Phase 1 ESA

A Phase 1 Environmental Site Assessment is a fundamental part of the real estate due diligence process and provides critical information about environmental liabilities associated with a property being purchased.

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What Is A Phase 1 ESA?

A Phase I Environmental Site Assessment (Phase 1 ESA) is an investigation of a property’s current and historical use. The process views and investigates a property in regards to former use in order to determine if there is a potential for hazardous conditions that might be present on the property. Typically, a Phase 1 environmental study involves an on-site inspection by an environmental firm with detailed photography to document conditions.

Lenders require a Phase 1 Environmental Site Assessment for all properties that are greater than 4 units. 100% of the time, lenders will require a Phase 1 study for commercial properties. For multifamily properties – it can go either way. A Phase 1 ESA interviews with past and present building occupants, and with owners of neighboring properties are also conducted to validate past uses. A Phase 1 ESA does not involve any testing of things like paint, soil, or moisture, though a visual inspection may indicate the presence of hazardous materials.

Our firm offers complete, thorough, and expedited Phase 1 ESA and consulting that is uniquely tailored to real estate developers. Our Phase 1 studies are performed by certified environmental professionals (EP) who are predominantly looking for indications of hazardous materials or other signs of conditions that would impact the health and safety of the area due to contaminants or hazardous conditions. Our goal is to provide you with a simple process that keeps you involved & informed throughout the process. When looking at Phase 1 Environmental Site Assessment companies, you won’t find a simpler choice than the team at Essel Environmental.

Speak with one of our friendly client representatives today to discuss your needs and how we can quickly and efficiently meet them. Call us at +1 (800) 595-7616 or use our quick and easy to fill out contact form. We are here to serve you!

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Phase 1 Environmental Site Assessment

How Long Does a Phase 1 ESA Take?

A Phase 1 ESA takes anywhere from 2 – 3 weeks. The team at Essel Environmental will give you the verbal within 1 week to let you know whether it’s a “green light” or “red light.” Then, if you want to proceed – we will complete the Phase 1 Environmental report.

How Much Does a Phase 1 ESA Cost?

Phase 1 Environmental Site Assessments cost anywhere between $1,800 to $4,600. The cost is dependent upon property location, and the complexity of the site’s history and uses.

A Phase I environmental site assessment can confirm suspicions about whether or not a property has potential risks, but it acts as only a single layer of a complete assessment process. It does not include collection or evaluation of soil samples, water, lithological analysis, radon testing, or any other kind of lab analysis. The study can determine whether a Phase 2 ESA needs to be conducted, or it can confirm that a site is indeed “clean” so that the sale of the land may proceed.

Phase 1 ESA Investigation

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Frequently asked questions on the Phase 1 ESA

Site Visit

  1. Inspection of the Site
  2. Catalog the Presence of Hazardous Materials or Petroleum Products

Historical Research

  1. Historical Aerial Photographs
  2. Reverse Street Directories
  3. Building Permits
  4. Planning Records
  5. Topographical Maps
  6. Sanborn Fire Insurance Maps
  7. Department of Oil and Gas Maps
  8. Title Information

Geology and Hydrogeology

  1. Soil Type
  2. Geological Setting
  3. Groundwater Depth

Regulatory Research

  1. Fire Departments
  2. State Environmental Agencies
  3. Federal Environmental Agencies

Interviews and Document Review

  1. Interview Tenants and Owners
  2. Interview State and Local Regulators
  3. Review Provided Report

If you are buying or financing a property, you want to know if any contamination or hazardous conditions exist before the transaction. This is important because you may be paying the cost of the clean up. Therefore, the Phase 1 ESA is crucial in protecting the buyer or lender from future liability.

A Phase 1 ESA is conducted for commercial and industrial properties, rural land, open undeveloped land, and residential multi-family properties. As such, nearly all real estate transactions involve a Phase 1. However, for multifamily properties, it can go either way.

In addition, lenders require a Phase 1 for all properties that are greater than 4 units. 100% of the time, lenders will require a Phase 1 environmental report for commercial properties.

The ASTM 1527-13 standard highlights the scope of the work involved in a Phase 1 ESA. The standard is updated every few years to reflect revisions made by the ASTM committee.

Its primary function is to break down the sections of what a Phase 1 ESA covers and highlight the credentials an environmental professional must possess in order to be allowed to perform the Phase 1 Environmental Site Assessment.

