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YOUR TAX DOLLARS AT WORK

So the state started freeway construction in the middle of a former chemical plant without first checking to see what might lie beneath the surface of the ground. This is a remarkable oversight given the state's own records which documented the 22-year presence of Olin Mathieson on the site.

This negligence is underscored by the large painted eagle on the Gabrielli building with the word Mathieson" attached. The environmental experts assessing the land failed to recognize the logo of one of the world's largest chemical companies.

It's likely that had we not been so driven by construction schedules, none of this stuff would have happened," Sullivan says. If we'd done a Phase II audit and found this sump, we would have backed way off."

And a Phase II investigation should have been ordered. Several local and national environmental experts agreed that an essential part of a Phase I audit is a title search. Apparently, in this case, the environmental engineers who conducted the audit never examined the chain of possession of the property, or relied on a cursory document that only traced possession of the land back five years. Such a document would not have reflected Olin Mathieson's ownership of the parcel from 1950 until 1972.

Though there is no statutory requirement that a Phase I assessment include an examination of chain-of-title documents, a title search is standard operating procedure in the industry. One local consultant, who asked not to be identified because his firm regularly deals with ADOT, said that while many aspects of a Phase I survey are based on experience and opinion, any competent report would include an inspection of chain-of-title documents for at least the past 50 years. Similarly, guidelines established by the American Society for Testing and Materials require a Ôqualified inspector" to conduct a 50-year survey of property uses by deed search, interviews and aerial photographs." The Arizona Chamber of Commerce and the Consulting Engineers Council of Metropolitan Washington both suggest 50 years as a reasonable period for historic review.

If such a title search had been conducted, the presence of Olin Mathieson on the deed would have almost certainly alerted the consultants to the need to conduct a more intensive survey. It is unlikely the pesticide-laden sump could have escaped detection had the state gone to Phase II and taken core samples, especially since the toxic sump lay precisely in the path of the expressway.

Bruce Scott, of Scott, Allard and Bohannan, Inc., the environmental consulting firm that contracted with the state for both the initial environmental audit and the more intensive post-spill investigation, refused to answer questions. Scott referred all inquiries about the Gabrielli property to ADOT's Sullivan.

Sullivan admits mistakes were made. He has no explanation for why the environmental engineers apparently relied on a truncated title search. Sullivan explains that the consultants only researched ownership back five years and theorizes that frenzied freeway building and intense pressure to meet construction schedules led to oversights. But he says there was nothing diabolical in the state's machinations. Sullivan says when the Phase I audit was conducted, the clues to the chemical company's occupation of the site were either overlooked or ignored.

In defense of the consultant, Sullivan says that when the audit was conducted, the lot was heaped with trash to be recycled, with piles of paper and barrels of glass. Aside from the portable building Gabrielli used as an office, the buildings were in disrepair. It looked like what it was-a place where people dumped garbage. And it had been 16 years since the chemical company had done business on the site. Still, Sullivan agrees the big eagle should have tipped off ADOT.

Somebody should have caught that," Sullivan says. In a Monday-morning- quarterbacking sense, we look real dumb."

GENE GABRIELLI knows his garbage; he is, after all, in the resource-recovery business. He says he can look at a garbage can and, given certain demographic clues about its owner, list its contents with about 90 percent confidence. When he talks about recycling, about resource recovery," he becomes almost messianic, lifting his eyes and steepling his hands, unconsciously assuming the posture of the reflective minister.

He is not making a joke when he says he has trash in his blood. For him, there is something noble in scavenging worth from refuse, and he tends to describe his business as a grand, humanitarian crusade. While he admits his battles with ADOT have left him a bit shell-shocked and loopy, he talks about resource recovery with the matter-of-fact precision of an expert.

It's what he does, what his father did. Before ADOT condemned his land, he made a good living from it.

When I first started in this business, we were doing nothing but newspapers, no magazines, no computer paper or anything," he says. And we were getting about $10 a ton for it. And we were paying $5 or $6-boy, I was so stupid. Eventually it got up to $45 a ton, but we're not going to see those days again. Not for a long time. During World War II, they used to get $20 a ton for all this stuff, and here I was in 1973 I was getting $10."

By 1987, his business, Ecology Companies, was thriving, paying good wages to its employees and fair prices to the independent contractors who hauled the garbage in.

It makes me feel good when I see someone who works for me driving a brand-new vehicle, to see someone who's happy in their work," Gabrielli says. That's what drives me in this business, to help people, to see them do well. I'm a product of other people's waste. Other people's garbage is my treasure-I have to think like that in this business. I have to think that we're doing something to make the world a better place. I really believe that."

Though he is folded behind an executive's desk in a dark-paneled office, his natural milieu is out among the heaps of light cardboard and computer paper that have already begun to occupy his new lot off Grand Avenue. It has been nearly two years since Gabrielli has been able to fire up his prized machine, an eight-ton green-painted paper compactor and baler he calls Crunch, the Magic Dragon." It has taken that long, he says, to find a suitable site on which to relocate, to move his equipment and get it back in working order. Though the state is paying him for his expenses, Gabrielli had to take bids on the moving, then pay the bills himself, submit them to the state and wait to be reimbursed. It has been a tough two years, and the litigation is just starting. There is a very real chance that when the smoke clears Gene Gabrielli will be a ruined man, but he sees no alternative.

