First of all, as stated in previous blogs, we in the biz refer to it as a Phase I ESA (use the Roman "I") but to educate the masses, I will use the incorrect but more often searched term of "Phase 1 ESA."
You are busy, I understand, so let me get you on your way quickly. On a bell curve, most of our Phase I ESAs will fall within a range of between $1,800.00 and $3,000.00. There you are, off you go to make more money so we will have more business. But for a more nuanced explanation of why a Phase I ESA costs so much, read on.
Regardless of the type of site usage or size, the first thing we do when we start a job is to order documents needed to complete the report. This includes historical documents like Sanborn fire insurance maps, historic aerial photos, historic topographic maps, and historic city directories. We also need to have relevant government databases searched for sites in a radius of up to one mile from the subject property. These documents cost at least $350.00 per site. All Phase Environmental, Inc. (APEI) must now complete the report with a budget of between $1,400.00 and $2,650.00. This number will decline with mileage and transportation time. Also, regulatory agencies often require fees to research their files (even if it is found that no records exist) and they may charge additional fees to provide copies. The remaining money will be spent on labor hours and we are running a business, so yes, a small amount will need to be profit.
What follows is an explanation of the amount of time needed to write an industry standard Phase 1 ESA and for these reports, time is the largest cost factor.
Prospective Client Question: I want to purchase a property that is only 3,000 square feet, improved with a 2,800 square foot dress shop, no hazardous materials whatsoever, so what’s with the high price of the Phase 1 ESA? What are you guys, carpet baggers?!
As discussed previously in "What in the wide, wild, world is a Phase 1 Environmental Site Assessment?" there are research components of the Phase 1 ESA report that are necessary for all properties, regardless of their current use. This dress shop may be located on 6th Street in downtown Los Angeles. This would mean that the property has most likely been developed since prior to 1900. Yes, most downtown properties were first developed in the 1800s. We therefore must research all of the uses and tenants on this property going back at least 120 years. There are passels of data points that will need to be looked at in order for us to compile a comprehensive history of the property. Why do all of this research? This dress shop could have been a dry cleaner or small metal plating shop in the 1950s. These uses are common contributors to subsurface contamination and if you were to purchase this property, you would also be purchasing any future testing and cleanup costs.
But wait, that’s not all, we also need to do the same historical research for all of the immediately adjacent sites. Unfortunately, sites across a street are still considered to be adjacent so we will need to include these too. In this case, there will be at least four adjacent sites that will be researched back to the 1800s. Why are we doing all this work on adjacent sites? That taco stand on the corner next to you may have been a gasoline station in the 1970s. If we can’t find records detailing the removal of the tanks and testing of the soil, then this is a possible contributor to subsurface contamination of the dress shop property.
So far, we have only discussed the historical uses of the subject property and adjacent sites. We still need to travel to the dress shop and visually inspect the site, adjacent sites, and surrounding area. Even for simple sites, this can chew up a half day, more if you need to take the 5, 10 or 110 freeway to get there.
The last component required is our database research. We will be looking at environmental listings of sites that can be as far away as one mile! It is our job to determine if the dress shop was listed in any of the databases and if there are any other sites listed that have the potential to have impacted the dress shop. In an area like downtown Los Angeles, there will be dozens of sites that will need to be addressed.
We will need to discuss the relevant surrounding sites to include: their address, distance and direction from the dress shop, their location upgradient/ crossgradient/ downgradient from the dress shop, and we will need to provide a professional opinion regarding the possible impact the site may, or may not, have on the dress shop.
You may ask; why would a Phase 1 ESA cost less than $1,800.00 or more than $3,000.00?
Honestly, there are very few sites that can be priced below $1,800.00. We would need to be studying a vacant lot, never developed, surrounded by vacant lots that have never been developed, and it would need to be near our offices.
Sites costing more than $3,000.00 would include large industrial sites, sites that have a long history of extensive chemical use, sites located in heavy industrialized areas, and out of town sites. APEI has multiple clients that will send us out of town to do their Phase 1 ESA because they need a consultant they can trust.
As is evidenced above, producing Phase 1 ESA reports is a labor intensive endeavor. No two sites are the same; there is no "boiler plate" report that can be used for all reports. Profit margins on Phase 1 ESAs are very narrow and there is no room for error. Every Phase 1 ESA must be properly priced and managed for everything to work.
The most important point to be made regarding money is that the cost of the Phase 1 ESA is, by far, not the most important aspect of the Phase 1 ESA. Here are two reasons to support this claim:
A poorly researched report could have you purchasing an old gasoline station, drycleaner, metal plating shop, printing facility, electronics manufacturing facility; all with liabilities costing hundreds of times more than the cost of a Phase 1 ESA to deal with.
An inexperienced environmental consultant could have you performing expensive Phase II subsurface testing that may not be necessary.
Good luck with your project and always feel free to call use at 800-567-7729 or email us with your questions to: info@phaseoneesa.com.