Phase 1 Environmental due diligence must be performed by an “Environmental Professional” trained under ASTM standards and experienced with CERCLA requirements, with additional local requirements. It is critical for inspectors to be aware of any state or local site assessment requirements. These requirements are often different than federal ASTM standards. Typically, Phase 1 reports are performed by environmental engineering consultants.

Most authorities recommend hiring an experienced consulting firm. Phase 1 environmental reports require very specific information and language in order to protect the property buyer from future liability. Hiring a firm with insufficient experience or training can only compound your risk if the report fails to provide you with accurate data.

In accordance with the Environmental Protection Agency (EPA) regulations, mold, asbestos tech, and home inspectors are not allowed to conduct a Phase 1 Environmental Site Assessment report, unless they meet the qualifications of being an environmental professional. All firms need to include a statement of qualifications in the Phase 1 reports they conduct, proving their experience and education for conducting an ESA.

The assessment will be relied on buyers, sellers, investors, lenders and insurers. The risks are high, and there’s no need to make them higher by using an inexperienced consultant.

For property buyers, it is important to know what a Phase 1 assessment is and what it isn’t.

Phase I ESAs do not involve any testing of things like paint, soil, or moisture, though a visual Phase 1 inspection may indicate the presence of hazardous materials. A standard ESA Phase 1 investigation also does not address some serious contaminants such as asbestos, lead-based paint, and mold. These are covered under a separate Hazardous Materials Survey. A full hazardous materials inspection is not required by a Phase I.

There are six major outcomes from a Phase 1 ESA:

  1. Clean bill of health: No further action is needed.
  2. Recognized Environmental Condition (REC): the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property.
  3. Material threat: a physically observable or obvious threat, which is reasonably likely to lead to a release that, in the opinion of the environmental professional, is threatening and might result in impact to public health or the environment.
  4. De minimis condition: a condition that generally does not present a threat to human health or the environment, and that generally would not be the subject of an enforcement action if brought to the attention of appropriate governmental agencies.
  5. Controlled Recognized Environmental Condition (CREC): A recognized environmental condition resulting from a past release of hazardous substances or petroleum products that has been addressed to the satisfaction of the applicable regulatory authority.
  6. Historical Recognized Environmental Condition (HREC): A past release of any hazardous substances or petroleum products that has occurred in connection with the property and has been addressed to the satisfaction of the applicable regulatory authority or meeting unrestricted residential use criteria established by a regulatory authority, without subjecting the property to any required controls.

If anything comes up in the Phase 1 environmental report that indicates the presence of hazardous materials, a Phase 2 is usually needed. A common dealbreaker for any real estate transaction is the presence of a Recognized Environmental Condition (REC), which can be found during a Phase 1. A REC is the presence or likely presence of any hazardous substances or petroleum products in, on, or at a property. Some RECs include dry cleaners, auto repair facilities, underground storage tanks, or even a toxic radioactive dump site.

Although a REC can be a dealbreaker, the regulations were updated in 2013 to make it possible to clear a property with a Recognized Environmental Condition for unrestricted use under certain conditions when the contamination is deemed to be sufficiently contained and controlled.

The Phase 1 is the fundamental start to the due diligence process and usually always step one. A common misconception is that a clean Phase 1 is the end of the road and you will never have to worry about anything related to the subsurface on your site. Although the Phase 1 ESA is a good way to get an idea about the history of the site, its purpose isn’t to cover everything.

Commonly, if a Phase 1 ESA is requested for a refinance and it comes back “clean” then usually that is all the lender needs. This is the simplest scenario. Unfortunately, we are always speaking with developers that have had a clean Phase 1, but as they moved forward in the development or approval process, they were required to do further investigations, soil sampling, etc.

In California, developers have to get approval through the planning commissions, building departments and other agencies. In addition, there are requirements from the approval agencies, specifically planning, to makes sure there are no potential issues in the subsurface. As a result, even though a Phase 1 ESA may be clean, the request to do a further investigation may not go away.

The subsurface is a unknown environment. There is no way to be 100% certain that a subsurface investigation would yield clean samples, even in the case of a clean Phase 1. As such, the Phase 1 won’t investigate imported soil that may have happened 50 years ago or fill material that may be present.

There is no way to know what is ahead by just relying on a Phase 1 ESA, which is why you must depend on your environmental consultant to provide with you with guidance not just on your immediate need, but also what is ahead.

When you need Phase 1 ESA services near me, you can’t go wrong with Essel Environmental. Our experienced team offers services to California and the surrounding areas, with a national reach – ensuring that you can arrange a due diligence assessment for your commercial property regardless of location.

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