Selling Guide

Published September 4, 2018

E-2-02: Suggested Format for Phase I Environmental Hazard Assessments (06/28/2011)

This exhibit provides the suggested format for Phase I environmental hazard assessments.

I. PROPERTY LOG

Project Name:
Property Address:
Developer/Sponsor Name:
Developer/Sponsor Address:
Developer/Sponsor Telephone:
Lender Name:
Lender’s Underwriter’s Name:
Environmental Consultant:
Consultant’s Firm Name:
Consultant’s Firm Address:
Consultant’s Telephone:
Date Phase I Assessment Completed:
Date Phase II Assessment Completed:

II. SUMMARY OF PHASE I ASSESSMENT RESULTS/RECOMMENDATIONS

1. Check applicable result for each hazard, indicating for each “Fail” whether (1) there is a possible remedy or (2) whether a Phase II assessment is needed.
Hazard Pass Fail Possible Remedy
Waste Sites
PCBs
Radon
Underground Storage Tanks
Asbestos
Other (List)
___________
___________
2. Attach a brief explanation for each hazard that needs a Phase II assessment. List all data deficiencies, test results, etc., that require further assessment.
3. Attach a brief explanation for each failed hazard that could be corrected by taking remedial actions. Explain what actions are required and how they should be performed.
4. Underwriter’s Comments (Attach Phase I Information Checklist):
Signature: _______________________________ Date: _________________

III. INFORMATION CHECKLIST: INFORMATION SOURCES

Check the information sources used to perform the various aspects of the Phase I environmental hazard assessment.

1. Overall Property Description
Building Specifications Lists of Commercial Tenants Previously On-Site
Historical Aerial Photos Verification of Public Water and Sewer
Current Aerial Photos Interviews with Local Fire, Health, Land Use, or Environmental Enforcement Officials
Title History
Site Survey
Neighborhood Zoning Maps
Neighborhood Land Use Maps
Other (List)
2. Waste Sites
Comprehensive Environmental Response, Compensation, and Liability Information System (CERCLIS) lists or similar state lists of contaminated properties (covering any properties that are within a one-mile radius of the subject property)
State Environmental Protection Agency (EPA) site lists of contaminated properties (covering any properties that are within a one-mile radius of the subject property)
Site Soil and Groundwater Test Results
Other (List)
3. Polychlorinated Biphenyls (PCBs)
Utility Transformer Records
Site Survey of Transformers
Site Soil and Groundwater PCB Test Results
Other (List)
4. Radon
Water Utility Records
Gas Utility Records
On-Site Radon Test Results
Other (List)
5. Underground Storage Tanks
Oil, Motor Fuel, and Waste Oil Systems Reports
Site Soil and Groundwater Tests
Site Tank Survey
Comprehensive Environmental Response, Compensation, and Liability Information System (CERCLIS) lists or similar state lists of contaminated properties (covering any properties that are within a one-mile radius of the subject property)
Other (List)
6. Asbestos (Required only if subject property is the conversion of an existing building)
Dated Building Construction/Rehabilitation Specifications
Engineer’s/Consultant’s Asbestos Report
Other (List)

IV. INFORMATION CHECKLIST: EVALUATION OF SPECIFIC HAZARDS

Answer all applicable questions by marking the appropriate box—“Y” for Yes, “N” for No, or “DK” for Don’t Know:

A. Waste Sites

Y N DK
1. Are there results of physical testing (including on-site sampling of soil and groundwater that meets all regulatory standards and sound industry practice) to show that the property is free of waste contamination and is being operated in an environmentally safe manner?
2. Are there any obvious high-risk neighbors in adjacent properties engaged in producing, storing, or transporting hazardous waste, chemicals, or substances?
Note: If the answer to question 1 is “yes” and the answer to question 2 is “no,” stop here because, for underwriting purposes, the property will be acceptable from the standpoint of waste site contamination. Otherwise, answer the questions below.
3. Was the site ever used for research, industrial, or military purposes during the last 30 years?
4. Has any of the site space ever been leased to commercial tenants who are likely to have used, transported, or disposed of toxic chemicals (such as a dry cleaner, print shop, service station, etc.)?
5. Is water for the building provided by either a private company or a well situated on the property?
6. Does the property or any site within one mile of the property appear on any state or federal list of hazardous waste sites?
7. Is there any documented or visible evidence of the handling of dangerous waste on the subject property or on neighboring sites (such as stressed vegetation, stained soil, open or leaking containers, foul fumes or smells, oily ponds, etc.)?
Note: If the answer to any of the questions from 2 through 7 is “yes” or “don’t know,” then the property either fails or needs a Phase II assessment conducted. If the answers to all of the questions 2 through 7 are “no,” the property, for underwriting purposes, will be acceptable from the standpoint of waste site contamination.
8. Underwriter’s Comments:
9. Phase I Assessment Results (check one)
____ Pass ____ Fail ____ Possible Remedy ____ Phase II Required
10. Underwriter’s Signature and Date:_________________________________________

