Environmental Review Policy for Acquisitions of Real Property Assets
   

Purpose:

 

To establish guidelines for the environmental review of all land prior to acquisition

 

Date Approved:

 

February 13, 2003

 

Background:

 

The U. T. System Environmental Review Policy for Acquisitions of Real Estate adopted in 1991 required that all appropriate inquiries be made as to the condition of each proposed real estate asset prior to acquisition so as to minimize the potential for exposure to claims for damages under the applicable laws governing the environment and hazardous materials.  At that time it was anticipated that the policy would be modified at such time as a nationwide industry standard was created.  The ASTM standards now incorporated into the policy are universally recognized as the new national standard.  Additional text and editorial changes to the policy clarify the levels of environmental screen necessary for a variety of property types and the processes to be followed for implementation.

 

At the August 13, 1998 meeting, the policy was amended to address leases of real property as well as the acquisition of title to real property by purchase, gift, exchange, or otherwise and was renamed the U. T. System Environmental Review Policy for Acquisitions of Real Property Assets.  Amendments to the policy were made at the November 11, 1999 meeting to lower the risk associated with enforcement of the Endangered Species Act and the Clean Water Act and at the February 13, 2003 meeting to include inspection for mold.

 

 

U. T. SYSTEM ENVIRONMENTAL REVIEW POLICY
FOR ACQUISITIONS OF REAL PROPERTY ASSETS

 

 

Statement of Policy

 

It is the policy of The University of Texas System to minimize its potential for exposure to claims made under the applicable laws governing the environment and hazardous substances by making all appropriate inquiry with regard to the environmental condition of real property assets, including leaseholds, prior to acquisition.

 

Scope of the Policy

 

To reduce the risk of liability, the U. T. System will complete an environmental site assessment (ESA) prior to acquisition of any real property asset, except as specifically provided in this policy.  For purposes of this policy, the term "real property asset" means any interest in real property except a mineral interest severed from the surface estate, a leasehold in improvements only, or a leasehold less than five years in duration that does not contemplate any improvements to be constructed by U. T. System or other activities that would result in disturbance of the soil.  The term specifically includes without limitation any acquisition in fee simple of real property, any leasehold on which U. T. System will construct improvements, and any leasehold where an underground storage tank, water wells, or monitoring wells exist.  Federal and State statutes impose certain liabilities on owners of real property, including public institutions of higher education, when hazardous or other regulated substances have been deposited, stored, or released on the property.  Hazardous and other regulated substances include not only the most dangerous or toxic substances, but also a wide array of chemicals and compounds, many of which are components of household trash or are found in raw materials and wastes.  Environmental Hazards may also include the presence of molds in or on improvements.  Liabilities related to hazardous and other regulated substances may include costs associated with removal of these substances from the property, including overhead and enforcement expenses.  If environmental hazards are identified, the U. T. System should then weigh the risks that may arise with respect to such hazards in determining whether the acquisition is beneficial and appropriate.  If no risks are identified, the U. T. System may, under certain circumstances, be able to assert a defense to liability if contamination that was unknown at the time of acquisition is later discovered.

 

The Environmental Review Process

 

1.      At a minimum, prior to acquisition of any real estate asset, the benefited component, with respect to purchases of land or leaseholds to be used for campus purposes, or the Real Estate Office with respect to all other real property assets, will conduct an initial ESA using the American Society for Testing and Materials (ASTM) transaction screen process E1528.  For purposes of the policy, "benefited component" means the component that will use and have control over land acquired by purchase, gift or bequest, or lease.  The benefited component will determine the scope of further assessment based on the property's location and history, and findings of the transaction screen.

 

2.      The chief business officer of the benefited component or the chief business officer's delegate will coordinate the review process for purchase of real property assets to be used for campus purposes.

 

         a.      No component of the U. T. System will add property to the inventory of campus real property assets until a qualified university employee or a qualified outside professional retained by the component performs an ESA in accordance with this policy.

 

         b.      The benefited component will pay all costs of the ESA that are not paid by a donor or an external entity whether the acquisition is by purchase, gift, bequest, or other means.

 

         c.      Any office or component of the U. T. System will notify the Real Estate Office immediately upon identification of a real property asset which may be donated or bequeathed to the U. T. System or any component institution.

 

         d.      No component will make a commitment to accept a donation or bequest of a real property asset until the appropriate office has complied with this policy with respect to such asset.

 

3.      All ESAs will comply with the appropriate standards established by ASTM, unless otherwise specifically provided for in this policy.

 

4.      The Real Estate Office may require, when appropriate, an investigation of other environmental issues or conditions beyond the scope of the ASTM guidelines, such as mold, lead, biological, radiation contamination, endangered species, or wetlands.

