April, 2013
As any sophisticated developer knows, when considering purchasing and redeveloping a property one must consider certain important “due diligence” issues. Primary amongst these are environmental and geotechnical considerations. What many developers do not know, however, is that in certain circumstances these two elements of pre-development investigation may be combined, with the potential to save thousands of dollars and streamline the due diligence process.
Look for the final article of Pioneer’s three-part series on mold in the next Groundswell!
The first step in environmental due diligence is typically the Phase I Environmental Site Assessment (Phase I). The Phase I and related historical and site inspection assessments have been a common facet of the due diligence process since the late 1980s, although a standardized scope of investigation for the Phase I was not developed until 1993, by the American Society for Testing & Materials (ASTM).
A thorough, comprehensive Phase I is a crucial aspect of any property transaction. The main purpose of this investigation is to evaluate potential soil and groundwater contamination issues (referred to as “recognized environmental conditions”), as well as certain “business” environmental risks including, but not necessarily limited to, asbestos, lead paint, and wetland considerations. When “recognized environmental conditions” are identified, a subsurface investigation — most commonly referred to as a “Phase II” — is typically the next step in order to determine if and to what extent a given subject property has been impacted.
A geotechnical investigation is intended to aid in building foundation design and pre-development planning. This study is generally required prior to obtaining a building permit for a given construction project.
A subsurface investigation for environmental purposes can be costly. Typically, a relatively simple “Phase II,” such as to address an accessible underground storage tank system, may be only approximately $2,500. However, costs to adequately assess a large industrial/manufacturing facility, can easily exceed $30,000, with even more costs potentially required to define on-site contamination, if found.
If a thorough ASTM standard Phase I has been performed, with areas of potential subsurface contamination adequately identified, it may be beneficial for a developer to conduct an environmental “Phase II” concurrent with the geotechnical investigation. As an example, Developer X recently acquired a 30-acre nursery, with a long history of pesticide and herbicide usage. The past use and associated handling of hazardous materials were identified as a “recognized environmental condition” in a Phase I performed by the consultant contracted. As a result, the a subsurface investigation was recommended, with a focus on certain areas historically used to store and mix pesticides and herbicides. Developer X, however, also required a geotechnical investigation in order to assess the suitability of the subsurface materials for the proposed residential development. These two primary components of due diligence were combined, with the advancement of subsurface borings and procurement of samples for both chemical and geo-technical analyses. The end result was that Developer X saved roughly $4,000 in drilling and equipment and personnel mobilization charges.
In summary, having the foresight to perform a geo-technical investigation concurrent with environmental subsurface sampling, if necessary, has the potential to save a property developer significant costs, as well as time.