KEY CONCLUSION: Comfort letters from regulatory agencies are required for financing of properties contaminated by migration from offsite sources. Obtaining a letter could cost $1,000-$30,000 and require approximately 3-4 months.
A Comfort Letter, sometimes known as a Property Status Letter, has become an essential part for financing of properties contaminated from an off-site source. This letter is issued by a regulatory agency Regional Water Quality Control Board (RWQCB), Department to Toxics (DTSC) and the Environmental Protection Agency (EPA), depending on which agency provides oversight for the site which caused the contamination.
This letter is issued by a regulatory agency and specifies that the subject Property is not the source of contamination in groundwater beneath it but is from an off-site source (known or unknown).
The United States Small Business Administration (SBA) requires this letter for financing contaminated properties and many conventional lenders are following suit if contamination has impacted the subject Property.
The agencies usually require a comprehensive Phase 1 Environmental Assessment (ESA) to carefully document the previous uses of the Property.
The agency will want to know whether the previous uses could have involved the uses of the same solvents that are in the groundwater from the off-site source.
Besides summarizing the complete history, the regulatory agency will usually want verification that the Property is contaminated and therefore it is often necessary to perform Phase 2 soil and groundwater investigation. Historical Phase 2 information may also be valuable for agency determination. See next page for recent sample projects:
ERAS has significant recent experience in obtaining comfort letters and the following is a summary of several recent projects:
1500-1501 Space Park Drive, Santa Clara
ERAS transmitted ESA report to representative of RWQCB. The Property was located in a well known plume of volatile organic compounds (VOC) aka solvents. Historical research indicated no historical use of these chemicals at the Property. No further documentation was required to obtain letter.
Total time to obtain Letter: 3 Months
3266-3324 Investment Boulevard, Hayward
Monitoring wells were discovered near the up-gradient and down-gradient borders of Property. Samples collected from wells indicated solvents in the up-gradient well but not the down-gradient well. Results of Phase 1 and Phase 2 monitoring results were provided to representative at the RWQCB.
Total time to obtain Letter: 2 ½ months
462-472 Vista Way, Milpitas
Contamination by solvents detected on up-gradient Property line. After review of ESA by RWQCB six soil borings and two sub-slab vapor sample borings were proposed and agreed to by RWQCB.
Total time to obtain Letter: 2 ½ Months
Note that comfort letters CANNOT be negotiated from city or county agencies if they are the oversight agency for the leak case. This excludes most properties contaminated by gasoline station leaks.