Agency Due Diligence. Phase I Environmental Site Assessments (ESAs)

Transcription

1 Agency Due Diligence Phase I Environmental Site Assessments (ESAs)

2 Agencies Who are they? Delegated Underwriting and Servicing (DUS) Lenders Underwriting is delegated Chief Underwriter Seller Servicers Underwritten by Freddie Mac U.S. Department of Housing and Urban Development Underwritten by HUD 2

3 Agencies Who are they? Delegated Underwriting and Servicing (DUS) Lenders Underwriting is delegated Chief Underwriter Seller Servicers Underwritten by Freddie Mac U.S. Department of Housing and Urban Development Underwritten by HUD 3

4 Report Timing Timelines differ from Standard Phase I ESAs Return turn around Freddie/Fannie 2-3 Weeks Standard (rush requests common) HUD 4-5 Weeks Standard (Sampling may take longer) Be prepared for multiple touches Comments/Revisions Multiple reviewers Freddie/Fannie 2-4+ revisions common HUD 6 months to 1 year for review process Must match all reports (e.g. appraisal, ALTA, PCA, etc.) 4

5 Fannie Mae & Freddie Mac Specific Requirements Database Report Assessor Qualifications Unit Observations PCBs Non-Scope Considerations Asbestos Containing Material Lead-based Paint Radon Lead in Drinking Water Mold 5

6 Regulatory Agency Database Report Insert icon or image here ASTM search radii Insert icon or image here ASTM Search Radii Extend TRIS and FINDS to 1-mile Requires identification if located in Superlien States 6

7 Assessor Qualifications Insert icon or image here ASTM E Insert icon or image here 24-hour Asbestos Inspector Course 8 hour annual refresher 5 years experience with relevant degree OR 3 years experience with license (e.g. PE, PG) Knowledge of the following: Soil and/or ground water contamination & sampling Asbestos identification and abatement PCB contamination UST identification, abandonment and removal supervision Radon measurement and mitigation LBP identification and abatement design and supervision Familiarity with applicable federal, state and local environmental and public health laws and regulations Development of O&M programs 7

8 Unit Observations Insert icon or image here No specific requirements Sample requirements can dictate Partner recommends at least 5% Property Condition Assessment (PCA) 5-10% depending on size of complex Insert icon or image here For properties with less than 100 units, the greater of five units or 10% of all units For properties with 100 units or more, the greater of 10 units or 5% of all units Sampling requirements can dictate PCA 10% 8

9 Polychlorinated Biphenyl (PCB) Insert icon or image here No specific requirements Insert icon or image here Determine ownership of equipment If PCB containing equipment is property owned, determine content if pre-1979 date of construction If PCB equipment is utility owned, get verification of ownership and content via phone or in writing 9

10 Asbestos-Containing Materials (ACM) Insert icon or image here 1981 cutoff No sampling required Good commercial practices Insert icon or image here No cutoff date State no ACM or sample friable materials Friable* suspect ACM in units must be sampled 5-12 samples Friable over 10% asbestos must be removed *if encapsulated limited sampling allowed 10

11 Lead-Based Paint (LBP) Insert icon or image here 1978 cutoff No sampling required Good commercial practices Insert icon or image here 1978 cutoff No sampling required Sampling needed if no O&M is desired 11

12 Radon Insert icon or image here No specific requirements Typically sampling Zone 1 only 10% ground floor or 1/building Chief Underwriter may require sampling in Zones 2 & 3 Follow-up short-term is allowed Long-term testing >> Mitigation Insert icon or image here Sampling for all zones 10% groundfloor or 1/building, whichever is greater No sampling if no ground floor units Follow-up short-term is allowed Long-term testing >> Mitigation 12

13 Mold Insert icon or image here No sampling required Good commercial practices Insert icon or image here No sampling required Comment on visual/olfactory signs Interview management 13

14 Lead in Drinking Water Insert icon or image here No sampling required Good commercial practices Insert icon or image here No sampling for municipal water Private domestic water supply Must collect first draw samples Private irrigation water supply Sampling not required 14

15 Operations and Maintenance (O&M) Plans Insert icon or image here ACM if pre-1981 LBP if pre-1978 Mold if significant history of mold/leaks UST if recommended by consultant Radon - if recommended by consultant Insert icon or image here ACM if friable ACM remains in place (no cut off date) LBP if pre-1978 Mold if history of mold/leaks UST/ASTs when present Radon typically not, but have seen when mitigation is present PCB property owned pre-1979 equipment 15

16 Department of Housing & Urban Development (HUD) Topics Loan types and guidance Compliance factors Non-Scope Items (ACM, LBP & Radon) 16

17 HUD Programs Three Loan Types and Guidance Multifamily (Multifamily Accelerated Processing (MAP) 223f) Healthcare (LEAN 232f) Substantial Rehabilitation / New Construction (221d4) 17

