Environmental Site Assessments – Property

WHAT IS A PHASE I AND PHASE II ENVIRONMENTAL SITE ASSESSMENT?

Many people are unfamiliar with what a Phase I and Phase II Environmental Site Assessment (ESA;s) are, and their difference. Phase I and Phase II ESA’s can help you to minimize the risk management that hazardous materials could cause you down the road. To put it simply, a Phase I Environmental Site Assessment determines the potential for dangerous substances, site contamination, while Phase II will tell you if those substances are already present in the environment. However, there are other detailed site assessment differences to help understand how each can help you as you establish your business space.

Phase I Environmental Site Assessment

The goal of a Phase I Environmental Site Assessment is to determine the probability that a building environment or building site has been contaminated with a hazardous substance. This phase of an Environmental Site Assessment can sometimes be time-consuming as it typically involves reviewing property records, site inspection for any visual evidence contamination has occurred, and sometimes interviews with previous owners, occupants, or local government officials to produce an assessment report. Usually, there are no samples taken to be analyzed during Phase I Environmental Site Assessments, but you should still consider having it performed by professional consulting services who has been trained on regulatory standards.

Some of the things a site inspector might look for during this phase of site assessment from visual observations and records reviews include:

• Material containing asbestos
• Lead-based paints
• Molds
• Natural disaster hazards
• Radon testing

A Phase I Environmental Site Assessment will not only tell you about the potential for environmental problems in your space, it also looks at activity in the surrounding area. If a nearby business has experienced any issues with site contamination, an site inspector will make a note of it for the next phase of site testing.

Phase II Environmental Site Assessment

Should the site inspector performing your Phase I Environmental Site Assessment find an issue, it is likely they will recommend moving on to the next step in the process – a Phase II Environmental Site Assessment. The purpose of a Phase II Environmental Site Assessment is to determine if a property has been contaminated with potentially hazardous or toxic materials. This assessment phase involves the actual collection of samples from the property to be analyzed. Some of the tests a certified professional may perform during Phase II Environmental Site Assessments include:

• Sampling of the soil and water for signs of site contamination
• Interior inspections for molds, radon or lead paint
• Comparing lab results to the guidelines set by the government
• Use of land related to protected areas, such as wetlands, ecological resources or endangered species.

These tests, along with information from the Phase I Environmental Site Assessment will be used to determine if other inspections are needed, and the potential for any removal of materials or cleanup of the property.

WHY SHOULD I HAVE A PHASE I AND PHASE II ENVIRONMENTAL SITE ASSESSMENT?

The main reason people decide to have Phase I and Phase II Environmental Site Assessments is because they are looking to purchase commercial property. Due to the seriousness of the materials and conditions these inspections find, it can mean a big financial hit to the owner, as well as how the property can be used, or if it can be used.

Protection from Liabilities

Starting a business is hard enough as it is. But imagine moving into a property and then discovering there are site environmental issues, leaving you with the financial burden. While a Phase 1 Environmental Site Assessment does not always identify all problems, it will at least show that you tried to do your due diligence in trying to do a environmental impact assessment if there were problems with the property before you bought it.

Business Risks

Issues are often found in buildings that are no longer being used for their original purpose. Have you seen a restaurant that has re-purposed an old factory or gas station? It is not uncommon but does come with the risk assessments that previous operations could have left the space contaminated. It is not uncommon for these properties to have issues with the soil or groundwater or other site contamination.

Requirement of Lenders

If a business or commercial loan is involved in the purchase of the property, you will likely need a Phase I Environmental Site Assessment to get approved. Your lender will need to know that there are no contamination issues that could decrease the value of the property, especially if it could mean the business will not be able to meet the requirements of repaying the loan.

Future Sales of the Property

Just like you, potential buyers and lenders will want a full history of the property for risk management. If a Phase I Environmental Site Assessment has not been performed, they will likely require one for liability purposes. This could turn up many issues, as you know, leaving you, the owner, responsible for cleaning up or removing any site contamination problems with the property. Depending on the severity of the issue, this could hold up the sale of the property for longer than expected.

CONTACTING A PROFESSIONAL FOR PHASE I AND PHASE II ENVIRONMENTAL SITE ASSESSMENT

Consider this as a business owner: You would not want to hire an employee without knowing their history. The same is true for commercial property you are considering buying. If there are issues with the site property, you will want to know exactly what you are dealing with. You will need the help of a professional who knows the regulations surrounding contaminated properties and risk management.

Environmental Assessments

As you consider an environmental consultant, you will want to consider:

• Compatibility – previous work with similar businesses, experience with your local or state government, experience with specific pollutants
• Credibility – references from previous clients, reputation with current clients, years in business
• Cost – do understand what you are paying for, consider your budget, obtain a detailed scope of the project

CONTACTING A PROFESSIONAL FOR PHASE I AND PHASE II ENVIRONMENTAL SITE ASSESSMENT

Consider this as a business owner: You would not want to hire an employee without knowing their history. The same is true for commercial property you are considering buying. If there are issues with the site property, you will want to know exactly what you are dealing with. You will need the help of a professional who knows the regulations surrounding contaminated properties and risk management.

Environmental Assessments

As you consider an environmental consultant, you will want to consider:

• Compatibility – previous work with similar businesses, experience with your local or state government, experience with specific pollutants
• Credibility – references from previous clients, reputation with current clients, years in business
• Cost – do understand what you are paying for, consider your budget, obtain a detailed scope of the project