Panel discussion from the 2013 Annual Client Summit Anthony J. Buonicore, Moderator Panelists: Nestor Benavides, President, EMG Holly Neber, President, AEI Consultants Rick Ferguson, US Bank Brian Walker, Chase

1. PANEL DISCUSSION:
Why the Phase I ESA Should NOT
Be Viewed as a Commodity

2. Anthony J. Buonicore, Moderator
Panel:
Nestor Benavides, President, EMG
Holly Neber, President, AEI Consultants
Rick Ferguson, US Bank
Brian Walker, Chase

3. › A marketable item that is mass-produced and
unspecialized to satisfy a need.
› Describes a class of goods for which there is
demand, but which is supplied without qualitative
differentiation across a market.
› Interchangeable with other items of the same type.
› Market treats as equivalent with no regard to who
produced (“fungibility”).
› Typically leads to smaller profit margins and
diminishes the importance of factors other than
price.
Definition of a Commodity

4. NEED A PHASE - I REPORT?
DON'T SQUASH YOUR DEAL WITH A HIGH BILL,
_____'s BANKERS PHASE - I COST ONLY $730.00!
WITH _____’S BANKERS PHASE - I, YOU GET A REPORT THAT CONFORMS WITH ASTM’S STANDARDS & INCLUDES:
¨ State environmental files review of sites within 1 mile.
¨ State Underground Storage Tank registrations within 1 mile.
¨ State Leaking Underground Storage Tank sites within 1 mile.
¨ Landfill listings within 1 mile and Storm Water Regulatory Analysis.
¨ Treatment Storage and Disposal facilities and Storm Water Compliance review.
¨ Site Inspection by State and Federal Registered Consultant.
¨ Asbestos Construction Building Materials (ACBM) over-view and much more

5. › Organized in January 2012 at the EBA’s Santa Fe meeting
› Mission:
 Provide a unified voice for Phase I EPs in the industry
 Disseminate information and provide a consistent
message on good commercial industry practice
 Educate those who rely on Phase I ESAs
 Improve the status of the industry
› Roundtable meets four times per year (in conjunction with
Spring and Fall ASTM meetings and Winter and Summer
EBA meetings)
Phase I Environmental Consultants
Roundtable

6. › “What you need to know as a Phase I EP that is NOT in the
ASTM E1527 Standard”
› Twelve (12) specific issues were identified in June 2012 at
the EBA Newport, RI meeting that needed to be addressed
› Supported by an industry-wide survey conducted by the
Roundtable in August-September 2012
› More than 100 representatives of the Phase I industry
participated in the full day workshop
› First Roundtable report published January 31, 2013 (Report
No. 13-001-31) focusing on the workshop
October 23, 2012 Roundtable Workshop

7. > Recognized that:
 The quality of Phase Is across the
market is highly variable.
 The consistency of Phase Is is
highly variable.
 Phase I pricing is highly variable.
Why Phase I Should Not Be Viewed as a
Commodity

8. > ASTM E1527 recognizes that:
 The extent of the investigation may vary
depending on property type, client’s
expertise, client’s risk tolerance and the
information developed in the course of the
inquiry.
 There may be site-specific considerations that
can impact the scope of work conducted.
 Professional judgment is integral to a Phase I
investigation.
Why Phase I Should Not Be Viewed as a
Commodity Cont’d

9.  ECR Industry Survey found that:
 On PRICE:
 EPs compete on price for their Phase I ESAs…
Why Phase I Should Not Be Viewed as a
Commodity Cont’d

10.  ECR Industry Survey found that:
 With respect to client views the Phase I as a commodity:
 EPs feel that ___ of their clients view Phase I ESAs as a commodity.
Why Phase I Should Not Be Viewed as a
Commodity Cont’d

11.  Similarly, EDR Insight’s 1Q13 State of the Property Assessment Market
Survey (April 2013) found that:
 EPs feel pressured on price:
Why Phase I Should Not Be Viewed as a
Commodity cont’d

12.  EDR 1Q13 State of the Property Assessment Market Survey found that:
 Pricing pressure from lender clients vs. prospective purchasers:
Why Phase I Should Not Be Viewed as a
Commodity cont’d

13.  EDR 1Q13 State of the Property Assessment Market Survey found that:
 EPs feel that their clients give them credit for their value proposition:
Why Phase I Should Not Be Viewed as a
Commodity

14. Why Phase I Should Not Be Viewed as a
Commodity Cont’d
Debt Phase I ESAs Equity Phase I ESAs
Client?
Lender Prospective purchaser
Why?
Phase I to protect its risk Phase I to protect its risk
Risk Profile?
Secured creditor exemption from
cleanup liability
Liability for total cleanup cost (may
exceed value of the property)
Maximum loss is capped at the
collateral
Litigation liability with potential third
parties
Can foreclose without cleanup liability Potential liability is not limited
Phase I Investigation Cost?
Generally less expensive Phase IESA
because risk profile is much lower
Generally more expensive Phase I ESA
because risk profile is significantly
greater

15. Q & A
Why Phase I Should Not Be Viewed as a
Commodity