Office of Inspector General

Audit Report 

REPLACEMENT HOUSING AT THE

AUSTIN AVENUE RADIATION SITE

E1SFF7-03-0117-8100090

March 30, 1998
Inspector General Division

 Conducting the Audit: Mid-Atlantic Audit Division

Philadelphia, PA

Region Covered: Region 3

Program Office Involved: Office of Solid Waste & Emergency 

 Response

Washington, DC
As signed by Michael Simmons on 03/30/98.

 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

 WASHINGTON, D.C. 20460

OFFICE OF 

 THE INSPECTOR GENERAL

March 30, 1998

MEMORANDUM

SUBJECT: Final Audit Report on Replacement Housing

at the Austin Avenue Radiation Site

Audit Report No. E1SFF7-03-0117-8100090

FROM: Michael Simmons /s/

Deputy Assistant Inspector General 

 for Internal Audits (2421)

TO: Timothy Fields, Jr.

Acting Assistant Administrator

 for Solid Waste and Emergency Response (5101)

Attached is our final audit report on Replacement Housing at the Austin Avenue

Radiation Site. The overall objective of this audit was to determine the

reasonableness of costs paid by EPA to build ten new houses. This report contains

important findings and recommendations concerning the need for EPA to develop a

policy for building houses under Superfund.

In this particular audit, the Office of Inspector General (OIG) did not measure the

audited office’s performance against the standards established by the National

Contingency Plan (NCP). The findings contained in this audit report are not

binding in any enforcement proceeding brought by EPA or the Department of

Justice under Section 107 of the Comprehensive Environmental Response,

Compensation, and Liability Act to recover costs incurred not inconsistent with the

NCP.
4

ACTION REQUIRED

In accordance with EPA Order 2750, you as the action official are required to

provide us with a written response to the audit report within 90 days of the final

audit report date. Your response should address all recommendations, and include

milestone dates for corrective actions.

This audit report contains findings that describe problems the Office of Inspector

General has identified and corrective actions the OIG recommends. This audit

report represents the opinion of the OIG and the findings contained in this audit

report do not necessarily represent the final EPA position. Final determinations on

matters in this audit report will be made by EPA managers in accordance with

established EPA audit resolution procedures. 

We have no objections to the further release of this report to the public. If your

staff has any questions, please contact Michael Wall, Team Leader, Mid-Atlantic

Audit Division, at (215) 566-5800, or Bill Samuel of my staff, at (202) 260-3189.

Attachment
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Report No. E1SFF7-03-0117-8100090

EXECUTIVE SUMMARY

Introduction Superfund was established by the Comprehensive

Environmental Response, Compensation, and Liability Act of

1980, which was reauthorized by Congress in 1986 and 1990. 

The purpose of the program is to protect public health and

the environment from the release, or threat of release, of

hazardous substances. This protection can range from

“removal” actions to control emergency situations, to more

permanent long-term “remedial” actions. The Austin Avenue

Radiation Site underwent both removal and remedial

actions.

The site consisted of 40 properties in six municipalities that

were contaminated with radium and thorium, which are

considered health hazards when inhaled or ingested. Under

a removal action, 18 of the properties were decontaminated

and restored at a cost of $24 million. The remaining 22

properties were addressed through the remedial program at

a cost of $31 million. The remedial cleanup included

demolition, sampling, excavation and disposal of the

radiologically contaminated materials, temporary and

permanent relocations of the homeowners, and

reconstruction of the houses. Regarding the 22 properties,

initially Region 3 had wanted to demolish most of the

contaminated structures and permanently relocate the

owners into replacement houses. However, due to public and

political pressure, the Region allowed most of the owners the

option to either relocate or to have new houses built on site. 

Ten of the owners chose to rebuild. Eight of the owners

chose to permanently relocate. Four of the owners were not

given a choice as to how their properties were to be

remediated.

Objective The purpose of this audit was to determine the

reasonableness of the costs paid by EPA to build ten new

houses at the Austin Avenue Radiation Site.
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Report No. E1SFF7-03-0117-8100090

Results-in-Brief At the Austin Avenue Radiation Site, Region 3 spent an

average of $651,700 each to custom-build 10 houses (see

Exhibit A for “Before” and “After” pictures). The appraised

value of the old houses averaged only $147,000 each. The

cost variance occurred because the Region built new houses,

rather than relocate the owners, as has been historically the

case. Also, the Region undertook the building of new houses

without benefit of any guidance from EPA Headquarters. 

Adopting the position that EPA was obligated to replace “like

for like,” even though the original houses had been built

decades earlier, resulted in cost becoming less of a factor. 

The lack of guidance, coupled with the demands made by

some property owners and local government representatives,

lengthened the process and increased costs.

We do not believe that EPA should be in the house-building

business. Furthermore, EPA was not mandated to replicate

every facet of an existing structure.

Recommendations We recommend that the Agency establish a policy whereby

instead of building new houses, EPA will give preference to

other options that consider the fair market value of the

properties. For example, EPA could give the owners: (a) the

replacement value of their property, such as is done by the

insurance industry; or, (b) the amount EPA would have paid

to permanently relocate the owners under the Uniform

Relocation Act. Either of these options would enable the

owners to arrange for the rebuilding of new homes on their

existing lots at a fair and reasonable cost without involving

the government in the house-building business. We also

recommend that the Agency develop a policy now that

explicitly defines equivalent housing before this type of

situation occurs again. 
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Report No. E1SFF7-03-0117-8100090

Agency Response to

Draft Report

The Agency agreed with our recommendations and indicated

that it will evaluate and define: (1) equivalent housing when

Superfund activities impact residential properties; and (2)

address the available options for providing equivalent

housing in lieu of building new houses for impacted

residents.

OIG Evaluation EPA’s response meets the intent of our recommendations. 

We will be available to review the policy as it is being

developed, and provide input from our perspective.
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Report No. E1SFF7-03-0117-8100090

TABLE OF CONTENTS

EXECUTIVE SUMMARY .............................................. 1

CHAPTER 1 ......................................................... 7

Introduction ................................................... 7

Purpose .................................................. 7

Background .............................................. 7

Noteworthy Accomplishments ............................... 11

Scope and Methodology .................................... 11

Prior Audit Coverage ...................................... 13

CHAPTER 2 ........................................................ 15

EPA Paid Excessive Amounts to Build Houses ...................... 15

Conclusion .............................................. 24

Recommendations ........................................ 25

Agency’s Response to Recommendations ...................... 25

OIG Evaluation .......................................... 26

EXHIBIT A ........................................................ 29

Before and After Pictures of Properties ............................. 29

APPENDIX A ...................................................... 41

Agency’s Response to Draft Audit Report ........................... 41

Region 3's Comments to Draft Report .............................. 49

APPENDIX B ...................................................... 53

Distribution .................................................. 53
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Report No. E1SFF7-03-0117-8100090

CHAPTER 1

Introduction

Purpose The purpose of this audit was to determine the

reasonableness of the costs paid by EPA to build ten new

houses at the Austin Avenue Radiation Site.