In 1973, he located his Ecology Companies on the lot that had been occupied by Olin Mathieson. It prospered, more or less, for the next decade, growing into a more than $3 million-a-year business and allowing Gabrielli an annual income in the six figures.

Records show that in 1983 Gabrielli stopped renting and bought the land for $515,000. He says he planned to stay there, that when he bought the land he had no idea that the Hohokam Expressway was going to crash right through it. He says the parcel was ideally suited for his admittedly dirty business. He needed a lot of space to store the wastepaper and plastic and metal his company recycled, and he needed the railroad spur that charged along the property's southern boundary and rolled up to the back of the big warehouse.

It was in late 1986 that he first heard about the Hohokam. Though Gabrielli denies that he saw the project as a chance to make some quick money, he retained Louie Majors, a Phoenix businessman with a real estate background, to help him with the sale of the property. In a letter dated October 19, 1987, Gabrielli named Majors his agent in the sale of the property to ADOT and stipulated that Majors was to receive 10 percent of the gross selling price-a minimum of $1.2 million to $1.9 million depending on mutually agreed upon terms of relocation costs of equipment and building." Around this time, Gabrielli sent a letter to ADOT that announced his intention to move his resource-recovery business to a less valued property" because of the rapidly increasing land values in the area, a continuous economic development of businesses and the proposed Papago Freeway extension adjacent to the property.

In light of the above, it is no longer feasible for us to continue doing our type business in this area," Gabrielli wrote. But as is often the case in such circumstances, Gabrielli's estimation of what his land was worth was considerably more than what ADOT offered. And it took a lot longer for the state to make an offer on the land than the six to nine months Gabrielli estimated it would take for the sale to be completed. On January 3, 1989, ADOT offered Gabrielli $130,000 to buy a small section of his land-just enough to build the Hohokam Expressway-and suggested that Ecology Companies shift its operations slightly northward to accommodate the construction.

Six days later, Gabrielli responded with a counteroffer. He was unwilling to accept a partial sale-he insisted the state take all or nothing. He would accept $4,087,566 for his property, plus $1 million for the seven old buildings on it.

Basically, what Gabrielli was doing was playing an old game in condemnation cases. He acquired an optimistic evaluation of his property-about ten times more than he paid for it six years earlier-to try to make a little on the deal. Or a lot on the deal. The state on the other hand, while obligated to pay just compensation, almost always initially offers an amount significantly lower than what it eventually pays for the land. The discrepancy between Gabrielli's appraisal of the land and the state's appraisal is not unusualÏthere have been local condemnation cases where juries have awarded landowners 15 or even 20 times more than the state's final offer.

Usually these initial offers are merely the starting point for negotiations, and in a letter dated June 8, 1989, the state did revise its offer for the Gabrielli property. ADOT offered Gabrielli $411,500 for the entire parcel. On the same day as the offer, a letter from ADOT acquisition services manager Brian Rockwell was hand-delivered to Gabrielli that indicated the state was prepared to begin eminent-domain proceedings to acquire the property. On June 22, Gabrielli sent another letter to ADOT, offering to sell the property for $1,175,655. The state never responded to that letter, and a condemnation hearing is scheduled to begin this July.

The state of Arizona acquired Gabrielli's land through a venerated legal precept known as eminent domain. This process allows government to acquire private land to make public improvements. Though the law requires that the state pay the disenfranchised landowner just compensation" in exchange for the property, disputes often arise from the process.

There is a legitimate question about how much the Gabrielli property was worth before the Hohokam Expressway was built. It seemed especially well-suited for a recycling business, and probably ill-suited for almost any other use. Situated near Tempe and only a few miles east of Phoenix's central business district, it was conveniently located. The farther you have to haul your garbage, the more it costs, and Gabrielli was close to a lot of garbage. There was a railroad spur on the property that made it easy to load processed waste products onto cars and ship them out. He had plenty of land on which to stack the raw material, and no neighbors to complain about the eyesore. And though the buildings that stood on the land were dilapidated and probably worthless to almost anybody else, they were adequate for Gabrielli's purposesÏthey kept the rain off his equipment and paper.

Even before the Hohokam was built, the area was beginning to shift away from the heavy industrial use for which it was zoned to lighter, brighter and presumably more profitable uses. The meat-packing plants and feedlots that once surrounded the former Gabrielli property began to disappear about a decade ago, until now only the Stockyards Restaurant and Tovrea Castle remain as reminders of the cattle trade. Now to the east, across 48th Street, cars jerk through the parking lot of a PACE store, a new consumer clubhouse. It's not hard to imagine a small office building or warehouse on the site.

part 2 of 4

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Philip Martin