B. Polychlorinated Biphenyls (PCBs)

Y N DK
1. Are there any transformers or capacitors that contain PCBs anywhere on the property?
2. Is there any visible or documented evidence of soil or groundwater contamination from PCBs on the property?
Note: If the answers to the above questions are “no,” stop here because, for underwriting purposes, the property will be acceptable from the standpoint of PCB contamination. If the answer to a question is “don’t know,” stop here since a Phase II assessment is required. Otherwise, answer the questions below.
3. If the answer to question 1 above is “yes,” are any of the capacitors or transformers inside residential buildings?
4. If the answer to question 1 above is “yes,” are any of the transformers or capacitors not clearly marked, not well maintained, or not secure?
5. If the answer to question 1 above is “yes,” is there any evidence of leakage on or around the transformers or capacitors?
6. If the answer to question 2 above is “yes,” have PCB concentrations of 50 parts per million or greater been found in contaminated soils or groundwater?
Note: If the answers to questions 3 through 6 are all “no,” the property, for underwriting purposes, will be acceptable from the standpoint of PCB contamination. Otherwise, the property either fails or needs a Phase II assessment.
7. Underwriter’s Comments:
8. Phase I Assessment Results (check one)
____ Pass ____ Fail ____ Possible Remedy ____ Phase II Required
9. Underwriter’s Signature and Date:

C. Radon

Y N DK
1. Is there any evidence that nearby structures have elevated indoor levels of radon or radon progeny?
2. Have local water supplies been found to have elevated levels of radon or radium?
3. Is the property located on or near sites that are currently, or were formerly, used for uranium, thorium, or radium extraction or for phosphate processing?
Note: If the answers to the above questions are all “yes,” a Phase II assessment is required. If the answers to questions 2 and 3 are “no,” the property, for underwriting purposes, will be acceptable from the standpoint of radon contamination. If the subject property is a conversion of an existing building, go to question 4.
4. Were the results of an EPA-approved short-term radon test that was performed in the basement of each of the subject buildings within the last six months at or below four picocuries per liter?
Note: If the answer to this question is “no” or “don’t know,” a Phase II assessment is required.
5. Underwriter’s Comments:
6. Phase I Assessment Results (check one)
____ Pass ____ Fail ____ Possible Remedy ____ Phase II Required
7. Underwriter’s Signature and Date:

D. Underground Storage Tanks

Y N DK
1. Is there a current site survey performed by a qualified engineer that indicates the property is free of any underground storage tanks?
2. Is there any visible or documented evidence of oil or groundwater contamination on the property?
3. Are there any petroleum storage and/or delivery facilities (including gas stations) or chemical manufacturing plants located on adjacent properties?

Note: If the answer to question 1 is “yes,” and the answers to questions 2 and 3 are “no,” stop here because, for underwriting purposes, the property will be acceptable from the standpoint of underground storage tank contamination. If the answers to questions 2 or 3 are “yes” or “don’t know,” also stop because the property either fails or needs a Phase II assessment. Otherwise, answer the questions below.

4. Are there any active underground tank facilities on-site that are used for activities such as motor fuel, waste oil, or fuel oil storage?
5. If the answer to question 4 is “yes,” have these facilities been maintained in accordance with sound industry standards (such as those in the American Petroleum Institute’s Bulletins 1621 and 1623 or the National Fire Protection Association’s Bulletins 329, 70, 77, etc.)?

Note: If the answer to question 4 is “no,” go to question 8 below. If the answer to question 4 is “don’t know,” stop here because the property either fails or needs a Phase II assessment. If the answer to question 5 is “no” or “don’t know,” stop here because the property either fails or needs a Phase II assessment. If the answers to questions 4 and 5 are “yes,” answer the questions below.

