PGTS Standard
9. When real properties are accepted into trust or in other instances where legal title is taken (either in a fiduciary or non-fiduciary capacity) on behalf of the trust or estate on or after January 1, 1993, an investigation is made regarding hazardous waste. The organization’s legal counsel licensed to practice in the applicable jurisdiction shall direct and approve the appropriate level of environmental review. (NADWP S 55 20) [PGO, PGP, PGTS]
Environmental Review of Real Estate
You may wonder why does standard #9 apply to all three accreditation levels of service? All three levels of service may receive real property as a donation to their organization, thus, Standard #9 is applicable to all entities that receive real property as a gift.
Real property can be a welcome and impactful gift to Seventh-day Adventist (SDA) church organizations. PGTS Standard 9 requires that an environmental review be completed before legal ownership of the real property is taken by the church entity. In addition, if your organization chooses to accept fiduciary responsibilities as trustee of revocable or irrevocable trusts where any real property is placed into the name of the trust or the SDA organization’s legal name, this standard also applies. A primary reason standard 9 exists is to help SDA organizations avoid liability arising out of hazardous waste contamination.
An even greater concern is the potentially significant health hazards that real property with hazardous waste could cause if a church organization were to use the property as a school, church, or in some other public manner.
Types of Environmental Inspections
Non-professional inspections are usually done at very little or no cost by certified PGTS personnel using a checklist. This checklist should include but not be limited to types of buildings on the property, construction materials, history of the property, description of the terrain, lead paint, asbestos, standing water, underground tanks and lines, discolored ground, roads leading to nowhere, septic systems, drainage ponds and pesticides. The environmental inspection checklist should be reviewed and approved by your organization’s legal counsel. Some examples of an environmental inspection checklist can be found in Appendix B of the PGTS Manual starting on page 26. This type of inspection does not provide a basis for the “innocent landowner defense” under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (“CERCLA”).
Under CERCLA, purchasers of real property must fulfill “all the appropriate inquiries” requirements in order to assert the innocent landowner defense. An Environmental Site Assessment (ESA) is a professional inspection by a licensed environmental inspection service that identifies potential and existing environmental contamination liabilities. This inspection is not a home inspection service that only looks at the property’s condition. The most common professional inspection is called a Phase 1 ESA. If the Phase 1 is completed to the correct ASTM International (formerly known as American Society for Testing Materials) standards, the Phase I ESA can satisfy the “all appropriate inquiries” requirements. The Phase 1 ESA entails a legal records review, a site inspection, and interviews with owners, occupants’ neighbors and local government officials. The Phase 1 ESA will be used to determine if additional professional reviews and tests will need to completed in order to complete the “all appropriate inquiries” requirements. These additional types of ESA inspections are Phase 2 ESAs which include collecting a series of soil, groundwater, and soil gas samples to determine the specific presence of hazardous substances on the site; a Phase 3 ESA deals with the remediation of a contaminated site. Generally, your organization would not want to be involved with any real property requiring more than a Phase 1 ESA.
Some organizations require Phase 1 ESA on all real property offered to them as a donation. Although this provides the organization the legal protection of an “innocent landowner” and removes the risk of the non-professional missing something, it is very costly, ranging in price from $1,500 to $5,000 or more. Gifts of real property can be straightforward, such as gifts of residential property in a long-established residential neighborhood. In these cases a nonprofessional inspection may be adequate provided legal counsel has reviewed all of the relevant liabilities and agrees that the risk is minimal. Standard 9 should not be interpreted as requiring a Phase 1 ESA inspection; it simply requires that each organization, along with their legal counsel, determines what is the appropriate level of inspection for the property being donated.
Types of Real Property
Many different real estate types may need to be inspected for environmental issues. There are three types of inspection checklists in Appendix B of the PGTS Manual. Below are the names on the checklists and some examples of the type of real estate they each cover.
Residential – Rural (outside city limits) or urban (within the city limits). Less than 5 acres.
Acreage – Farm, ranch, dumpsite, landfill, vacant land, other. More than 5 acres.
Commercial or Industrial – Rural (outside of city limits) or urban (within the city limits), Zoning, type of development on the property.
What is required?
Each accredited SDA organization must work with its legal counsel to approve the intake process of real property gifts. Organizations are responsible for completing the appropriate environmental review as directed by its authorizing committee and legal counsel for every parcel of real property either donated to or taken into legal ownership by the organization as trustee. The approved process for environmental inspection of real property may be included in an attorney opinion letter, but it is not required to be.
Best Practices
The following are some best practices when it comes to Standard 9.
1. There should be a physical visit to the real property by a certified PGTS authorized individual and an inspection checklist completed.
2. If the donor is available, have them complete the real property donor checklist. Why would a donor not be available? Some real property comes to the organization after the donor has passed away. In this case, you could ask a family member or neighbor to help fill out this checklist.
3. A checklist will typically include:
- Donor demographic information
- Viewing the entire site, including the inside and outside of structures
- Current use of the property
- Type of construction or structure(s)
- When the property was acquired
- Former owner(s)
- Prior uses
- Use of adjoining real property
- Other helpful information
- Any present or past presence of the following
- asbestos
- toxic contamination
- hazardous waste
- underground tanks or pipelines
- any other contaminates
Be curious
When PGTS personnel conduct a non-professional environmental inspection, they should be curious about any real property features that may seem out of order or unusual.
During one inspection conducted by a PGTS director, there was a large rock in the backyard of the older residential residence. The rock was not so large that it could not be moved. When moved, it revealed a fill spout of an underground fuel oil tank. This underground tank posed a significant environmental hazard and could have been missed by not looking under the rock.
Conclusion
To find a reputable Environmental Testing Company in your area, check the following website Top Rated ESA Consultants. You should look for a company that uses the ASTM International reporting standards. These standards are voluntary consensus standards but bring consistency to the report that will be issued to your organization.