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Environmental Due Diligence - Non-Scope Items

Joe Berlin — Tue, 17 Apr 2012 13:55:04 -0400

The topic of whether non-scope items should be included in a Phase I ESA is a timely issue. Several lenders whom we work with are updating their environmental programs and asking for our input on the inclusion and reporting of non-scope items. Our experience with non-scope items (e.g. asbestos, lead-based paint (LBP), wetlands, mold) is they can, at least in the short run, have a more direct impact on development cost than the presence of recognized environmental conditions (RECs) identified in the "standard" Phase I ESA.

LNAPL Defintions and Concepts

Joe Berlin — Fri, 03 Feb 2012 11:40:31 -0500

Light non-aqueous phase liquid (LNAPL) is defined as "a light, nonaqueous-phase liquid (e.g. oil) that has a density less than water (density<1.0 gm/cm3) and is immiscible in water" (ITRC, 2009). LNAPL is the more accurate term for describing non-dissolved liquid (e.g. gasoline) on or within the groundwater.

Evolving Methods of Free Product Evaluation

Joe Berlin — Fri, 03 Feb 2012 11:22:32 -0500

As of the date of this document (February 2012) amendments to Michigan's Leaking Underground Storage Tank (LUST) Act (Part 213) have passed the State Senate and have been forwarded to the State House of Representatives. These amendments present new opportunities to achieve "closure" for LUST sites in Michigan. The closure for a great many of these LUST sites has been delayed due to the current or historic presence of "free product" which is more accurately referred to as light non-aqueous phase liquid (LNAPL). The new protocol will no longer be the simple presence of free product/LNAPL, but whether it is mobile or migrating.

Ohio Blog #2: Ohio VAP v. Michigan BEA Process

Joe Berlin — Mon, 05 Dec 2011 11:56:48 -0500

Let's continue with our assessment of the liability protections offered under the Ohio Voluntary Action Program (VAP), compared with federal liability protections under CERCLA (Superfund) as well as those available in nearby states. The Ohio VAP is regarded by many developers and their lenders as useful/feasible for only a small number of properties, typically the very largest of projects, due to the cost and time to complete the VAP process. As is the case for many Brownfields, the former owner(s) have vanished or are uncollectible, and the cost for cleanup can often exceed the property value. As a result, many developers are driven to look to "clean" Greenfields as opposed to dealing with the regulatory hassles of Brownfields. This leads to the common "donut hole" around our core cities.

BFPP and Ohio VAP: Continuing Obligations versus Cleanup

Joe Berlin — Thu, 10 Nov 2011 10:07:18 -0500

The 2002 CERCLA amendments require a purchaser to conduct “all appropriate inquiry” (AAI) prior to the purchase of a property. The process begins with an AAI-compliant Phase I Environmental Site Assessment (ESA) and, if recognized environmental conditions (RECs) are identified, proceeds to a Phase II ESA (the sample collection part of the process). If contamination is found during the Phase II ESA, sufficient investigation must be conducted to inform the BFPP as to the nature and extent of contamination and what might be considered reasonable steps regarding that contamination. As part of the federal BFPP protection, the landowner must meet certain qualifying criteria and satisfy five continuing obligations (CO).

Brownfield Assessment Grants - City of Grand Rapids

Joe Berlin — Fri, 07 Oct 2011 11:38:13 -0400

The City of Grand Rapids received two U.S. EPA Brownfield Assessment Grants: Hazardous Substance ($200,000) and Petroleum ($100,000) for the redevelopment of properties in the City. As of October 1, 2011, there is approximately $200,000 in grant funds remaining and the grants run through 2015. During this period, the City can complete the following activities on eligible Brownfield sites: • Phase I Environmental Site Assessments (ESAs) • Phase II ESAs - Soil and Groundwater Investigation • Asbestos/Lead - Based Paint Inspections • Hazardous Materials Surveys • Baseline Environmental Assessments • Due Care/Continuing Obligations Evaluations • Remediation Assessments

Environmental Due Diligence and SBA Financing

Joe Berlin — Tue, 17 May 2011 10:32:48 -0400

Let's face it. The banking environment today has been dramatically, and perhaps permanently, changed by the credit crisis of the last two years. Loans that were easy for small businesses to obtain three years ago have all but disappeared, or are only available today on uneconomic terms. Lenders have grown much more sensitive to the many risks—economic, financial, and environmental—embedded in their loan portfolios.

BLDI Environmental Engineering Opens Cincinnati Office

Joe Berlin — Thu, 28 Apr 2011 10:24:46 -0400

BLDI Environmental Engineering today announced the official opening of their new office in Cincinnati, Ohio. BLDI is an environmental engineering firm which helps businesses and banks identify, prevent, and lessen environmental property risks.

