What to Look for in a Phase I Environmental Before You Commission One
A Phase I Environmental Site Assessment is standard due diligence in affordable housing development. It's typically required by lenders and tax credit investors, and it's the formal mechanism for identifying recognized environmental conditions that could affect a site's value or usability.
But a Phase I comes after you've decided a site is worth pursuing seriously. The question for early-stage evaluation is whether you can form a working hypothesis about environmental risk before you've spent the time and money to commission a formal assessment.
You can. Here's what to look for.
The historical use question
The most important input to an informal environmental screen is a site's use history. Environmental risk is primarily driven by what happened on a site and on adjacent properties over time — not by how the site looks today.
A few categories deserve immediate attention:
Former gas stations and petroleum storage. Underground storage tanks are among the most common sources of soil and groundwater contamination in urban areas. If a site was ever a gas station, service garage, or fuel storage facility, assume there's a meaningful probability of contamination until proven otherwise.
Former dry cleaners and industrial uses. Chlorinated solvents — used in dry cleaning and many industrial processes — are among the most persistent and expensive environmental contaminants. They're common in urban environments that housed light industrial and retail uses in prior decades.
Adjacent site history. Contamination doesn't respect property lines. A site with a clean history can have significant contamination if an adjacent property has a history of petroleum storage or industrial use. Look at what surrounded the site, not just what was on it.
How to research historical use without a consultant
Sanborn Fire Insurance Maps document historical building configurations and uses in urban areas going back to the late 1800s, and are often available through public library systems.
Historical aerial photographs (available through Google Earth's historical imagery and USGS Earth Explorer) can reveal uses that no longer leave a visible trace on the property.
EPA databases. The EPA's ECHO database, the Superfund site list, and state-level environmental agency databases index known contamination sites and permitted facilities.
State underground storage tank databases. Most states maintain databases of registered underground storage tanks, including those that have been removed. A site with a former UST on record is a meaningful flag even if the tank has been removed.
What this screen is and isn't
Preliminary environmental research isn't a substitute for a Phase I. What it does is give you a working hypothesis about environmental risk before you've committed the time and money of a formal assessment. That hypothesis shapes how you think about the site as you decide whether it deserves further investment.
When contamination doesn't kill a deal
Environmental contamination doesn't automatically disqualify a site. Known and bounded contamination with a defined remediation cost is actually in a more knowable position than suspected contamination with no data. Many states and municipalities have brownfield redevelopment programs that provide financial assistance for remediation to enable affordable housing.
The timeline compatibility question matters too: some remediation approaches require 12-24 months of active cleanup. If that timeline conflicts with a LIHTC credit round or a construction financing commitment, the contamination may be workable on a longer timeline but not on the current deal's schedule.
Knowing enough about environmental conditions early lets you factor these considerations into the go/no-go decision rather than discovering them after significant resources have been committed.
Alpha Deal helps development teams identify environmental flags during early-stage site evaluation — so due diligence resources get concentrated on sites worth pursuing.