So, you need to complete a Phase I Environmental Site Assessment (ESA) for your affordable housing development, substantial rehabilitation, or Tax Credit applications? Most know that the standard scope of a Phase I ESA includes a review of readily available historical and regulatory information, a site reconnaissance, interviews, and may also include a review of other business risk items. This seems straightforward, but what else is needed? Applying for financing for an affordable housing project can be much more complicated. Proactively planning for and understanding the environmental considerations related to financing your affordable housing development can help mitigate risks and increase the success of your project.
Wetlands, cultural and historical resources, noise? These are things that can derail or delay your financing if not identified early in the process. What about floodplains, explosive and flammable substances, endangered species? If the Site is developed you may have to address radon, asbestos, lead-based paint, and mold/moisture issues. Identifying your financing structure, the parties involved, and knowing their environmental requirements are some of the keys to identifying and scoping the appropriate environmental assessment activities.
The United States Department of Housing and Urban Development (HUD) will require a number of additional assessment items above and beyond the standard scope Phase I ESA. The various state housing agencies, such as the Texas Department of Housing and Community Affairs (TDHCA), the Georgia Department of Community Affairs (GADCA), and the Arizona Department of Housing (ADOH) all have similar requirements. To a lesser extent both Freddie Mac and Fannie Mae have requirements that go beyond the scope of a standard Phase I ESA.
Assessment of these additional items will add time and cost to the due diligence process. However, knowing the requirements upfront and adding an experienced consultant to your team that has the resources to assess these items will streamline this process by providing both time and cost savings.
A team including Environmental Professionals; Natural Resource Specialists; Licensed Asbestos, Lead and Radon Inspectors; and others will be invaluable. Furthermore, on a new development project, a team carrying geotechnical engineering capabilities can provide further savings.
Knowing the financing requirements upfront will help borrowers complete the appropriate environmental assessment activities to minimize delays and lower the hurdles for your project. Adding a team with the expertise and resources to effectively address these items will further the potential for successful project outcomes.
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