Key Conclusions: The process of obtaining a “comfort letter” from the State of California for SBA financing has changed. Environmental agencies will open a case for the site and it will require significantly more time and money to request the preparation of a comfort letter.
In the past, Property owners could request a “comfort letter” which is required by the SBA for financing of properties that are affected by contamination from off-site sources. These letters were issued by the State of California Regional Water Quality Control Board (RWQCB), Department of Toxic Substances Control (DTSC) and Environmental Protection Agency (EPA). All that was needed was a written request along with transmittal of investigation reports.
The State has instituted a new policy for the comfort letter that will cost considerably more time and money. The following are the steps that will now be required:
- Complete a Memorandum of Understanding (MOA) and submit to agency
- After a caseworker is assigned provide a retainer (approximately $6,000) to the agency for costs for oversight
- Transmit applicable reports for review to the selected agency
Note that a Phase 2 may be necessary to document subsurface environmental conditions to the satisfaction of the environmental agency and to provide evidence that the Property is not a source of the contamination.
Hazardous waste in Campbell, CA
Former gas station in Concord, CA
Recommendations: Request that ERAS performs an ESA and/or reviews the results of your ESA and Phase 2 report. The interested parties should be notified that total costs for obtaining the comfort letter could be $10-20K or more, and could take 3-6 months or more.