Phase I Environmental Site Assessment
Federated Environmental will complete your comprehensive Phase I Environmental Site Assessment (ESAs) in accordance with the (a) United States Environmental Protection Agency (USEPA) Standards and Practices for All Appropriate Inquiries {(AAI), 40 CFR Part 312} and (b) guidelines established by the American Society for Testing and Materials (ASTM) in Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process /Designation E 1527-13 (ASTM Standard Practice E 1527-13): Phase I Environmental Site Assessment for real estate transactions, property development, bank financing, re-financing, securitizations, and foreclosures, and other in-house proactive risk management programs.
The Phase I Environmental Site Assessment is “Exhibit A” in your innocent landowner, bona fide prospective purchaser (BFPP), and contiguous property owner (CPO) defenses. Collectively, these are your landowner liability protections (LLPs). Environmental due diligence begins here.
The purpose of a Phase I Environmental Site Assessment is to gather sufficient information to develop an independent professional opinion about the environmental condition of the property and to identify actual or potential environmental contamination which may impact the property value or effect claim to an “innocent land owner” exemption following acquisition. Assessments are also performed at end-of-lease cycles between tenants, to prepare a loan portfolio for securitization, or to evaluate a tenant’s activities within a leased property for insurance purposes. In many instances, the SBA requires a Phase I Environmental Site Assessment to qualify for its SBA 7A and 504 loan programs.
The establishment of an “innocent landowner” defense against joint and several liability pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA 1980-81), and perhaps more importantly the Superfund Amendments and Reauthorization Act (SARA, 1986), requires individuals contemplating acquiring a property must satisfy an “all appropriate inquiry” and perform “due diligence” into the property history and ownership. This inquiry requires that the individual obtain an environmental assessment by a registered environmental professional to determine whether a property is subject to contamination or contains hazardous materials.
Federated Environmental’s real estate clients have relied on our Phase I Environmental Assessment product for over two decades. Developed with our experience and commitment to technical and regulatory competence and on-time delivery, a Phase I Environmental Site Assessment from Federated Environmental is a remarkable value. Federated Environmental’s scope of work and report formatting are easily tailored to client specifications. Our Phase I Environmental Site Assessment scope of work includes (if requested) additional “non-scope” items such as preliminary evaluations for asbestos-containing building materials, lead-based paint, radon gas accumulations and water quality.
Phase I Environmental Site Assessment Components:
- Project Synopsis, Scope of Work, and User Reliance: a summary of the ESA purpose, applicable standard, user, and project limitations.
- Subject Property Description: a description of the property, improvements, flatwork, utility services and the enviro-geographic setting (topography, geology and hydrogeology).
- Historical Records Research: a review of historical fire insurance maps, city directories, title records, local and state regulatory files for the subject property and surrounding properties; dating back to the property’s first developed use (an ASTM requirement).
- Property Physical Site Inspection: a evaluation of current site operations, occupants of adjacent properties and the surrounding area. Possible environmental concerns and recognized environmental conditions (RECs) identified are confirmed with key site personnel with specialized site knowledge.
- Environmental Risk Analysis Report: provides professional conclusions and recommendations on which to base your environmental risk determination.
Federated Environmental utilizes a number of quality controls to ensure that Phase I Environmental Site Assessments are completed in a uniform, professional, and cost-effective manner. Phase I Environmental Site Assessments are completed using the pending ASTM E 1527-05 Standard Practice for Environmental Site Assessments: Phase I Environmental Site Assessment Process. Completed Phase I Environmental Site Assessments are peer-evaluated to include a series of reviews for thoroughness and accuracy. This quality control process is completed by a team of Sr. Project Managers and Professional Geologists operating from Federated Environmental’s main office in Baltimore, Maryland. Sr. Project Managers have a significant experience conducting Phase I Environmental Site Assessments that make them uniquely qualified to assess the potential for liability in real estate transactions.
Small Business Administration-Backed Loans (SBA Loans)
Federated Environmental Associates, Inc. has conducted well in excess of 10,000 Phase I Environmental Site Assessments for SBA 7A and 504 loan programs on real properties nationally over the past 15-years for both the new loan and asset recovery department of bank and non-bank mortgage lenders.
Issued September 23, 2013 and effective January 1, 2014, the U.S. Small Business Administration has issued the revised, updated version of the requirements for the agency’s 7(a) and Certified Development Company (CDC) loan programs. All documentation submitted in support of SBA-backed loans needs to be updated to reflect SOP 50 10 5 (F), not its predecessor, SOP 50 10 5(E).
Phase I Environmental Site Assessment Samples
Project: Phase I Environmental Site Assessment
Client: Large Manufactured Home Community Development and Management Company
Project Location: Robinsonville, Mississippi
Federated Environmental was retained to perform an environmental assessment of 288 acres of raw land for a proposed new community development. During the assessment, Federated Environmental discovered that the property (a cotton field) regularly flooded to a depth of several inches in the spring, a fact that was overlooked by the developer’s acquisitions officer and apparently withheld by the seller. Federated Environmental’s discovery of this condition saved the developer hundreds of thousands of dollars in development modification costs and additional potential liability. The developer successfully used the obtained information to get a significantly reduced selling price on the property. Today, a new community is located on the property without any flooding problems.
