Phase 2 Environmental Site Assessments (ESA): Why are they needed and how much do they cost?

A Phase 2 Environmental Site Assessment (ESA) is an investigation that is conducted after a Phase 1 ESA has identified potential areas of concern on a property. The purpose is to determine whether or not there is actual contamination present, and if so, to what extent.

Whenever there is a potential for contamination due to past uses of the property, such as industrial uses or known or suspected contamination in the area, conducting a Phase 2 ESA is recommended in order to protect your investment.

The costs can vary significantly from project to project but the average is anywhere from $7,000 to $20,000 or more depending on the contaminants found and the testing needed. Every project is unique.

A Phase 2 ESA is typically requested when:

1) contamination is suspected but has not been confirmed through a Phase 1 ESA; or

2) additional information is needed to assess the risk posed by known contamination.

3) many lenders require them as part of their due diligence when loaning money for commercial real estate transactions.

The Environmental Site Assessment (ESA) process typically begins with a review of existing records followed by site visits and testing.

The scope of work can vary depending on the size and complexity of the property, but typically includes some combination of soil and groundwater sampling, asbestos testing, lead paint testing, and indoor air quality testing.

This usually involves collecting and analyzing soil and/or groundwater samples from the property in question. Based on the results of the analysis, a determination can then be made as to whether or not the property poses an unacceptable risk from an environmental standpoint.

Once all data has been collected, it is analyzed and presented in a report that includes a statement of opinion from the environmental consultant.

In some cases, a Phase 2 ESA may also be conducted as part of ongoing environmental remediation efforts at a property.

For example, if elevated levels of contaminants are found in soil or groundwater samples during a Phase 2 ESA, additional sampling may be needed in order to delineate the full extent of the contamination.

This can help inform the design of any necessary remediation efforts.

Why Is A Phase 2 ESA Important?

There are two main reasons why a Phase 2 ESA is important for commercial real estate transactions.

First, it can uncover potential environmental liabilities that could have significant financial implications.

Second, it can provide peace of mind for both buyers and lenders by confirming that the property does not have any hidden environmental issues.

In some cases, the findings of a Phase 2 Environmental Site Assessment (ESA) may be used to negotiate a price reduction or to obtain environmental insurance to transfer the risk to another party.

In other cases, the findings may be used to identify contamination issues that need to be remediated prior to closing on the property.

Either way, having a clear understanding of any contamination risks upfront is critical for protecting your investment.

If you are considering purchasing or leasing a commercial property, make sure to have a Phase 2 ESA conducted to mitigate the risks of contaminated soil, groundwater, or indoor air.

U.S. Commercial Building Inspections (USCBI) of Southern California provides commercial property inspection services in San Diego, Orange, Los Angeles, Riverside, and San Bernardino Counties.

Call 619-473-2133 for a free quote.