Background Superfund was established by the Comprehensive

Environmental Response, Compensation, and Liability Act of

1980, which was reauthorized by Congress in 1986 and 1990. 

The purpose of the program is to protect public health and

the environment from the release, or threat of release, of

hazardous substances. This protection can range from

“removal” actions to control emergency situations, to more

permanent long-term “remedial” actions. The cleanups are

funded either by the parties responsible for the

contamination, or from a trust fund established under the

Act. The Austin Avenue Radiation Site underwent both

removal and remedial actions all of which was paid for out of

the trust fund. 

Site History Austin Avenue consisted of 40 radiologically contaminated

properties in six municipalities. Between 1915 and 1922, a

company located on Austin Avenue in Lansdowne,

Pennsylvania conducted a radium-processing operation. 

This operation generated approximately 210 tons of

“tailings” containing radium and thorium, some of which

were mixed into materials used to build or renovate houses

within the six municipalities. 

Radium and thorium are considered health hazards when

inhaled or ingested. The threat posed by the contamination

at the 40 properties was due to the significant possibility

that the radiological contamination may spread into the

environment in an uncontrolled fashion. Thus, EPA believed
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Report No. E1SFF7-03-0117-8100090

that the actual or threatened releases of hazardous

substances from this site posed a threat to the public health

and the environment. 

The history of the Austin Avenue Radiation Site is

intertwined with that of the Lansdowne Radiation Site. In

1924, a university professor, who had worked at the Austin

Avenue company, set up a radium-processing operation in

the basement of his home to produce radium-filled implant

needles for the treatment of cancer. In 1984, EPA

determined that this house, as well as an adjoining house,

were radioactive. After the houses were demolished and the

site cleaned up, a private developer built four new houses on

the property.

EPA Actions Under a removal action, 18 of the Austin Avenue properties

were decontaminated and restored at a cost of $24 million. 

The remaining 22 properties were addressed through the

remedial program at a cost of $31 million. The remedial

cleanup included demolition, sampling, excavation and

disposal of the radiologically contaminated materials,

temporary and permanent relocations of homeowners, and

reconstruction of the houses. Regarding the 22 properties,

initially Region 3 had wanted to demolish most of the

contaminated structures and permanently relocate the

owners into replacement houses. However, due to public and

political pressure, the Region allowed most of the owners the

option to either relocate or to have new houses built on site. 

Ten of the owners chose to rebuild. Eight of the owners

chose to permanently relocate. Four of the owners were not

given a choice as to how their properties were to be

remediated. Instead one was relocated, and the other three

had their properties repaired. 
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Report No. E1SFF7-03-0117-8100090

PROPERTY

OPTIONS PROVIDED

TO OWNER

OWNER’S

 SELECTION

A Relocate or Rebuild Rebuild

B Relocate or Rebuild Rebuild

C Relocate or Rebuild Rebuild

D Relocate or Rebuild Rebuild

E Relocate or Rebuild Rebuild

F Relocate or Rebuild Rebuild

G Relocate or Rebuild Rebuild

H Relocate or Rebuild Rebuild 

I Relocate or Rebuild Rebuild

J Relocate or Rebuild Rebuild

K None N/A

L None N/A

M None N/A

N Relocate or Rebuild Relocate

O Relocate or Rebuild Relocate

P Relocate or Rebuild Relocate

Q Relocate or Rebuild Relocate

R Relocate or Rebuild Relocate

S Relocate or Rebuild Relocate

T Relocate or Rebuild Relocate

U Relocate or Rebuild Relocate

V None N/A

Rebuild Option For the 10 property owners who selected to build new

houses, EPA’s Record of Decision called for the Federal

Government to fund the construction of new houses to

replace the ones demolished by EPA. The new houses would

cost an estimated $5 million and would be constructed:

- On the same lots once all the debris and contaminated

soils were removed. 
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Report No. E1SFF7-03-0117-8100090

- In accordance with current building codes, using

modern materials and methodologies.

- With the equivalent amount of floor space as the

contaminated houses.

- To retain the same architectural character and “curb

appeal” as the contaminated houses. 

The Record of Decision also allowed each property owner to

participate in the selection of a building design, materials,

and features for the property. 

On December 15, 1994, EPA entered into an interagency

agreement with the US Army Corps of Engineers (USACE)

in the amount of $28,300,000 to arrange for the demolition,

cleanup, and construction activities during the remedial

action. On July 28, 1995, the USACE awarded a

$13,685,414 firm-fixed price contract to remove

contaminated materials, renovate houses, and build new

houses. The total cost of the contract with modifications was

$15,164,165. As of January 1998, all of the new houses had

been turned over to the owners. 

Relocation Option On December 30, 1994, EPA entered into an interagency

agreement with the USACE in the amount of $1,820,630 to

arrange for the permanent relocations. The eight owners

who opted to relocate were to receive comparable houses in

accordance with the Uniform Relocation Assistance and

Property Acquisition Policies Act (URA). Under the URA,

the Government provides relocation benefits such as moving

expenses, as well as a purchase supplement up to a

maximum of $22,500 to enable the owner to relocate to a

comparable replacement property. This purchase

supplement is the difference between the cost of the

replacement property and value of the original property. 

According to the URA, relocations must be to a decent, safe,

and sanitary dwelling meeting applicable housing and

occupancy codes. The dwelling must be adequate in size

with respect to the number of rooms and area of living space
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Report No. E1SFF7-03-0117-8100090

needed to accommodate the displaced persons. In addition,

the relocation must be to a comparable replacement property. 

This means that in addition to being decent, safe, and

sanitary, the property will be among other things:

- Functionally equivalent to the previous house.

- Adequate in size to accommodate the occupants.

- In a location as desirable as that of the previous

house.

- Within the financial means of the displaced persons.

As of November 1997, EPA had spent approximately

$1,184,962 on the permanent relocations and all but one of

the owners had been relocated. 

Noteworthy

Accomplishments

The Austin Avenue Radiation Site presented novel

challenges to Region 3 and the US Army Corps of Engineers. 

This particular project was extremely difficult to manage

because of its direct impact on a very concerned community. 