18 HUD- Compliance Factors Coastal Zone Management Act Floodplain Management Historic Preservation Includes archeology and relevant Tribes Wetlands Protection Sole Source Aquifers Endangered Species Act Wild and Scenic Rivers Act Farm Land Protection Policy Act Environmental Justice HUD Environmental Standards Noise abatement and Control Explosive and Flammable Hazardous, Toxic, or Radioactive Materials and Substances Airport Clear Zones and Accident Potential Zones 18

19 HUD- Compliance Factors HEROS (HUD Environmental Review On-line System) Internal on-line review system Worksheet for each item No work sheet for items Action needed for each item 16. Coastal Barrier Resources 17. Flood Management 18. Historic Preservation 19. Noise Abatement 20. Hazardous Industrial Operations 21. Airport Hazards 22. Protection of Wetlands 23. Toxic Chemicals and Radioactive Materials 24a. Endangered Species 24b. Sole Source aquifers 24c. Farmlands Protection 24d. Flood Insurance 24e. Environmental Justice 25. Unique Natural Features and Areas 26. Site Suitability, Access, and Compatibility with Surrounding Development 27. Soil Stability, Erosion, and Drainage 28. Nuisances and Hazards 29. Water, Supply, Sanitary Sewers 30. Solid waste disposal 31. Schools, Parks, Recreation, and Social Services 32. Emergency Health Care, Fire and Police Services 33. Commercial/Retail and Transportation 19

20 Coastal Barrier / Coastal Zone Management Act Projects located within the Western Region have no coastal barrier resources Projects along east coast must be reviewed for coastal barrier and/or coastal zones Lake areas should be reviewed as well FOIA must be submitted to State agency for No Effect concurrence. Partner can write based on (list site information), it is Partner s opinion the existing facility will have No Effect to the coastal management zone and no additional action appears warranted at this time. 20

21 Floodplain Management Recognize that the major drainage ways are significant geographical features that serve as flood control systems To ensure the safety of people and property by providing for the drainage of storm water To maintain, preserve, or enhance the quality of water in a river or basin To maintain or improve wildlife habitats, corridors, native vegetation, and natural terrain Retard runoff through grading and other methods of water diversion and/or storm drainage designed to attenuate peak flow conditions 21

22 Historic Preservation Define the Area of Potential Effect (APE) 22

23 Wetland Protection Review the US Fish and Wildlife website for wetland mapping 232f - When on-site wetlands exist, HUD will require assurance from the Borrower that no activities that may impact a wetland will be undertaken without prior approval from HUD 223f Extensive data must be provided to aid HUD in evaluating wetland impacts 23

24 Endangered Species (IPaC Report) USFWS - The IPaC (Information for Planning and Conservation) report Critical Habitat Area Comment on potential impact 24

25 Wild and Scenic Rivers Act The project is not located within one mile of a listed Wild and Scenic River, or the project will have no effects on the natural, free flowing, or scenic qualities of a river in the National Wild and Scenic Rivers system. 25

26 Farmland Protection Policy Act Determine if the project site does not include prime or unique farmland, or other farmland of statewide or local importance as identified by the US Department of Agriculture, National Resource Conservation Service, or the project site include prime or unique farmland, but is located in an area committed to urban uses (use Soil Mapper) Request evaluation if land type from the NRCS; discuss mitigation measures including measures to prevent adverse effects on adjacent farmlands. 26

27 Environmental Justice EPA Environmental Justice Screening and Mapping Tool 11 environmental indicators 6 demographic Were any other adverse environmental impacts identified? Were these environmental impacts disproportionally high for low-income/minority communities 27

28 Noise Abatement and Control Indoor Outdoor Special Approvals/ Requirements Acceptable 45 db 65 db None. Normally Unacceptable >45 db 66 db 75 db -Environmental assessment and attenuation required for NC. -Attenuation strongly encouraged for SR. -Exterior amenity areas need to mitigated to 65dB for NC and encouraged for SR. Note: EIS required if area is largely undeveloped or will encourage incompatible development. Unacceptable > 45 db > 75 db -EIS Required. -Attenuation required for NC with approval by the Assistant Secretary for Community Planning and Development, or Certifying Officer. 28

29 Explosive and Flammable Operations Contact the local Public Safety Officer, Fire Chief, or Planning Director Use field observation to identify industrial or commercial storage facilities (e.g., tanks) Aerial photos and land use maps can supplement observations Contact owners/operators of storage facilities to find out what is being stored there Acceptable Separation Distance (ASDs) FOIA to fire department for concurrence 29

30 Explosive and Flammable Operations Pipelines, Buildings must be 10-feet from outer boundary of easement 30

31 Phase II MAP Guidelines state HUD may determine that if a Business Environmental Risk is identified, Phase II investigation may be warranted 31

32 HUD Non-Scope Items Non-scope items: ACM, LBP, Radon All sampling must be conducted by a licensed or certified professional Findings should be presented in standalone report and summarized in the Phase I ESA 32

