HUD's Office of Multifamily Housing just made the first change to its MAP Guide in seven years. (The MAP Guide is used by hundreds of MAP-approved lenders as well as HUD's multifamily offices across the country.) I obtained the letter of transmittal for the new policy from a HUD contact, and it states that the revisions were made in part to "include a new test that has been developed since the MAP Guide was last revised in 2002: where applicable, a vapor intrusion screen analysis must be done prior to Firm Commitment." Phase I ESAs must now include "an initial vapor (a.k.a. gas) intrusion screen performed using Tier 1 of ASTM's E 2600-08 Standard Practice for Assessment of Vapor Intrusion into Structures on Property Involved in Real Estate Transactions."

Over the past several years, there's been a growing body of evidence that chemicals can penetrate building foundations at levels that raise health concerns for the occupants. There have also been more and more tenant lawsuits against property owners for vapor intrusion issues. And states began developing their own individual vapor intrusion policies. Plus, New York, home to one of the most well-known VI cases in the entire country, recently became the first state to enact a law specifically requiring building owners to disclose vapor intrusion conditions to tenants. Earlier this year, Pollution Engineering published an article I wrote on vapor intrusion. In it, I quoted a member of commonground's Advisory Panel Elizabeth Krol, the Northeast Due Diligence Manager for Shaw Environmental & Infrastructure Group, who observed that "we need to educate our clients about the risks of VI in terms of health effects to employees and tenants, as well as liabilities associated with property transfer." 

HUD's adoption of E 2600 is the latest recognition of the risks that VI poses--specifically at multifamily properties. Yesterday I reached out to Orion Alcalay, an EP at AEI Consultants who does a lot of VI work, and I asked him to comment on VI at multifamily sites. What he told me was, "Whether a property is commercial or multi-family residential, VI has the potential to pose a significant health risk to humans. These risks can potentially expose property owners to legal liabilities and decrease property values.  In multi-family residential properties, the number of people which could potentially be affected increases due to the larger number of occupants.  Furthermore, the potential exposure period for occupants at multi-family residential properties is generally greater than at commercial properties, assuming one spends more time at home than at work." Orion also reminded me that when mold first became a hot issue, tenant complaints of health problems and legal repercussions against property owners increased. Word of potential unsafe living conditions can quickly lead to litigation-not to mention "mass vacancy of a building or property." 

By adopting E 2600-08, HUD endorsed the collaborative effort within ASTM of hundreds of consultants, attorneys and end users who wrote the standard. HUD is the first federal agency to do so...but probably not the last.

I just read the new policy and noticed that HUD also addressed a topic of debate that occurred here on commonground just this week: When do consultants "need to identify the potential for vapors as a REC?"  HUD's answer? All the time:

"If the Tier 1 vapor intrusion screen determines there is a potential for such vapors to occur in the subsurface below existing and/or proposed on-site structures, these conditions shall also be deemed to be RECs for purposes of the Phase I ESA"(section 9.3(A) (i) Vapor Intrusion Screen). In addition, if there is a potential for vapors (either based on the results of the Phase I or from prior Phase IIs), the "Phase II ESA shall either include either a tier 2 screen (pursuant to ASTM E 2600), a tier 3 vapor intrusion assessment (VIA) pursuant to LSTF policy and/or procedure (as discussed in ASTM E 2600), or go directly to Tier 4 "mitigation" (as discussed in ASTM E 2600)."

Although Elizabeth, Orion and many other EPs are actively educating clients about the risks of VI, awareness is still not widespread. Earlier this week, Pat Coyne, a colleague of mine, was a co-presenter, along with Lita Freeman, an EP from LFR, on a bi-weekly call of the Environmental Bankers Association's Risk Management Committee. After a technical conversation on VI, one banker asked the rest of the group:  "Are your EPs mentioning VI when they discuss scopes with you?" The majority said no. Pat's take was that, given the current economic pressures on EPs (pricing and shortage of projects), this could reflect a reluctance on the part of EPs to raise any issues that "might rock the boat, add cost, or complicate the job." 

The reality is that many EPs already consider VI during their Phase Is without calling it such. Many will bring VI up to the client without it being a formal part of the agreed-upon scope. The example Pat gave was: "I considered 12 surrounding sites using the E 1527 scope. Now, applying the E 2600 lens to assess VI potential: these five sites are downgradient and beyond the critical distances for COCs (chemicals of concern) afforded by the E 2600 standard; these two sites are across a stream and hydraulically separated, precluding vapor migration; these four are separated by soil type and formation that make vapor migration unlikely, and they're beyond critical distances for petroleum, also afforded by the E 2600 standard; and the last site is closed, no release exists to generate vapors." If you're not familiar with the Tier 1 screen, that progression gives you a general sense of the approach it's based on. Pat also said many lenders on the call seemed open to getting more detail from their EPs on the logic behind an approach that would (in most cases) rule out VI as a concern. EPs doing VI work already rely on E 2600 as a construct for having these types of discussions with clients.

I think that HUD's adoption of E 2600 is an important one for environmental consultants, and not just the ones tied into the HUD market. It also came at an interesting time. As Sean Dundon pointed out in a June blog, "Given the absence of liquidity/financing for construction and rehab projects for multi family assets, we are left with Fannie Mae, Freddie Mac, and HUD as primary sources of debt." HUD is distributing millions of dollars in funding, and is one of the few active sources of work for EPs right now. I've talked to a number of consultants doing work for developers chasing stimulus dollars from HUD, particularly on affordable housing projects, and these Phase Is are much more complex than standard basic scopes. They typically cost more and take longer to do. This new policy expands the scope of work even further.

And beyond the HUD market, multifamily properties are viewed as the best opportunities for investment right now, beating out industrial, office and retail.

HUD's recent policy stance further supports that vapor intrusion is worth paying attention to upfront. This gives EPs a good basis for having a discussion with clients on why the risk of VI can be greater at tenant-occupied sites like apartments and condos for the reasons Orion cited. It's significant enough to be recognized by a large lender like HUD and there's now a consensus-based practice that can eliminate it as a concern and protect properties used as collateral.

Back in my post-college days at a consulting firm, I had a fabulous first mentor. I can still hear him telling us junior staffers: "If you learn nothing else as a consultant, know this: Teach your client something valuable that protects his interests and you'll have that client for life."

You now have an excuse to do just that in a market when opportunities like this aren't coming around often enough.