I’m in due diligence on a 135 unit park with a lagoon system in MN. The lagoon is 40+ years old and is showing some wear. I’m looking at replacing the lagoon with a packaging plant or something similar in the next 10 years. My major concern is will this limit potential institutional buyers that would not be interested in owning a park with a sewage treatment facility? Will it limit the institutional financing (Wall street) available to finance the park?
Thanks,
-Jaden
Do you have 500k- 750k available for a new system? Yes, plants limit your exit as do lagoons. I’m not even sure the costs of mitigating an expired lagoon. If you want this park and put a new plant in it, it’s possible you may have to hold it for a long time.
@jagy23
At the bootcamp I did a few years ago out in Denver, we had the “pleasure” of visiting a lagoon park. If I remember correctly maintenance was performed by the scuba diving 80+ year old owner, and that does not include the spray of “s**t” he would occasionally activate to lower the lagoon when it got to overflow. (@frankrolfe can correct me on the particulars, I’m sure he knows which park I’m talking about).
Anyway, to me it seems like a nightmare and a half for the ROI. I would walk.
Assuming the lagoon is fine (and you have the reserves to remediate it + replace with a plant), I would not walk. Again, if it hits the targets on day 1 under this assumption, then there is no reason to walk it. If you aren’t sure if it does, then you know what path you need to walk in diligence.
What you need to do is educate yourself on wastewater treatment fully. I am not, which is why I enrolled in the wastewater treatment engineering program at my local community college for the fall semester. We come across many scenarios like what you are talking about and I have a hard time believing that if the price is right, you cannot make it work. Education will trump fear so get educated if you aren’t already.
Charles you limit you potential new buyers with a package plant and since we have had one we prefer if given a choice a septic system over a package plant.
I think both have their advantages and disadvantages and it would depend a lot more on factors related to the area and the characteristics of the park. To be honest though, come June, I’ll be owning my first private utility park and it has septic. After doing the diligence on it, I am far more comfortable with that set-up than I initially thought I would be.
Since we are on the topic, what exactly are the possible scenarios where fully replacing a plant would become necessary? I’ve heard of it happening, but I’ve never gotten an answer to why it was necessary in those cases. It just seems like you could replace the failing components as they go bad. I’m sure I’m missing something with this thinking.
Main reason for replacing package plant is that alot of them are built out of steel. I mean the basins (compartments) typically .250 gage or lighter. Steel in waste application is usually in pretty poor shape in 30 to 50 years. The steel basicly rots and delaminates no way to even weld it and worst areas are usually in contact with the ground. The benefit of a package plant is small foot print, all components self contained but when the steel shell starts to go its pretty much done.
Charles D - good for you getting educated on the topic. I have said this before on different threads: I will put a lagoon up against any other system. They are not inferior - just a different system. There are very few moving parts and therefore can be much less costly to maintain than a treatment plant. Also, am curious about quotes of $500k or more for new systems. I just received a ball park quote for a .020 MGD extended aeration plant for around $150k (installed).
@bjy can you share the name of the company that gave you that price on the extended aeration plant?
The price to actually build a plant is pretty small lots of room for multiple people to mark it up before it gets to end user.
Thanks
Phillip
MLF Enterprises Denver CO (formerly Case/Cotter). I agree - it is mostly steel tank, piping and a few blowers and motors. I would build my own if I had nothing else to do:).