American property owners battling to stop energy companies from snaking oil pipelines across their lands need only look to Mayflower, Ark., for a window into what can go wrong when pipelines burst in backyards.
Eight months after an ExxonMobil pipeline leaked Canadian oil across an Arkansas subdivision, a cloud of uncertainty looms large over the young families, singles and retirees who chose the affordable, decade-old Northwoods neighborhood to establish roots. Nearly half of them have put their houses up for sale in search of a fresh start they never wanted.
“The area is blanketed with ‘For Sale’ signs,” said April Lane, a community health advocate who has worked with the spill victims. Twenty-nine of the development’s 62 homes have either been sold to Exxon under its buy-out program or are on the open market.
Some people were forced to sell because oil settled in their homes’ foundations, where removing it is nearly impossible. Others chose to leave because of fears about potential health effects and the marketability of their properties. Those who are staying aren’t necessarily doing so by choice: Many don’t have enough equity to afford a down payment on a new home in another suburb, according to local real estate brokers.
The upheaval has torn at the fabric of the once tight-knit central Arkansas neighborhood, where barbecues were regularly held and neighbors watched after each other’s kids, who played in Northwoods’ three cul-de-sacs and five streets. Ryan Senia, a 30-year-old bachelor who bought his Northwoods home in 2009, said it was either sell to Exxon now or risk “holding onto that thing forever.”
“It’s like selling a salvaged car—nobody wants to buy it.”
Indeed, only Exxon is buying in Mayflower, casting a pall over real estate prospects across the town of 2,200. The company has purchased 20 of the 29 homes for sale in Northwoods—three of which Exxon demolished after a soil assessment revealed oil in the foundations.
As far as the remaining nine, “it’s going to be really, really difficult to sell those houses,” said Jerry Hill, a broker with ERA Henley Real Estate in nearby Conway, who has been trying to sell one of the Northwoods homes for three months. “Selling them is almost impossible at this point in time,” she said.
“We’re in an ambiguous situation that’s never happened before,” said Glen Rega, an agent at the real estate company Crye-Leike who represents two sellers in Northwoods. But that is no reason for pessimism, he said. “I’m sure once the first buyer goes in there and doesn’t have any issues, then more will see the value that’s there.”
Before and After
The subdivision was thrust into this position on March 29, when 5,000 barrels of oil spewed out of Exxon’s 65-year-old Pegasus pipeline. Twenty-two homes were evacuated, almost one-third of the Northwoods development.
The leaked oil was from Alberta’s tar sands region, similar to the diluted bitumen (dilbit) that would flow through the controversial Keystone XL project, if it’s built. Dilbit has been shown to be more difficult to clean up than conventional oil—but it wasn’t on the radar of most Northwoods residents. Few if any even knew that an oil pipeline was buried under their lawns.
Before the accident, Northwoods was a typical pleasant middle-class subdivision—two-story brick homes, quarter-acre lots, big garages, wooden fences and crew-cut grass. The first home in the neighborhood was built in 2003. In real estate terms, homeowners got more house for considerably less money than in a suburb closer to Little Rock, 20 miles away. And since most people weren’t planning on moving for many years, they also got the hope of rising home values and resale values, and financial security.
Northwoods “had beautiful resale value before [the oil spill]—one of the only areas in Mayflower with nice, new homes like that,” said Kim Burks, a Crye-Leike agent who represents a Northwoods seller. While most people came to Northwoods with plans to stay for life, seven homes were put back on the market in the last few years before the spill. They all sold within three months for prices ranging from $115,000 to $189,000.
ExxonMobil bought the 20 houses for their pre-spill values of between $140,000 and $195,000. The nine houses on the market are within $10,000 of those amounts.
Whether and when those will sell—and for how much—is anyone’s guess. There’s no historical data about how pipeline spills affect home values and housing markets, because most crude oil pipelines run through rural or undeveloped areas. Angela Hill, the assessor of Faulkner County, where Mayflower is located, said the county hasn’t reduced its assessed values of Northwoods properties. “It’s a tough one because there’s not a whole lot for us to look at where it’s happened before,” Hill said. “There are lots of spills out there, but not in residential neighborhoods.”
The closest example is the BP Deepwater Horizon oil spill in July 2010. The spill didn’t foul properties, but it did soil thousands of miles of coastline and affect beachfront property values and occupancy rates in Mississippi, Louisiana and Florida. According to Alicia Hollis, a condo realtor in Okaloosa Island, Fla., nearly three-quarters of her properties lay empty immediately following the oil disaster. “People canceled in droves,” she said. Those who rented were paying 20 percent less than before. It took about three years for most rental prices to rebound, she said, and some properties values never recovered in part due to the economic downturn.
Hill in Faulkner County said it’s too early to predict how Mayflower’s real estate market will pay out.
Yet there are reasons for concern. Home mortgage lenders would be reluctant to issue loans for Northwoods properties, due both to the uncertainty from the oil contamination and the lawsuits filed by homeowners against Exxon, according to Doris Watkins, a loan originator at First Security Bank in Conway. The owners of 19 Northwoods properties are involved in about a half-dozen “joinder” suits seeking compensation for damages from Exxon and its contractors.