 

5.      If the initial transaction screen indicates areas of concern, the "Responsible Officer" (Real Estate Office or Chief Business Officer of the benefited component with respect to real property assets to be used for campus purposes, as appropriate) may (i) reject the real property asset, (ii) accept the real property asset with the identified risks, or (iii) require further investigation in the form of a Phase I, II, or III ESA.

 

6.      If the Responsible Officer requests a Phase I ESA, a qualified outside professional will perform the ESA unless the component or the U. T. System has a qualified employee to complete the review.

 

         a.      All contracts for Phase I ESAs must be in a form acceptable to the Office of General Counsel.

 

         b.      The Office of General Counsel and the Responsible Officer shall review the Phase I ESA report.

 

         c.      If the Phase I ESA indicates areas of concern, the Responsible Officer may (i) reject the real property asset, (ii) accept the real property asset with the identified risks, or (iii) require additional investigation in the form of a Phase II or III ESA.

 

7.      A qualified outside professional must conduct any Phase II ESA, unless the component receives express written permission from the Executive Director, Real Estate Office to conduct all or part of the Phase II ESA in-house based on the institution's expertise.  The Phase II ESA should include an extensive review of prior uses of the land and records pertaining to those uses, an examination and sampling of the property, and testing of all samples collected.

 

         a.      All contracts for Phase II ESAs must be in a form acceptable to the Office of General Counsel.

 

         b.      The Office of General Counsel and the Responsible Officer will review the Phase II ESA report.

 

         c.      If the Phase II ESA indicates areas of concern, the Responsible Officer may (i) reject the real property asset, (ii) accept the real property asset with identified risks, or (iii) require additional investigation in the form of a supplemental Phase II or a Phase III ESA.

 

8.      A qualified outside professional must conduct any Phase III ESA.  The ESA should include extensive physical sampling of the site, testing of all samples, estimates of the extent of contamination, and estimates of the total cost to clean up the site.

 

         a.      All contracts for Phase III ESAs must be in a form acceptable to the Office of General Counsel.

 

         b.      The Office of General Counsel and the Responsible Officer will review the Phase III ESA report.

 

         c.      If the Phase III ESA identifies unacceptable contamination or cleanup estimates, the real property asset will be rejected and will not be acquired.

 

9.      The Real Estate Office will maintain complete ASTM guidelines for the ESA transaction screen process, as revised from time to time.  The Real Estate Office will distribute the guidelines at cost to any component business and development offices upon request.

 

10.     When the U. T. System or a benefited component conducts an ESA either in-house or using a qualified outside professional and elects, based on the results of the ESA, not to acquire the real property asset under review, it is the System's policy to provide a copy of the ESA, with an appropriate disclaimer to the seller/current landowner or landlord, if requested.

 

Recommended Environmental Review by Property Type

 

The level of screening will vary according to type of real property asset, history and location.

 

1.      Residential:

 

         a.      Have a qualified in-house individual or outside professional conduct an inspection.

 

         b.      Conduct a site visit and a review of aerial photos for the past 50 years if such photos are readily available from libraries or archives.  If there is concern about past land uses (i.e., the property was vacant and in a remote or formerly industrial/
commercial area, the site visit indicates distressed vegetation, or there is other evidence of contamination), then a 50-year title search may be warranted.

 

2.             Vacant/Unoccupied Lands:  Step 1.b above.  The site visit should include (a) asking neighbors about prior uses such as dumping, and (b) inspecting along on-site roadways or fence lines where historical dumping would be more likely to have occurred.  Aerial photos may be particularly useful in evaluating historical dumping on vacant lands.

 

         In geographical areas where endangered species might be present, a review of U. S. Fish and Wildlife Service maps might be appropriate in determining if further investigation on this issue is warranted.

 

         Visual inspection of the site for topographical, hydrological, and vegetative indicators of wetlands may also be appropriate, depending on the geographical location of the property.

 

3.      Commercial Sites:  Steps 1.a and 1.b above.  A 50-year title search will be useful in evaluating former uses of commercial property.  Every attempt should be made to obtain from the current or past owners, operators and/or tenants the nature of business conducted at the site including a review of copies of any permits, licenses, notices of violation or consent agreements issued to owners, operators or tenants of the site.

 

4.      Industrial Sites:  Engage a qualified outside professional to conduct a Phase I ESA in accordance with ASTM Phase I Standard E1527, including a review of copies of any permits, licenses, notices of violation or consent agreements issued to current or past owners, operators or tenants of the site.

 

 


Last reviewed March 2003