Phase I 


The Phase I ESA involves a review of records, a site inspection, and interviews with owners, occupants, neighbors and local government officials. Phase I sampling and laboratory analysis conducted by an environmental professional trained in the appropriate standards are rare. The review of government records and interviews may take a lot of time. To ensure a quality assessment, allow sufficient time for the process.
Contamination can result from activities that took place on the site and also come from activities at a nearby property. The records and interviews will be the best sources to provide this information. Public records are available regarding the locations of properties that have been classified as contaminated by federal or state regulations. Depending on their proximity to your site, contamination could have made its way to your site.
SBA Phase I Environmental Site Assessment means all properties purchased through the United States Small Business Administration‘s 504 Fixed Asset Financing Program require specific and often higher due diligence requirements than regular Real Estate transactions. Due diligence requirements are determined according to the NAICS codes associated with the prior business use of the property. There are 58 specific NAICS codes that require Phase I Investigations. For example, they include, but are not limited to: Funeral Homes, Dry Cleaners, and Gas Stations. The SBA also requires Phase II Environmental Site Assessment for any Gas Station that has been in operation for more than 5 years. The amount requested in the loan cannot include additional cost to perform this assessment. Therefore, the ESA adds significant costs to the borrower.
Freddie Mac/Fannie Mae Phase I Environmental Site Assessments[1] are two specialized types of Phase I ESAs. ESA’s are required for loans financed through Freddie Mac or Fannie Mae. The scopes of work are based on the ASTM E1527-05 Standard.  For instance, specific requirements include the percent and scope of the property inspection; requirements for radon testing; asbestos and lead-based paint testing and operations-and-maintenance (O&M) plans to manage the hazards in place; lead in drinking water; and mold inspection. For condominiums, Fannie Mae requires a Phase I ESA anytime the initial underwriting analysis indicates environmental concerns.[11]
HUD Phase I Environmental Site Assessment The U.S. Department of Housing and Urban Development also requires a Phase I ESA for any condominium under construction that wishes to offer an FHA insured loan to potential buyers.[12] Please feel free to contact us with any further questions regarding Phase I ESAs.