We discuss how banks, Phase I Environmental Site Assessments, and RMA are related.
For anyone getting a Phase I ESA because a "banks says so", there are undoubtedly a ton of questions. From the simple question like what is a Phase I ESA to the more complex such as what does a Phase I ESA cover to the very important how much does a Phase I ESA cost, it makes total sense that people want to know what's in store for them.
There's one particular question we hear on a weekly basis, which is "are you pre-approved to do a Phase I by my bank?
This is a fantastic question since banks are usually sparse on details. Even worse, some banks recommend going with a pre-approved company, who (from our experience) tend to be the lowest bidder, offing low-quality Phase I's that barely meet the ASTM standard.
If you choose (and pay) a company to do your Phase I ESA who isn't "approved", then it likely won't be acceptable to your bank, and won't satisfy the bank's requirements. Like anything else, if you don't give the bank what they want, you're not going to get that mortgage, that loan, the credit line, whatever it is. It just won't work. So, choose the wrong company to do your Phase I ESA and you're out of luck. It might be the best Phase I of all time, but if that firm isn't "approved" by your bank, then it's no go. So obviously, you want and need to have a company do your Phase I ESA for your property transaction who is "approved" by your bank.
Is RMA approved by banks to do Phase I Environmental Site Assessments?
I'd love at this point to tell you that we're approved by your bank, or by all banks. It would be great to tell you we've been through a "central clearinghouse" that approves all Phase I ESA practitioners, or have passed muster in some fashion by the USEPA as being qualified to conduct Phase I ESAs.
But that's not how it works.
There is no clearinghouse for Phase I ESA practitioners. In fact, folks like myself don't have to get pre-approved to do a Phase I ESA by the USEPA or any state environmental or legal agency. What we have to do is meet fairly strict qualifications as per ASTM standards.
What's that mean to you? You're free to hire whoever you want to do your Phase I ESA, regardless of their experience. Or knowledge. Or competency. Or ability to meet the required definition of an environmental professional by the ASTM and AAI standards. It's really buyer beware. So, let the buyer beware! I do, however, encourage you to check out these two articles which can help shine some light on the dangers of getting a Phase I done by someone inexperienced.
- Who can conduct a Phase I ESA?
- Why you should avoid a cheap Phase I ESA.
- How a Phase I ESA can prevent a bad investment.
But let's address the question. Are we, RMA, approved to conduct a Phase I ESA by your bank? But consider this:
- I just did a Google search of the number of FDIC insured banks in the U.S. Here is what I came up with: "According to the FDIC, there were 6,799 FDIC-insured commercial banks in the United States as of February 11, 2014."
- Same with credit unions: "In the United States, there are 6,557 credit unions."
That makes nearly 14,000 banks and credit unions in the U.S., which doesn't include other people who often finance transactions like venture capital firms, or others who require Phase I ESA's like insurance companies, private companies, etc.
So the answer is, in almost every instance, NO, we are not approved by your bank to do a Phase I ESA. BUT!
RMA can be qualified by any bank, credit union, financer, etc.
We are not "pre-approved" but we very easily can get approved. In fact, anytime we've gone through an "approval" process, we've never been rejected or turned down because we more than meet every qualification necessary to conduct a Phase I ESA. We've done it when we needed to, and usually not beforehand.
Banks often have a pre-qualification process for "non-approved" Phase I ESA practitioners to ensure they meet some certain level of competency and have required insurance coverage before they'll accept their work for property transactions they're lending on or are otherwise involved in. This is the "approval" if you will.
We've done this a few times for some very large banks, some regional banks, and even some smaller local community banks. From what we've seen during the experience, this vetting process runs the gamut from well put together and meaningful to a nonsensical waste of everyone's time.
I will say we don't do this all the time because most banks usually don't request it, which is the real bottom line. To state it again - most of the time pre-qualification isn't required by banks, credit unions, or other lending institutions.
However, it also depends on what's in store. If you have one small piece of property, and your bank has a substantial qualification process where we have to jump through innumerable hoops to get certified, we're probably going to pass. If we have to just send in some simple paper work, then we'd be up for the job. If you have a good project, several properties, or a complicated property, then we would be willing to spend some time getting approved. It's all going to depend on the complexity and quantity of the work. Your call, we're here to help.
Should you use a pre-approved Phase I ESA practitioner?
Now don't think that frees you up to submit a piece of junk Phase I ESA to your bank, as they're not that dumb. They'll see through it, and pre-qualification or not, they'll likely reject it. So we're back to square one, the burden is on you to choose the right Phase I ESA practitioner.
Some banks maintain a listing of "pre-approved" Phase I vendors, and we're not on any to the best of our knowledge. Wondering why not?
Because if that's the case we become a commodity, and most potential customers merely call around for the lowest price. If the bank has already vetted these people, what does a customer care? I can only state now, because there is a lot, lot, lot more riding on your choice of who does your Phase I ESA than merely price. As we have discussed many times on this site, the wrong choice can cost you a huge amount of money and grief, far more than what you'll save by going with the cheapest price. And that is a game we don't want to get involved with, so we normally don't want to go on that list of "lowest priced Phase I practitioners".
If you're solely looking for the lowest price provider, that's not us. We pride ourselves on conducting every Phase I ESA in strict conformance with ASTM standards, done by environmental professionals (who attend yearly Phase I ESA training to stay well versed with the standards), and produce high quality work. We don't always recommend a Phase II ESA like some shysters do, and we don't turn out garbage, useless reports (which we've seen dozens of times, especially ones rejected from banks!).
But as a rule, no, we don't go around getting pre-approved by every bank we meet. Nor do most good Phase I ESA practitioners, I dare say. Their experience and reputation provides ample work, not being on a list of bidders who undercut each other for the lowest price.
Additional Information on Banks & Phase I Environmental Site Assessments
Often times we see banks ask for things that are not part of a Phase I ESA. Anything outside of the ASTM standards are considered "non-scope" as they are not part of the scope of a Phase I ESA. These articles can help shed some light on the subject.
- Phase I ESAs, Lead, Mold & Asbestos
- What does a Phase I ESA cover?
- Do Phase I ESA results need to be reported?
- How long is a Phase I ESA good for?
- How long does a Phase I ESA take to complete?
If you're still wondering if we can get approved, call us at 609-693-8301 or feel free to contact us online. Like I stated, the answer is almost yes, we can get approved by your bank, credit union, whoever.