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When you choose an environmental professional to perform a Phase I Environmental Site Assessment (ESA), it’s important to choose the right one. Choosing an environmental consultant on the basis of cost or convenience alone could end up being the most expensive part of your real estate acquisition.

Does your environmental consultant have the experience and resources you need?

Phase I ESAs performed by firms with limited staff and resources can miss issues – expensive issues. Does your ESA provider follow the ASTM and AAI scopes of work? Do they research multiple sources to develop the full history of your property? When environmental problems aren’t identified during the Phase I ESA stage, it’s the client who will end up paying.

Can your Phase I environmental consultant provide local guidance?

Does your environmental consultant understand and work with local regulatory programs? Many states have specific regulatory programs and requirements for assessing former industrial sites, like New Jersey’s Industrial Site Recovery Act (ISRA), or for documenting existing contamination, like Michigan’s Baseline Environmental Assessment (BEA) program. Only a company familiar with the local regulations can help you choose what’s appropriate for your site and your deal.

Does your Phase I environmental consultant understand your development plans?

While a basic Phase I ESA might allow you to obtain financing, only a firm with remedial redevelopment experience can identify development hurdles like Activity and Use Limitations (AULs), risks associated with changing a property’s use, or costs associated with the management and disposal of impacted soil or groundwater during the development process. Don’t get surprised by a multi-million-dollar soil disposal bill – work with a firm with the experience to evaluate potential redevelopment costs before the deal gets signed.

Relying on a report prepared for someone else means relying on a vendor working in their best interests – not yours.

It’s important for a potential purchaser to get their own environmental report. Relying on the seller’s environmental reports can be costly if the seller’s consultant has soft-balled a potential issue with the site. The goal of a Phase I ESA is not just to check a box on a financing form; it allows you to identify potential environmental issues that could cause unexpected expenses, construction delays, and legal ramifications – before a deal has been made. The first step in truly understanding the environmental risks to a real estate transaction is choosing a Phase I vendor who brings more to the transaction than a checked box.

Author

Genevieve Reynolds

Senior Project Manager