Recently, several environmental consultants have told me that their companies plan to change their Phase I ESA strategy this year to begin emphasizing their firms' value throughout the entire property ownership lifecycle.

The idea is to begin offering clients a hybrid service that combines pre-acquisition due diligence assessments with life-of-ownership environmental monitoring and the sales pitch goes something like this: "For $2,000 I can conduct a Phase I ESA now or for $2,000 and then $1,000 per year I can deliver the ESA and provide ongoing property monitoring for as long as you own the property."

So the question is "is it possible for an environmental professional to deliver $1,000 in value during the years in which a commerical property is not transacting?" These clients thinks it is very possible and I would agree with them.

Each of these firms has a slightly different idea of how they would monitor properties after the initial Phase I had been completed but they all share similar characteristics.

First, the data, findings and opinions from the original ESA would need to be archived and used going forward as a baseline. Second, periodic updates would need to occur looking for material changes such as the up-gradient adjoining property that just appeared in the state's leaking tank database. Finally, an automatic alerting mechanism would need to be developed to notify stakeholders of material changes that were identified and to suggest the appropriate actions.

Some "back of the envelope" math makes it pretty clear why these firms are excited about the opportunity. Right now, the average commercial property transacts every 7 years. If you assume an ESA averages $2,000, then the total revenue opportunity from a property is $2,000 every 7 years. But if the same property is then monitored for $1,000 per year, the total revenue opportunity from that property increases by 400% to $8,000. In addition, because the monitoring firm has attached itself to the property, the chances of winning the next Phase I project have probably been increased. After all, who knows that property better than the firm that has been monitoring it?

Given the continuing obligations language under AAI combined with the FDIC's recently updated environmental policy which emphasises monitoring portfolio loans, it seems that this may be an idea whose time has come.