The Massachusetts Brownfields Tax Credit Program (MABTC), enacted in 1998, is a statute that allows eligible developments to receive a tax credit of up to 50% of costs directly incurred in remediating environmental contamination in situations where the contamination was not caused by the taxpayer.
In order to be eligible for the tax credit, there are several criteria which must be met. In addition to the owner/operator not having caused the contamination, the remediation costs must equal at least 15% of the property’s assessed value at the time of the remediation, and the property must be located in an economically distressed area (EDA). Generally speaking, these criteria are reasonable and sensible. With respect to the EDA criteria however, the question of what exactly constitutes an “Economically Distressed Area” is pertinent due to the changing economic landscape in our communities which has led the EDA designation being implemented in a non-uniform manner. The designation of EDA is calculated based on a variety of factors gathered from census information. Currently about two thirds of Massachusetts cities and towns are listed as ‘Economically Distressed’, and this number continues to increase.
While the concept of having EDA criteria is logical- to provide support to the communities with the least amount of resources for remediation- when the majority of the State is designated as an EDA, the utility of this metric comes into question. Currently, Municipalities that are not listed but wish to be, may apply through the State to become designated EDAs. This method is potentially detrimental because it slows down the process by which properties are eligible to receive the Brownfields credit, reducing the program’s efficiency by delaying the remediation of contaminated sites.
The fastest way to address this issue is to simply remove the EDA criteria from Brownfields Tax Credit eligibility. Doing away with the EDA would likely expedite the remediation of Brownfields properties across Massachusetts, and strengthen a statewide initiative to clean contaminated sites, instead of segregating the incentives by community. The Brownfields Tax Credit Program has been very successful in Massachusetts. Removing the EDA designation would continue to foster the redevelopment of properties that, without the financial assistance offered by tax credits, may have otherwise remained contaminated.