Dec 2020 – Phase I

In 2014, Gerry Kirkpatrick wrote the article below regarding the potential cost to perform a Phase 1 Environmental Site Assessment. The information in this article still holds true today, but with some added considerations. Over the past several years, there has been increasing attention focused on contaminants of emerging concern. Most of these chemicals have been around for quite some time, but more recent information has shed light on the potential harmful effects to human health and the environment. Since the concern for these chemicals is only recent, they have not been regulated or identified as hazardous substances (until recently). Here in lies the problem. Since these chemicals had not been historically identified as hazardous, there is no record of their use, storage, or releases to the environment. The lack of historical records adds another layer of due diligence and research that will likely not be identified by the traditional Phase 1 database searches. So maybe, the cost of a Phase 1 just increased!

Here is Gerry’s original article.

“How much does it cost for a Phase I Environmental Site Assessment?”

I am asked that question weekly. I certainly don’t want to be unhelpful, but it depends.  At Environmental Standards, Inc. a “typical” Phase I ESA, undertaken using ASTM 1527-13 – the latest guidance available – usually runs around $2,000 to $3,000. That said, at complex facilities, I have had to charge as much as $45,000 or more for Phase Is; sometimes even more for environmental site assessment projects done outside the United States.

Why do some of Environmental Standards’ competitors charge less? I don’t know. Expenses alone (database searches, agency visits, site visits) now run close to $1,000, and the actual time for a site visit (usually at least 4 hours if done properly) can be costly. If a consultant says a Phase I will cost anything less than $2,000, be very careful. The product (report) you receive may not be compliant with regulations or provide you the protection you need.

Questions to ask a consultant when inquiring about a Phase I:

• Will you visit the environmental agency if there are files available?
• How long will you spend on site?
• What are the qualifications of the person doing the site visit and writing the report (not the person signing off on the report, but rather the person actually doing the work)?
• How long have you been in business?
• Have you ever been sued?

Phase I costs vary with the nature of the property (size, use, and regulatory history) as well as the client’s needs (refinance, purchase, risk tolerance). Those and other factors need to be taken into account to properly complete a Phase I and provide our clients real value. A properly completed Phase I ESA can avoid thousands, if not hundreds of thousands of dollars in mistakes, unnecessary risk exposures, and regulatory fines.

Many property investors view a Phase I Environmental Site Assessment no differently than they view a title report – just a document to have such that a box can be checked during a commercial real estate closing. I encourage those of you who think that way to reevaluate your perspective.