Did you know?
The Massachusetts Department of Revenue offers a 50%, dollar for dollar, tax credit towards the eligible costs incurred for the remediation of a brownfields site?
What is a Brownfield?
Brownfields are described by the EPA as properties that may have hazardous substances, pollutants or contaminants present. Many times, Brownfield sites were previously used for industrial purposes.
Why does the DOR offer a tax credit for brownfield remediation?
Left unused, these contaminated sites cause harm to the surrounding environment. Even though many of these sites are desirable redevelopment locations, the added remediation can make a site too costly for many developers. This tax credit is a way to incentivize developers by rewarding their remediation efforts. The program is a great compromise between the state and developers. Developing these sites has created jobs, cleaned up environmental hazards, and updated communities, without spending tax payer dollars.
What if I can’t use the tax credits?
The great part about the Brownfield Tax Credit, is its transferability. This means these credits can be bought and sold through a transfer process. For example, Cherrytree Group guarantees at least $0.90 per one tax credit dollar. In other words, a $100,000 in tax credits could be sold for $90,000 of cash. Many times this money is used as cash into the project, or towards a developers next project. With proper due diligence and early structuring, these tax credits can even be worked into project financing as equity upfront.
How does a site qualify for the tax credit?
The site is eligible if there is:
- A RTN (Release Tracking Number) and closed out with a permanent solution (or Activity Use Limitation for a 25% credit)
- The qualified remediation expenses are at least 15% of the assessed value of the property
- Is commercial or a mixed-use property
- The applicant did not cause the contamination
- The applicant owned or leased the property during the remediation activities
- The site has complied with DEP regulations
- The costs must be incurred by an entity
- The site is in an economically distressed area
- The site has closed with a permanent solution
What qualifies as an expense?
Any cost that is directly related to remediation. The most direct costs are LSP costs, soil excavation, and environmental attorneys, but these are rarely the only eligible costs incurred when remediating a site.
Why do I need a tax credit professional?
Using a tax credit professional for Brownfields Tax Credit deals can be very beneficial. With extensive knowledge of the program and relationships with the DOR, tax credit professionals will help maximize on the size of the issued tax credit. Other added benefits of using tax credit professionals on your team include consulting, deal structuring, and brokering credits.
When should I contact a tax credit consultant?
As soon as you know your project will require remediation. The Massachusetts Brownfield Tax Credit program follows rigorous guidelines making it very easy for an applicant to miss and/or lose money that could be tax credit eligible. These mistakes and losses tend to occur early, as well as, throughout the project. Many of these mistakes are very difficult and costly to correct at the end of a project. Bring on a tax credit consultant to a project as early as possible, and avoid these mistakes to truly maximize your tax credit.
Who should I contact for consulting?
Cherrytree Group is Massachusetts only full service tax credit consulting company, and has over 15 years of combined tax credit experience. Cherrytree Group offers a free Brownfields Tax Credit assessment, and works on a success fee. There may be other options, but none can maximize and/or monetize your tax credit like Cherrytree Group.