ERI’s Comprehensive Service Offerings
Third-Party Environmental Report Review (Phase I Reviews)
The most common method of identifying environmental risk on a collateral property is through traditional site-specific investigations such as Phase I & Phase II Environmental Site Assessments, Remedial Action Reports, and regulatory file reviews. ERI’s Environmental Professionals have extensive experience in environmental assessments, remediation activities, regulatory requirements, and financial services. ERI staff can communicate regulatory and environmental risks clearly so that loan officers, syndication partners, and credit officers can make prudent business decisions. ERI will review the Phase I report along with any other available environmental reports and prepare an Environmental Review Memorandum, which clearly summarizes the review findings, identifies environmental risks, and provides recommendations for additional information and/or assessment when appropriate. Our recommendations will always be consistent with the client bank’s risk tolerance as well as industry best practice.
SBA Approved Records Search with Risk Assessment (SBA-Compliant RSRA) – Desktop Review
Although the Records Search with Risk Assessment was developed by the Small Business Administration (SBA), it is one of the most widely used due diligence products in commercial lending by banks of all sizes for both SBA and non-SBA transactions. The SBA-Compliant RSRA includes a review of at least two historical sources (aerial photographs, city directories, fire insurance maps), a regulatory database report, an interview with a site contact (if desired by the client), and a Risk Determination by an ERI Environmental Professional. The SBA-Compliant RSRA is prepared in accordance with the requirements set forth in SBA SOP. These reviews are typically performed on commercial loans with low risk. SBA-Compliant RSRA reviews include BOTH purchase of the data and a thorough written review by an Environmental Professional. An SBA-Compliant RSRA is a comprehensive site screening tool that provides a lender with a site history along with known current and past regulatory issues without the time and expense of a site inspection.
Environmental Risk Management Policy Development
A sound Environmental Risk Management Policy is the first step in providing a roadmap to understanding and mitigating environmental risk. Over the past 25 years, ERI has assisted numerous lenders with development of Environmental Risk Management Policies and Procedures. ERI provides technical expertise to develop and amend policy/procedures to suit the client bank’s risk tolerance. Our recommendations related to policy/procedures development will always be consistent with industry best practices due to our considerable experience with banks of all sizes and geographic footprints. A comprehensive Environmental Risk Management Policy, combined with customized due diligence products allows banks to manage environmental risk in a cost‐effective and efficient manner.
Lender Sustainability Services
ERI is partnering with The EI Group, a multidisciplinary environmental engineering, occupational safety and health consulting firm whose primary focus is aimed at supporting Fortune 1000 corporations involved in manufacturing, energy production and transportation services. This initiative is being driven by a standardized climate disclosure rule anticipated for release by the Securities and Exchange Commission (SEC) in early 2024. As a result of this anticipated rule by the SEC, companies targeted for commercial lending will be required by those publicly traded financial institutions which extend loans, to provide corporate climate impact data on their ESG practices and carbon footprint to better evaluate long-term lending risks. As the demand for financial institutions to take accountability for their carbon footprint intensifies, there is a growing need for institutions to assess the ESG practices of their clients. ERI and EI experts are here to help financial institutions build and implement a standardized system so that institutions can confidently assess their potential clients’ ESG activities to then be able to report on their own.
Environmental Screen with Risk Rating
An Environmental Screen is used to determine if the subject property or adjacent properties are identified on an environmental regulatory database report. ERI reviews an ⅛-mile regulatory database report and provides an Environmental Professional Risk Rating. The typical turn time for the Environmental Screen is two business days. ERI’s clients use this due diligence product as a screening tool for new loans with relatively low loan amounts and for renewals to determine if additional environmental due diligence is warranted.
Environmental Screen Plus
The Environmental Screen Plus is similar to the Environmental Screen, as it includes a ⅛-mile radius report and Environmental Professional Risk Rating, but the Environmental Screen Plus also includes a review of readily available online historical aerial photographs. This environmental due diligence product is used to determine if the subject property or adjacent properties are identified on a regulatory database report and as a screening tool for low-risk collateral properties with relatively low loan amounts. However, the Environmental Screen Plus is also a great tool for evaluating the environmental risks associated with existing collateral, as it can be used to determine if any new environmental regulatory listings of concern have been identified since loan origination.
Regulatory Database Report Review
A Regulatory Database Report Review is intended to determine if the collateral property or any adjacent properties have been listed on any federal, state or local environmental databases. The regulatory database report is the same regulatory database report that is included in a Phase I report, extending to a 1-mile radius and detailing the environmental listings for the subject site and surrounding properties. An ERI Environmental Professional will review this database report as well as online historical aerial photographs and summarize the findings and potential impacts to the collateral property in an Environmental Review Memorandum. The typical turn time for a Regulatory Database Report Review is 3 business days. Our clients use this due diligence product on low risk properties for new loans as well as renewals. In many cases, a client will request a Regulatory Database Report Review along with review of a dated Phase I report in lieu of ordering a new Phase I report, saving the borrower both time and money.
Policy Implementation & Maintenance
ERI assists the client in rolling out the bank’s policy and procedures to lenders and credit staff. ERI’s knowledge and expertise helps client banks manage and implement their environmental risk policies and programs, saving time and expenses while maintaining business goals.
