This blog assumes that the reader is aware of what a Phase I ESA is. If not, visit Phase I ESA on our website for more details.
Most banks or lenders require a Phase I ESA before the buyer purchases any commercial or industrial properties. This helps them verify that there are no potential environmental concerns, and thus the property would be a good investment. In the case that a Phase I discovers any recognized environmental conditions or REC’s a Phase II is most likely required. Check out alternatives to a Phase II ESA if you’re unsure as to whether to move forward with one.
The purpose of a Phase II ESA is to determine if the concerns raised in the Phase I report are true or false. The extent of a Phase II assessment is entirely based on the results of the Phase I ESA. You may need a limited subsurface analysis or a remediation plan depending on the RECs. In layman’s terms, a Phase II ESA involves collecting a series of samples and sending it to the lab. The lab conducts tests to gain information about the contamination. To achieve guaranteed success from a Phase II ESA, here are a few steps you can follow:
The first step would be to prepare for what’s to come. Know that Phase II’s are significantly more expensive than Phase I ESAs. Phase II ESAs also take a much longer time because it involves more parties who will collect, submit, and test the samples. It could take anywhere from three weeks up to four weeks on average. Phase II ESA’s usually vary between five thousand to seventy thousand Canadian dollars ($CAD). Since the potential risks are known at this stage, an approximate price range for best- and worst-case scenarios can be obtained. This step helps the buyer determine what changes need to be made to the project in terms of timeline and finances. A Phase II ESA may seem like a roadblock but think of it as an investment in the future of your property.
In the case that you hire a different consulting firm for your Phase II operations, have a copy of your Phase I ready and know the basics of the RECs. It is essential that you do your research and contact various consulting firms to determine your best option. Don’t focus on who gives you the cheapest estimate; dig deeper. Look for reviews of the company, prioritize quality over quantity. Are they following the required standards? Suppose your project is in Alberta. Does APEGA or other agencies approve them? Do they have enough experience with your specific predicted contaminations? If the consulting firm is renowned but expensive, are they giving you a fair price? These are just some of the criteria you can use to pick your consultant. If you’re still unsure or overwhelmed, ask your bank or lender to recommend a company of their choice. Chances are, if the bank backs them, they will be a more reliable source.
Once your consultant has been picked, you have to establish some level of trust in them and their work. All Phase II ESA’s have a set of standards that need to be followed, but, just like Phase I, some conclusions in part will be up to the engineer’s professional opinion. The scope of work varies depending on the results of Phase I. Don’t expect your consultant to follow the same process as another consultant or another Phase II that was conducted for similar REC’s. All Phase II ESAs are not carried out the same way. At the least, your consultant will collectsoil and groundwater samples to determine if the mentioned potential risks are present. If they are present, additional testing may be required to determine the extent of the contamination and what the samples comprise.
Consider environmental insurance regardless of the results of your Phase II. Some insurance plans protect commercial properties in case there are undiscovered risks in the future. It can also save you if your work causes contamination on site. Either way, it is always recommended that you do a Phase II if you’re planning on purchasing the property with RECs. It may present as a roadblock now but will save you millions in the future. Various companies ignored their RECs, which led to a more catastrophic event that resulted in harm to the people, environment, or property.
While Phase II may sound scary, it will just be a minor setback for your project with the right people around you.
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