By Jack Stubbs
The need for any company to undertake environmental and geological due diligence measures is an integral part of the approval process for any project in the real estate pipeline. Atlas Geosciences NW, a company founded in September 2017, specializes in providing a wide variety of environmental and related geological consulting services to its clients, helping them to effectively complete the due diligence arena and regulatory processes involved with projects.
We recently spoke with the co-founders of Atlas: Lannie Smith, president and principal environmental scientist, and Elizabeth Rachman, vice president and principal hydrogeologist. The conversation focused on some of the services that Atlas provides for its clients in the environmental and geological arena, and how the company’s objectives fit into larger trend in the real estate market’s consulting industry.
Can you tell me a bit about Atlas Geoscience NW (the company’s founding and history, how it began, current values etc.)?
Atlas is an environmental and geological consultant firm founded by Liz and myself in September of this year. Liz and I have each been in the consulting industry for over 20 years and have been business associates since 2003. We have established and managed satellite offices and departments for other environmental consulting firms throughout the Puget Sound area. The company came about primarily from the momentum of our business development efforts over the years, getting to know more and more clients throughout the region and receiving constant encouragement from them to go out on our own. We attend economic forecasts for the region regularly, and the general consensus lately seems to be that, although the region might experience a modest recession in the next year or two, commercial real estate (which is our largest market) likely will see little or no effect.
What clients does Atlas predominantly serve, both demographically and geographically? Where does Atlas operate, and in which industries? Can you expand upon the company-specific tailored due diligence programs that Atlas implements?
Atlas generally services the entire western United States, focusing primarily on Washington, Oregon and Alaska. Our clients are anyone involved in developing, investing in, or establishing the value of a piece of real estate, which typically includes owners/investors, developers, lenders, brokers, attorneys and insurance companies. Our business model is centered around understanding what the client needs, in terms of due diligence or regulatory closure, and helping them to understand how to achieve those goals as quickly and cost-effectively as possible.
Can you speak a bit to the specific environmental and geological consulting services that Atlas provides?
Specific services that we provide include Phase I Environmental Site Assessments, Phase II subsurface investigations (such as soil, groundwater and soil vapor sampling), underground storage tank assessment services, hazardous building materials surveys, remedial actions (cleanup), regulatory compliance reviews and regulatory negotiations. These services are intended to provide the environmental due diligence, assessment and consulting necessary to navigate the various environmental regulations applicable to a real estate deal or project. We also offer hydrogeological evaluations related to groundwater issues in construction projects.
In broader terms, can you speak to the importance of providing environmental and related geological consulting services to companies? How was this goal first conceptualized, and how does it fit into companies’ larger objectives, in both the short- and long-term?
The environmental due diligence industry has been around since at least the 1980s, as the various environmental regulations and their impacts on real estate value became more evident. Based on conversations that we have had with commercial bankers, environmental issues can create a greater deficit on a property’s assessed value than anything else that typically turns up during the real estate appraisal process, because of the costs and time necessary to mitigate these issues. Many properties in prime locations have not been developed because the environmental cleanup costs and time do not allow for the deal to pencil.
Can you elaborate on the specific risks involved with environmental and geological processes (as they relate to businesses)?
The best example we can give of environmental risk in real estate is if you go to sell or refinance a property that has previously been assessed at $1 million and the environmental due diligence finds that a $250,000 cleanup is needed (which is not an unusual amount for cleanup). In that event, your property has just been devalued by 25 percent until that cleanup is done. We see this kind of issue often with property owners that short-changed the environmental due diligence process (either by their own choice or by their lender) when they purchased the property. This is one reason to make sure you choose a lender you trust.
Are there any other companies doing exactly what Atlas is doing? How does Atlas strive to set itself apart from other similar consulting services? What makes Atlas unique?
Environmental due diligence and remediation has become a common aspect of the real estate industry, so there are many companies that provide our services. Regarding what sets us apart, the goal of our new firm’s business model is to maximize those attributes that we have gotten the best feedback on from clients. We understand what clients want and explain the issues to them in a way that they understand. This seems to be a common issue that we have found over the years, in that many consultants do not look at information from the client’s perspective. This is extremely frustrating for a client.
What are some of the challenges involved in conveying and ultimately implementing Atlas’ strategies for companies? Can you elaborate on the education method that Atlas provides its clients about the various due diligence processes and best practices? Why is this education so important, and how does it emphasize transparency between both parties involved?
In our opinion, the biggest challenge in our industry (and perhaps in any consulting business) is communication: staying on top of what the client’s goal is and then helping the client to understand what they need to get there. We often see clients pay too much for services that they can either get for less or, worse, did not need in the first place. Other times, a client pays too little for a service and ends up getting no value at all for their money. This is often because the client was unaware of what they needed. One example is a client that spent $250,000 on a cleanup project and, after we came on to the project, determined that they had not accounted for approximately $250,000-$300,000 more that would be needed because of a separate, unidentified issue. The latter situation killed the deal and could have been avoided with a decent Phase I.
How does Atlas ensure that its consulting services are current and up-to-date? How does Atlas ensure that its implementing the most accurate, efficient and tailored services for its clients?
Atlas stays up to date on regulations, technologies and other industry issues by committing itself to continuing education courses, webinars and seminars, subscribing to industry update provider lists and staying involved with client and peer affinity groups.