What is an Environmental Site Assessment (ESA)?
An Environmental Site Assessment (ESA) is a comprehensive process used to evaluate the environmental conditions of a property. Its primary purpose is to identify potential sources of contamination and assess the associated risks. An ESA is generally requested by the bank for financing purposes or for site plan application and rezoning purposes.
The most common type of ESA is the Phase I ESA and we will focus on discussing the Phase I ESA in this article. In addition, Phase I ESA can be performed with one of the two standards – Canadian Standards Association (CSA) and O.Reg. 153/04. It’s very crucial that the Phase I ESA uses the correct standard to satisfy the purposes of the ESA.
What is a Phase I Environmental Site Assessment?
A Phase I ESA is the initial step in evaluating a property’s environmental condition. It involves a thorough investigation of historical records, site inspections, and interviews with relevant parties. The goal is to identify potential environmental concerns, such as past uses of the property that could have led to contamination. Key components of a Phase I ESA include:
1. Records Review: Researching historical records, aerial photographs, and maps to uncover any previous uses that might have involved hazardous materials.
2. Site Inspection: Conducting a physical inspection of the property to identify signs of contamination or other environmental risks.
3. Interviews: Gathering information from current and past property owners, occupants, and other stakeholders to understand the property’s history.
When to Use a Phase I ESA?
A Phase I ESA is typically used during property transactions, such as buying or refinancing commercial real estate. Lenders often require a Phase I assessment to assess potential environmental liabilities before approving financing. Phase One ESA is also used for the rezoning process, site plan application, change of land use, etc. There are different standards of Phase I ESA reports that are tailored for different purposes. Using the correct standard is extremely crucial as you will risk getting rejected by the requested parties and end up having to redo the report again using the correct standard.
Two Standards for Phase I ESA – CSA and O.Reg 153/04
Within the Phase I ESA, there are also two standards that you need to be aware of. Depending on the purpose of the ESA, you might select to do the Phase I ESA using one of the two following standards:
- Canadian Standards Association (CSA)
- O.Reg. 153/04
Generally, if you are doing a bank financing or refinancing , for lenders, due diligence, pre-purchase condition, property purchase and sale, and
property insurance condition, you would do the Phase I ESA using the CSA standard. Typically, the bank would require a CSA Standard Phase I ESA. The bank or the interested parties will clearly tell you which standard they require. If not, you must clarify with the requesting parties.
If the purpose of the ESA is to support a change of the property to a more sensitive land use, you may be required to do the Phase I ESA with the O.Reg. 153/04 standard. For land use change or to support a particular land use such as Site plan application, Rezoning application, Childcare Centre or School use, etc, you would have to perform a O. Reg. 153/04 Phase I ESA. In certain ministries or municipalities, they might also require you to provide a Record of Site Condition (RSC) for zoning, development or change of use purposes as well.
The parties that required ESA such as lenders, insurers, and municipalities can determine which standard you need to be in compliance.
At the time of writing, a typical Phase I ESA for CSA generally costs between $3,000 CAD to $5,000 CAD. A Phase I ESA for O.Reg Standard generally costs between $4,000 CAD to $7,000 CAD depending on the size of the site. RSC could cost around $5,000 CAD to $9,000 CAD.
Before you embark on an ESA, do make sure you are getting the correct standard as the ESA report using the wrong standard will unlikely to be accepted by the requested parties.