In addition, EPA and USACE personnel had to address the

concerns of Local, State and Federal elected officials as well

as those of the individual property owners. We commend the

personnel involved with this project for their efforts to solve

the complex problems associated with the 10 properties and

the numerous issues associated with the remainder of this

large project. More than 240 railroad cars (approximately

22,000 tons) of radiologically contaminated materials were

carefully excavated and removed from several residential

neighborhoods and shipped for disposal at a permitted

facility.

Scope and

Methodology

We performed the audit in accordance with the Government

Auditing Standards (1994 Revision) issued by the

Comptroller General of the United States as they apply to

economy and efficiency audits. Our review included tests of
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the program records and other auditing procedures we

considered necessary.

We reviewed the Comprehensive Environmental Response,

Compensation, and Liability Act, the Uniform Relocation

Assistance and Property Acquisition Policies Act, the Code of

Federal Regulations, the Federal On-Scene Coordinator’s

After Action Report, and the December 1993 Memo from the

Assistant Administrator for the Office of Solid Waste and

Emergency Response which authorized Region 3 to build

new houses. We also reviewed the interagency agreements

with the US Army Corps of Engineers (USACE), as well as

the contract awarded to clean up the site and build the new

houses. In addition, we performed two site visits during

which we attended weekly progress meetings and toured

houses under construction.

We performed our review in EPA Region 3 where we

interviewed the On-Scene Coordinator, and the Section Chief

and the Remedial Project Managers (RPMs) from the

Remedial Section of the Hazardous Sites Cleanup Division. 

We also interviewed personnel from the USACE

Construction Division and the Real Estate Division. We

reviewed voluminous EPA documents maintained by the

former and current RPM regarding EPA’s decision to build

the new houses. These included the Proposed Remedial

Action Plan (PRAP), the Revised PRAP, the Record of

Decision, and various documents relative to community

opposition. We also reviewed log books maintained by the

former RPM, costs related to building the new houses, costs

associated with temporarily and permanently relocating

residents, and the minutes from weekly progress meetings

that were submitted by the cleanup contractor.

The scope of our audit focused primarily on the Austin

Avenue Radiation Site and the reasonableness of the costs

EPA paid to build 10 new houses. Our audit included an

evaluation of management controls and procedures

specifically related to the audit objective. As part of this

audit, we reviewed the Hazardous Sites Cleanup Division’s
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Report No. E1SFF7-03-0117-8100090

Annual Reports on Internal Controls for fiscal years 1994 to

1996. There were no weaknesses identified in these reports

that pertained to the scope of work we audited.

We completed our survey on May 30, 1997. As a result of our

survey, we initiated an in-depth audit on June 2, 1997. The

field work for this audit was completed on December 31,

1997. We submitted position papers on potential issues to

EPA Headquarters’ Director, Office of Emergency and

Remedial Response (OERR) on January 5, 1998, and to the

Region 3 Acting Director, Hazardous Sites Cleanup Division,

on January 6, 1998. We received Region 3's response on

January 26, 1998, and met with regional personnel on

February 4, 1998 to discuss their response and clarify

several issues. On February 2, 1998, OERR responded to the

position papers. On February 5, 1998, we discussed this

response with OERR personnel and solicited comments on

our proposed recommendations. 

We issued a draft report on February 11, 1998, to the

Assistant Administrator for Solid Waste and Emergency

Response. His response of February 26 also included

comments from the Region 3 RPM. On March 5, 1998, we

met with the RPM to clarify several issues. On March 17,

1998, we received comments from the Administrator of

Region 3. On March 19, 1998, we held an exit conference

with the Administrator and Acting Deputy Administrator of

Region 3, and with representatives of the Office of Solid

Waste and Emergency Response. EPA’s responses to our

draft report are summarized at the end of Chapter 2 and

provided in their entirety in Appendix A.

Prior Audit

Coverage

There has been no prior audit coverage of the issues

discussed in this report. 
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Report No. E1SFF7-03-0117-8100090

On average, EPA spent

over $650,000 to

custom-build houses.

CHAPTER 2

EPA Paid Excessive Amounts to Build Houses

At the Austin Avenue

Radiation Site, Region 3 spent

an average of $651,700 each to

custom-build 10 new houses. 

The appraised value of the old

houses averaged only $147,000

each. The cost variance

occurred because the Region built new houses rather than

relocate the owners, as has been historically the case. Also,

the Region undertook the building of new houses without

benefit of any guidance from EPA Headquarters. Adopting

the position that EPA was obligated to replace “like for like,”

even though the original houses had been built decades

earlier, resulted in cost becoming less of a factor. The lack of

guidance, coupled with the demands made by some property

owners and local government representatives, lengthened

the process and increased costs.

We do not believe that EPA should be in the house-building

business, or that it is mandated to replicate every facet of an

existing structure. In the future, we recommend that the

Agency use other options instead of building new houses. 

One option that was previously suggested by the USACE for

the site was to compensate the owners for the fair market

value of the properties to enable them to arrange for the

rebuilding of new homes on their existing lots. We also

recommend that the Agency develop a policy now that

explicitly defines equivalent housing before this type of

situation occurs again. 
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Report No. E1SFF7-03-0117-8100090

EPA strongly urged

to build houses.

Build Versus

Relocate

The Region’s original intent was to relocate the owners, as

had been done in the past at other Superfund sites. 

According to regional Superfund personnel, building new

houses was more costly because of Federal contracting

requirements. For example, the “Davis-Bacon Act”

mandated increased labor rates, and the “Buy American Act”

restricted the sources available for materials. Also, although

the USACE was quite experienced with relocating people

into comparable houses, neither it nor Region 3 were

experienced in building new houses. Moreover, building new

houses required more involved negotiations with owners and

more oversight on the part of the Government. 

Accordingly, on July 1, 1993, Region 3 issued a Proposed

Remedial Action Plan (PRAP), which explained that EPA

would permanently relocate the owners into comparable

housing and demolish most of the houses. In response,

however, the Region received over 700 form letters protesting

the proposed relocations and demanding that EPA build new

houses. The arguments presented against relocating the

owners included dwindling property values, a shrinking tax

base, and the fear that EPA would leave the municipalities

with abandoned lots. The Region, on the other hand, argued

that at a former Superfund site—in the same area and with

the same problem—it had relocated the owners, demolished

the houses, and cleaned up the site upon which four new

houses now stood generating tax revenue. The Region also

preferred relocation over building because it would cost less,

and because regional personnel were inexperienced with

building houses and negotiating housing amenities with

owners.