2010 Part 201 Amendments – Does the “New” BEA Cause Redlining by Default?

Joe Berlin — Thu, 28 Apr 2011 10:18:59 -0400

As we are all too aware, Michigan amended its environmental statute effective December 14, 2010. The environmental liability protections in the amended Part 201 now have a “continuum of liability and risk prospectively” which we have found during discussions with many lenders instills a significant amount of uncertainty. As several lenders stated, this uncertainty brings lower property values and loan underwriting problems. These issues, combined with elimination of the determination option for the BEA, a requirement for Small Business Administration (SBA) acceptance of a BEA, contracts the sources and amounts of available funds for lending.

Obtaining SBA Financing with the New Part 201 Environmental Regulations

Joe Berlin — Thu, 24 Feb 2011 11:45:10 -0500

While the SBA has been an invaluable lifeline for many small businesses, both entrepreneurs and bankers need to understand how recent changes in Michigan’s environmental statute (Part 201) affect obtaining SBA financing which in turn, alters the loan underwriting and approvals process. As of today, the Baseline Environmental Assessment (BEA) as a stand-alone document no longer meets SBA policy. The Michigan Bankers Association (MBA) has written to SBA to express a position that the BEA should meet SBA policy. Although we would hope for a positive outcome on the part SBA acceptance of the BEA, it appears that probability of that outcome is not high.

Part 201 Chlorinated Solvent Cleanup

Joe Berlin — Thu, 13 May 2010 16:32:00 -0400

Location: Michigan

All environmental engineering firms are not built the same. On several occassions, we've learned that getting a second opinion from BLDI helps our clients avoid unnessesary expenses and work stoppages in their cleanup projects.

Gas Station Sales Through Receiverships

Joe Berlin — Fri, 16 Apr 2010 08:31:15 -0400

Many creditors are utilizing receiverships to protect their assets when dealing with many properties, maybe most notably gas stations and convenience stores. A few items we have seen in 2008 through 2010 include the lack of understanding of how underground storage tank (UST) insurance influences property and business val

Project: BCN Technical Services - BLDI Guides Purchaser Through Due Diligence Process

Joe Berlin — Thu, 08 Apr 2010 15:53:00 -0400

Location: Hastings, Michigan

Performing the due diligence process on the site of a known environmental impact can get complicated, especially when the business that occupies the site needs to stay in operation. Flexibility is the key.

Project: Commercial Real Estate Transaction - Site with Underground Storage Tanks

Joe Berlin — Tue, 06 Apr 2010 15:44:00 -0400

Location: West Michigan

Due diligence for transactions involving properties with underground storage tanks can be complicated.

Underground Storage Tank Corrective Action & Insurance Claim Support

Joe Berlin — Wed, 10 Mar 2010 16:17:00 -0500

Location: West Michigan

When there's a tension between two parties, an impartial partner can make a differece, and keep negotiations on track. We experienced this first-hand when an owner of a service station had reached an impasse with an existing environmental consultant.

Part 201 Remedial Action Plan Closure, Cost Recovery, and Property Transaction Support

Joe Berlin — Thu, 25 Feb 2010 16:40:00 -0500

Location: Eastern Michigan

Environmental cleanup "surprises" discovered after purchase of a property can cause a lot of stress, but it doesn't have to be that way.

BLDI Briefing: SBA Letter

Joe Berlin — Thu, 11 Jun 2009 09:29:00 -0400

By Joseph W. Berlin, PE, CFE

The Small Business Administration (SBA) amended its Environmental Due Diligence (EDD) requirements for SBA loans (SOP 50 10 5(A)).

The Cost of Consultant Bias in Application of RBCA at LUST Sites

Fri, 22 May 2009 10:04:00 -0400

There are over 9,000 Leaking Underground Storage Tanks (LUSTs) at 7,000 sites in Michigan (AP, 2009).

Environmental Due Diligence in Workout and Foreclosure

Mon, 09 Mar 2009 10:22:00 -0400

Introduction

As the number of non-performing loans has dramatically increased over the past year, the ability of Special Asset Group (SAG) personnel to respond using traditional tools and methods has been severely taxed.

The Cost of Incomplete Environmental Due Diligence in Seller-Financed Gas Station Deals

Joe Berlin — Wed, 22 Oct 2008 10:32:00 -0400

Takeaway Point:

Given the tight credit market, seller financing is becoming the primary means for gas station sales. And in seller-financed deals, it is common for environmental conditions – such as contamination and unresolved releases – to be ignored.