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Industry Terms and Definitions

Definitions:

Actual Knowledge - The knowledge actually possessed by an individual rather than an entity. Actual knowledge is to be distinguished from constructive knowledge, which is knowledge imputed to an individual or entity.

Air Emissions - Any physical, chemical, biological or radioactive substance or matter that is emitted into or otherwise enters the ambient air surrounding a property and contains air pollutants as defined in Section 302 of the Clean Air Act, as amended, 42 U.S.C, 7602.

Aerial Photograph Review - A study or review of aerial photographs of a site obtained for the historic period of interest. The photographs are reviewed to ascertain site conditions and features that may no longer exist and to serve as a source of historic site use information.

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Ancillary Structures - Structures that are not the primary improvements of the Property but which may have been constructed to provide support uses.

Applicable Surface - All intact and non-intact interior and exterior painted surfaces of a residential structure, per HUD Regulations, 24 CFR 200.820 as delineated in the Architect's Analysis and Inspection for Project Mortgage Insurance Handbook No. 4860.1 Rev I.

Appropriate Inquiry - An inquiry into the previous ownership and uses of a property, as defined in 42 U.S.C. 9601 (35)(B), that will give a party to a real estate transaction the defense to CERCLA liability provided by 42 U.S.C. 9601 (35(A) and (B) and 9607(b), assuming compliance with other elements of the defense.

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Asbestos - Six naturally occurring fibrous minerals found in certain types of rock formations. Of the six, the minerals chrysotile, amosite and crocidolite have been most commonly used in building products. When mined and processed, asbestos is typically separated into very thin fibers. Because asbestos is strong, incombustible and corrosion-resistant, asbestos was used in many commercial products beginning early in this century and peaking in the period from World War II into the 1970's.

Asbestos Containing Material (ACM) - Any material or product which contains more than one percent asbestos.

As-Built Plan - A drawing which covers property boundaries, streets bordering the site and building layouts and provides accurate scale and a north arrow.

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Building Codes - A compilation of rules adopted by the municipal, county and/or state governments having jurisdiction over the Property that govern the property’s design &/or construction of buildings.

Building Systems - Interacting or interdependent components that comprise a building such as structural, roofing, side wall, plumbing, HVAC, water, sanitary sewer and electrical systems.

Chewable Surface - All protruding painted surfaces up to 5 feet from the floor or ground, which are readily accessible to children under 7 years of age per HUD Regulations, 24 CFR 200.820 as delineated in the Architect's Analysis and Inspection for Project Mortgage Insurance Handbook No. 4860.1 Rev I (eg., corners, window sills and frames, doors and frames, and other protruding woodwork.)

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Client - Purchaser of project services.

Comprehensive Environmental Response, Compensation and Liability Information System (CERCLIS) - The list of sites compiled by EPA that have been investigated or are currently being investigated for potential hazardous substance contamination for possible inclusion on the National Priorities List.

Commercial Real Estate - Any real property except a dwelling or property with only one to four dwelling units for residential use. The term “commercial real estate" includes but is not limited to properties used for industrial, commercial, medical or educational purposes and properties used for residential purposes which have more than four residential dwelling units.

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Commercial Real Estate Transaction - A transfer of title to, or possession of real property or receipt of a security interest in real property, except that it does not include transfer of title to or possession of real property or the receipt of a security interest in real property with respect to an individual dwelling or a building containing less than five dwelling units, nor does it include the purchase of a lot or lots to construct a dwelling for occupancy by a purchaser, but a commercial real estate transaction does include real property purchased or leased by persons or entities in the business of building or developing dwelling units.

Construction Debris - Concrete, brick, asphalt and other such material discarded in the construction or demolition of an improvement to property.

Construction Document Review and Budget Analysis - A comprehensive review of construction documents, including a budget comparison analysis. The service also includes the review of many related construction documents including specifications, soils report, architectural contracts, engineering contracts, construction contracts, environmental reports, utility agreements, and regulatory requirements. Documents are reviewed to determine the viability of the project and budget, along with the completeness of the documents. A site visit is recommended for any renovation work.

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Construction Loan Administration Services - The review and monitoring service for commercial construction projects that helps identify problems and oversights. CLA services resolve these project-stopping issues while they are small and manageable.