Region 3 also received pressure

to build new houses from Local,

State, and Federal officials. For

example, on August 24, 1993, the

Acting Regional Administrator

received a letter signed by two Senators and three

Congressmen. The letter strongly urged EPA to reconsider

its preference for relocation which seemed based on financial

considerations, and to build new houses. In the meantime,
1

 Community acceptance is one of nine criteria evaluated when selecting a remedy. 

The lack of community acceptance can change a remedy. The Acting Regional

Administrator at that time informed us that he did not change the remedy because

of political pressure, but rather to gain community acceptance.

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Report No. E1SFF7-03-0117-8100090

the Region had requested EPA Headquarters (Director,

Office of Emergency and Remedial Response) to determine if

Superfund monies could even be used to build new houses,

pointing out that Agency actions at this site may set

precedent for future remedial actions at other sites. On

October 19, 1993, the Acting Regional Administrator again

asked for a decision, explaining that the local officials were

planning to approach the Administrator, and that he was

under considerable pressure to finalize the Agency’s position

on this situation. On December 17, 1993, EPA Headquarters

(Assistant Administrator for the Office of Solid Waste and

Emergency Response) informed Region 3 that it could—and

should—build new houses that were equivalent to those in

place prior to demolition. However, the Region received no

guidance on how to go about this process. 

In order to gain community acceptance,1 the Region issued a

revised PRAP on March 2, 1994, which offered many of the

owners the option to rebuild, but asserted that five of the

properties could be repaired. Based on community response,

EPA modified the revised PRAP. On June 27, 1994, the

Record of Decision stipulated that 18 property

owners—including 4 whose houses that had been slated for

repair—could now have their houses rebuilt. Ten of the

owners took advantage of this option. Thus, Region 3 and

the USACE now reluctantly entered the custom housebuilding business.

Cost to Build Before building the new houses, the USACE paid a

contractor to appraise the old houses. As seen in the

following chart, EPA paid 300 percent more on average to

construct the new houses than the appraised value of the

properties; in two instances, the building costs exceeded the

appraisals by 400 percent. NOTE: We derived the “COST

TO REBUILD” from the amounts proposed by the contractor

on the “Contract Unit Price Schedule” included in the firm-
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Report No. E1SFF7-03-0117-8100090

fixed price contract awarded on July 28, 1995, plus

subsequent modifications to the Price Schedule. This did not

include the cost of removing the contaminated materials.

PROPERTY

APPRAISED

VALUE

COST TO

REBUILD

A $103,000 $354,360

B $114,500 $277,694

C $120,500 $390,628

D $141,500 $422,175

E $153,200 $507,878

F $155,000 $360,395

G $161,000 $706,010

H $161,500 $489,816

I $162,700 $487,449

J $200,000 $911,411

TOTAL $1,472,900 $4,907,816

In addition to the $4.9 million in direct costs, the Agency

paid approximately $1.6 million in indirect costs. According

to Regional and USACE personnel these indirect costs

included:

[ Fees paid to architect & design engineer to 

design the 10 houses $570,829

[ Fees paid to architect & design engineer $ 98,615

to meet with owners to select interior 

amenities

[ Time spent dealing with owners & public 
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Report No. E1SFF7-03-0117-8100090

Customized replication of 70-year-old

houses increased government cost.

officials by:

EPA $ 48,893

USACE Construction Division 150,000

USACE Real Estate Division 149,404

USACE Cleanup Contractor 300,000

[ Davis-Bacon labor adjustment 100,711

[ Landscaping for the 10 houses 141,734

[ Fees for local inspections 9,500

[ Fees for supplemental local inspections 40,125

Subtotal - Additional Costs Incurred $1,609,811

[ Direct Building Cost 4,907,816

Total Cost $6,517,627

Cost Became Less

of a Factor

The Region knew it would cost more to build new houses,

than to take advantage of the USACE’s expertise and

relocate the owners. However, it appears that after the

Region’s authority to build equivalent houses was clarified,

cost became less of a factor. Based on the figures above, EPA

spent an average of $651,700 each to rebuild 10 houses

whose appraised value averaged only $147,000 each. Refer

to Exhibit A for “Before” and “After” pictures.

Regional

personnel

explained that

part of the high

cost was

attributable to Federal mandates such as the “Davis-Bacon”

and the “Buy American” Acts. They also explained that

these houses cost more to build because the Region had

replicated as closely as possible the original houses, in order

to “make the owners whole again.” Unfortunately, this

engendered extraordinarily excessive costs, because rather

than replacing the original houses with houses of equal

value, the Region replaced them with extensively customized

replicas. This decision to replace “like for like” coupled with
2

 Contrary to the Region’s advice, some owners ceased paying their mortgages.

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Report No. E1SFF7-03-0117-8100090

the demands of some of the owners resulted in the total costs

being far higher than they need have been. In dealing with

the owners, EPA utilized the services of individuals from a

variety of occupations including architecture, interior design,

botany, and in one instance, psychiatry.

Personnel from the USACE, Region 3, and the architect

negotiated with property owners over the custom design of

their new houses. During these “design and fashion”

meetings, each owner was afforded the opportunity to choose

their amenities such as rugs, cabinets, and bath tubs. 

Although EPA was extremely generous in the building of the

new houses, there were complaints, most of which did not

appear warranted. Moreover, some of the cost increases

were directly attributable to such complaints, as well as the

fact that some owners were more demanding than others. 

The circumstances associated with Property “G” were the

most challenging for Region 3 personnel to resolve.

Property “G” This property was demolished and the owner received a

custom-built house. The contaminated property was a threestory house purchased in 1989. In 1992, the owners stopped

paying the mortgage2 and by 1994 faced foreclosure. The

owners did not live in the house, but their son did, along

with two tenants.

The property was described by the Remedial Project

Manager as “run-down, unmaintained, and in a large

portion, structurally unsound.” EPA’s architect classified the

building as being in “fair to poor condition,” noting that

“most all of the existing structure roofing/porch structure

was rotted or failed . . . .” Although the appraised value of

the property was only $161,000, its replication had cost EPA

over $700,000 in direct building costs. EPA has also spent,

or will have spent, $100,000 in moving, storage, and rental

fees for the owner’s son. Finally, according to EPA

personnel, the owner’s son made many unreasonable

demands that were time consuming and costly to resolve. 
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Report No. E1SFF7-03-0117-8100090

- Whereas most of the other owners required three

“design and fashion” meetings, this individual

required five meetings and numerous phone contacts

to discuss the amenities for the new house. According

to Region 3 personnel, part of the problem was his

inability to come to a decision, and part of the problem

was his overt intention to get the best of everything. 

