March 27, 2013

Brownfields Tax Credit: History and Current Climate

Massachusetts law forces owners or operators of contaminated property to clean up the property without regard for who caused the contamination.  The Massachusetts Brownfields Tax Credit was enacted in 1998 to assist communities in cleaning up contaminated sites and fostering redevelopment, because without such assistance the market for sales and development of contaminated properties would be adversely affected.   The Brownfields Tax Credit helps owners/operators of brownfields sites, who were not responsible for the contamination, to fund the cleanup of those sites.

Originally, the Massachusetts Brownfields Tax Credit (BTC) program included sites with RAO’s from 1998 through 2005.  Once 2005 approached, legislation was passed that extended the Brownfields tax credit to include sites cleaned up from 2005 through 2009.  Similar legislation has been passed every two years since, each time extending the Massachusetts Brownfields Tax Credit program for the subsequent two years.  This brings us to 2013, when the Massachusetts Brownfields Tax Credit program is once again set to expire.  In 2012, extension of the BTC statute failed passage, and for the first time since its original enactment; the Massachusetts Brownfields Tax Credit program was not extended for another two years.

Current Climate:

As it stands, the Massachusetts BTC program is set to expire on August 5th, 2013, for projects that are currently in remediation status and do not receive a permanent solution by that date.  Governor Deval Patrick recently vetoed a proposed two year extension of the Massachusetts Brownfields Credit, which would have extended the program from 2013 through 2015, pending a procedural review of all tax credit issuances in the Commonwealth. 
So what does the pending expiration of the Massachusetts Brownfields Credit really imply for those with Brownfields contaminated sites?

The answer is optimistic.

If the Massachusetts BTC Program does wind up expiring on August 5th, it does not mean that all Brownfields Tax Credits will cease to be issued.  It simply means that for properties that are currently in the process of being remediated, should the remediation not be completed by August 5, 2013, i.e. with an RAO or ROS being files with the DEP, then tax credits would no longer be available for that property.  This is good news for owners of Brownfields sites where the contamination was remediated prior to August 5th because there still may be a window of eligibility for applications for Massachusetts Brownfields Tax Credits.

For more information on applying for or monetizing Brownfields Tax Credits, contact The Cherrytree Group.