Myth: “It’s a residential property, so I don’t need to a Phase I Environmental Site Assessment.”
Today’s Apartment Building Could Have Yesterday’s Environmental Concern
“Why would you need a Phase I ESA on a residential property?” As property uses change, buildings get demolished or renovated, parcels get redeveloped, and former commercial and industrial uses can disappear almost completely from view. There may also be environmental concerns that originate from a neighboring or nearby property.
The purpose of a Phase I is to research the property’s history to better understand the property you’re acquiring or selling and not simply the building you see.
Our team recently completed due diligence on a residential property in San Diego which, based on its current use, might not immediately raise environmental concerns. However, historical research revealed a dry-cleaning operation had previously occupied the property.
Dry cleaners are particularly important because historical operations may have involved chlorinated solvents such as PCE. Even after the business closes, the building changes hands, or the entire property is redeveloped, impacts associated with a historic release can potentially remain in soil, soil vapor, or groundwater. The important takeaway is that current use does not always correlate to historical use and, no matter the type of property, it’s always recommended to do your due diligence before acquiring or selling a property.
Some other historical uses worth checking for:
- Gas stations/service stations
- Auto repair or body shops
- Manufacturing or machine shops
- Printing operations
- Former agricultural uses
- Fuel storage
- Industrial facilities
- Other businesses which have historically handled hazardous chemicals or petroleum products
Sometimes the Concern Isn’t on Your Property
McAlister GeoScience recently came across a listing for a multi-family building, where our staff previously identified a historic adjoining dry-cleaning facility. The dry-cleaning facility was later converted into a doggie day care. All outside appearances for this listing seem innocuous enough, but a deeper dive could reveal possible environmental concerns from the neighboring property’s historical use.
This illustrates why buyers, lenders, brokers, and developers shouldn’t stop their environmental review at the property line.
Contamination doesn’t necessarily respect parcel boundaries. Depending on the contaminant and site conditions, releases from neighboring properties can affect soil, soil vapor, and groundwater. Thus, your property which has a completely benign historical use could still warrant closer evaluation due to an adjoining or nearby property.
Residential Doesn’t Automatically Mean Low Risk
People may be more inclined to question environmental conditions when purchasing an industrial warehouse rather than when looking at an apartment building, multifamily development, residential redevelopment, or mixed-use property. However, today’s residential use doesn’t erase yesterday’s commercial or industrial history.
This is particularly relevant in areas which have undergone significant redevelopment or changes in land use. A new residential building may occupy land which may have historically looked very different.
For investors and lenders, the question shouldn’t necessarily be whether the property is “residential” or “commercial.” The question is whether enough is known about the property’s history and surrounding area to understand the potential environmental risk.
We’re Here to Help
Whether you’re looking at an industrial facility, retail center, multifamily property, or residential redevelopment, environmental due diligence is about more than what’s visible today. Understanding historical uses and surrounding properties can reveal potential concerns that aren’t apparent from a listing or site visit.
The team at McAlister GeoScience can quickly evaluate your project over the phone and we offer fast two-day turnaround times utilizing our proprietarily databases and over 35 years of experience. If you’re evaluating a property and aren’t sure what level of environmental due diligence makes sense, our team can help.