For example, he demanded a cedar roof because a

neighbor had gotten one as a “tradeoff.” He wanted

his kitchens upgraded and demanded crystal lighting

fixtures and a “Tea for Two” bathtub (an oversized tub

installed on a platform to accommodate two people). 

When Region 3 refused these demands as

unwarranted, he claimed that EPA was unfair and

had lied to him.

- This individual insisted on extensive design changes,

upgrades, and tradeoffs. As a result, the new house

received a variety of “add-ons” including: a second

terra-cotta flue from the basement, a second electrical

panel in the basement, a powder room in the

basement, 42" kitchen cabinets (instead of the

standard 30" cabinets), a second stairway from the

kitchen to the basement, a bay window in the kitchen,

and a library on the first floor with cabinets and a

sink. 

- Despite the Region having made extensive design

changes and concessions, when it came time to move

out of the contaminated house, this individual refused. 

Unless his demands were met, he threatened to

“create a disruption and a media show.” As the

impasse continued, the Region contemplated

contacting the US Department of Justice to seek

assistance in dislodging this individual from the

premises. Such actions, however, became unnecessary

as he finally agreed to temporarily relocate.

- Finding a temporary house also presented a problem. 

This individual refused to consider any of the

comparable houses shown him. He demanded to be

housed in a mansion, with an in-ground swimming
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Report No. E1SFF7-03-0117-8100090

pool, situated on 20 acres. The Region refused and

offered to pay $1,850 a month to place him into a

$250,000 house, described by the RPM as being

“immaculate” and “a house anyone would be happy to

call home.” Although this individual finally agreed to

relocate to this “dump” as he put it, he still expressed

concern that it was too small to accommodate his

“stuff.” This included items such as used tires,

automobile mufflers, and planks of wood.

- Actually moving this individual also proved expensive. 

EPA spent $33,864 to move his belongings, plus an

additional $13,990 to rent storage areas ($9,750 for

heated storage + $4,240 for unheated storage).

- Finally, upon entering the contaminated house, EPA

was unable to access the upper two stories because

this individual had taken the stair treads and the

banisters. Upon further investigation, it was learned

that he had also removed a variety of other items

including: light fixtures, door knobs, door jambs,

window mounting hardware, cabinets, the heater,

sinks, and toilets.

On the other hand, EPA did refuse to authorize a variety of

demands such as: the “Tea for Two” bathtub, a cutting board

insert for the sink in the library, excessive telephone line

installation, a full bathroom in the basement, imported

porcelain tiles, excessive landscaping features, and a new

garage. EPA also refused to pay the owners $50,000 for their

unpaid mortgage bills.

As of October 1997, the new house was complete. However, 

the individual was unable to move in because the

municipality refused to issue a “use and occupancy” (U&O)

certificate for the house, despite the fact that EPA had paid

the municipality inspection fees of $40,125, or an average of

$5,700 to inspect the new houses. Specifically, the

municipality objected to a detached garage which it classified

as a “blight determination.” Although the Region pointed

out that the poor structural condition of the garage existed
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Report No. E1SFF7-03-0117-8100090

Inspection fees

demanded from EPA.

prior to EPA’s involvement at the property, and that the

garage was not part of the project because it was not

contaminated, the municipality demanded the garage be

replaced before it would issue a U&O certificate. 

Coincidently, this objection was raised because of a

complaint by the owner of an adjoining property who: (a)

was also receiving a new house from EPA; and, (b) was a

local government official deeply involved in many of the

negotiations with the Region over the site. As of December

1997, the municipality finally issued a conditional U&O

certificate. 

To summarize, EPA spent

over $700,000 to build the

house seen on the right. 

It replaced a house

appraised at $161,000. 

EPA has also spent, or

will have spent, an

additional $100,000 in

moving, storage, and

rental fees for this

individual. Moreover,

EPA incurred thousands of dollars more in indirect expenses

dealing with this individual.

Inspection Fee Issue One municipality demanded that

the Agency obtain permits for

the demolition of the old houses

and the construction of the new

houses. EPA explained that it

did not have to obtain permits

under Superfund. However, the Region did agree to pay

“reasonable” inspection fees beyond the $9,500 already

incorporated in the USACE’s cleanup contract for

inspections. These fees would allow the municipalities to

review the housing designs and inspect the building of the

new houses to ensure that they adhered to local building

codes. Thereupon, the municipalities were to issue a U&O

certificate to enable the owner to occupy the house.
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Report No. E1SFF7-03-0117-8100090

One municipality which took advantage of this offer, claimed

$73,500 for its services, including $5,000 in legal costs. 

However, the USACE and the RPM reviewed this claim and

concluded that EPA should pay only $22,400. Dissatisfied

with this amount, the municipality negotiated with the

Region over a five-month period and in March 1996, received

$40,125.

Conclusion We believe that EPA should not be involved in the housebuilding business. While we understand that the Agency

believed it needed to build the new houses to achieve

community acceptance, we believe it was more generous than

it had to be. The Region gave each owner a custom-built

house replicating the intricate workmanship of the original

house. As a result, the government built 10 houses paying

an average of $651,700 each, when the original houses were

appraised at an average of only $147,000 each. Finally, EPA

and the USACE encountered considerable complications

from local governments and from some of the very owners

who were to receive the new houses.

There currently is no policy available regarding the building

of houses under Superfund. Region 3 asked EPA

Headquarters to decide if houses could be built. EPA

Headquarters replied that they could, but provided no

instructions, policy, or guidance. We found no evidence to

suggest that EPA was mandated to replicate the houses that

had existed at the Austin Avenue Radiation Site. We believe

that the Agency should consider other options instead of

building new houses. One option that was previously

suggested by the USACE for this site was to compensate the

owners for the fair market value of the properties to enable

them to arrange for the rebuilding of new homes on their

existing lots. 

However, before this type of situation arises again, where

EPA builds houses, the Agency should have in place explicit

parameters to define what is meant by equivalent housing. 

We do not believe that the Agency should be obligated to

build customized replicas of the original houses.
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Report No. E1SFF7-03-0117-8100090

Recommendations We recommend that the Assistant Administrator for Solid

Waste and Emergency Response:

(1) Establish a policy whereby instead of building

new houses under Superfund, EPA will give

preference to other options that consider the fair

market value of the properties. For example,

EPA could give the owners: (a) the replacement

value of their property, such as is done by the

insurance industry; or, (b) the amount EPA

would have paid to permanently relocate the

owners under the URA. Either of these options

would enable the owners to have their houses

rebuilt at a fair and reasonable cost without

involving the government in the house-building

business.