Project: Phase I Environmental Site Assessments (Portfolio)
Client: Fast Food Restaurant Real Estate Investments Trust (REIT)
Project Location: State of Florida
Federated Environmental was retained to perform environmental assessments of 37 fast food restaurant in the State of Florida using a Portfolio Asset Ranking Program. Using this program, Federated Environmental quickly categorized the properties as high risk and low risk, and proceeded with the appropriate level of inquiry based on the perceived risk. Of the 37 properties, 4 were dropped from the portfolio as being too high risk and 18 were determined to be low risk. For those 18 Federated Environmental proceeded with limited Transaction Screen assessments. Full Phase I Environmental Assessments were conducted on the remaining 15 properties. By using this protocol, Federated Environmental was able to save the client over $30,000.00 in assessment fees and associated time delays. The REIT financed the acceptable properties in an accelerated manner and at a reduced cost.
Project: Phase I Environmental Site Assessment
Client: Large National Bank
Project Location: Banning, California
Federated Environmental was retained to perform an environmental assessment of a small cassette tape manufacturing company. The inspection revealed that the property was abandoned by the owners and over 80 drums of hazardous chromium salts and solvents were left on-site in unlabeled and improperly stored drums. Significant chromium contamination of the soil on-site was readily observable from its neon blue color. Federated Environmental alerted the client, who requested that we notify the appropriate authorities. Under the federal Superfund Program and the State Hazardous Waste Site program, the property was subsequently investigated and cleaned up at a cost of $500,000.00. In addition, Federated Environmental was subpoenaed to testify against the prior owners by the Harris County District Court. In addition to creating and abandoning a hazardous waste site, federal authorities discovered that the cassettes were being duplicated in violation of copyright and exported to Mexico.
Project: Phase I Environmental Site Assessment
Client: Multifamily Housing Authority
Project Location: Hagerstown, Maryland
Federated Environmental was retained to perform an environmental assessment of a four story, 30 unit apartment building slated for renovation under a variety of federal programs. During the assessment, Federated Environmental discovered extensive lead-based paint in extremely poor condition. Federated Environmental was subsequently retained to work with the building owners, architects, and lead paint contractors to develop a lead paint abatement specifications package. Prior to Federated Environmental involvement in the abatement process, the projected abatement cost was $550,000.00 with an extremely limited scope of work. In addition, the obtained contract did not contain any contingencies or details on the abatement processes or specific work areas. The completed specifications package developed by Federated Environmental saved the housing authority over $200,000.00 on abatement costs and loss of time.
Project: Phase I Environmental Assessment
Client: Residential Neighborhood Coalition
Project Location: Aurora, Colorado
Federated Environmental was retained to perform an environmental assessment of a residential neighborhood that was formerly the location of a tritium spoils (radioactive waste) dumping area. Through the use of historical air photographs and review of military documents forwarded based on a Freedom of Information (FOIA) request, Federated Environmental was able to identify the area of the low level radioactive waste dumping within the neighborhood, which covered several blocks. Federated Environmental was subsequently hired to perform extensive testing of the area for radioactive elements, radon, and radon daughters (decay substances of radioactive waste). The testing revealed some radon accumulations in the area, but not enough to represent a significant risk. No significant radiation generation was noted during the testing. When the testing was completed, the US Department of Defense (DOD) requested a copy of the results. After the DOD read the report, they issued a letter stated that the tritium spoil piles were removed from the area two decades ago.
Project: Phase I Environmental Site Assessment
Client: National Shopping Mall Management Company
Project Location: Pittsburgh, Pennsylvania
Federated Environmental was retained to perform an environmental assessment of a 1.8-million SF shopping mall for interested purchasers. In addition, the bank hired their own environmental consulting firm to perform an assessment. The bank reviewed their own consultant’s report and made the loan. The interested purchaser briefly reviewed the Federated Environmental report, however, it was not used as part of the settlement package. The Federated Environmental report noted friable asbestos located above the ceiling tiles and on ductwork near and above the ceiling. The bank’s consultant’s report did not. At the completion of the transaction, the mall purchaser began an extensive renovation, and in the middle of the project, discovered friable asbestos dust and debris everywhere throughout the mall. The purchases were forced to close the mall during the renovation, and as a result, sued the bank’s consulting firm for the cost of the abatement and all of the projected mall receipts from Thanksgiving through Christmas of that year. Federated Environmental’s report, although unread by the lender, was found to be complete with regard to the ACM and the risk associated with renovation activities by legal representatives of both sides.
Federated Environmental has completed this Phase I Environmental Site Assessment and many more to the satisfaction of our clients. If you would like further information, please contact us. We are always happy to discuss USEPA requirments and our services.