Toxic waste, other restrictions leave RTC with unsalable land

December 16, 1990|By Los Angeles Times

WASHINGTON -- The Tooth Cave pseudo scorpion in Texas. Petroglyphs in New Mexico. Toxic waste almost everywhere.

These are just some of the bizarre and vexing problems the U.S. government has inherited in its bailout of the savings and loan industry. And they are likely to become more numerous as more thrifts fail.

The Resolution Trust Corp., the new federal agency that has taken on the assets of hundreds of failed S&Ls, recently found to its horror that at least 2,000 of the properties it has seized cannot be sold on the open market.

The parcels are unsalable because of toxic hazards and a myriad of other scientific, environmental and historic restrictions on the land that troubled S&Ls and shakily financed developers once dreamed of turning into shopping malls and suburban tract homes.

Those properties are in limbo, and federal officials are at a loss to figure out how they will get rid of them. In some instances, the agency may be forced to just give the land away and accept big write-offs, despite its official mandate to sell its holdings for prices as close to market rates as possible.

"A huge cloud is hanging over these properties," sighed Gary Bowen, RTC's deputy director of asset and real estate management. "You can't get a market price for them."

The RTC currently holds 37,000 properties from nearly 500 insolvent thrifts. Roughly 1,500 of those properties are listed as containing some form of endangered species or other valuable natural, historic or scientific asset. Another 400 have been identified as having some form of hazardous waste contamination.

Meanwhile, the RTC's property list is growing faster than the government's ability to inventory and identify the land, so more problem properties are likely to turn up.

"We don't have any idea, really, what we have yet," said Jim Davis, a senior asset-disposition specialist with the agency.

The RTC holds at least 7,000 acres of raw land in the hill country west of Austin, Texas, where several local S&Ls had hoped to build single-family homes.

Now that turns out to be home to the Tooth Cave pseudo scorpion, plus at least four other small but rare cave-dwelling invertebrates. Wildlife specialists also have identified the region as the habitat of the golden-cheeked warbler, a small, insect-eating songbird placed on the government's endangered species list last May. Tens of thousands of choice acres in the region, including the RTC's properties, have been ruled off-limits for further development; they are now legally protected as an endangered species habitat.

The RTC is studying whether the seized properties can be sold or donated to a non-profit wildlife conservancy group in the area.

But if the land is given away, the RTC will be forced to take a huge loss at a time when the agency is already facing the prospect of asking for billions of dollars more from Congress to cover the mounting costs of the S&L cleanup.

Meanwhile, in New Mexico, the agency owns 14 acres of valuable land outside Albuquerque that was to have been developed into homes by an S&L that has since gone belly-up. After the RTC took over the property, the federal government identified the land as the site of rare petroglyphs -- prehistoric rock drawings dating back 2,000 years to some of the earliest Indian settlements in the Southwest.

In June, Congress created the Petroglyph National Monument, a national park that encompasses much of the area surrounding the RTC's properties. Now, Mr. Bowen of the RTC said, the only potential buyer is the National Park Service, which is not eager to pay top dollar.

It remains unclear what will happen to the roughly 400 RTC-owned properties contaminated by hazardous wastes. In Conroe, Texas, outside Houston, for instance, the RTC took over an unfinished residential development of 12 lots. It turned out that the property was a former factory site where highly toxic creosote once was made.

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