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Phase I ESAs in Motor City – how things are a little different in Detroit

The Phase I Environmental Site Assessment (or ESA), considered by many in the real estate and finance industries as the most essential form of environmental due diligence, can vary in complexity and challenge when conducted in a city with a storied industrial history known as the automotive capital of the world.  The development of Detroit in the early 20th century was shaped in part by the designs of Detroit architecture firms Smith, Hinchman, and Fields (now SmithGroupJJR), credited with the design of the Ford Piquette Avenue Plant, and Albert Kahn Associates, credited with the design of the Packard Motor Car Company factory, the half-mile-long Ford River Rouge Complex, and numerous other industrial buildings throughout the region.  This historical industrial development has impacted the way Phase I ESAs are conducted today, including warranting the close scrutiny of local records from unique sources.  Environmental Professionals (EP) in the Detroit market should be familiar with several key resources to provide thorough environmental site assessment services and adequately address business environmental risk.

Environmental Records Search in Detroit

Phase I ESAs typically begin with a search of environmental records.  Because the development of many parcels in Detroit predates the availability of modern heating sources such as natural gas, the review of oil record cards at the City of Detroit Buildings, Safety Engineering, and Environmental Department (BSEED) is an important first step.  Oil records cards often date back to the early 1900s, and include documentation of heating oil tanks as well as underground storage tanks (USTs) for fueling or bulk chemical storage.  Building permits from BSEED also date back to the early 1900s, and provide details on historical occupants that may not show up in other records.  Historical occupants can also be identified by visiting Bresser’s Information Service and reviewing criss-cross directories.  Bresser’s is a family-owned business that has operated since 1946, from the post-war era all the way through the era of Dan Gilbert’s Rock Ventures acquisitions and the Detroit bankruptcy.  Criss-cross directories list occupants by street name and number, and are extremely helpful when evaluating the potential for environmental conditions.  City of Detroit Fire Department records are another local source for information regarding the past uses of properties in Detroit.  Fire Department inspection records, which often include sketches of storage locations for hazardous materials, are maintained to support effective fire fighting and to protect first responders.  Another key environmental record that environmental professionals review is the collection of Sanborn Fire Insurance Maps available fromEnvironmental Data Resources, Inc. (EDR) or the Detroit Public Library.

What’s the Next Step?

The question that always comes up at the start of a Phase I ESA is “What do we do if we find something of concern?”.  The good news about Phase I ESAs in Detroit is the fact that historical records are widely available, which can help to support the performance of all appropriate inquiry into the environmental history of real property. But these same records may also indicate that additional assessment to determine recognized environmental conditions is warranted.  Typical next steps include a Phase II Environmental Site Assessment consisting of soil, soil gas, and/or groundwater sampling to determine whether the historical uses have impacted the property.  One of the benefits to performing this additional assessment at the time of acquisition is the opportunity to prepare a Baseline Environmental Assessment (BEA), which affords liability protection for existing impact to new owners or operators of impacted property in Michigan.  Experienced environmental professionals in the Detroit market have many record sources and tools to support your environmental due diligence, whether you need a Phase I Environmental Site Assessment or an assessment that goes deeper.

Posted in Environmental Due Diligence, Phase I Environmental Site Assessments, Real Estate Due Diligence.

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