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The Greenery of Brownfields

[fa icon="calendar'] Oct 17, 2014 11:45:00 AM / by Lillian Clark posted in Brownfields Tax Credits

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The Greenery of Brownfields:

What exactly is a Brownfields site?  

This term, which was first minted in 1992, is defined by the Environmental Protection Agency (EPA) as a “property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant”.  This EPA definition was used as the foundation of the original federal brownfields program back in 1995, and derivatives thereof have been adapted for use under state brownfields programs across the nation.  Although the federal brownfields program was allowed to sunset in 2011, many of the state Brownfields programs are still thriving, and, given that the federal program was the genesis of these state programs, we still focus on the roots of the federal program for guidance and understanding.

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Top 5 Reasons to attend the Springfield, MA Brownfields Event

[fa icon="calendar'] Sep 12, 2014 11:46:00 AM / by Lillian Clark posted in Brownfields Tax Credits

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           Due to the success of our May event, “Obtaining a Brownfields: Why You May be Closer Than You Think”, the Cherrytree Group is proud to host a second event in Springfield, MA to accommodate Western Massachusetts-based LSPs and environmental professionals.  The event will feature a panel of guest speakers including: Kerry Bowie, Director of Brownfields and Environmental Justice at the Massachusetts Department of Environmental Protection (DEP), Richard Cote, P.E., LSP, Principal, Manager at Comprehensive Environmental Inc, and Warren Kirshenbaum, President, Cherrytree Group.  The event is intended to educate LSPs and those in the environmental community on the specifics of what a Brownfields site actually is; how to obtain and monetize Brownfields Tax Credits; and how these credits help foster community redevelopment.

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Changes in Eligibility, Timing, and Requirements for Brownfields Tax Credits

[fa icon="calendar'] Jul 28, 2014 11:49:00 AM / by Warren Kirshenbaum posted in Brownfields Tax Credits

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     Many states offer valuable incentives or tax credits that encourage the remediation of contaminated lands. As states have extended and amended their brownfields tax credit programs, some changes in eligibility, timing and requirements to apply for the tax credits have been enacted, as well as efforts to provide additional clarity, transferability, expansion, or, in some cases, restrictions. Warren Kirshenbaum, the author of a recent article in Bloomberg, says that while these tax credit programs may seem daunting, they should not discourage potential developers from considering currently contaminated properties as sites for redevelopment. Highlighting the success of the Massachusetts brownfields tax credits program, Warren says that states continue to issue these credits, and a vibrant resale market for these credits exists, allowing for the continued strategy of using tax credits to recoup funds spent on remediation expenses.

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Recap of, "Obtaining a Brownfields: Why You May Be Closer Than You Think"

[fa icon="calendar'] Jun 20, 2014 11:50:00 AM / by Lillian Clark posted in Brownfields Tax Credits

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Taking Advantage of Brownfields Tax Credits

[fa icon="calendar'] Apr 21, 2014 11:52:00 AM / by Warren Kirshenbaum posted in Brownfields Tax Credits

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     Although there is currently no national tax-incentive program for brownfields renewal in place, many states still offer valuable incentives or tax credits that encourage the remediation of contaminated lands. Mortgage originators and others involved in comme

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Appeals Process Change for Brownfields Tax Credits

[fa icon="calendar'] Mar 15, 2014 11:55:00 AM / by Lillian Clark posted in Brownfields Tax Credits, appeal for brownfields

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     Massachusetts Brownfields Act 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. The credit is awarded based on the amount of eligible remediation expenses that are approved by the Department of Revenue (DOR). Not all of the expenses submitted for a Brownfields Tax Credit (BTC) however, are initially approved by the DOR.
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Brownfields Eligibility: Census Tracts In Economically Distressed Areas

[fa icon="calendar'] Feb 4, 2014 11:57:00 AM / by Lillian Clark posted in Brownfields Tax Credits, Economically Distressed Areas (EDA)

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     The Massachusetts Brownfields Act is a statute that allows eligible tax payers to receive a tax credit for costs directly incurred in remediating environmentally contaminated land in situations where the taxpayer did not cause the contamination.  One of the qualification requirements for the Massachusetts Brownfields Tax Credit (BTC) is that the property must be located within “Economically Distressed Area” (EDA).  For many land owners or developers with a potential Brownfields site the term, “Economically Distressed” is discouraging because they assume their property will not fit under this category.  Many of these same owners/operators are surprised to learn that their properties are in actuality considered EDA’s.  In fact, of the 351 Massachusetts cities and towns, there are 248 Economically Distressed Areas.

     Most of the time, EDA’s are whole towns or cities, for example the city of Cambridge, or the town of Burlington.

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What are Activity and Use Limitations and How Do They Fit Into the Massachusetss Brownfields Program?

[fa icon="calendar'] Jan 24, 2014 11:58:00 AM / by Lillian Clark posted in Brownfields Tax Credits, Activity and Use Limitations (AUL)

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     Massachusetts State law requires that owners/operators of land that has environmental contamination clean up the site whether or not the owner/operator caused the contamination.  In order to help offset remediation costs, which are often very expensive, Massachusetts enacted the Brownfields Tax Credit (BTC) program which was established to aide landowners/lessees who were forced to remediate land that they did not contaminate. Traditionally, this blog has focused on the 50% tax credit awarded to eligible sites where either a permanent solution called a Response Action Outcome (RAO) or a Remedy Operation Status (ROS) has been achieved. Within the BTC however, there is a 25% tax credit that is awarded to RAOs which have Activity and Use Limitation’s (AULs) imposed on the land.
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Developers Can Use Tax Credits to Finance Projects

[fa icon="calendar'] Nov 29, 2013 2:44:00 PM / by Warren Kirshenbaum posted in Brownfields Tax Credits, Historic Rehabilitation Tax Credit, Investment Tax Credit, federal tax credits, Renewable Energy

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State, Federal Offsets Help Recover Costs In Tight Times

      Many developers tend to think “traditional” when it comes to commercial real estate financing sources, resulting in a scramble to obtain the funds necessary to finance a project. Without knowledge of how to secure available federal and state tax credits specific to projects, developers unwittingly “leave money on the table.”

