Commercial real estate and construction sites typically have several layers of regulations involved. State, local, and sometimes even Federal codes need to be strictly adhered to, in order to ensure that everything is compliant. This is especially true if there is going to be a transfer of ownership with an existing commercial property.
At Hydroscience Group we have decades of experience performing Phase I & II Assessments for commercial real estate. This sophisticated and complex investigatory process will note current, as well as past property, uses dating back up to the original development of the commercial property.
What Is A Phase I Assessment?
One of the goals of a Phase I Assessment is to accurately identify any potential or existing environmental contamination concerns, as well as any liability factors. This includes assessing both the underlying land as well as any physical improvements that have been made to the property. It also includes a detailed and accurate record of prior property ownership.
It is essentially a due diligence report of existing and past environmental conditions. A Phase I Assessment is most often prepared for real estate transactions. This includes things like commercial properties, raw land purchases, structure purchases, property leasing, and existing business purchases, as well as new residential developments.
Phase I Assessment information is typically required for bank loans. However, it might also be required in property leases, or in a case where the sale of property happens in conjunction with a change in local zoning laws.
Why Do I Need A Phase I Assessment?
The American Society for Testing and Materials requires compliance on a variety of issues. The ESA Phase I assessment is the standard they adhere to with the Environmental Protection Agency and their All Appropriate Inquiries rule. This is further coded in the EPA’s federal regulations 40 CFR Part 312.
This essentially means that the Phase 1 Environmental report will be required by most financial institutions and other potential lending agencies. Most absolutely require it before approving funding for a property. Especially a commercial property.
Today the Phase I assessment is largely seen as a standard part of the process when selling or purchasing commercial or industrial real estate. It is also common for developers before starting a new residential development project.
Much of the same information is also passed on to potential insurance companies and underwriters. This makes it an important part of securing these other necessary aspects of a real estate purchase. It may also influence the premiums for an insurance policy.
How Do I Set Up A Phase I Environmental Site Assessment?
Most of the time, a Phase I Environmental Site Assessment is conducted by a local consulting firm or environmental engineering firm. Having hands-on experience in the area is certainly helpful. Fortunately, Hydroscience Group has extensive experience throughout the state of New Jersey. This allows us to make sure that the Phase I Assessment is done right, and that all potential risks on the property have been identified, and codified in a way that other interested parties or governing bodies want to read.
The Phase I Assessment essentially serves to identify all the primary factors of a site before the sale. Generally, as part of a broad inspection process. Should samples or the site’s history indicate areas where there might be a past or present problem, they will be noted for the Phase II Assessment.
What Is A Phase II Assessment?
A Phase I Assessment essentially sets the groundwork for the Phase II Assessment. Once the ES-1 information has been collected and analyzed, any potential issues will be noted for Phase II.
This is a more in-depth subsurface investigation of soil and water that may consist of things such as:
- Collecting soil samples
- Collecting groundwater samples
- Surface water samples
- Soil and vapor samples
There are several things that the assessors look for including things like the presence of chemical or metal contamination. If warranted, they may need to perform more extensive testing which could call for the use of special equipment like:
- A drilling rig
- A hydraulic push
- A hand auger
- A backhoe
Should the data collected by the Phase I Assessment turn up evidence of a potential contamination issue a Phase II assessment will be needed to confirm it, or to clearly define the extent of the problem. Some public agencies, lenders, and potential insurers may also require additional tests. This could include things like:
- A property condition assessment or PCA
- A hazardous materials survey
- A probable maximum loss report
- Further Soil Tests
- Additional ground and surface water tests
What Is The Difference Between Regulated And Unregulated Contaminants?
The Environmental Protection Agency maintains drinking water regulations that cover up to 90 well-known contaminants. They may be included in a Site II assessment if the evidence is found that they are present in the soil, surface water, or groundwater. This information must be passed on to the EPA to ensure that the highest standards and regulations are maintained.
In accordance with the Safe Drinking Water Act, the EPA must also identify and list any unregulated contaminants, which might appear in either the Site I or Site II assessment. This process also requires the EPA to periodically publish this list of contaminants which is known as the Contaminant Candidate List or CCL.
If the site history shows a past record of a regulated or unregulated contaminants in the soil, surface, or groundwater, the Environmental Protection Agency may also require further tests. This will serve to determine if the problem is still actively present, or that it has been fully remediated and the site remains compliant.
A Trusted Hand To Help Guide You Through The Process
Hydroscience Group’s training and expertise in this area help us to guide you through the process of Phase I and Phase II Assessments. Our specialist can help you understand the results of each test, the potential need for further testing, and what remediation methods that might be necessary to ensure the site is compliant. We can also provide you with the documentation required by lenders, and other regulatory agencies.