Properties with that much baggage typically don’t appeal to investors in secondary markets who buy up mortgages. If you want to buy in Mayflower, Watkins cautioned, bring cash—though any home tied up in a lawsuit would have to be sold without “clear title.” Meaning, the home wouldn’t be recognized as debt-free, a big turn-off for buyers.
“If I had [a house] there, I’d probably take the Exxon deal and get out,” Watkins said.
Under Exxon’s deal, called the Property Purchase and Price Protection Program, the company offered to buy any home in Northwoods at its pre-spill value. If a home was among the 22 that were evacuated and its owners wanted to sell, then Exxon would immediately buy it. If a home was among the 40 outside the zone, the owner would have to put it on the market for 120 days before seeking a deal with Exxon. For anyone wanting to remain in the neighborhood, Exxon would provide “a one-time payment for potential loss of property value,” according to the documents the company sent to residents in May. The program also provides closing costs and moving allowances, aid to tenants and help marketing homes. The offer expires in May 2016.
So far, Exxon has purchased 14 of the evacuated homes and six other Northwoods homes. “ExxonMobil will maintain and market the properties it purchases in a manner that will be considerate of the value of the neighboring properties and the rest of the subdivision,” said Exxon spokesman Aaron Stryk.
Some residents who were forced out have moved back in. Lane, the community advocate, believes they and others may soon join the exodus. “I don’t think necessarily that those people are intending on staying long-term. … They are probably waiting to see what their neighbors homes who are listed sell for.”
Ryan Senia, whose home was evacuated and is now living in a suburb of Washington D.C., felt he didn’t have much of a choice but to sell to Exxon.
After the spill, he would visit his home and watch workers wearing masks and gloves dig up his oil-filled lawn, cart away contaminated soil, backfill it and test for oil. Senia’s property was approved for re-entry in May. “Oil isn’t observable when driving past in your car,” he said. “The soil still has small amounts of oil which can sometimes be seen after rain storms. … I would not want to live there.”
County records show that Exxon paid him $165,000 for his 1,800 square-foot house, with its 500-square-foot garage.
“If there’s not a severe discount on any of these properties, why buy it?” Senia asked. “People who live on the pipeline … can they sell their house? Only time’s going to tell. In my mind, a lot of people are going to say, ‘There’s no way in hell I’d touch that.’ But I could be wrong.”
‘I Don’t Think It’s Safe’
By September, all but three of the 22 evacuated homes were labeled safe for return by the Unified Command, which responded to the spill and includes Exxon, the Arkansas Department of Health, the U.S. Environmental Protection Agency, Faulkner County and the Arkansas Department of Environmental Quality.
Tests conducted by the state DEQ found oil deep in the foundation of those three houses. The owners sold them to Exxon, which the company demolished. It was “an effective and efficient way to ensure that all of the remaining oil has been removed,” said Stryk, the Exxon spokesman.
Lane said the demolitions have driven people out. “There have been some families who have flat-out said ‘I am not coming back. I don’t think it’s safe. We are just going to find another place to live.'”
While little is known about health risks to people who live near oil spill sites, crude oil contains small amounts of heavy metals that stay with the oil as it seeps into the ground. The compounds, which include mercury, manganese, nickel and chromium, are toxic at high doses. Some, like arsenic and lead, can damage the nervous system even at relatively low doses.
Since September, the state Department of Health has been offering free health consultations anyone in the Mayflower area. Those results have not yet been released.
The effects go beyond the physical. William Mason, a physician with the department, said there is concern that people who lived in Northwoods at the time of the spill could develop post-traumatic stress disorder. He said the free consultation includes a mental health screening.
“When these people were evacuated, it was done rapidly,” Mason said. “They had to leave everything behind, figure out where their children were going to go to school. ‘Am I safe? Can I go back and get my belongings?’ I think there will be some of that element that will occur.”
Wilma Subra, an environmental consultant who has spent decades working with communities hit by chemical accidents, said that no matter how thorough the physical cleanup may be, the affected residents often suffer psychologically, and many neighborly relationships are lost. Subra works extensively with people impacted by the BP Gulf spill.
“Even if you’re able to rebuild a community, some of those neighbors will never come back, and they may be the aunts and cousins who gave you a ride to the doctor or who watched your children,” Subra said. “That support network is often ripped apart … It’s a tremendously stressful situation, and there is definitely a need for mental health counseling.”
Subra visited Mayflower in April. She said she is especially concerned for people who live outside the evacuated Northwoods section, and who have experienced respiratory problems, skin rashes, nausea or cardiovascular issues—classic symptoms of exposure to the chemicals found in crude oil, according to Subra. There is a fear that residents may not be compensated by Exxon if their health issues persist, because so little is known about how mixtures of heavy metals break down and change in the environment over time and affect people.
“I think it’s clear their problems have been caused by the spill,” Subra said. “But I can’t say their cases would be a slam dunk. I think Exxon would fight them.”
Bruce Selcraig contributed to this report.
This story is part of a joint investigative project by InsideClimate News and the Arkansas Times. Funding for the project comes from readers who donated to an ioby.org crowdfunding campaign that raised nearly $27,000 and from the Fund for Investigative Journalism.