Construction Monitoring - A comprehensive site observation and evaluation summary, which includes EMG’s evaluation and recommendations on the construction draw request. Draw documents must be provided before the site visit. The service is designed to provide EMG’s client with up-to-date data on the validity of the draw request compared to actual percent of construction completed, construction progress, and quality of construction. It also includes a review of schedules, change orders, lien waivers, regulatory compliance and quality control.

Defective Paint Surface - Paint on applicable surface that is cracking, scaling, chipping, peeling or loose, per HUD Regulations, 24 CFR 200 820 as delineated in the Architect's Analysis and Inspection for Project Mortgage Insurance Handbook No. 4860.1 Rev 1.

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Deferred Maintenance - Deficiencies that result from postponed maintenance, or repairs that have been put off until a later time and that require repair or replacement to an acceptable condition relative to the age of the system or property.

Docket - Docket of civil actions filed by the Department of Justice for EPA since 1972.

Draw Request - A package of legal and other related documents supplied by the Borrower to the Lender for the purpose of receiving a funding advancement.

Drum - A container (typically 55 gallon) which is used to store hazardous substances, hazardous wastes or other regulated materials.

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Due Diligence - The process of inquiring into the environmental characteristics of a property.

Dwelling - Structure or portion thereof used for residential habitation.

Emergency Response Notification System (ERNS) - ERNS contains over 25,000 spill records and stores information on reported releases of oil and hazardous substances. The data is collected from spills reported to EPA and the Coast Guard National Response Center.

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Environmental Audit - The investigative process to determine if an existing facility is in compliance with applicable environmental laws and regulations.

Engineering - Analysis or design work requiring extensive formal education, preparation and experience in the use of mathematics, chemistry, physics, and the engineering sciences as provided by a Professional Engineer licensed to practice engineering by any state of the 50 states.

Environmental Lien - A lien, which is a charge, security or encumbrance upon property, imposed on a property to secure the payment of a debt, obligation or duty arising out of an environmental release, contamination or cleanup or a hazardous substance including but not limited to liens imposed pursuant to CERCLA 42 U.S.C. 9607(1) and similar state or local statues.

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Environmental Professional - A person possessing sufficient training and experience necessary to perform a records review, a site reconnaissance and other activities and from this information, has the ability to develop conclusions regarding the environmental status of the property in question. An individual's status as an Environmental Professional may be limited to the type of assessment to be performed or to specific segments of the assessment for which the professional is responsible. The person may be an independent contractor or an employee of the User.

Environmental Site Assessment (ESA) - The process by which certain levels of appropriate inquiry or due diligence are conducted for a property. At the option of the User, an environmental site assessment may include more inquiry than that required to constitute Appropriate Inquiry.

Expected Useful Life - The average amount of time in years that a system or component is estimated to function when installed new.

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Facility Index System - A list compiled by EPA of all facilities identified by EPA for regulation under one or more environmental programs.

Federal Register - Publication of the United States government published daily (except for federal holidays and weekends) containing all proposed and final regulations and some other activities of the federal government. When regulations become final, they are included in the Code of Federal Regulations (CFR), as well as published in the Federal Register.

Fill Dirt - Dirt, soil, sand or other earth obtained off-site, that is used to fill holes or depressions, create mounds or otherwise artificially change the grade or elevation of real property. It does not include material that is used in limited quantities for normal aesthetic landscaping activities.

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Friable Asbestos Material - Any material that contains more than one percent asbestos by weight, that, when dry, can be crumbled, pulverized or reduced to powder by hand pressure. This may also include previously non-friable material which becomes broken or damaged by mechanical force.

Funds Administration - Monitors the project over its duration and ensures that project funds are properly being applied to work and materials on the borrower’s project.

Hazardous Chemicals - Chemicals or materials used in the workplace that are regulated under the OSHA Hazard Communication Standard or the 'right-to-know' regulations in Title 29 CFR 1910.1200.

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Hazardous Material - A hazardous material (HM) is any substance or mixture of substances having properties capable of producing adverse effects on the health and safety or the environment of a human being. Legal definitions are found in individual regulations.

Hazardous Materials Incident Report System (HMIRS) - HMIRS contains hazardous material spill incidents reported to the Department of Transportation. These spill incidents are not necessarily listed in ERNS.

Hazardous Substances - Chemicals, mixtures of chemicals or materials subject to the regulations contained in Title 40 CFR For transportation purposes, means a material, and its mixtures or solution identified by the letter in Tide 49 CFR 17.010 when offered for transportation in one package, or in one transport vehicle if not packaged, and when the quantity of the material therein equals or exceeds the reportable quantity (RQ). For details, refer to Title 49 CFR 171.8 and Title 49 CFR 172,101.

