PHASE II ENVIRO- Is it absolutely necessary?

9 Replies

Hey community- I am in contract on a gas station with an auto service garage. Plan is to keep the gas pumps flowing and repurpose the service station to two retail units (this is part of a larger STR concept with contiguous properties). The station had a phase II done in 2012 after they removed an old tank and has kept solid maintenance systems and records. I know how this will sound, but the $10K expense for phase II is a heavy due diligence expense and the bank isn't even requiring it. Am I crazy going in without the phase II?

Do you have a phase 1 with a NFA letter? If not, I think I would at least do that and put the trust in the environmental experts. There could be other unseen environmental risks that the old phase 2 did not remediate or something affecting the area since 2012. There isn't really any good way to remove all the risk without a no further actions letter. In my experience, a phase 1 will cost you about $1,000-$3,000. Just my two cents and what I would do.

Thank you James! Yes, Ive engaged a company for the phase I. Im expecting however that since it is a gas station, they will likely recommend a phase II by default. I guess well see how it goes and what kind of report they generate.

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@Avi Burnbaum . Just did a phase 2 recently with drilling and water/soil sampling it ran $6k. Was something we could’ve maybe skipped but we gained clarity everything was indeed ok and well worth it. If it were me I’d do testing if the new phase 1 indicates that it is needed.

@Avi Burnbaum . My property was in CT so the firm I used can’t help you. Cost will depend on the scope of work required. You might get several quotes to see the variation but also look for a strategy to limit the scope.

Thanks for the feedback. Im quickly becoming convinced that Phase II if recommended, is the way to go. Question is- are there variables that would cause one enviro company to recommend and not another? Do they have any recourse if they do not recommend and something is found? Also how do I know if they're just upselling more services?

@Avi Burnbaum

your banks environmental team should be able to comment on the proposed work scope. I’ve had it happen where the Bank was satisfied with having a lesser amount of phase 2 testing done than the environmental company initially proposed.