Going green ...Financial incentives help brownfields development

Many people have heard the term brownfield used in relation to the development or redevelopment of real property.

In fact, many of my clients inquire about the possibilities of receiving loans, grants, tax credits or other financial mechanisms for purchasing less-than-desirable property due to environmental concerns, and often ask, "Can I receive any 'green' in a brownfield?"

In 1995, Missouri enacted the abandoned property, redevelopment projects law codified at 447.700 RSMo.

This law was significantly amended in 1998, and its primary mission is to encourage development of government-owned, abandoned industrial sites, to create new jobs and attract new businesses to Missouri.

The Department of Economic Development implements the Brownfield Redevelopment Program, and for those sites that qualify, direct loans, loan guarantees, grants, tax credits, inducements and abatements may be obtained but qualification is difficult.

First, only government-owned properties are covered under the law a significant limitation.

State, county or municipal governments may acquire ownership by way of donation, purchase, tax delinquency, foreclosure or default, but transfers by way of donation or purchase may trigger government liability for clean-up if plans go awry.

Second, the property must be vacant for a period of at least three years from the time application is made to the program.

Third, financial assistance received can only be used for certain allowable costs. Allowable costs include costs to acquire the property, to prepare the site, to demolish or construct project facilities, to complete environmental feasibility studies, and to pay architectural, engineering and legal service fees and expenses incurred throughout the process.

Remediation tax credits may also be obtained for up to 100 percent of the remediation cost.

Fourth, the project must be "eligible" which essentially means that once operational, it must preserve or create new jobs, attract new business to Missouri and prevent existing business from leaving.

Further, should environmental remediation be necessary, the remediation must be conducted through Missouri's Voluntary Clean-Up Program (MVCP).

The MVCP allows risk-based clean-up levels, deed restrictions, liability releases and covenants not to sue for the protection of lenders, owners and parties completing the remediation.

The benefits of qualification are significant if achieved.

It is also important to note that the U.S. Environmental Protection Agency administers its own Brownfields Program under similar principles and guidelines. For fiscal year 1999, Congress appropriated $91 million to EPA for the Brownfields Program.

On March 22, 1999, the city of Springfield resubmitted its application to the EPA for a $200,000 grant to complete the environmental assessment of property located near the downtown area. The city is now awaiting response from the EPA, which is expected by midsummer.

Additional information on brownfields may be obtained on the Web at:

www.ecodev.state.mo.us and

www.epa.gov/brownfields.

(Christiaan D. Horton is an attorney & counselor at law with Neale & Newman LLP.)

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