Don’t make the same mistakes as your competitors

Common mistakes developers make

Often the environment is one of those distant factors you don’t think of first when purchasing a property. In some cases, an after-thought. This could be a hugely costly mistake and one that isn’t considered until you’re in the thick of it.

The location is spot on, the market is ideal and the timing is perfect. Sounds too good to be true. Maybe it is.

Consider your due diligence of the site and make sure you know what you’re buying and what you’ll be up for.

Contaminated sites can be some of the most lucrative assets when managed correctly. It is important to understand your environmental exposure before and during acquisitions, transactions and construction.

Types of potentially contaminated sites include the following:

  • Service stations
  • Market gardens
  • Drycleaners
  • Automotive and engine workshops
  • Manufacturing workshops
  • Landfills
  • Quarries
  • Gasworks
  • Timber preservation and tanneries
  • Rifle ranges
  • Abattoirs
  • Airports
  • Railway yards
  • Cattle dips

Before you purchase a site

It’s good practice to engage an environmental consultant to conduct an environmental due diligence (desktop study) to assess for potential risk of soil or groundwater contamination prior to purchasing a site. This is also known as a Preliminary Site Investigation or a Phase 1.

This is a relatively cheap way to find out potential risks at the site and will help you make an informed decision. A Phase 1 covers such things as:

  • What was the site historically used for?
  • Is there an environmental audit overlay or a planning condition?
  • What is the potential environmental liability and potential engagement with the EPA?
  • What are the potential cost requirements?
  • What are the clean-up, damages and business risks?

Moving ahead with your purchase

If purchasing a suspected contaminated site, you need to understand the extent of contamination issues and factor this into your budget for assessment (Detailed Site Investigation), potential remediation and auditing.

We recommend you choose a consultant that is a Certified Environmental Practitioner (CEnvP) for the assessment/testing and remediation to give comfort that the scope of work proposed is appropriate and will survive scrutiny.

Most developers factor in an environmental consultant, but many are surprised to find out they will likely also need to consider an environmental auditor.

What’s the difference between a Consultant and an Auditor?

The consultant undertakes the physical sampling, assessment, remediation and management plans to then provide to the auditor for verification.

Environmental auditors are appointed by a regulating state government body (such as EPA) and are highly qualified and skilled individuals who have met strict criteria and guidelines.

An auditor is independent and accountable to the EPA for verifying that the consultant’s findings are in accordance with the guidelines, and ultimately assists in “lifting” planning restrictions and deciding if the intended use of the site is suitable.

The environmental consultant cannot be the auditor at the same site as this would be seen as a conflict of interest – like marking your own homework.

What would trigger an Environmental Audit?

An Environmental Audit may be required when:

  • you are redeveloping a potentially contaminated site to a more sensitive use (e.g. from a former petrol station to residential or a childcare centre);
  • you are developing land that is covered by an Environmental Audit Overlay;
  • there is a planning permit requirement relating to a site located in a landfill buffer zone;
  • it is requested by local council as a condition in your development application;
  • you are wanting to assist in reducing future risk and understand potential contamination management measures (due diligence);
  • EPA requests to understand the risk of harm caused by an activity; or
  • compliance is to be demonstrated with a regulatory licence.

Can an auditor add value?

Experienced auditors can add value by providing advice prior to purchasing a site to point out any environmental liabilities and potentially avoid or minimise ongoing financial costs.

When you engage an auditor early in the process you can save on time and costs associated with investigations, avoiding unnecessary re-work. The auditor can help guide you from the start.

Auditors can also offer creative ways to manage issues that pose a potential threat to human health and the environment. For example, methods of vapour intrusion ventilation in a basement carpark of a multi-storey residential apartment.

Additionally, auditors interact with the many stakeholders and understand the processes and legislation to help move things along quickly and effectively.

What do I need to consider when appointing an Auditor?

Auditors are a key part of the development approval process and careful consideration should be exercised in appointing the right auditor.

Each auditor is different as they come with varying experiences and areas of expertise. Whilst they all try to enforce and uphold the same rules, regulations and practices, matching an auditor’s experience and/or area of expertise with the project is typically beneficial.

Experience, communication, outcome-focused, integrity, quality; these are qualities that form a good, reliable auditor.

Don’t get caught out

  • Choosing the right consultant and auditor can “make or break” your project.
  • If you get an audit quote for as little as $10k, expect variations. This can blow-out, so make sure you carefully evaluate the scope of the audit that has been costed.
  • Audit the auditor. If an audit has been triggered, ask for similar case studies from the auditor and examples of where they have assisted the client and provided timely pragmatic advice.
  • Be prepared if your design plans have to change to suit environmental requirements.
  • Site investigations and results may take a while; the sooner you start testing the more the likelihood to meet your project timeline.
  • Engage the auditor before you start site assessments to avoid unnecessary re-testing.
  • Choose an auditor who has a good working relationship with the consultant as this will reduce time and interaction issues between them.
  • Factor in a contingency cost for unforeseen environmental issues. A “just in case” fund.
  • Don’t get stuck in the “it won’t affect me” bubble. We have seen this many times. It’s smart to conduct due diligence before purchasing the site, no matter what.

Author: Phil Hitchcock and Tanya Thake

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