INFORMATION ABOUT PHASE I ENVIRONMENTAL SURVEYS
PROJECT PROFILES:
Introduction
Many clients who request Phase I Environmental Site Assessments (ESA's) are encountering the survey process for the first time. Phase I Environmental surveys started in the late 1980's as a method to see if there are environmental liabilities associated with a particular property. Environmental liabilities can occur at a property either because of the historical uses of the property, and/or because surrounding properties have contributed to contamination of the property, and/or because of the variety of other factors which are considered during the environmental survey process. In the United States, due to the federal Superfund law, environmental problems can result in a loss of collateral value of a particular property. Therefore, banks typically require a Phase I environmental survey prior to lending money or increasing a credit line if the property is used as collateral.
What's Included?
The Phase I environmental survey basically includes:
- A review of environmental regulatory database files (state and federal) on the property and surrounding area.
- Interviews with local officials regarding the property and surrounding area.
- Interviews of the "most knowledgeable person" familiar with site history.
- Review of historical maps and information on the property.
- A site inspection.
The content is dictated by the ASTM standard covering ESA's.
What Common Environmental Liabilities are Encountered?
If environmental liabilities are found at a particular property, it is RT's policy to tell you as soon as the problem is noted. Many items are minor and can be resolved relatively quickly.
The most common environmental problems found with properties include:
- Asbestos containing materials are present, either as pipe insulation, or as vinyl asbestos tile.
- Lead paint is present.
- Tanks are or were historically present.
Another problem frequently encountered is that a surrounding property has environmental problems, and it is so close to the subject property that further investigation is needed to see if the subject property is affected.
On some properties, there may also be what is known as "historical fill." Whenever there has been filling of a property, there is always environmental concern, because fill material may not have been "clean fill" and the fill material may be contributing to groundwater contamination. In such instances, the extent of the fill and its nature needs to be determined.
What if I Need a Phase II?
Asbestos containing material is present in many properties where structures were built before 1978. Asbestos containing material may be present in pipe insulation, on a boiler, as sprayed on insulation, or in vinyl asbestos tiles. If the material is in good condition, abatement is frequently not necessary. However, completion of an asbestos containing material survey, as well as preparation of asbestos containing material O&M Plan is required under federal regulations for commercial and industrial property, as of November 1995. The ACM survey and O&M Plan can usually be completed in several days.
Lead-based paint is present in many structures built before 1980. As of Fall 1996 EPA and Department of Housing and Urban Development regulations come into effect and require that residential buyers be notified that lead-based paint is present. Many buyers and sellers want to determine whether the lead-based paint is or is not a problem. A lead-based paint survey for a small facility, residence or commercial facility, can generally be completed in one half day.
Underground Tanks - Where one or more underground tanks are present at the facility, a GEOPROBE investigation can be conducted along with field test kits as a preliminary indication to determine if the historical operation and presence of the tanks has impacted soils at a particular site. A GEOPROBE is a state of the art exploration device where a one inch diameter probe hole is installed. Field test kits are then used to see whether or not significant gasoline or oil contamination is present in site soils. Frequently, several tanks can be investigated within one day, and if contamination is present, the extent of it can be determined if it is localized.
Pesticides/Herbicides - Properties with historical agricultural uses may be contaminated with lead or arsenic pesticide/herbicide residues. We can test a composite soil sample for lead and arsenic, or conduct more detailed testing, including a more complete pesticide scan, for such pesticides as DDT.
Historical Fill - Quite frequently in urban areas, historical fill is present at a particular site. This includes rubble, coal ash, or other materials which may or may not be of environmental concern. Test pits can be installed to determine the depth and extent of the materials. Test pits can be installed to determine the depth and extent of the materials. Test pits are installed using a back hoe or hydraulic hoe. One day of test pits, along with field screening for lead using the XRF meter, and use of field test kits for volatile organics and petroleum hydrocarbons.
THE VALUABLE PHASE I SITE ASSESSMENT: ASSIGNING REAL RISK TO TRANSACTION ENVIRONMENTAL ISSUES
With the sustained growth of the region's economy, It is obvious that the volume of real estate transactions in the area has increased. Similarly, the volume of Phase I Environmental Site Assessments which we are conducting has grown accordingly. As a key component of our business, RT continues to develop new strategies which set our Phase I product apart from our competitors.
What Defines a Valuable Phase I?
The goal of the effective Phase I is not to simply identify potential problems. Many assessments commonly fail to include what the buyer and seller really need from the report, which are recommendations and conclusions as to precisely what the identified issues mean to the transaction. Frequently, the results of a Phase I site assessment indicates the obvious features of the property. In many cases, the property owner or potential buyers are, to a degree, already aware of such risks.
The challenge of the effective Phase I report, and the characteristic which gives it real value to a client is the way that it defines the liabilities associated with the features which pose potential concerns. While at first this may seem like a subtle difference, it is in fact an extremely important extension of the report which many companies fail to provide. It is important, then, for an effective Phase I to keep in mind the goals of the reader. That is, when a potential purchaser or buyer is reading a Phase I, they are thinking, OK, now what does this mean to my transaction?
Take for example, a relatively common observation: the property has an out-of-service underground storage tank on site. It is not enough for a Phase I Assessment to simply report that a UST is on-site, and list its age, size and contents. This is, in fact, of no real assistance and can hold up the transaction. The valuable Phase I, after noting that the UST is present, also addresses the following important factors: What is the nature of the upcoming transaction? What, if any, documentation can be provided to address the condition of the UST? Are there any indemnifications or other agreements in the upcoming transaction which would affect the determination of this tank as a risk? And finally, what would be the potential costs (i.e., affect on the transaction) associated with the investigation and/or tank removal to eliminate the risk?)
As illustrated above, perhaps the most important part of an effective and valuable Phase I am that the individual preparing the Phase I must understand the dynamics of the transaction itself.
Future Planned Use
In addition to the nature of the transaction, the future planned use of a subject property can affect the determination of what potential risk an issue poses. The future planned use of a property can help to determine the real risk of such issues as the presence of potable wells, lead-based paint, fluorescent lighting, waste or debris piles, and many others. Effectively considering this factor can help to define whether these issues are of great or little concern. These decisions become of particular importance when potential environmental concerns are identified inside a building or structures, such as the presence of lead-based paint or asbestos-containing material. In these circumstances, the valuable Phase I will address the following questions:
- What is the client's role in the pending transaction?
- What degree of public or private occupancy or use of the property is planned?
- Is the structure to be partially renovated, fully renovated or demolished?
- Is there to be continuous or part-time residential occupancy of a building, and will children be on the property?
- What is the cost of the abatement of these risks found, and how will it affect the upcoming transaction?
All of these factors, when properly considered, help to create an assessment that is of real value to the client. Essentially, the value is derived from the assignment of real, quantifiable risk to the issues found on a property. Since these quantifiable items are often factors into the price of a property as part of transaction, it becomes a very important part of the negotiation and closing process.
Please call Gary Brown at (610) 265-1510 for more information or questions regarding Phase I's, or use the Request for Services form to obtain a proposal within 24 Hours.
24 HOUR PROPOSAL TURNAROUND
