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INFORMATION ABOUT
PHASE I ENVIRONMENTAL SURVEYS
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?
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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.
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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.
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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.
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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.
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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.
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