There is no easy fix ... Crystal Meth cleanup is a costly concern for the multifamily industry.

Real estate providers facing less-than-stellar economic conditions and an increasingly complex regulatory environment have recognized another possible trouble spot on their radar in recent years--clandestine drug labs.

These labs typically produce methamphetamine, often called "Crystal Meth," an illegal, potent and addictive central nervous system stimulant. These labs can create tremendous headaches and potential liability for property owners.

The problem is not isolated to the apartment sector. It affects all sectors of the real estate industry,, including commercial buildings, mobile homes and single-family housing because these labs do not need a lot of space to operate. In July, the U.S. Department of Justice (DoJ) testified before the House Committee on Government Reform that "a growing number of small, dangerous clandestine laboratories are straining communities and state and local police forces." An estimated 50 percent of all clandestine labs are now found on rental property. Using just one state as an example, the Colorado Department of Public Health and Environment reported that the number of clandestine lab seizures increased from 150 in 1999 to 452 in 2001.

While law enforcement authorities typically handle the initial investigation of these labs, properly owners are often responsible for subsequent decontamination, which can be costly. Unfortunately, there are no federal standards designating when a former lab is again safe for habitation, leaving owners to choose among numerous expensive decontamination strategies and with uncertain insurance coverage.

This article is based on a recently released members-only NAA/NMHC guidance document titled "Cleaning Up Crystal Methamphetamine Labs in Apartment Properties," which describes the problem and offers guidance on what to do if owners suspect or encounter a clandestine lab.

What is Crystal Meth?

Crystal meth, a Schedule II controlled substance, is a synthetic central nervous system stimulant. It goes by a number of street names, including speed, ice, chalk, fire and glass. It is sold in many forms, including pills, capsules, powder or chunks, and it can be snorted, smoked, injected or taken orally.

Crystal meth users can incur brain damage as well as increased heart rates, blood pressure and body temperature. It frequently causes violent and erratic behavior in users. If taken in high doses or for persons who chronically abuse it, effects include nervousness, irritability and paranoia.

Methamphetamine is a relatively simple drug to produce and may be manufactured using common inexpensive and readily available household chemicals found at department and hardware stores. These products include over-the-counter cold medications, rock salt, battery acid, brake and lighter fluid, drain cleaners, red phosphorous road flares and pool acid.

Clandestine drug labs do not require sophisticated laboratory equipment. Instead, an operator may use items such as mason jars, hot plates, coffee filters, pressure cookers, pillowcases, plastic tubing and gas cans. There are several techniques used to produce crystal meth. All processes use a variety of chemicals including explosives, solvents, metals, salts and corrosives. During the drug manufacturing process (cooking), additional compounds and by-products are produced. The fumes, vapors, spillage and waste associated with this process can be toxic.

Potential Health Effects

There is little known about the health effects from chronic (long-term) exposure to contaminants left behind after a clandestine lab is dismantled. However, individuals exposed to even low levels of contaminants for a long period of time, such as neighbors or residents of a former lab site, may have serious health effects.

The potential health effects depend on the specific chemicals to which a person is exposed, the amount of said chemicals, the duration of exposure, and the health status of the person who is exposed.

Additionally, children who live in former lab properties, in adjacent properties or those properties that have not been adequately cleaned appear to be exceptionally sensitive to these chemical exposures. At the time of publication, a study is being conducted by the National Jewish Hospital in Denver to study the affects of active clandestine labs on children.

The $70,000 Problem

After a lab is discovered, federal and state funding generally pays to remove the bulk of the chemical contaminants and other lab-related debris. Law enforcement officials undertake this initial cleanup to collect evidence and assess the extent of the damage.

However, once law enforcement shuts down an illegal clandestine lab, hauls away the bulk chemicals, and arrests the suspects, a pressing concern remains: the acids, solvents and other flammable and toxic chemicals used to manufacture the drug may still lurk in the wails, appliances, carpets, furniture, sinks, drains and ventilation systems.

Generally, the area is closed to all residents, and more often than not, building code officials will prohibit any entrance until the property' has undergone proper remediation.

Under the current legal framework, the property owner is not only responsible for paying for the rest of the cleanup, they are also responsible for ensuring and determining the habitability of a structure that has been used as a clandestine lab. According to the Drug Enforcement Administration (DEA), it costs an average of $3,300 to clean up an illegal drug lab (in FY 2002). However, remediation costs may be far more significant. One Idaho property management company spent more than $5,000 cleaning up a 300-square-foot apartment.

One Colorado apartment owner reported that at a high-end community, two apartment homes that rent for $1,200 each were destroyed due to a fire and subsequent sprinkler system flooding caused after an active crystal meth laboratory blew up. The total cost for cleaning up the two apartments was approximately $70,000, not including the $7,200 in lost rents that resulted in the units being inactive for three months.

"Although we were lucky that there were no serious injuries involved," said Lynn McCarty, of Camden Property, Trust, "the damage to the units, coupled with the cost involved and the negative publicity, made this a very unfortunate incident. We weren't able to recover any funds from the resident who ran the laboratory, as he had no resources. Our management and maintenance teams have been educated on the signs of what may be a crystal meth laboratory in an apartment, and we hope not to experience this again."

Clandestine labs cause many expensive problems for owners and managers of apartment properties, including loss of rent, decline in property, values, civil penalties, dangerous and threatening residents, resentful and angry neighbors and loss of other valued residents.

In addition, some states and municipalities require disclosure of any clandestine labs found on the property to future residents. In May 2003, Arizona enacted such a law, the violation of which could enable a resident to void a lease agreement and subject an apartment owner to a $1,000 penalty,.