(2) Develop a policy now that explicitly defines

equivalent housing, before this type of situation

occurs again.

Agency’s Response

to Recommendations

The Assistant Administrator concurred with our

recommendations and indicated the Office of Solid Waste and

Emergency Response will evaluate and develop policy that

will: (1) define equivalent housing when Superfund activities

impact residential properties; and (2) address the available

options for providing equivalent housing in lieu of building

new houses for impacted residents. The policy is expected to

be issued by September 30, 1999. 

The Assistant Administrator’s response also included

comments from the Region 3 Remedial Project Manager

(RPM) for the Austin Avenue Radiation Site. The RPM

asserted that the costs cited in our draft report were not the

true rebuilding costs, but were rather only estimates

submitted by the contractor. 

The RPM believed that our suggestion to compensate

property-owners with the fair market or replacement value to
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Report No. E1SFF7-03-0117-8100090

enable them to rebuild presented several problems. 

Specifically, he asserted that: (1) an amount of money equal

to the fair market value would have been inadequate to

rebuild comparable structures; (2) the Federal Government is

required to provide homeowners with comparable living

arrangements, and it cannot provide the homeowners with a

cash equivalent to the fair market value of their properties if

they desire a replacement dwelling; (3) the Federal

Government could not relinquish its responsibility for 

building comparable dwellings to the homeowners; and, (4)

property owners would not accept a forced arrangement. 

Finally, the RPM challenged the fairness of our comparing

the appraised values of the properties to what it cost EPA to

rebuild them. Instead, he believed it would be more

reasonable to compare what it cost EPA to rebuild with the

houses’ replacement values, as might be done by insurance

companies. 

On March 5, 1998, we met with the RPM and clarified

several issues. We also made several minor editorial changes

in our report as warranted. However, we did not materially

change our position.

OIG Evaluation 

EPA’s response meets the intent of our recommendations. 

We will be available to review the policy as it is being

developed, and provide input from our perspective. 

We disagree with the RPM’s comment that it is not fair to

compare the cost EPA paid to rebuild the houses to their fair

market value. We believe that the fair market or appraised

value of a property should be used as the basis to compensate

owners. The USACE used such appraisals calculated by its

contractor to negotiate the relocation of other Austin Avenue

Site owners into comparable housing under the Uniform

Relocation Act. Moreover, we contacted two major insurance

companies and learned that the insurance industry: (a) takes

into consideration a house’s worth, even when writing a

replacement insurance policy on a new house; and (b) would

probably only write a policy on older houses (such as those at

Austin Avenue) for their fair market value. The example
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Report No. E1SFF7-03-0117-8100090

illustrated by one agent was a pre-1955 house. It had a slate

roof, hardwood floors, and plaster walls and was valued at

$150,000. It would therefore be insured for a “face value”of

$150,000. But if it cost $200,000 to replicate the house the

owner would have to make up the difference or start trading,

i.e., get drywall instead of plaster.

Finally, the cost figures we used were taken directly from the

contract.
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Report No. E1SFF7-03-0117-8100090

EXHIBIT A

Before and After Pictures of Properties
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Report No. E1SFF7-03-0117-8100090

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Exhibit A

Page 1 of 10

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Report No. E1SFF7-03-0117-8100090

Before - $103,000 

After - $354,360

Property A
Exhibit A

Page 2 of 10

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Report No. E1SFF7-03-0117-8100090

Before - $114,500

After - $277,694 

Property B
Exhibit A

Page 3 of 10

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Report No. E1SFF7-03-0117-8100090

Before - $120,500

After - $390,628

Property C
Exhibit A

Page 4 of 10

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Report No. E1SFF7-03-0117-8100090

Before - $141,500

After - $422,175

Property D
Exhibit A

Page 5 of 10

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Report No. E1SFF7-03-0117-8100090

Before - $153,200

After - $507,878

Property E
Exhibit A

Page 6 of 10

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Report No. E1SFF7-03-0117-8100090

Before - $155,000

After - $360,395

Property F
Exhibit A

Page 7 of 10

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Report No. E1SFF7-03-0117-8100090

Before - $161,000

After - $706,010

Property G
Exhibit A

Page 8 of 10

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Report No. E1SFF7-03-0117-8100090

Before - $161,500

After - $489,816

Property H
Exhibit A

Page 9 of 10

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Report No. E1SFF7-03-0117-8100090

Before - $162,700 

After - $487,449

Property I
Exhibit A

Page 10 of 10

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Report No. E1SFF7-03-0117-8100090

Before - $200,000

After - $911,411

Property J
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Report No. E1SFF7-03-0117-8100090

APPENDIX A

Agency’s Response to Draft Audit Report
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43

As signed by Timothy Fields, Jr. on 02/26/98. Report No. E1SFF7-03-0117-8100090

 UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

 WASHINGTON, D.C. 20460

OFFICE OF 

 SOLID WASTE AND EMERGENCY

RESPONSE 

February 26, 1998

MEMORANDUM

SUBJECT: Draft Audit Report on Replacement Housing

at the Austin Avenue Radiation Site

(Audit Report No. E1SFF7-03-0117)

FROM: Timothy Fields, Jr. /s/

Acting Assistant Administrator

 for Solid Waste and Emergency Response (5101)

TO: Michael Simmons

Deputy Assistant Inspector General

 for Internal Audits(2421)

As requested, the Office of Solid Waste and Emergency Response (OSWER), in

consultation with Region 3, has reviewed the draft audit report entitled Replacement Housing at

the Austin Avenue Radiation Site, dated February 11, 1998. This report documents Region 3's

efforts to provide replacement housing for residents affected by cleanup activities at the Austin

Avenue Radiation Site in Delaware County, Pennsylvania.

I concur with the recommendations stated in the report regarding the development of

policy that pertain to replacement housing at Superfund sites. OSWER will evaluate and develop

policy to: (1) define equivalent housing when Superfund cleanup activities impact residential

properties, and (2) address the available options for providing equivalent housing in lieu of

building new houses for impacted residents. We will begin development of the policy this year. 

Since regional workshops will be required to enable discussion and evaluation of the concerns and

options pertaining to these and other residential cleanup issues (including methyl parathion sites),

it is estimated that the final policy will be issued by September 30, 1999.
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Report No. E1SFF7-03-0117-8100090

In reviewing the Draft Audit Report and its Executive Summary, I would like to point out

that the recommendations in the Executive Summary are not a brief summary of the

recommendations in the Draft Audit Report. The Draft Audit Report recommends the

development of new replacement housing policy, whereas the Executive Summary goes well

beyond this recommendation to state OIG beliefs and suggested options. As stated above, I agree

that OSWER should develop such replacement housing policy. I request that the

Recommendations Section in the Executive Summary be shortened to agree with the concise

recommendations stated in the Draft Audit Report.

