Top 5 Challenges Lenders Face in Environmental Due Diligence

EDR surveyed 819 financial institutions that provided insight into the Environmental Due Diligence (EDD) challenges that they face. REPSG is a full service, customer conscious environmental firm that has the following commentary related to the below mentioned lender challenges:

 

Challenge #1: Environmental Reports and Risk-Based Decisions

  • Interpreting environmental results and knowing which risks to be concerned about
  • Finding out what the EP’s opinion is and determining whether the subject property has any environmental issues the bank should be concerned about

At REPSG, all EDD is performed by personnel who have many years of experience and meet the AAI and ASTM E1527-05 qualifications and can make coherent professional, environmental decisions. We make sure we understand the lenders risk tolerance and their overall lending goals. Our reporting is structured to clearly define what a Recognized Environmental Condition (REC) is and if it is a concern for the property in question. We clearly define the risks and recommendations in our reporting and follow up with the lender to ensure that any questions they may have are answered.

 

Challenge #2: Internal Education & Training

  • Understanding the importance of EDD in the context of the overall lending process
  • Educating senior management and loan officers

At REPSG we are very experience with lenders and their vary degree of EDD knowledge. We make sure that every lender understands the important that their personnel are knowledgeable and understands all of the potential EDD concerns and how it is a critical component of the bank’s overall risk management practices. We have meet with many lenders and presented case studies and conveyed the importance of knowing many risks involved with inadequate EDD or the choice not to require any EDD. We are contracted by many banks to perform a third party review of EDD reporting to endure that the EDD assessment was conducted in compliance with AAI and ASTM E1527-05 standards and that our professional judgment and that of the report writers professional judgment coincide with each other. Our goal is to make sure the lender understands their environmental risk.

 

Challenge #3: Turnaround Time

  • Meeting the challenges of efficiently conducting EDD

At REPSG, we know what items required for EDD take time and therefore have a system down that allows us to efficiently turnaround an EDD assessment to meet the client’s needs and the AAI and ASTM E1527-05 standards. The federal, state and local review of records is one of the most important and time consuming requirements of EDD, which REPSG makes a priority during our EDD research. We have experience turning around an assessment anywhere from two days to two weeks.

 

Challenge #4: EDD Decisions

  • Balancing EDD costs against risk tolerance
  • Determining appropriate EDD levels

At REPSG, we are very focused on what our customer’s ultimate goals and needs are for the property. We emphasize for them if the site’s history will pose large environmental risk and expense and if the risk is manageable through the longer and more intense regulatory process or possibly the more simplified construction and disposal process. Being able to breakdown the risk and type of management for a site can clarify the level of environmental liability related to the size of the loan.

 

Challenge #5: Competitive Issues

  • Justifying EDD costs to customers
  • Requiring borrowers to pay for a Phase I when a competing bank doesn’t.

At REPSG, we encourage lenders to compare our comprehensive EDD assessments to others. This comparison justifies the need for the assessment as well as being able to pass on the costs to their customer. We are very focused on producing a site-specific assessments tailored to identify the RECs and risks involved at each property.

This entry was posted in Blog, Due Diligence Issues, Site Development and tagged by Meredith Szymelewicz. Bookmark the permalink.

About Meredith Szymelewicz

“What is a scientist after all? It is a curious man looking through a keyhole, the keyhole of nature, trying to know what's going on.” Jacques Cousteau
  We secretly suspect that Meredith is part-dolphin. She’s been with REPSG for the last 10 years managing Phase I and Phase II Environmental Site Assessments, emergency response  management, estimating, National Environmental Policy Act (NEPA) assessments, State Historic Preservation Office (SHPO) submittals, wetlands delineations, historic records searches and has specific leadership and experience conducting due diligence and regulatory assessments within the telecommunications industry, but any chance Meredith gets she’s in the water or talking about water or changing her desktop background to cool pictures of water. Meredith received her B. S. in Marine Science with a concentration in Marine Biology from The Richard Stockton College of New Jersey and is a Certified Open Water Scuba Diver. Did we mention her dolphin tattoo?