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Stigmatization can cause a reduction in the value of the property
even when the environmental hazards have been remediated or
mitigated. See In re Custom Distribution Servs., Inc., 216
Bankr. 136, 154-155 (Bankr. N.J. 1997) (reducing fair market
value of property by 20 percent to account for environmental
stigma); Inmar Associates Inc. v. Borough of Carlstadt, 549 A.2d
38, 45 (N.J. 1988) (“not reasonable to conclude that contaminated
property is unmarketable, but stigma of contamination and other
factors suggest that capitalization rate may have to be altered
to reflect condition” (citing Patchin, “Valuation of Contaminated
Properties”, The Appraisal Journal 7 (Jan. 1988))).
A landlord takes on much greater risk when leasing property
to an independent operator of cardlocks (such as petitioner) than
when leasing the same property to a major oil company, because of
the difference in the lessee’s financial strength. An
independent operator may not have the financial wherewithal to
respond to a significant environmental problem, which would leave
the landlord primarily liable for the cost of the cleanup. A
landlord would thus likely require a greater return (by requiring
the payment of more rent) when leasing property to a small
independent operator of underground storage tanks than when
leasing the same property to a major oil company.
The additional credit risk assumed by a landlord leasing
property to an independent cardlock operator rather than a major
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