33 Asbestos Sampling Multifamily (MAP 223f) - Pre-1978, sample per Baseline Survey requirements (25-50 samples) - Sample suspect materials to include damaged, friable, undamaged non-friable and/or miscellaneous materials. All friable materials should be sampled per AHERA guidelines Healthcare (LEAN 232f) - Pre-1978, sample per Baseline Survey requirements (25-50 samples) - Sample suspect materials to include damaged, friable, undamaged non-friable and/or miscellaneous materials. All friable materials should be sampled per AHERA guidelines Substantial Rehabilitation (221d4) - If the project will involve demolition/significant renovation. Pre-1978 construction will require a Pre- Demolition Survey. Some local / state agencies will require asbestos testing regardless of date of construction. - Based on the type of substantial rehabilitation, sampling per Baseline Survey requirements (25-50 samples) may be acceptable. - Sample suspect materials to include damaged, friable, undamaged non-friable and/or miscellaneous materials. All friable materials should be sampled per AHERA guidelines 33

34 Asbestos 232f New Guidelines: O&M Plans that establish protocols for ACMs should be accompanied with evidence of hazard awareness training for maintenance staff Removal - Damaged friable materials - Friable materials in good condition with high potential for disturbance (e.g., accessible pipe or tank insulation, ceiling tiles where air exchanges occur in plenum above, ceiling tiles that are required to be moved to access mechanical equipment or piping on a routine basis, etc.) Limited removal/repair, encapsulation or enclosure - Damaged non-friable materials (limited removal/repair) - Limited damage to ceiling texture (limited removal/repair) - More extensive wall and/or ceiling texture damage or highly friable texture - Pipe insulation with limited damage but with limited potential for disturbance/impact (enclosure or removal) O&M - Non-friable materials in good condition - Joint compound or wall and ceiling textures in good condition - Adhesive ceiling tiles with no real potential for disturbance - Friable pipe insulation materials in mechanical areas in good condition with limited potential for disturbance/impact by routine maintenance activities 34

35 Lead-based Paint Sampling Multifamily (MAP 223f) - Pre-1960, a Risk Assessment in accordance with 24 CFR (b) must be conducted (XRF sampling and dust wipes. If testing indicates lead, soil sampling along the building drip lines are warranted) - Post-1959 to pre-1978, with no renovations planned, recommend O&M Plan - For conversions (renovation), pre-1978, a HUD Chapter 7 LBP Survey must be conducted (XRF sampling) - Pre-1978, recommend compliance with EPA's Lead Renovation, Repair and Painting Rule (RRP Rule) - (Side note, compliance with Title X warranted) Healthcare (LEAN 232f) - Not applicable; No sampling required - Pre-1978, recommend compliance with RRP Rule Substantial Rehabilitation (221d4) - Pre-1978, a HUD Chapter 7 LBP Survey must be conducted - Pre-1978, recommend compliance with RRP Rule 35

36 Radon MAP 223f Radon Screening Testing in EPA Zones 1 and 2 in accordance with ANSI AARST MAMF % ground floor units and 10% upper floor (State requirements may require more) QA/QC devices deployed 10% duplicates 5% blanks 3% spikes In the event radon is detected above the EPA action limit, a full radon survey is warranted. No average testing allowed. 100% ground floor If <100% of ground units tested & radon found above EPA limit in 1 unit, ALL ground level units must be mitigated 36

37 Radon LEAN 232f Radon Screening Testing in ALL EPA Zones in accordance with ANSI-AARST MALB % ground floor units, every 2,000 SF in large open areas and 10% upper floor (State requirements may require more) QA/QC devices deployed 10% duplicates 5% blanks 3% spikes 37

38 Radon 221d4 Radon Screening Testing in ALL EPA Zones If testing prior to renovation or demolition is considered feasible (i.e. no disturbance of air flow such as changing windows, doors, HVAC systems, etc), radon testing should be conducted in accordance with the applicable HUD guidelines (223f or 232f) as noted above. If testing is not considered feasible (i.e. there will be disturbance of air flow such as changing windows, doors, HVAC systems, etc), mitigation must be implemented in accordance with AARST/ANSI CC

39 Radon - Regulated State ENVIONMENTS 39

40 Radon Testing & Mitigation Costs Radon Cost of Testing vs. Mitigation $ Short term testing - $50* per canister $ Long term testing - $800 - $3,500* $ Mitigation - $1,200 - $3,500* *Prices vary per contractor / state 40

41 Closing Fannie / Freddie / HUD Guidance is ever evolving / dynamic Constant work with these lenders Interpretation / practice isn t always clear based on guidance documents Various underwriters/reviewers can have different stances Use consultants who are familiar with the requirements Open dialog with consultants 41

42 Partner Contact Michael T. Chang (o) Charlotte, North Carolina 42