Phase I ESA (Environmental Site Assessment)
What is a Phase 1 ESA?
A Phase 1 ESA is a report that determines the environmental risk associated with lending, purchasing, leasing, or selling a property. The report is created following a site inspection by an environmental professional and detailed research on the property’s history from multiple sources, including federal, state, and local agencies. The outcome of a Phase 1 ESA is to determine if a property has recognized environmental conditions (REC) or historically recognized environmental conditions (HREC).
When does Fannie Mae require a Phase I ESA?
Any time a condominium is applying for Fannie Mae project approval, Fannie Mae reserves the right to request a Phase 1 ESA if the initial underwriting analysis indicates environmental concerns. Generally, Fannie Mae makes this determination from the Application for Project Approval (Form 1026) which asks if “…the lender has identified or become aware of any environmental problem(s)?” The answer can be ‘yes’ for a variety of reasons, including if the development is on a federal superfund site/zone, there is the existence of asbestos, the site was previously used for chemical processing, etc.
However, answering ‘yes’ to this question on the form doesn’t necessarily mean Fannie Mae will request a Phase 1 ESA- the form also allows for an attachment explaining if remediation has been completed.
When does HUD require a Phase 1 ESA?
Several types of condominium developments are required by HUD to include a Phase 1 ESA when they are applying for FHA project approval. These include:
- Proposed developments;
- Developments under construction (defined as any development in any stage prior to being issued a certificate of occupancy;)
- New construction developments (defined as having their certificate of occupancy for one year or less;) and
- Newly converted gut rehab developments (‘newly converted’ being defined as any development that has had their date of declaration/master deed for less than 2 years.)
So basically, HUD requires a Phase 1 ESA for every kind of condominium development seeking FHA project approval except:
- Existing developments; and
- Newly converted non-gut rehab developments.
However, even these developments may be required to get a Phase 1 ESA if they are applying for FHA project approval, as HUD also reserves the right to request a Phase 1 ESA for any reason. This rarely occurs.
Strategic Inspections: Industry Leader in Phase 1 ESAs.
In the last six years Strategic Inspections has completed over 3,000 Phase 1 ESAs. Strategic Inspections follows industry standards, utilizes qualified industry professionals, and possesses the experience to handle any project’s unique challenges.
Strategic Inspections’ expertise and attention to service ensures that each project receives an immediate response and appointment, expedited inspection and review timeline, followed by a high-quality Phase I ESA report conforming to submission requirements and customized to each development’s unique needs.
Highlights of Strategic Inspections’ Phase 1 ESA:
- Conforms to ASTM e1527-05 industry standard
- FHA and Fannie Mae compliant
- Prepared by top environmental experts with vast experience
- High quality digital reports for simple information management and submission
- Strategic Inspections’ Phase 1 ESA service is not limited to condos. We have experience with every type of project from commercial to heavy industrial developments.
Unsure if your development requires a Phase 1 ESA? Interested in commissioning an ESA or learning more? Contact Strategic Inspections.