Benefits Of Comprehensive Environmental Due Diligence

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Benefits Of Comprehensive Environmental Due Diligence

  1. 1. Benefits of Comprehensive Environmental Due Diligence February 10, 2009 Presented by Geo-Technology Associates, Inc. Geotechnical and Environmental Consultants
  2. 2. Your Host Geo-Technology Associates, Inc. Environmental and Geotechnical Consultants  Founded in 1985  11 offices in New Jersey, Pennsylvania, Delaware, Maryland, Virginia, and North Carolina  150 employees  Clients include commercial and residential developers, builders, banks, government agencies, and telecom  Over 500 Phase I ESAs performed in 2008
  3. 3. Focus of Presentation  The real estate market has changed  Greater scrutiny of property transactions  Greater need for accurate appraisals  All real estate appreciates in value – right?  Benefits of comprehensive due diligence  Client first approach  Overall cost savings  Risk mitigation  Client/lender satisfaction
  4. 4. Focus of Presentation  Incomprehensive environmental due diligence gives you the following:  Inaccurate appraisals  Unknown risk  Failed deals  Unhappy clients/lenders or both  Lost revenue  Lost opportunities
  5. 5. Detective Work Case Study
  6. 6. Case Study “Detective Work”  Historical Uses  Residential Block  1981 Strip Mall Constructed
  7. 7. Case Study “Detective Work”  Two Previous Phase I ESAs  “The Harbor Wash Tub”  Drop off dry cleaning only
  8. 8. Case Study “Detective Work”  Schematics for Suprema Dry Cleaning Machine
  9. 9. Case Study “Detective Work”  Well placed floor drain  Standard exhaust system
  10. 10. Case Study – Conclusions “Detective Work”  Deal is stalled  Client needs additional time to evaluate the REC – extension denied (for now)  Owner has the following:  Unknown risk  Failed deal (for now)  Owner is an unhappy client  Potential lost revenue  Potential lost opportunity
  11. 11. How Clean Do You Want It? Case Study
  12. 12. Case Study “How Clean Do You Want It?”  Based on the Phase I ESA findings, Phase II recommendations are made to either: 1) Confirm the existence of a potential REC or 2) Evaluate the extent of contamination when a REC is uncovered  Also need to account for:  Site conditions  Client/lender risk tolerance  Appropriate regulations
  13. 13. Case Study “How Clean Do You Want It?”  Client retained a firm to perform a Phase I ESA  The firm was recommended by the lender  Initiated a Phase II ESA due to stained soil and other RECs
  14. 14. Case Study “How Clean Do You Want It?”  Phase II ESA indicated extremely high soil concentrations  Future use is a contractor yard
  15. 15. Case Study “How Clean Do You Want It?”  The firm also recommended entering Maryland’s Voluntary Cleanup Program
  16. 16. Case Study “How Clean Do You Want It?” Examples of RECs
  17. 17. Case Study “How Clean Do You Want It?” Examples of RECs
  18. 18. Case Study “How Clean Do You Want It?” Examples of RECs
  19. 19. Case Study “How Clean Do You Want It?” Examples of RECs
  20. 20. Case Study “How Clean Do You Want It?” Examples of RECs
  21. 21. Case Study “How Clean Do You Want It?”  Client wants a second opinion  Meeting with the lender and Client. The following concerns are identified:  How widespread is the on-site contamination?  Is there off-site migration?  Does the property need to be entered in the VCP?  What are the cleanup costs?
  22. 22. Case Study “How Clean Do You Want It?”  GTA Scope of Work  Phase II ESA included:  Test pitting to evaluate vertical depth of petroleum impacted soils – on-site contamination  Soil borings converted to temporary groundwater monitoring wells – off-site contamination  Phase II ESA Results  Petroleum contamination was surficial  No groundwater encountered - contiguous clay layer  Solid waste was placed on concrete slab
  23. 23. Case Study – Conclusions “How Clean Do You Want It?”  Generation of Opinion of Probable Cost  Container and drum removal  Petroleum impacted soil removal and disposal  Sorting and removal of solid waste  Lender financed the property using it as collateral  Client has a contaminate baseline study to compare to future tenants
  24. 24. Case Study “How Clean Do You Want It?”
  25. 25. Case Study “How Clean Do You Want It?”
  26. 26. Case Study “How Clean Do You Want It?”
  27. 27. Focus of Presentation  Incomprehensive environmental due diligence gives you the following:  Inaccurate appraisals  Unknown risk  Failed deals  Unhappy clients/lenders or both  Lost revenue  Lost opportunities
  28. 28. Deep Harbour Case Study
  29. 29. Case Study “Cleaner Contamination?”  Historical Uses  Fertilizer Plant
  30. 30. Case Study “Cleaner Contamination?”  Historical Uses  Fertilizer Plant  Bulk Fuel Storage
  31. 31. Case Study “Cleaner Contamination?”  Historical Uses  Fertilizer Plant  Bulk Fuel Storage  Auto Repair/Junkyard
  32. 32. Case Study “Cleaner Contamination?”  Historical Uses  Fertilizer Plant  Bulk Fuel Storage  Auto Repair/Junkyard  Adjacent Properties  Bulk Fuel Storage  Dry Cleaning Factory
  33. 33. Case Study “Cleaner Contamination?”
  34. 34. Case Study “Cleaner Contamination?”  1926
  35. 35. Case Study “Cleaner Contamination?” 1950’s
  36. 36. Case Study “Cleaner Contamination?” 1950’s
  37. 37. Case Study “Cleaner Contamination?”
  38. 38. Case Study “Cleaner Contamination?”  Historical ESA’s identified “minor contamination”  Legal advice – no Voluntary Cleanup Program (VCP)  Client acquires the property  Full construction begins
  39. 39. Case Study “Cleaner Contamination?”  “Major” contamination found  Changed legal counsel, retained GTA (Phase I and II ESAs), and entered the VCP  Eventually, eight USTs, hundreds of linear feet of product piping, and over 6,000 tons of impacted soil were removed  Now a “Responsible Person” (no public funds available)  Perception issues  Potential reduction in sale price of residential units  Delay charges from GC due to contamination
  40. 40. Maryland’s VCP Submit Proposed RAP Response Action Public Participation Process and Plan (RAP) Process RAP Review (75 day review) RAP Modifications Revised RAP Received (30 day review) RAP Approved RAP Implementation and Completion Certificate of Completion (COC)
  41. 41. Case Study “Cleaner Contamination?”  Worked with regulators to:  Address contamination
  42. 42. Case Study “Cleaner Contamination?”  Worked with regulators to:  Address contamination  Address public perception  Identify off-site issues impacting the site
  43. 43. Case Study “Cleaner Contamination?”
  44. 44. Vapor Intrusion ASTM Standard E2600-08
  45. 45. Case Study “Cleaner Contamination?”  Worked with regulators to:  Address contamination  Address public perception  Identify off-site issues impacting the site  Implement a Remedial Action Plan
  46. 46. Case Study “Cleaner Contamination?”  Worked with regulators to:  Address contamination  Address public perception  Identify off-site issues impacting the site  Implement a Remedial Action Plan  Received Closure Letter
  47. 47. Case Study – Conclusions “Cleaner Contamination?”  Damages in excess of $2 Million dollars  WHY?  No current Phase I ESA prior to purchase  Poor legal counsel – not familiar with the VCP  Remediation  Groundwater treatment system  Remediated vapor issues in Buildings Q & R  Removal of impacted soil and USTs
  48. 48. Thank you! Any questions?

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