In Des Moines, Iowa, developer Bob Knapp and his holding company, Equitable L.P, have been fined a record $500,000 for mishandling asbestos during a retrofit of the downtown Equitable Building to add condominiums.
In 2005, Knapp bought the building for $5 million with the intent of developing the upper floors into exclusive condos and renting out its lower floors to commercial tenants, of which there were already quite a few.
The building, a high-rise in downtown Des Moines on Locust Street, was erected in 1924 to house administrative staff for Equitable Insurance Company. At 19 stories, it was the tallest building west of the Mississippi River until the completion of Financial Center in 1973. It remains the eighth tallest building in Iowa.
Knapp started his renovation in 2005, and things were going well until the current recession dried up the housing market. Knapp sold only three of the condos, but retained almost full rental status until 2008, when several tenants including a large jewelry firm decamped, reducing rental income and pushing Knapp perilously close to insolvency.
Knapp’s mishandling of the renovation since its inception may have exposed many building occupants to asbestos, but it wasn’t until 2007 that the Iowa Department of Natural Resources (DNR) took note of Knapp’s haphazard methods, which included failing to have a trained supervisor present for asbestos removal when workers converted the upper floors. This resulted in a more than $10,000 fine, the highest amount the DNR can assess on its own. The contractor who provided the workers and failed to provide safety equipment was also fined $11,250.
In 2008, the DNR also instituted fines, and the Iowa Environmental Commission forwarded the case to the state attorney general’s office because inspection officials felt the fines were too small to curb Knapp’s continual violations.
Tests conducted at the site from 2005 through 2008 showed a considerable amount of free asbestos, which could have infected the thousands of building visitors seeking help from lawyers, dentists and doctors, or shopping for jewelry and books. Knapp also used the lobbies to attract shoppers to his condos, which were even higher in asbestos contamination based on air quality sampling. Knapp also reportedly disposed of the asbestos improperly.
The 2008 investigation, which revealed high levels of friable asbestos, caused long-time tenants like Joseph’s Jewelry to move. Wellmark and Aviva USA are in the process of finding new locations. Tenants who stayed charge that state environmental workers should have posted notices about the dangers. No one is happy.
The newest fine comes one week after Vantus Bank, which bankrolled Knapp’s development to the tune of $8 million, foreclosed on the property. Knapp also owes more than $1 million to various contractors who worked on the project, all of whom have filed mechanic’s liens for nonpayment of services. In addition, several investors are on the hook to these same creditors for about $400,000.
According to Iowa Attorney General Tom Miller, the fine is the largest ever imposed by the state. So far, Knapp has paid $100,000 of the fine. If the fine is not completely paid over the next two years, Knapp – who agreed to the penalty in Polk County District Court – will be found in contempt of court and face additional penalties. Knapp’s lawyer, Charles Becker, had no comment.