Phase II Environmental Testing

If a Phase I Environmental Site Assessment (ESA) identifies a recognized environmental condition or the potential for soil contamination, then Phase II Environmental Testing is performed to evaluate the potential contamination.  A Phase II involves soil, soil-gas and/or groundwater sampling and analysis to determine the presence, or absence of, petroleum products or hazardous waste in the subsurface of the site. The Phase II mostly focuses on finding the specific Areas of Concern and Chemicals of Concern discovered in the Phase 1 ESA report.  The Phase 2 is very streamlined and serves only to answer the question “is there or is there not a release of hazardous materials at the site?” It may not address “how big is it?”  To answer “how big is it” a Site Characterization or a “Phase 3” would be necessary.

When designing a Phase II ESA, the most important pieces of information necessary are:

• Areas of Concern
• Chemicals of Concern
• Local geology
• Site access issues

Drilling methods used most often during Phase II Environmental Testing projects:

• Push Probe
• Hollow Stem Auger
• Hand Auger
• Mud Rotary
• CPT Drilling

Other subsurface drilling technologies include; sonic drilling, telescope drilling, air rotary, and solid stem auger. When the Phase II Environmental Site Assessment is being done to investigate volatile organic compounds (VOCs), sampling for soil gas instead of, or in addition to, soil samples may be considered. Soil gas sampling is particularly advantageous in porous media such as sands.

Phase I Environmental Site Assessment

 

A Phase I Environmental Site Assessment is a generally accepted report for evaluating the environmental liability associated with a property, and is frequently required by lenders.

An environmental consultant conducting a Phase I ESA gathers information regarding a property to evaluate whether past or present activities may have caused contamination of the soil or groundwater.  If the Phase I ESA uncovers a recognized environmental condition (REC), the environmental consultant will usually recommend a Phase II ESA, which involves invasive soil or groundwater testing. Their information sources when conducting a Phase I ESA may include the following:

 

Site Visit

-Inspection of site and observation of surrounding properties

-Note presence of hazardous materials and potential sources of contamination

-Look for evidence of past uses of the property

 

Historical Research

-Aerial photos

-City directories

-Building permits

-Topographical maps

-Oil & gas maps

-Title information

 

Geology & Hydrogeology

-Soil type

-Ground water flow

 

Regulatory Research

-Fire department and other local agencies

-State & federal environmental agencies

 

Interviews & Document Review

-Tenants, owners and property managers

-State & local regulators

-Review provided reports

 

The widely accepted standard for conducting a Phase I ESA is the American Society of Testing Materials (ASTM) 1527-2005 Standard, although specific clients and agencies may have additional requirements and standards. The ASTM E1527-05 Standard for Phase I Environmental Site Assessments has been accepted by the EPA as meeting the requirements of All Appropriate Inquiry. The EPA’s All Appropriate Inquiries Rule governing the scope of Phase I Environmental Site Assessments went into effect on November 1, 2006 and provided specific scope requirements for a Phase I ESA to meet the requirements of CERCLA’s (Comprehensive Environmental Response, Compensation and Liability Act, commonly known as the Superfund law) innocent land owner defense.

Possible Changes to ASTM E1527 Standard

The ASTM E1527-05 Standard for Phase I Environmental Site Assessments has been accepted by the EPA as meeting the requirements of All Appropriate Inquiry. The latest revisions to the ASTM E1527 were done in 2005, and in 2012 the standard is currently under review for another round of potential changes. The Phase I Environmental Site Assessment scope of work is not anticipated to change dramatically and many of the potential changes serve simply to clarify language. However several potential changes could impact the way Phase I ESAs are conducted or written.

 

For example, a potential new category of Recognized Environmental Condition (REC) has been proposed: the Controlled Recognized Environmental Condition (CREC), which would apply to risk-based closures of contaminated sites. If adopted, this new term would impact the way findings and conclusions are discussed in the Phase I ESA Report, and could potentially impact the report user’s understanding of environmental risk. Certainly the term would require some education of the industry.

 

Another potential change to the Phase I Environmental Site Assessment process is an explicit requirement for regulatory file reviews on adjacent properties. Many environmental consultants already perform these file reviews during the Phase I ESA when deemed appropriate due to high risk information being identified at the adjacent properties (such as a leaking gas station). However, an explicit mandate for these file reviews could impact the cost and timing of the Phase I Report, as well as the environmental consultant’s liability.

A decision will have to be made in 2013 whether to adopt any changes to the E1527 standard, or renew the standard as is.

Property Condition Assessments

 

A Property Condition Assessment (PCA) is a survey of a property by an architect, engineer, or commercial building inspector in order to understand the condition of the building. A Property Condition Assessment Report (PCR) is generated and discusses each building system and its condition. Different lenders can have varying requirements regarding a PCR, but a common guide is the ASTM E2018 Standard Guide for Property Condition Assessments: Baseline Property Condition Assessment Process.

The most important part of the Property Condition Assessment Report is the Immediate Repairs table and the Replacement Reserve Table, which helps the client understand how the condition of the building will impact the assets financial performance. Safety concerns usually show up in the Immediate Repairs Table along with failing or damaged building systems, while maintenance issues that can be deferred will be in the Replacement Reserve Table.

