When purchasing a commercial, industrial or development property, environmental assessments are a crucial part of your due-diligence process.
Bank loans and municipal permits are most often contingent on environmental assessments and potential remediation.
While it may seem like a complicated process to navigate, environmental consulting firm Next Environmental works closely with their clients from the initial assessment to remediation so they can meet their business goals quickly and within budget.
“What people should know is that contamination is often much less risky than it’s perceived to be, and that lenders will lend on it. It’s all about understanding the issue in the context of your business goals,” Senior Business Development Manager Shane Rigter says.
“By no means is contamination a dealbreaker. It’s just about understanding the extent of the issue, and the dollar amount that goes along with it.
So, you’ve bought a commercial property. Now what? Rigter breaks down what property owners, buyers, and developers should keep in mind.
Phase 1 Assessment
If there is any kind of uncertainty surrounding the possibility of contamination on a property, a Phase 1 is key.
“A Phase 1 environmental site assessment is where you’ll want to start,” Rigter says.
A Phase 1 is the investigation into the likelihood of contamination, including a professional opinion on historical land use.
When conducting a Phase 1, a qualified field lead from Next Environmental will schedule a suitable time to visit the site to complete a visual survey, including outside and inside any existing structures. They will also typically conduct interviews with various stakeholders familiar with the property.
From there, the field lead will complete research for the report, including a review of historical fire insurance maps, city directories, aerial photographs, and multiple different databases. This collective research helps provide a comprehensive background on the potential for contamination at the property.
Clients will then receive a 70-80 page report with a ‘yes’ or ‘no’ answer on whether further work is being recommended or not.
Some of the historical land uses often flagged for further investigation include gas stations, auto repair shops, manufacturing facilities, dry cleaners and more.
“There is a laundry list of business operations that are considered to pose a higher risk or are indicative of contamination,” Rigter says.
Why do I need a Phase 1?
“Environmental assessments are often required for both permitting and financing,” Rigter says.
From a compliance standpoint, municipalities in B.C. are not authorized to issue development-related permits to properties that have a history of high-risk business operations until a compliant assessment has been completed.
When it comes to financing, banks often have a threshold for which loans will require an environmental assessment to mitigate any financial risk on their end.
For property owners, a Phase 1 is essentially a business tool that allows purchasers to achieve their business goals, whether it’s related to financing or permits.
“You can certainly buy without an environmental site assessment, and you may get lucky, but you run the risk of the site having an unseen history and which can lead to financial implications down the road,” Rigter says.
Rigter has worked with many clients who are often surprised to learn they are responsible for the financial obligations of remediation due to historical on-site activities for a property they had purchased years prior without an assessment.
What are the costs and timing requirements for completing a thorough environmental assessment?
Next Environmental is one of the fastest operating companies in the business, offering five-business-day turnarounds for any Phase 1 in British Columbia.
In addition, they offer fixed price quotes for every stage of investigation, including remediation.
“We provide cost certainty upfront, so our clients know what to budget for, and so there’s no risk of surprise or cost overruns. This allows all industry stakeholders to approach a project with certainty, and to help mitigate risk in an inherently risky business.”
To learn more about environmental assessments and how Next Environmental can help, visit nextenvironmental.com.