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Hazardous Waste - Any material listed as such in Title 40 CFR 261, Subpart D or that possesses any of the hazard characteristics of corrosivity, ignitability, reactivity or toxicity as defined in Tide 40 CFR 261, Subpart C or that is contaminated by or mixed with any of the previously mentioned materials (see Title 40 CFR 261.3).

Hazardous Waste Data Management System (HWDMS) - HWDMS includes selective information on over 324,000 sites which generate, transport, store, treat or dispose of hazardous waste as defined by the Resource Conservation and Recovery Act (RCRA). Records available on HWDMS will eventually be transferred to the RCRIS database.

Hazardous Waste Generation - The act of producing hazardous waste.

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Hazardous Waste Management - Systematic control of the collection, source separation storage, transportation, processing, treatment, recovery and disposal of hazardous wastes.

Hazardous Waste Manifest Uniform (EPA Usage) - The shipping document, originated and signed by the waste generator or his authorized representative that contains the information required by Tide 40 CFR 262, Subpart B.

Hazardous Waste Site - A location where hazardous wastes are stored, treated, incinerated or otherwise disposed.

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Immediate Repairs - Physical deficiencies that require immediate action as a result of: (i) existing or potentially material unsafe conditions, (ii) significant negative conditions impacting tenancy/marketability, (iii) material building code violations, or (iv) poor or deteriorated condition of critical element or system, or (v) a condition that if left “as is”, with an extensive delay in addressing same, has the potential to result in or contribute to critical element or system failure within one (1) year.

Inaccessible Area - Space enclosed with wall board or other similar material, locked area or any space which would require destructive measures (i.e., cutting, hammering, removing, etc.) to gain access.

Infectious Waste - Waste that contains pathogens or consists of tissues, organs, body parts, blood and body fluids that are removed during surgery or other procedures. See Tide 42 CFR Part 72.

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Lead-Based Paint Hazard - A lead content of 1.0 milligram or higher per square centimeter of painted surface, per HUD Regulations, 24 CFR 20.820 as delineated in the Architect's Analysis and Inspection for Project Mortgage Insurance Handbook No. 4860.1 Rev 1.

Lead Containing Paint - The U.S Department of Housing and Urban Development (HUD) has defined a lead containing painted surface as one (1) of the following (Limits may vary by State): A surface coating material containing more than one milligram per centimeter squared (1.0 mg/cm2) of lead as determined by utilizing the X-ray fluorescence analysis method; and/or A surface coating material containing greater than 0.5% lead concentration by weight utilizing the flame atomic absorption spectrophotometry analysis method.

Local Government Agencies - Those agencies of city or county government having jurisdiction over the Property. City and county government agencies include but are not limited to parishes, townships and similar terms.

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Material Safety Data Sheet (MSDS) - Written or printed material concerning a hazardous substance which is prepared by chemical manufacturers, importers and employers for hazardous chemicals pursuant to OSHA's Hazard Communication System, 29 CFR 1910.1200(g).

National Fire Protection Association (NFPA) - An international voluntary membership organization to promote and improve fire protection and prevention and establish safeguards against loss of life and property by fire. Best known on the industrial scene for the maintenance of National Fire Codes, (i.e., 16 volumes of codes, standards, recommended practices, and manuals) and periodically updated by NFPA technical committees.

National Priorities List (NPL) - List compiled by EPA pursuant to CERCLA 42 U.S.C. 9605(a)(8)(B) of properties with the highest priority for cleanup pursuant to EPA's Hazard Ranking System. See 40 CPR Part 300.

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NESHAPs - National Emission Standards for Hazardous Air Pollutants, CAA Section 112 also refers to chemicals regulated under this program.

NIOSH - National Institute for Occupational Safety and Health of the Public Health Service, United States Department of Health and Human Services (DHHS). Federal agency which, among other activities, tests and certifies respiratory protective devices and air sampling detector tubes, recommends occupational exposure limits for various substances and assists OSHA and MSHA in occupational safety and health investigations and research.

National Pollutant Discharge Emission Systems (NPDES) - Permit system created by Section 402 of the Clean Water Act to regulate discharges of hazardous materials into waterways.

