By Ian Murdoch and Skyler Besley, Pinchin Ltd.
“Deal killers,” the animated term given to your local Environmental Consultants when they uncover those historical property issues and let the skeletons out of the closet. Albeit no one wants to uncover hidden secrets on a potential acquisition, it’s important to understand asset management and site assessments from the eyes of the consultants. Whether you represent the real estate, investment or site management team, understanding the basics of asset management and Environmental Site Assessments (ESAs) could help in closing deals faster, providing better leverage and competitive bid opportunities.
Phase I ESAs
Let’s start with your friend the Phase I ESA specific to the Ottawa market. You’ve got three types of Phase I ESAs to understand:
1. The majority of the Phase I ESAs prepared in Canada are completed in general accordance with the Canadian Standards Association (CSA) document entitled “Phase I Environmental Site Assessment, CSA Standard Z768-01” dated November 2001 (reaffirmed 2012), which typically includes a review of readily available historical records, a review of readily accessible regulatory records, a Site reconnaissance, interviews, an evaluation of information and reporting. CSA Phase I ESAs are the most common, cost effective type of Phase I ESAs and are accepted by all financial institutions.
2. In Ontario, when you need to change land uses to a more sensitive use (e.g., from commercial to residential), you must file a Record of Site Condition (RSC) with the Ontario Ministry of the Environment and Climate Change (MOECC). As such, the Phase I ESA must be completed in accordance with Part VII and Schedule D of the Province of Ontario’s Environmental Protection Act R.S.O. 1990, c. E.19 and Ontario Regulation 153/04: Records of Site Condition – Part XV.1 of the Act, and last amended by Ontario Regulation 333/13 on December 13, 2013 (O. Reg. 153/04). O.Reg. 153.04 Phase I ESAs are much more in-depth than CSA Phase I ESAs and can become costly due to the filing of the RSC and the correspondence with the MOECC.
3. In Ottawa, specifically, as well as some other municipalities in Ontario, when filing for Site Plan Approval (SPA), the Phase I ESA must be completed in general accordance with O.Reg. 153.04; however, you do not have to file an RSC with the MOECC. SPA Phase I ESAs are typically twice the cost of CSA Phase I ESAs due to the different reporting structure and additional information that needs to be reviewed/summarized as part of an SPA Phase I ESA.
As you can see, the purpose (e.g., financing, SPA or change of land use) plays a large role in the cost, complexity and timeline of the reporting.