     Tax credits allow a dollar-for-dollar offset against taxes due. As such, they act as a form of tax payment. Tax credits are not to be confused with a tax deduction, which reduces adjusted gross income and can lessen the tax due. Tax credit recipients can use the credit to offset taxes, or can sell the credit in order to gain income. Restrictions, limitations, recapture risk, compliance obligations and transferability of the tax credit are dependent on the type of tax credit issued.

      A variety of tax credits exist, including those for historical remediation, low-income housing, renewable energy and brownfields projects.

     Historic rehabilitation tax credits promote the rehabilitation of historic buildings by the private sector. This is one of the nations’ most successful and cost-effective community revitalization programs, as historic renovations – which are extremely expensive – may not otherwise be undertaken without this tax credit.

     State and federal historical rehabilitation tax credits together can offset as much as 40 percent of a construction project’s budget and they can make or break the feasibility of resurrecting a building with significant community value. With these credits, preservation efforts are more economically appealing than replacement costs. Likewise, being designated as a historic place may increase property values, thereby enhancing the property’s economic bottom line.

      The market for tax credits allows for the completion of often essential projects that might not otherwise see the light of day due to the difficulty of financing through traditional funding avenues.

      It is important to note that the process of applying for, securing and monetizing tax credit awards is an information and document sensitive process which is enhanced by using a consultant, a broker or a syndicator, and at times a lawyer to complete the paperwork.

Energy Credit Revenue

      There are two significant tax credits for renewable energy projectsinvestment tax credits (ITC) from capital investments in the technology and/or the facility that creates renewable energy; and renewable energy credits (RECs) that are generated as a result of the production of renewable energy.

     ITCs amount to 30 percent of the project capital costs, whereas the REC formula is organic – for each megawatt hour of electricity a renewable energy project generates, the owner receives one REC. These RECs can then be sold, allowing the producer of the renewable energy to reap revenue from the credit.
     RECs can be purchased from companies that supply power, natural gas, biomass, and energy products, or from any producer of renewable energy. This source of revenue subsidizes the operating costs of a renewable energy facility, which is necessary to allow said facilities to remain financially feasible. A REC is retired once it is sold, ensuring that the credit is used but once.

      Increasingly, businesses are investing in RECs as a means to implement more eco-conscious practices. Purchasing RECs allows a company to support renewable energy development, even when it does not produce renewable energy and is not directly utilizing renewable energy for its consumption needs. RECs are designed to encourage the development and distribution of renewable energy technology and the production of renewable energy.

Recovering Cleanup Costs

      Finally, mention needs to be made of the Massachusetts Brownfields Tax Credit. Although some commercial property owners will go out of their way to avoid brownfields sites, others recognize the benefits inherent in the brownfields tax credit, which is intended to encourage the reclamation of polluted property as well as to enhance economic growth by fostering the rehabilitation of abandoned properties.

      If the property qualifies for the credit, costs related directly to the environmental clean-up – such as outlays to determine, contain or remove contamination – will apply toward the issuance of credit. By monetizing the credit, often a brownfields property owner that cannot or does not desire to use the tax credit can recover up to 50 percent of the eligible costs of cleaning up the site.
      The tax credits outlined above illustrate a sound approach to attracting new investment and financial activity during a challenging economic climate.


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Brownfields Tax Credits Aid in Massachusetts Development

[fa icon="calendar'] Nov 8, 2013 2:53:00 PM / by Warren Kirshenbaum posted in Brownfields Tax Credits

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     The LSP Association (LSPA) is the non-profit, professional society for Licensed Site Professionals (LSPs), the environmental consultants licensed by the Commonwealth to oversee the investigation and remediation of hazardous waste sites in Massachusetts, and for other professionals involved in these activities. We work to help our nearly 1,000 members achieve and maintain high standards of practice in overseeing the assessment and remediation of hazardous waste disposal sites. Our members work with their commercial and industrial clients to remediate contaminated sites, often in economically distressed areas, so these properties can be placed back into active and productive use.

      We write to urge CPAT to consider the positive economic development and public health impacts of the Brownfields Tax Credit, and to expeditiously recommend continuance beyond its current expiration date of August 5, 2013.

      Since 1998, the Brownfields Tax Credit has been providing liability relief and financial incentives to investors and developers, and encouraging parties to clean up and redevelop contaminated areas. This Act continues to attract new investment in properties that might otherwise be tied up in litigation and financial woes, while ensuring that the Commonwealth's high public health, safety, and environmental standards are met.

      The Brownfields Tax Credit program has worked. Sites that would otherwise have been dormant, or worse, have become useful again. The social and economic benefits of this transformation have included more jobs, increased affordable and market-rate housing, more business activity, and the remediation of contaminated sites in nearly 200 communities. Moreover, contaminated sites that once posed dangers to the public have been brought into compliance and now, rather than eroding our limited resources, are serving to expand our economic and tax-paying base.

Some of our members, for example, are involved with projects in South Boston, which is experiencing a renaissance in growth and development; some of these projects are currently dependent on the Brownfields Tax Credit for their economic viability.


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