Also, it appears that there is a duplication in paragraphs describing the “use and

occupancy” certification for one new house. The second paragraph on page 22 appears to be a

restatement of the paragraph at the top of page 21. We recommend that these paragraphs be

consolidated.

Region 3 has prepared separate review comments which pertain to specific project details

included in the Draft Audit Report. Region 3's comments are attached.

Thank you for the opportunity to provide comments on the Draft Audit Report. If you

have any questions, please contact Ken Skahn of the Office of Emergency and Remedial Response

(OERR) at 703-603-8801, or Elizabeth Harris, OSWER audit liaison, at 202-260-7323.

Attachment

cc: Mike Shapiro Dev Barnes

Abe Ferdas Johnsie Webster

Elizabeth Harris Sharon Hallinan

Ken Skahn Barbara Braddock
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Report No. E1SFF7-03-0117-8100090

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

REGION III

841 Chestnut Building

Philadelphia, Pennsylvania 19107

SUBJECT: Review of Draft IG’s Report on Austin 

Avenue Radiation Site

FROM: David P. Turner, RPM

Western PA Section (3HS22)

TO: Kenneth Skahn

Office of Emergency and Remedial Response (5204G)

I have reviewed the “Draft Audit Report” regarding the Austin Avenue Radiation Site,

dated February 11, 1998 and offer the following comments

Page 1: 2nd Paragraph:

The remedial action also included disposal of the contaminated wastes.

The owners not given a choice of rebuilt or relocation were either :owners of duplex

homes where the rebuild housing density on the existing lots could not be assured (since both

duplex owners would have had to select the rebuilt option), or they were owners of properties

that only had a portion (i.e. porch) contaminated and that portion could be repaired / replaced.

Page 2, “Recommendations”:

The Region does not agree with the Draft Report’s opinion that the ROD “...went beyond

providing equivalent structures that were authorized by EPA Headquarters.” EPA HQ reviewed

the ROD containing the “same curbside appeal language” and concurred before it’s signing.

 The IG recommends that EPA use other options instead of building new houses and cites

an option, attributed to a suggestion by USACE, “...to compensate the owners for the fair market

value of the properties to enable them [the owners] to arrange for the rebuilding of new homes on

their existing lots.”

This suggested option presents several problems. First, the concept of “fair market

value” is quite subjective and is closely associated with “appraised value.” In no instance would

an amount of money equal to the “fair market value” of any of the properties have been adequate

to rebuild, in any comparable fashion, the structures that were destroyed during the response

action(s). Second, the Uniform Relocation Act requires that the federal government provide

homeowners with living arrangements that are comparable to those destroyed by the government,
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Report No. E1SFF7-03-0117-8100090

if the owners so desire. The federal government cannot merely hand the owners cash equivalent

to the “fair market value” of their properties, but must actively seek to provide a replacement

dwelling if the owners desire a replacement dwelling. Third, since replacement housing is

required by federal law, and, therefore, must be provided for as part of the remedial action, to

allow the property owners to use government funding to rebuild their respective dwellings would,

in effect, constitute the conduct of a portion of a remedial action by those owners. The legal and

practical implications of this are certainly prohibitive. Fourth, no reasonable property owner

would accept such a forced arrangement, and EPA would likely end up facing a class action

lawsuit.

Even if EPA were to compensate the owners with the “replacement value” of their houses

(as opposed to the “appraised value” or the “fair market value”), to expect the homeowners to

rebuild their own houses would still be problematic for the reasons noted above. 

Page 5 Site History: The W. L. Cummings Radium Refining Company was the company located

at the intersection of Austin and Union Aves. Same appears on p. 6 of the Draft Report where the

“Austin Avenue Company” is referenced.

Page 6 EPA Actions: The Action also included permanent relocation for affected homeowner

selecting not to have their homes rebuilt.

The Draft Report references four owners not given a choice. These four owners

referenced were owners of duplexes. These owners were not given a choice because the Region

was not able to assure the Borough that the housing density of the respective lot would be

achieve. (In order to rebuilt these homes on the same lot, meeting the same duplex housing

density, each of the respective homes owners would have had to select reconstruction option.)

The ROD included this provision (lack of options for these owners) to prevent a possible situation

were one owner selected rebuild and the adjoining owner selected relocation.

Page 7 Table: Some errors in Table identified, please check:

Property R: Options provided to Owner: None

Property V: Property addressed under Removal Action - Repair

Page 8.Relocation Options: The Draft Report references last resort housing. Loaning money is

just one option under available in the URA’s “housing of last resort” provision.

Page 9 Noteworthy Accomplishments: The remediation proceeded without incident except for a

broken wrist suffered by a worker during the dismantlement of a house.

Page 13 , 2nd paragraph - reference page 2 comment regarding EPA HQ authorization.

Page 14 2nd paragraph : the four new homes constructed are two duplexes.
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Report No. E1SFF7-03-0117-8100090

Page 15, “Cost to Build”: The IG states that, EPA paid 300 percent more to construct new

houses than the appraised value of the properties...” However, to compare the cost to rebuild the

subject houses with the appraised values of those houses is not a fair comparison. Virtually no

house had an appraised value that would have provided sufficient funds to rebuild that house. A

more reasonable comparison would have been to compare the cost that EPA incurred to rebuild

the houses with the “replacement values” of those houses as might be done by insurance

companies. If such a comparison were made, it would be shown that EPA’s costs to rebuild the

houses were more comparable to the “replacement values” and, therefore, not as disparate as

when compared to the “appraised values.” (The appraised values of the properties only had

relevance for those instances in which the property owners chose offsite relocation.) 

Page 15 : Cost to Rebuild: The Draft Audit Report does not address the fact that the costs paid

to rebuild the various structures were included as “unit price” items in the submittal of a formal

response to a Request for Proposal (“RFP”) by the contractor who received the government’s

contract, under the auspices of USACE, for the project. These are not true costs, but the bidder’s

estimate. The position paper also does not note that the selected contractor’s proposal was both

the lowest price proposal and the most responsive, responsible proposal for the entire remedy.