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Non-friable Asbestos Material - Any material that contains more than one percent asbestos by weight, that when dry, cannot be crumbled, pulverized or reduced to powder by hand pressure.

Non-PCB Transformer - Any transformer that contains less than 50ppm PCB.

Operator - Person or entity occupying or using commercial real estate.

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Owner - Holder of legal or equitable title to real property.

PCB Activity Database (PADS) - EPA regulates under TSCA the storage and disposal of PCBs. Those who handle PCBs (generators, transporters, commercial storers and/or brokers and disposers) are required to notify EPA of their PCB waste activities.

PCB-Contaminated Transformer - Any transformer that contains 50 ppm PCB or greater, but less than 500 ppm PCB.

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PCB Transformer - Any transformer that contains 500 ppm PCB or greater.

Phase I Environmental Site Assessment - The process of evaluating a Property which typically includes: review of records, both public and private; site reconnaissance of the Property; interviews with current owners and operators of the Property; and evaluation and report preparation.

Physical Deficiency - Patent, conspicuous defects, or significant deferred maintenance of the Property’s material systems, components, or equipment as observed during the Project Manager’s Walk-through Survey. Material systems, components, or equipment that are approaching, have realized, or have exceeded their typical Expected Useful Life (EUL); or, that have exceeded their useful life result of abuse, excessive wear and tear, exposure to the elements, or lack of proper or adequate maintenance. This definition specifically excludes deficiencies that may be remedied with routine maintenance, miscellaneous repairs, normal operating maintenance, and conditions that do not present a material deficiency to the Property.

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Pits, Ponds or Lagoons - Man-made or natural depressions in a ground surface that are likely to hold liquids or sludge containing hazardous substances or petroleum products. The likelihood of such liquids or sludge being present is determined by evidence of factors associated with the pit, pond or lagoon, including, but not limited to, discolored water, distressed vegetation or the presence of an obvious wastewater discharge.

Pre-Construction Document and Budget Analysis Review - An up-front comprehensive review to make sure a construction project is completely and adequately planned before significant commitments are made and construction begins. The PCR validates that the key components of a project are in-place, reasonable, and financially sound.

Primary Improvements - The site and building improvements that are of fundamental importance with respect to the Property.

Project - Scope of services to be performed in conjunction with a specific property.

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Property - The real property which is the subject of the inquiry. Real property includes buildings and other fixtures and improvements located upon the property and affixed to the land.

Property Condition Assessment - Determines the present physical condition of the Project improvements and provides a professional opinion regarding future anticipated issues, which may result in a financial risk or liability to the Client. The process includes a visual walk-through to observe the existing conditions along with review of available construction documentation, public records and current budgets. This information is then deciphered and presented with recommendations for repair or further detailed review if the issues cannot be determined through visual observation alone.

Radon - A radioactive gas which occurs form the natural breakdown (radioactive decay) of uranium. Radon cannot be seen, smelled or tasted. Radon can be found in high concentrations in soils and rocks whether from natural sources, industrial wastes or by-products of uranium or phosphate mining. Outdoor air contains such low concentrations of radon that there is generally not a health problem. However, in an enclosed space, such as a home, radon can become concentrated in higher levels which may cause health concerns.

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Readily Available/Reasonable Ascertainable - Information that is obtainable from researching accessible sources commonly known to Environmental Professionals obtainable upon request within a reasonable time and at a reasonable cost in the context of a commercial real estate transaction. The period of time that is reasonable will vary depending upon the circumstances. For business records to be obtained from a current owner or operator, ten business days is a reasonable time within which to obtain such records. For public records, ten business days is a reasonable time within which to obtain such records.

Remaining Useful Life - The consultant’s professional opinion of the number of years before a system or component will require replacement or reconditioning. The estimate is based upon observation, available maintenance records, and accepted EUL’s for similar items or systems. Inclement weather, exposure to the elements, demand on the system, quality of installation, extent of use, and the degree and quality of preventive maintenance exercised are all factors that could impact the RUL of a system or component. As a result, a system or component may have an effective age greater or less than its actual age. The RUL may be greater or less than its Expected Useful Life (EUL) less actual age.

Replacement Reserves - Major recurring probable expenditures, which are neither commonly classified as an operation or maintenance expense. Replacement Reserves are reasonably predictable both in terms of frequency and cost. However, they may also include components or systems that have an indeterminable life but nonetheless have a potential liability for failure within the reserve term.

