When it comes time to check off the “environmental site assessment” on the due diligence check list, some clients ask us about the cheapest and quickest option we offer. At times these Limited Environmental Site Assessments (ESAs) are appropriate and can save our clients money during the closing process. Other times, however, opting for a limited assessment can leave out important information that our clients should know before taking title to a property.
Our Phase 1/2 Limited ESA includes a site visit and very limited historical research. Our Environmental Professionals will look for any visual indications of Recognized Environmental Conditions (RECs) such as an underground storage tank or Business Environmental Risks such as asbestos, lead paint and mold. A limited ESA does not include a regulatory database search nor a full historical review.
We offer a Phase 1/2 instead of a Transaction Screen (TS) since we feel that the TS does not provide our clients with the information they are most interested in for these smaller properties, including key issues such as asbestos, lead paint and USTs. Additionally, our Phase 1/2 report puts the pertinent information in a more user-friendly narrative than the TS checklist.
As a general rule of thumb, these Phase 1/2’s are best used for small residential properties or small commercial sites in a light commercial area. Properties in dense commercial or industrial areas are much more likely to have had some historical use which should be investigated as part of the due diligence process. Larger residential properties are also at a higher risk for environmental concerns since many of them formerly had heating oil tanks or are located in commercial areas.
Below are a few examples of why a full Phase I would be useful to our clients instead of the more limited Phase 1/2:
- A review of fire insurance maps show that the adjacent property was formerly a dry cleaner. It is now redeveloped as a restaurant so no visual signs remain. Without this full historical review, our client would not have known that their site is potentially contaminated by this adjacent site.
- A review of village building permits shows that there was a heating oil tank installed on our client’s property in the 1950’s. There are no visual indications of the tank on the property, but there are also no permits for its removal. Without this full historical review, our client would not have know that there may still be an underground storage tank on their site.
- A review of the regulatory database search shows that the neighboring property is enrolled in the Site Remediation Program (SRP) through the Illinois EPA but has not yet received a No Further Remedation (NFR) Letter. A further review of the FOIA files from IEPA show that this site is heavily contaminated due to its former use as a printer. Without this regulatory and governmental agency file review, our client would not have known that their site may be impacted by this neighboring contamination.
A Limited ESA is best suited for properties such as a 6-flat surrounded by other residential properties or a small storefront in a light commercial or residential area.
If you have questions about when a Limited ESA is appropriate or concerns about a specific site, contact Natalie Neuman, Group Leader Assessment Services, at nneuman[at]gabenv.com or 773-486-2123.