Scope

• Site Assessment
• Interviews
• City Building Department

Building Systems Evaluated

• HVAC Systems
• Elevators
• Plumbing
• Data and Telephone
• Boilers
• Electrical
• Fire Suppression Systems

 

Building Evaluation

• Foundation
• Structure
• Roof Diaphragm
• Interior Finishes
• Building Envelope

 

Site Improvements Evaluated

• Pavement
• Drainage
• Signage
• Lighting
• ADA Access

Zoning Reports

Zoning Reports are often just added on to our other due diligence products such as an ALTA Survey, a Phase I Environmental Site Assessment, and Property Condition Assessment, and are completed in the same time frame. A zoning report is a necessary part of many real property transactions because the current owner is responsible for existing zoning violations.  If the property being sold is a restaurant in an area not zoned for that purpose, this piece of information could affect the outcome of the sale.  Zoning laws do not end at usage regulations; often times cities and municipalities have provisions on setback requirements, the height of a building, building materials, parking spaces required, etc.  Partner’s Zoning Reports take all of these into consideration as well as other regulations; such as the Americans with Disabilities Act. Our Zoning Reports are completed by a legal professional (doctor of jurisprudence), within 3 weeks and at very competitive rates. Not all firms provide this, but we feel it is significant not only to ensure proper interpretation and application of the laws and regulations pertaining to the property, but also to ensure that the research for the Zoning Reports is complete and accurate. Having a Zoning Report compiled by a legal professional ensures a deeper and more complete analysis of zoning compliance.

 

Standard Zoning Report scope of work includes:

• Determine the specific zoning designation, as established by the current municipal code;
• Determine allowable uses under the zoning designation established by the zoning ordinance and whether the present use of the subject property conforms;
• Determine the minimum parking requirement and compare to actual parking count;
• Determine the density restrictions of the property;
• Determine minimum yard or setback requirements;
• Determine building height restrictions and the asset’s compliance;
• Determine implications of any nonconformities

Probable Maximum Loss Reports

The United States is divided into four zones depending on seismic hazard risk. Typically, real estate investors, developers, property owners, and lending institutions are all concerned about assets in seismic zones 3 and 4. Obviously, the areas more prone to earthquakes have a higher risk of loss to lending institutions. To assist in the underwriting transaction, Partner performs Seismic Damageability Assessment/Probable Maximum Loss reports.

The Probable Maximum Loss, PML, is the tool used most by real estate investors and lenders to evaluate how buildings will react to a seismic event. A PML evaluates the likely costs incurred from seismic damage to structures on a given site, taking into consideration building types, critical connections, local soil conditions, and local seismic activity. The PML is intended to suggest how the property will be affected by a probable seismic event, not guarantee how the property will perform during seismic occurrence.

PMLS can be calculated for 50 years and/or 500 years and can be expressed as a “Scenario Loss” estimate. The Scenario Upper Loss (SUL) is the scenario loss that has a 10% probability of exceedance due to the specified earthquake scenario as identified in the ASTM E2026-07 Standard Guide for Seismic Risk Assessment of Buildings (the Standard), and the Scenario Expected Loss (SEL) is the expected loss value due to the specified earthquake scenario. Therefore, the SUL represents an upper loss estimate, and the SEL represents an average or expected estimate.

ALTA Land Title Surveys

An ALTA Survey, commonly required during real estate transactions or development, is a detailed map of a property displaying all current upgrades, utilities, boundaries, and significant observations within the insured estate. ALTA Surveys are governed by a set of professional standards as updated in the “2011 MINIMUM STANDARD DETAIL REQUIREMENTS FOR ALTA/ACSM LAND TITLE SURVEYS” and adopted by the American Land Title Association and National Society of Professional Surveyors.

The survey details the surveyor’s findings regarding the property boundaries and how it relates to the title. The Survey delineates or makes note of all easements (rights to use a property without owning it) and exceptions cited within the title commitment (the document describing the rights being conveyed in real property during a property transaction). The survey can also outline zoning and flood zone restrictions or areas indicating possible future uses of the property. Furthermore, the survey can also reveal specific facts about the property relating to topography, parking configurations, wetlands, etc. The components of the ALTA survey are a boundary survey, title survey, topographic survey, and a location survey.

Boundary Surveys– A boundary survey determines the property lines of a parcel of land described in a deed or reference on a legal record plat. A boundary survey is recommended before buying, subdividing, improving or building on land. Surveying the parcel before these activities ensures that the expense and frustration of defending a lawsuit, moving a building, or resolving a boundary dispute can be avoided.

Topographic Surveys– Are surveys that determine and represent on a map the contour, physical features, and other physical representations of any portion of the parcel being surveyed.

Zoning Reports– Most real property transactions require a Zoning Report along with the battery of other essential services (Phase I ESA, Property Condition Assessment, ALTA Survey, etc.). Our Zoning Reports are completed by an in-house lawyer, within 3 weeks and at very competitive rates.