The sellers need to ensure that their property is presented with credible and reliable reports that can add value to it and show that the real estate asset is entirely safe and free of contaminants. Buyers also rely on the site assessment reports to know the reliability and other aspects of the real estate asset.
Reasons For Carrying Out An ESA
Environmental Site Assessment (ESA) is a due diligence process and a way to evaluate any given real estate asset’s environmental liability. It is the process through which a comprehensive inquiry is conducted into the present/past uses and state of a property to know whether it suffers from any Recognised Environmental Condition (REC). The comprehensive ESA process includes visual, site, and record (including historical records) inspection and evaluation of any given property. Research of the records of property available at private and government agencies and sources is carried out as well. The report is prepared for any real state holding and can identify the existing or potential environmental contamination liabilities. Some of the reasons, due to which an environmental site assessment procedure may be carried out include:
- Divestiture of properties.
- A compulsion is laid by any regulatory agency which suspects that certain toxic conditions may be present.
- Purchase of a real asset or property by an entity or person.
- A principal redistribution of ownership.
- A partnership buyout.
- Change in the use of the property.
- A desire of the owner of the property to understand it’s toxic history.
ESA Phase 1 and Phase 2
An environmental site assessment will address the underlying issues and the physical changes to a real estate asset. Some of the contaminant sites can be the “Brownfield” sites, which developed previously, are not currently used, and can be in a potentially contaminated state. The entire procedure is carried out into different phases, while the necessity of carrying out Phase 2 may depend on the results of Phase 1.
ESA Phase 1
The phase 1 ESA or level 1 environmental assessment is accomplished to research the historical and current uses of any property, often during the commercial real estate buyouts and transactions. The ESA Phase 1 report intends to assess if historical or current property uses have impacted the land, soil, and/or the groundwater lying beneath it in any way. The efforts are to know whether these contaminants pose a threat to human health or the environment, and the findings may also affect the value of a property. ESA Phase 1 can be done for all kinds of properties, including commercial, industrial, residential, agricultural, and vacant lands. The report should also comply with the standards and regulations. The essential inclusions of an ESA Phase 1 procedure are given below.
A site visit for observing the past and current conditions and the uses of properties. The adjacent and neighboring properties may also be inspected.
A “documentation” review is based on reviewing local, tribal, state, and/or federal regulatory databases. Soil, land, storage tank releases, storage and disposal of the hazardous substances (including engineering/institutional controls and petroleum products), and other such aspects are probed upon.
A review of the local and state agency records may include the health department, fire department, building department, and the state environmental agencies.
Interviews of the past and present property owners, occupants, operators, and other people connected with the given property. Property owners of the neighboring properties may also be questioned and interviewed.
An Environmental Professional (an agency or professional qualified based on academic, professional, and experience requirements) reviews the report, and the potential environmental risks to any property are identified. Once the professional environmental agency determines the concerns, recommendations are also made to address these concerns. If the REC is identified, a recommendation for Phase 2 Environmental Site Assessment may also be made. Under the Phase 2 assessment, the soil vapor, groundwater, and soil samples would be collected and analyzed in a certified and reliable laboratory for contaminants.
The Phase II Environmental Site Assessment
The second phase of ESA will test the soil gas, soil, groundwater, and other samples to detect contamination. A special emphasis is laid on identifying any hazardous waste or petroleum product on a site’s sub surfaces.
For collecting the samples, wells and surfaces can be dug through the use of appropriate technologies. Technologies and drilling methods, including push probe, mud rotary, and CPT drilling, may be used. If there is an investigation for detecting the volatile organic compounds, the soil gas samples may be taken as well, along with soil samples. The samples for phase 2 environmental site assessment are collected and are tested upon in a certified laboratory, and the results are obtained.
The ESA Phase 1 and 2 are essential to know whether a property has been contaminated in the past or present. It is also necessary to carry out the right procedures for overcoming the defects. While the services are quite affordable, they may increase the value of any property substantially. Buyers can also rely on these reports and refrain from investing in properties that may cause trouble later on.