The ROD contains information (ROD Table 1) indicating the estimated total cost

associated with the remedial action / construction: $38.4 (MM) (This figure was arrived at by

summing the actual option later implemented at each affected property.) The independent

government cost estimate performed by the COE for the clean up was $18.1 (MM). The seven

bids the COE received for the job ranged from $13.7 (MM) to $39.6 (MM), approximately the

range covered by EPA and the COE in their estimates. This is not unexpected since the

hazardous waste remediation business is very competitive. The bids were reviewed by two

independent teams at the COE and ranked for cost and technical merit. This contract was

awarded for $13.7 (MM) to the contractor determined to give the best value for the government’s

dollar.

A comparison of all the contract bid packages indicates that the cost of building the

replacement homes is about the same in each package. What this indicates is not that EPA paid

too much for the homes, but that its initial estimates of the cost of the homes was too low. This

was probably due to our (and the COE) inexperience in this area and an unfamiliarity with the

local market for home construction. It is another reason why we agree with the IG that the

Agency should not be in the home building business. It is also true, having better estimates of

these costs up front, well have changed our decision.

Page 15 2nd paragraph: The four homes referenced: “slated for repair” may be in error, for this

description is not entirely accurate. Four homes were not given a choice in the matter (the Pine

Street duplex properties).
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Report No. E1SFF7-03-0117-8100090

Page 19 3rd Bullet: The ATSDR psychiatrist provided assistance problems dealing with

relocation.

Page. 21: 1st Paragraph: The Borough contracted to a local contractor to provide the services

identified in the paragraph,.

Page 24, “Recommendations”: Recommendation number (1) advises that EPA should use

remediation options that consider the “fair market value” of the properties. The IG then advises

that, “For example, EPA could give the owners: (a) the replacement value of their property, such

as is done by the insurance industry...” It is apparent that the concepts of “fair market value” and

“replacement value” are not being used as distinct and separate concepts by the IG. EPA, in

rebuilding the houses, essentially provided the owners who chose building replacement with the

“replacement value” of their properties. The recommendation should be revised to reflect the

distinction between “fair market value” and “replacement value.” 
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Report No. E1SFF7-03-0117-8100090

APPENDIX A

Region 3's Comments to Draft Report
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Report No. E1SFF7-03-0117-8100090

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

REGION III

841 Chestnut Building

Philadelphia, Pennsylvania 19107

March 17, 1998

SUBJECT: Comments on Draft Audit Report:

Replacement Housing at Austin Avenue Radiation Site

FROM: W. Michael McCabe (3RA00) /s/

Regional Administrator

TO: Michael Simmons (2421)

Deputy Assistant Inspector General for Internal Audits

This responds to the February 11, 1998 Draft Audit Report on replacement housing at the

Austin Avenue Superfund Site.

First, the Region agrees that the Agency should not be in the home building business. As

the draft report indicates, the Region’s original proposal was to relocate families into comparable

replacement off-site homes under the Uniform Relocation Act (URA). The intense public

opposition which occurred when the proposed relocation plan reached the community, however,

challenged our established approach.

It was not simply the affected homeowners who opposed the Agency’s proposal. The

Region received almost eight hundred letters in protest, as well as significant bipartisan input from

federal, state and local representatives. The Region carefully considered this outpouring in light

of EPA’s mandate, under the National Contingency Plan, to evaluate community acceptance in

the course of remedy selection. In response, and after the Region had secured an opinion from

the Agency’s Office of General Counsel clarifying our authority, the Region included rebuilding as

an alternative to off-site relocation. At the time this decision was made, the additional costs

associated with this option were estimated to be minimal in relation to the total costs of the

cleanup. 

In its evaluation of this decision to include the rebuild option, the report focused on the

replacement of individual homes and not the community as a whole. When the Region modified

its remedy in an effort to secure community acceptance it was not dealing simply with a few

disgruntled homeowners, but with a community that was passionate and inflamed. The
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Report No. E1SFF7-03-0117-8100090

community found the prospect of vacant lots, diminished property values, and an eroded tax base

looming over them. Vacant lots to these communities were not the wholesome places where

small children learn to play baseball, but places where used tires and other unwanted items are

dumped. In Lansdowne, a small borough where most of the contaminated homes were located,

the prospect of a reduced tax base and a further erosion of property values was a frightening

reality. For this reason the community pushed, through its elected officials, to modify the

proposed remedy to include on-site replacement of dismantled homes. Superfund, by design, has

a robust community involvement process which includes the very real possibility that the

community can change the remedy. Such a change in fact occurred at Austin Avenue after the

Region considered all of the remedy selection criteria–including community acceptance and cost. 

Nonetheless, as the federal agency charged with protecting the public health and the environment,

we have an obligation not only to fulfill our fundamental mission in the affected communities we

serve, but also to manage costs for the benefit of the taxpayer in general. It is arguable that in

implementing the decision to rebuild in the absence of replacement housing guidance, too much

emphasis was placed on meeting homeowner preferences and too little on limiting costs.

The Region also agrees that there is a need for guidance that provides a clear definition of

what a “replacement dwelling” is and is not. The draft report’s evaluation of the Region’s vision

of “replacement dwellings” turns almost exclusively on cost, using the difference between the 

assessed value of the home and the rebuild cost as the benchmark. In reality, the assessed value

of a home bears no relation to the cost to construct that home today and therefore has no place in

an evaluation of the Region’s rebuild costs. The reasonableness of the Region’s rebuild costs in

this case can be measured only by reference to construction costs incurred by others in

constructing similar homes in similar locations at a similar time. The commonly accepted

insurance industry concept of “replacement cost” lends support to this position. A replacement

insurance policy would pay for the actual costs of construction, as EPA’s remedial action did, and

is not pegged to the assessed value of the home.

Finally, the Region found itself on the relocation “cutting edge” at the time the Austin

Avenue remedial action was selected. Our experiences in implementing this remedial action have

placed the Region in a unique position to assist in development of guidance that may be useful in

avoiding many of the problems discussed in the draft report. The Region stands ready to provide

such assistance in an effort to ensure that relocations performed during Superfund cleanup actions

are cost effective as well as responsive to community needs.

 
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Report No. E1SFF7-03-0117-8100090

APPENDIX B

Distribution

Headquarters

Office of Inspector General (2410)

Assistant Administrator for Solid Waste & Emergency Response (5101) 

Assistant Administrator for Congressional & Legislative Affairs (1301)

Assistant Administrator for Communications, Education & Public Affairs (1701)

Agency Follow-up Official (2710)

Agency Follow-up Coordinator (3304)

Audit Follow-up Coordinator (5101)

Regional Office

Region 3 Administrator (3RA00)

Director, Hazardous Site Cleanup Division (3HS00)

Public Affairs Branch (3CG20)

Audit Follow-up Coordinator (3PM70)

Other Offices

Divisional Inspector General Offices