground surface. In the second case, it may be that the system's malfunction is simply not in plain sight. Properly sized septic tanks for seasonal facilities should be pumped about every three to five years. Drainfields that have a pump should be emptied annually so the piping, wiring, and screens can be serviced or replaced before the season begins. A prospective buyer should ask if the tanks even have filters or screens and be shown where they are, how they work, and how they're maintained. If the demonstrator seems like they must really work to remember how, that's another red flag that the system isn't being maintained. A very large expense may be looming.
The Devil You Know
If a prospective buyer has worked at a camp for years, there can be great comfort in having seen and experienced the changes to the property over time. But being familiar with the property's "warts" can also make one numb to things that are worth consideration. In this case, a banker or lender can be a surprising ally.
The laws that apply to environmental concerns like sewage, ACM, and lead paint have all evolved to put the cleanup and remediation responsibilities on the property owner. While many real estate transfers can include catchall phrases such as "as is, where is," environmental worries fall into a separate class altogether because the costs can be significant, and these conditions can be easy to conceal. As the lienholder on the property, common practice for commercial lenders is to require that the property be thoroughly examined for evidence of environmental hazards with a written report or letter to document any areas of concern. Most often, the buyer's lender will not proceed to closing until the concerns are identified (Phase I Environmental Assessment), verified (Phase II), and resolved (Phase III remediation). The courts would hold that the three steps (if necessary past Phase I) are the "due diligence" necessary to set the stage for the "innocent landowner defense" (ILD). Once it is established that the condition predates the current owner, the prior owner is required to finance the cleanup. There is no statute of limitations as long as the prior owner has assets. Under the ILD, once those assets are exhausted, the current owner can apply for assistance from several sources. Again, once the transfer is complete, only pre-purchase due diligence serves to document for the court that whatever has been found is the prior owner's responsibility.
Current camp owners can commission their own due diligence investigation before a transfer is ever considered. Identified concerns can be corrected over months or even years. Environmentally unsound practices (like floor drains in the maintenance building to a dry well, for example) can be changed so that when a lender requires an environmental assessment, there are no surprises that delay closing. The seller can provide the original report and the records of the remediation early in the process to make the transaction is a smooth one.
Finally, what about the neighbors and the current state of things in the area? If they've lived there for any length of time, the bordering property owners probably have strong feelings about camp, either good or bad. Visiting with them and the local government representatives (township or county) can offer insight about the overall environment as well as camp's lasting effects on the community. A prospective buyer may discover the giant farm next door is slated to become a 500-lot subdivision or that the camp's driveway entrance has been the site of several serious car crashes because of a blind curve. If instead of an existing camp, one is considering a start-from-scratch site, asking questions may provide answers to how deep wells are, how much new septic systems cost, or whether the neighbors are resistant to change and would object to developing the property for a camp.
Some years back, I was asked to tour a prospective camp property in a very rural area of New England adjacent to an old community of longstanding families. The land itself had several development challenges, including wetlands adjacent to the lake and steep slopes not well suited for constructing athletic fields (cheaply). While these could all be overcome with enough money, the town's zoning officer told me in no uncertain terms that the community would object to a children's camp on the property. They'd rewritten their land development and zoning rules several years prior and excluded camps from their future. In relating this worrisome conversation, I recommended strongly that if my client made an offer, it should be contingent upon being granted all the necessary approvals by regulatory bodies, including the town's zoning board. My client made a very substantial cash offer without any such contingencies. Four or five years and several lawsuits later, there was no camp. The property was instead subdivided for summer homes and sold. The lesson here is to take seriously a property's history as well as the views and power of the community around it.
Rick Stryker is a professional engineer who is passionate about camps and the opportunities that they provide. He's always delighted to answer email questions at rstryker@reagan.com.