Compounding matters is the fact that labs typically found in apartment units are smaller, and smaller labs tend to be among the most dangerous. According to DoJ, these smaller labs are often operated by individuals with less experience and with little regard for the consequences arising from the use of toxic, explosive and poisonous chemicals.

Even more disturbing than the financial cost of these labs is the potential liability they create for owners. At this point there are no federal regulations or guidelines owners can use to determine what kind of cleanup is required to make the former lab safe for reoccupation. Owners are left to pick and choose from a wide range of different decontamination approaches with no benchmarks to determine whether a unit is indeed safe again.

What Should You Do?

Apartment management companies can minimize their potential liability by quickly identifying and shutting down illegal drug labs. Training onsite staff to recognize potential signs of crystal meth labs and lab wastes is the first step. Indicators include blackened windows, frequent visitors at all hours, chemical odors and more. (See sidebar on NAA/NMHC Recommended Action.) Staff should also be told not to approach a suspected lab, but instead to contact law enforcement.

After a lab is shut down, firms can best protect themselves by choosing the right remediation professional. Begin by contacting the state or local health department to determine the specific decontamination requirements for a particular property and then seek out contractors certified or recommended by the health department (if they in fact have a certification practice; not all do). Make sure to know the laws and regulations in the particular jurisdiction before beginning the remediation process. It is also important to seek an attorney's advice as to proper forms to complete to make sure that there is liability coverage with the municipality, as well as the remediation company.

Interview multiple companies and ask each to explain how their decontamination procedures differ from other contractors. Also ask for references from previous decontamination jobs. Before accepting a bid from a contractor, make sure the firm has visited the property.

Also, require an itemized bid that covers all the steps needed to re-lease the property and ask the contractor to clarify additional costs not included in their bid, such as re-cleaning if necessary. In addition, the remediation company should be willing to stand behind their work and agree to some form of liability coverage should future residents have problems after remediation.

For information, see NAA/NMHC's members only white paper on this topic at www.naahq.org/members/government/ issues/propmanagement/methlabs.aspx.

Potential Legal Liability

Though they are usually only found in small amounts, clandestine lab contaminants may endanger the health of anyone exposed to them, creating a potential liability for the property owner.

In May 2003, the Supreme Court of Oklahoma refused to dismiss a case filed by several residents who claimed they had become ill from the fumes and odors emanating from a methamphetamine lab in the bathroom of an adjacent apartment.

The plaintiff-residents alleged that the owners and management personnel "knew or should have known of the dangerous condition posed by the illegal manufacture of drugs in the adjacent apartment and negligently failed to warn or protect the tenants of the danger."

The Supreme Court agreed, holding that a property owner/manager "who retains possession of a portion of the leased premises, for use in common with other tenants, must use reasonable care to keep that portion--in a safe condition." The Court remanded the case to the trial court for further proceedings where it was still active when UNITS went to press.

Private remediation contractors employ a number of procedures for cleanup of illegal drug sites. These include:

* Contamination Removal and Disposal: Furnishings, draperies, carpeting, paneling, wallpaper, etc., that evaluators believe cannot be cleaned using other methods must be disposed of according to the type and degree of contamination.

* Ventilation: When solvents and other chemicals that may have soaked into the walls are slowly vaporizing indoors, ventilation may reduce contamination and decrease odors.

* Neutralization: Where acids and bases have been used, the potential for harmful effects may be reduced or removed through neutralization.

* Detergent-Water Washing: Some non-porous and semi-porous surfaces such as floors, tiles, walls and ceilings can be scrubbed with detergent and water solutions. Steam cleaning and high-pressure washes may be helpful for large areas of contamination.

* Encapsulation or Sealing: Contamination may be covered with layers of oil-based paint, polyurethane or other materials.

NAA/NMHC Recommended Action

Recognizing Meth Labs and Meth Lab Waste Sites

Step 1

Make onsite staff aware of the following lab indicators:

* Blackened windows, drawn curtains

* Frequent visitors at all hours

* Paranoid, odd behavior on the part of residents

* Extensive security

* Excessive garbage specific to meth manufacturing (including, but not limited to: packaging from over-the-counter ephedrine or pseudoephedrine cold pills: empty containers from antifreeze, white gas, ether, starting fluids; compressed gas cylinders; packaging from rock salt or epsom salts; Pyrex or glass containers; respiratory masks and filters; rubber gloves).

* Chemical odors

Look for the following signs:

* Access denied to property owners and managers, neighbors and other visitors.

* Unusual traffic and activities, such as excessive night traffic or purchases taking place.

* Burn pits, stained soil or dead vegetation, indicating dumping of chemicals or water.

* Individual apartment units that emit chemical smells, including sweet, bitter, ammonia or solvent smells.

Step 2

Isolate the area immediately involved.

Do not approach a suspected meth lab. Property employees who inadvertently enter a lab should back out immediately without disturbing the cooking process, chemicals or equipment. Many of these laboratories include booby traps.

Step 3

Contact law enforcement authorities to ensure an efficient and effective response.

Step 4

Contact general liability insurance carrier.

Policies commonly include a provision that permits the carrier to disclaim coverage if the claimant fails to promptly notify the carrier.

Alex Hecht is a Legislative Analyst for the NAA/NMHC Joint Legislative Program. He can be reached at 202/974-2300. Jamie Glonek is Director

of Government Affairs for the Colorado Apartment Association. He can be reached at 303/329-3300 Ext. 21.