The Importance of a Phase I Environmental Site Assessment
Zack Rieger | 12/6/2018
Making commercial real estate purchases can be a cumbersome task. The transaction can be riddled with devastating liabilities that could cost the investors far more money than was initially agreed upon. To prevent situations like these and to protect potential lease, purchase, sales, or financing of properties, environmental due diligence must
be performed. Performing Phase I Environmental Site Assessments (ESA) are essential to avoiding liabilities and managing environmental risks.
Robert Fagerness, Senior Engineer and Project Manager for eScreenLogic explains, “While financial institutions have multiple tools for identifying environmental risk, the most widely accepted and gold standard is a Phase I ESA.” He continues by explaining that the report is typically performed by environmental professionals, such as himself, during the escrow phase of a commercial real estate transaction.
The requirements for a Phase I ESA vary from lending institution but is typically required as means of due diligence to avoid potential environmental risk and liabilities. Each Phase I ESA report follows the guidelines set forth by the American Society of Testing Materials (ASTM) guidance document No. 1527-13. So why is a Phase I ESA important to have?
Fagerness states, “A Phase I ESA is important for a lender to safeguard their investment. Environmental Due Diligence is needed to ensure that a lender is not inheriting someone else’s environmental legacy, should the borrower default. From the forgotten historic corner gas station sites, auto repair facilities, industrial manufacturing sites, to historic dry-cleaner sites, there are numerous past activities which could have environmentally impacted subsurface media at commercial sites and to a lesser degree, residential sites. The Phase I ESA is a small price of the overall purchase price on a real estate transaction. I compare the Phase I ESA report to that of a title search that is performed prior to a purchase or re-finance.” He continues, “The procedure is needed to ensure the investment is sound and that there are no skeletons in the closet.”
What makes eScreenLogic’s Phase I ESA different from other due diligence firms? While the process of conducting a Phase I ESA is very similar to that of others, what sets eScreenLogic apart is the in-house knowledge, environmental expertise, attention to detail, and ability to perform assessments and complete the procedure in a timely manner. “We pride ourselves on completing the project within budget and on time as requested. We understand that many times our clients are under pressure to ‘close the deal’ in extremely narrow time frames…” eScreenLogic’s unique proprietary database [in development] is continually growing. Paired with powerful desktop evaluation tools, eScreenLogic’s Environmental Professionals can gather regulatory information expeditiously and complete a client’s request in a timely manner.
Environmental Due Diligence can save lenders, investors, and owners millions in costs and liability. Performing a Phase I ESA offers detailed accounts of a property’s past utilizing site history and regulatory databases. eScreenLogic makes their clients the priority, working with industry leading Environmental Engineers and Professionals to get your evaluation completed thoroughly, with time to spare.