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Short Term Repair Costs - Opinions of Costs to remedy Physical Deficiencies, such as deferred maintenance, that may not warrant immediate attention, but requiring repairs or replacements that should be undertaken on a priority basis, taking precedence over routine preventive maintenance work within a zero to one year time frame. Included are such Physical Deficiencies resulting from improper design, faulty installation and/or substandard quality of original system or materials. Components or systems that have realized or exceeded their Expected Useful Life (EUL) that may require replacement to be implemented within zero to one-year time frame are also included.

Small Quantity Generators (SQGs) - Defined as facilities producing less than 1,000 kilograms of hazardous waste per calendar month (kilograms per month), which is the equivalent of about 300 gallons or about five 55-gallon drums; note, however, some states define SQGs more narrowly.

Soil and Groundwater Analysis - Tests used to determine the presence of superficial or subsurface contamination and concentration levels; may involve soil borings and installations of test pits and/or observation wells.

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Soil Vapor Surveys - Surveys using gas chromatography equipment to map potential soil and groundwater contamination.

Solid Waste Facilities/Landfill Sites (SWF/LS) - SWF/LS type records typically contain an inventory of solid waste disposal facilities or landfills in a particular state. Depending on the state, these may be active or inactive facilities. The Federal Open Dump Inventory has been incorporated into SWF/LS.

Solvent - An organic chemical-based liquid that is capable of dissolving another substance and is itself a hazardous substance; used in a number of manufacturing/industrial processes including the manufacture of paints and coatings for industrial and household purposes, equipment clean-up and surface degreasing in metal fabricating industries.

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Specialty Consultants - Practitioners in the fields of engineering, architecture; or, building system mechanics, specialized service personnel or other specialized individuals that have experience in the maintenance and repair of a particular building component, equipment, or system that have acquired detailed, specialized knowledge in the design, evaluation, operation, repair, or installation of the particular component, equipment, or system.

State Hazardous Waste Sites (SHWS) - State hazardous waste site records are the states' equivalent to CERCLIS. These sites may not be listed on the federal CERCLIS list. Priority sites planned for cleanup using state funds (state equivalent of Superfund) are identified, along with sites where cleanup will be paid for by potentially responsible parties. Available information varies by state.

Structural Component- A component of the building which supports non-variable forces or weights (dead loads) and variable forces or weights (live loads).

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Topography - The configuration of the land surface area, including its relative elevations and the position of natural and artificial features.

TSD Facility - A facility that treats, stores and/or disposes of hazardous waste.

Toxic Release Inventory System (TRIS) - TRIS includes all facilities which release toxic chemicals in reportable quantities to the air, water or land as required under SARA (Superfund Amendments and Reauthorization of 1986), Title III, Section 313. Reporting covers approximately 20,000 sites and is required (Form R) each July 1st for the previous year.

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Toxic Substances Control Act (TSCA) - TSCA promulgated a rule requiring manufacturers and importers of certain chemical substances included on the TSCA Chemical Substance Inventory list to report current data on the production volume of these substances by plant site.

Underground Storage Tank (UST) - Any tank, including underground piping connected to the tank, which is or has been used to contain a hazardous substance or petroleum, and the volume of which is ten percent or more beneath the surface of the ground.

User - The party seeking to use the Phase I Environmental Site Assessment to perform appropriate inquiry with respect to the Property. A User may include without limitation, a purchaser of property, a potential tenant of property, an owner of property, a lender or a property manager.

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Walk-through Survey - The Project Manager’s site visit of the Property consisting of his visual reconnaissance and scan of readily accessible and easily visible components and systems. This definition connotes that such a survey should not be considered in depth, and is to be conducted without the aid of special protective clothing, exploratory probing, removal of materials, testing, or the use of special equipment such as ladders, scaffolding, binoculars, moisture meters, air flow meters, or metering/testing equipment or devices of any kind. It is literally the Project Manager’s walk of the Property and observations.

Wastewater - Water that (i) is or has been used in an industrial or manufacturing process, (ii) conveys or has conveyed sewage, or (iii) is directly related to manufacturing, processing or raw materials storage areas at an industrial plant. Wastewater does not include water originating on or passing through or adjacent to a site, such as storm water flows, that (i) has not been sued in industrial or manufacturing processes, (i) has not been combined with sewage, (iii) or is not directly related to manufacturing, processing or raw materials storage areas at an industrial plant.

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