Phase I – ESA Study

Definition

Phase I ESA Study – The Phase I ESA is defined as an environmental report that is offered by LOGAN in Latin America including the offices in Mexico, Colombia, Peru, and Central America – Costa Rica. The study is based on the ASTM Standard E1527-21 and is performed by environmental professional (Certified engineer or certified environmental specialist).

The intent of the report is to evaluate or assess if the current or previous use of a property presents a threat to soil or groundwater quality and thereby presents a potential risk to the prospective buyer of a property. This report can be performed on almost all property types such as constructed properties or vacant land. The original purpose of the report was to comply with the CERCLA act of the United States (1986). In Latin America, each country has its own laws that govern environmental liability.

Use – to identify environmental risks associated with a site or property. The report is a property inspection report that ordered during the due diligence phase of transaction. The use is to provide transparency to lenders, investors, and other parties to a transaction of the potential environmental risks of a property purchase.

When ordered – Typically the report is ordered during the due diligence phase of a transaction to purchase a commercial property. This phase begins when the property is under contract for purchase, sometimes with a LOI (Letter of Intent) or a PSA (Purchase and Sale Agreement).

Types

– Industrial Site Phase I

– Retail Site Phase I

– Office Site Phase I

– Hotel Site Phase I

– Special Use – Senior Living, Multifamily, Hospital Phase I

– Urban Land Phase I

– Rural Land Phase I

Process

Proposal – Consultant delivers proposal, and client returns it signed with any required deposit

Property History Research – Title documents, and Certificado de Libertad is reviewed to determine the prior use of the property. Other government resources are consulted depending on the country and municipality. Interviews are also undertaken with current and prior owners and lessees if possible.

Site Inspection – physical inspection of the current conditions and activities of the site. The site is walked and surveyed by a qualified environmental professional to look for signs of pollution or contamination – or high-risk activities that could be taking place onsite.

Report Production and Delivery – a standard Phase I ESA report is written in narrative form, which includes a discussion of the findings and conclusions. This includes photographs and a Phase I reliance letter. This letter is deliverable only to the client and restricts the report users to the client. Thereby, no other parties can legally rely upon the results of the Phase I report, other than the client.

Impacting Factors

Prior Use – uses that have a higher potential for contamination may impact the Phase I ESA. An example would be a gas station, where there is potential for contamination from the gasoline tanks.

Current Use – during the physical inspection of the property, they current use of the property can indicate that there has been pollution or contamination through visual verification

Type of Property – some properties are considered high risk, such as industrial uses, gas stations, some retail uses, urban land (redevelopment)

Important Inputs

– Historical information of site ownership and use.

– Government databases of existing polluted sites.

– Interviews with current and prior owners and tenants.

Recent Trends

New environmental laws being enacted in Latin America that hold companies responsible for environmental cleanup of sites.

Development of infill industrial sites within cities, that pose potential risks.

Environmental responsibility of corporations and their participation in organizations that provide frameworks for social, environmental governance (GRESB, Equator Principles, PRI).

Deliverable

Phase I ESA Report

1. Introduction – Purpose, Scope, Assumptions, Limitations, Conditions.

2. Site Description – Location, Site, Use, Description, Adjoining Uses.

3. User Provided Information – Title records, Environmental Liens, Specialized Knowledge, Commonly Known Info, Owner – Occupant Information, Past Issues.

4. Records Review – Standard Record Resources, Physical Sources, Historical Uses Information – Property and Adjoining Uses.

5. Site Reconnaissance – Methodology, Limiting Conditions.

6. Interviews – Owner, Government Officials.

7. Findings.

8. Opinion.

9. Conclusions.

10. Deviations.

11. Additional Services.

12. References.

13. Signature.

14. Qualifications.