Date: February 8, 2019Attorney: Douglas I. Eilender

Don’t Ignore Construction/Development Related Issues During Your Environmental Due Diligence.

Appropriate environmental due diligence on commercial real estate typically consists of a Phase I Environmental Site Assessment/ Preliminary Assessment Report (“Ph I/PAR”). This includes a visual site inspection and review of aerial photographs, Sanborn Maps, historical regulatory records and databases. The Phase I/PAR identifies what one would consider routine environmental issues, such as past manufacturing operations, underground storage tanks, trench drains, sumps or other issues that could adversely impact the subsurface or air quality of the property in question. What people sometimes miss are environmental issues related to construction, renovation or re-development. For example, if the building was built in the 1970s and you plan on performing a gut renovation, an asbestos survey should be completed so that you can get a handle on the estimated asbestos abatement costs. If there is a Deed Notice/Soil Remedial Action Permit in place due to the presence of historic fill or other residual soil contamination and a redevelopment is planned, the incremental increase in construction costs to dispose of the impacted soil and other NJDEP administrative requirements should be determined. Depending on the particular issue and proposed project/development, these construction and incremental increased costs attributable to pre- existing environmental conditions can add up. Failing to consider these costs and creating accurate budgets during due diligence can create major obstacles that can and should be avoided.