Although there is a widely used standard (ASTM 1527-00) outlining the scope of a Phase 1 Environmental Site Assessment (ESA), there should be differences in their costs, sometimes significant differences.
Should an ESA for a 5-acre chemical plant that is listed on environmental databases and that has undergone Phase 2 investigation and remediation cost the same as a Phase 1 on an office/warehouse building? Should the cost of an ESA on an active gasoline station cost the same as a medical office building in a residential neighborhood?
These are a number of issues that must be considered in deciding the cost of an ESA. These include some of the following:
- Size of Property and number of tenants
- Number of buildings and their current uses
- Past use including age of development of the Property and nearby area
- Previous Phase 1 and Phase 2 environmental work performed on or near the Property and the quality of that work
- Current use including physical condition
- Planned future use
- Current and historical use of adjacent parcels and surrounding area
Some environmental consultants charge a single price for all ESA projects. The reasoning is that what is lost on one project will be made up for on the next. One problem with that approach are that it is not fair to the buyer of the simpler Property.
More significantly there will necessarily be a conscious or unconscious effort to simplify the scope of work performed and the information provided for the more complicated Property. The ASTM standard requires review of specific minimum records for assessment purposes.
There is no way to simplify the ESA process if the buyer and the bank want dependable comprehensive information. Good decisions about the need for Phase 2 work can only be made from good and complete information that is obtained from a Phase 1 ESA.
ERAS recommends an avoidance of a single price ESA. The cost of an ESA project should be made on a case-by-case basis based upon specific characteristics of the Property. Call us if you have any questions about what is standard and what is not for any particular property.