Multiple Site Portfolio Reviews
ERI provides many lenders with additional third-party capacity to quickly process large portfolio reviews. Our staff is accustomed to meeting tight deadlines with the urgency and dedication needed to process large portfolios in a thorough and timely manner. The collateral detail and environmental issues are communicated in a format which enables lenders to understand the collateral risk and meet loan closing deadlines.
Expert Property Condition Assessment Report Reviews
ERI offers specialized reviews of Property Condition Assessment (PCA) reports tailored for financial institutions. With over 20 years of experience in building inspections and property assessments, our team ensures the accuracy, compliance, and reliability of PCA reports essential for informed lending decisions. Our services include reviewing and commenting on all relevant sections of a PCA for accuracy and potential areas of concern. We also evaluate the qualifications of the professionals who completed each PCA to ensure they meet the standards set forth in ASTM E2018-24. Importantly, our team assesses the accuracy of costs associated with observed building deficiencies and the prepared reserve schedule. This level of review protects lending institutions by ensuring the investment is adequately protected, by avoiding underfunding for anticipated building system maintenance and replacement items. Please reach out to ERI to today for more information about this review service.
Physical Climate Risk Assessment
ERI’s Physical Climate Risk Assessment is an evaluation aimed at understanding the potential climate-related risks associated with a property. It includes six risk categories: heat, precipitation, drought, wind, fire, and flood. The level of risk related to each risk category will be identified for the property. The Climate Risk Assessment also includes the completion of a Standard Flood Hazard Determination Form in accordance with the Federal Emergency Management Agency (FEMA). This review will determine if the property is situated within a flood zone and assesses the necessity of flood insurance, which is required by most underwriting departments. An ERI Environmental Professional will analyze this data and summarize the findings and potential climate-related risks to the collateral property. If appropriate, ERI will also suggest mitigation measures to maintain or enhance the real estate’s resilience against these risks over time.
Commercial Appraisal Reviews
ERI has partnered with qualified appraisers who will conduct independent commercial appraisal reviews to assess compliance with the Federal Reserve appraisal regulations and guidelines as well as professional standards. Qualified appraisers will conduct independent commercial appraisal reviews to assess compliance with the Federal Reserve appraisal regulations and guidelines as well as professional standards.
Seismic Reviews
ERI completes third-party review of Seismic Risk Assessments to verify that these reports incorporate ASTM E2026-24 (Standard Guide for Seismic Risk Assessment of Buildings) and best engineering practices for the evaluation of building structural/non-structural components and that subsequent PML (Probable Maximum Loss) evaluations adhere to ASTM E2557-24. During our review, was also verify that the accepted models used for earthquake occurrence and the subsequent ground motion from an earthquake in zones of seismic activity are utilized and that SEL-DBE (Scenario Expected Loss for Design Basis Earthquake) properly tie PML to evaluate potential damage to building structural engineering components.
Regulatory Agency Liaison
Considering acquiring a property with known contamination?
Want to know more about available funding or incentives?
ERI’s regulatory agency liaison support services can review historical property documentation, conduct a gap analysis to determine if further assessment is warranted, contact the appropriate regulatory authority on your behalf, procure bids from qualified Environmental Professionals and more! Along with ongoing client support during the entire process.
Environmental Risk Training
From current environmental topics to internal policy questions, ERI provides bank staff with a wide variety of training programs in the environmental risk management field. This training can be customized to address any topic of interest.
Complimentary Client Support
ERI’s client-first approach includes numerous complimentary services, such as creating, reviewing, and updating Environmental Risk Management Policies and keeping clients informed about regulatory updates and best practices in the industry. We also serve as a direct extension of the bank’s Environmental Risk Management Department by providing policy training and serving as an ongoing resource to credit, appraisal and environmental risk managers and loan officers.
Services
Let us be your guide from start to finish throughout your Environmental Risk Assessment process
“ERI also has an alliance with LaSalle Commercial Appraisal Management (L-CAM), one of the nation’s most experienced and respected commercial appraisal review firms. All of L-CAM’s review appraisers have at least 25 years of experience in the field of commercial property appraisal and commercial property appraisal review. In addition to providing appraisal review services, L-CAM provides consulting services to banks on appraisal compliance, appraisal policy development and appraisal ordering and review procedures. ERI and L-CAM work together to provide the nation’s leading alliance in outsourced appraisal and environmental review services for commercial lenders.”
Rob Landis, MAI, Partner
“What sets ERI apart from the competitors is your willingness to participate in calls with us and our bankers and go the extra mile walking us through these issues without charging extra. We appreciate all the extra time you and your team put in to hold our hand.”
Jennifer Welch, Vice President, Real Estate Valuation Project Manager. First National Bank
“I think the quality of ERI’s reviews is always great and I love that I can count on you guys for the quick turnaround. With so many projects going on these days I don’t have time to ask people if they can do reviews before I send them – I need to just be able to send them to someone I know who can get them done. ERI gives me that peace of mind.” …. “I hope you all know that I personally appreciate very much all that you do for us at BOTW. We could not do what we do without you.
Chip Viteralli, Environmental Risk Officer, Bank of the West