Phase 1 Environmental Site Assessments

[Ken Bradley]

Hello all! Wanted to throw up a post concerning Environmental Site Assessments. I am a recently retired Army Engineer and licensed professional engineer. Over the course of the last 10 years I've performed dozens of Phase 1 and 2's as well as Environmental Baseline Surveys, Condition of Property Assessments, an EIS or two and would love to help clear up any confusion you may have...or at a minimum get you pointed in the right direction.  I see a lot of discussion on the internets in various places that make this entirely too complicated. I just joined Bigger Pockets to learn more about investment in rental properties but I thought this might be a good way to give back and share something I actually know something about!

[Ken Bradley]

Brant,

    I think you hit on some of the rationale for not performing a phase 1.  I know some lenders require it and there is no way around it in that case.  I assume some investors have never had an issue and choose to roll the dice.  The issues are not just gas stations.  And assuming that your neighbor had one done and therefore you will be ok is definitely a bad idea.  ASTM E1527 is the standard for Phase 1's and it is very specific that the assessment is for that parcel ONLY. I.e. only looks at issues on the parcel and all other adjacent potential RECs are identified as Environmental Business Risks.  So, the risk may be on an adjacent parcel and the investor was convinced it would not effect his parcel.  Or in some cases an investor decides that the risk is worth it.  

     Also, I think some people simply look at a vacant parcel and say "there's nothing out here, I'm not paying for something to tell me there;s nothing here." I have a great example near Spanish Fort.  There is a community north of Spanish Fort called Perdido. If you just drive around you'd say there's nothing there but some country homes and a school.  However, in the late 60's there was a MAJOR train derailment there and it took 52 years for the final cleanup of the benzene in the groundwater.  

     And one final note is I don't think a lot of people understand that the EPA fines entities based upon their ability to pay.  I.e. even if a prior landowner created the issue you as the new owner could pay the bulk of the cleanup costs...crazy I know, but that's the way it works and that's why a lot of folks just perform a Phase 1 regardless.  

Kind of a long answer, but hope this helps.