6. If the answer to question 4 is “yes,” are any of the tanks more than 10 years old?
7. If the answer to question 6 is “yes,” have any of the tanks that are more than 10 years old been tested for leaks within the last year using a test approved by the American Petroleum Institute?

Note: If the answer to question 6 is “no,” answer the questions below. If the answer to question 6 is “don’t know,” stop here because the property either fails or needs a Phase II assessment. If the answer to question 7 is “no,” answer the questions below. Otherwise, stop here because the property either fails or needs a Phase II assessment.

8. Are there any deactivated underground storage tanks on the property?
9. If the answer to question 8 is “yes,” were all of the tanks deactivated in accordance with sound industry practices (such as under the American Petroleum Institute’s Bulletins 1604 and 2202 or the National Fire Protection Association’s Bulletin 30)?

Note: If the answer to question 8 is “no” or if the answer to question 9 is “yes,” the property, for underwriting purposes, will be acceptable from the standpoint of underground storage tank contamination. If the answer to question 8 is “don’t know,” or if the answer to question 9 is “no” or “don’t know,” the property either fails or needs a Phase II assessment.

10. Underwriter’s Comments:
11. Phase I Assessment Results (check one)
____ Pass ____ Fail ____ Possible Remedy ____ Phase II Required
12. Underwriter’s Signature and Date:

E. Asbestos

(Required only if the project is a conversion of an existing building)

All asbestos-related assessments, testing, remedial action, and maintenance programs must be in compliance with the Environmental Protection Agency’s document “Guidance for Controlling Asbestos-Containing Materials in Buildings” (EPA 560/5024, 1985)

Y N DK
1. Was the building constructed prior to 1979?
2. Does a site walk-through reveal any visible evidence of asbestos?
3. Is there any documented evidence of asbestos?

Note: If the answer to all of the above questions is “no,” stop here because, for underwriting purposes, the property will be acceptable from the standpoint of asbestos contamination. If the answer to any of the above questions is “yes” or “don’t know,” answer the questions below.

4. Is there an asbestos survey by a certified, independent firm that was performed since 1979?

Note: If the answer to question 4 is “yes,” answer the question below. Otherwise, stop because a Phase II assessment is required.

5. Did the survey find the building to be free of both treated and untreated asbestos-containing material?

Note: If the answer to question 5 is “yes,” stop here because, for underwriting purposes, the property will be acceptable from the standpoint of asbestos contamination. If the answer to question 5 is “no” or “don’t know,” the property either fails or needs a Phase II assessment.

6. Underwriter’s Comments:
7. Phase I Assessment Results (check one)
____ Pass ____ Fail ____ Possible Remedy ____ Phase II Required
8. Underwriter’s Signature and Date:

F. Additional Hazards

(Required only if the project is a conversion of an existing building)

Y N DK
1. Is there any visible or documented evidence of peeling lead paint on the floors, walls, or ceilings of either the unit living areas or the common areas?

Note: If the answer to question 1 is “no,” the property, for underwriting purposes, will be acceptable from the standpoint of lead paint contamination; however, answer the questions below related to other hazards. If the answer to question 1 is “yes” or “don’t know,” the property fails. However, answer the remaining questions since the project may be eligible if remedial actions to remove or cover all peeling lead paint are taken before the lender requests Fannie Mae's project approval.

2. Do the unit living areas or common areas contain urea-formaldehyde foam insulation that was installed less than a year ago?
3. If the answer to question 2 is “yes” or “don’t know,” did the current heating, ventilation, and air conditioning system meet the standards of the American Society of Heating, Refrigerating, and Air Conditioning Engineers when it was installed?
Note: If the answer to question 2 is “no” or the answer to question 3 is “yes,” the property, for underwriting purposes, will be acceptable from the standpoint of urea-formaldehyde foam insulation contamination. However, answer the remaining questions. If the answer to question 3 is “no” or “don’t know,” the property fails. However, answer the remaining questions since the project may be eligible if the lender can demonstrate that the ventilation system meets the American Society of Heating, Refrigerating, and Air Conditioning Engineer’s standards before it requests Fannie Mae's project approval.
4. Does the local utility providing the drinking water meet current EPA requirements for lead concentration?
5. Underwriter’s Comments:
6. Phase I Assessment Results (check one)
____ Pass ____ Fail ____ Possible Remedy ____ Phase II Required
7. Underwriter’s Signature and Date: