Funding Sources
President Bush signs new Federal Brownfields legislation
Funding Sources for Brownfields Redevelopment (3/30/01; rev. 6/21/01)
1. Tax Increment Financing (TIF): Where taxes for underutilized or undeveloped sites are frozen at current levels for a period of time. This provides an incentive for cleanup and/or redevelopment. After redevelopment, the higher level of new taxes (the tax increment) reverts to the redevelopment agency.
2. 1997 Taxpayer Relief Act §198(c)(2)(A): Allows parties to fully deduct brownfield-related cleanup costs in the year in which they were incurred. (This deduction may have to be recaptured as ordinary income under section 1245 when the party sells or otherwise disposes of the property that would have received an additional basis if the party had not elected this deduction.) Covers sites located in: EPA Brownfield Pilot areas; census tracts where 20% or more of the population lives below the poverty level; census tracts with a population under 2,000, where 75% or more of the land is zoned industrial or commercial, and which are adjacent to 1 or more census tracts with a poverty rate of 20% or more; and any federally-designated Empowerment Zone or Enterprise Community. Sites on the Superfund NPL list are not eligible.
3. EPA Brownfields Action Agenda: Pilot program and other grants for brownfield site assessments and cleanup.
4. HUD Community Development Block Grants (CDBG): Funds may be used for loans, loan guarantees, grants and technical assistance activities. Eligible activities include neighborhood revitalization projects, economic development work, and community facility and service upgrades. The City of Binghamton plans to shift more of its Block Grant money to demolish eyesores and help spruce up neighborhoods.
5. HUD Section 108 Loan Guarantees: Allows parties to finance physical and economic development projects that are too large for front-end financing with single-year CDBG grants. Eligible activities include economic development initiatives, housing rehabilitation and public facility projects, and large-scale construction projects.
6. Brownfield Economic Development Initiative (BEDI) grants. For FY 2000, HUD had $25 million under the BEDI program for grants and loan guarantees to clean up and redevelop brownfield sites. Does not include awards for brownfields projects through CDBG and Section 108. Fundable activities include: acquiring brownfield sites, demolishing/deconstructing existing buildings, installing needed infrastructure, constructing/rehabilitating housing, conducting job training, providing business loans, creating public facilities, and attracting business start-ups and expansions. Unfortunately, BEDI grant eligibility assumes a link with HUD Section 108 grants for which many smaller jurisdictions cannot comply. For 2002 application details see: http://lgean.org/html/whatsnew.cfm?id=172
7. HUD/USDA Empowerment Zone (EZ) and Enterprise Community (EC) programs: Offer special treatment and incentives to geographic areas where government wants to encourage private investment.
8. SBA Section 7(a) Loan Guaranty Program: Provides loans to small businesses unable to secure financing on reasonable terms through conventional lending channels. Can guarantee up to 75% of a loan, with a maximum guaranty of $750,000.
9. SBA LowDoc Program: Offers a simple, one-page application form and rapid two- to three-day turnarounds on loans to small businesses of under $100,000.
10. SBA Section 504 Program: Provides long-term financing of fixed assets for healthy, expanding but still small (generally less than 500-employee) businesses. Administered through 400 SBA-licensed certified development companies (CDCs) around the country. They issue SBA-backed debentures and offer borrowers low interest, 20-year loans with a fixed interest rate. Constituting up to 40% of any given project’s cost, SBA loans may range from $350,000 to $6 million. The loans have a typical loan-to-value ratio of 90 percent, so the project’s down payment can be as low as 10 percent.
11. Empire State Development Corporation’s Rebuild Now-NY pilot program: Sites are nominated by municipalities or industrial development agencies. They are evaluated by ESD’s consultant, O’Brien & Gere Engineers to select those with the highest potential for cost-effective redevelopment and job creation. For each selected brownfield site, environmental testing is done to design a cost-effective, use-based remediation plan and negotiating an approval Voluntary Cleanup Agreement which can be relied upon by the eventual user. Successful sites will then be added to ESD’s inventory of “Build Now” sites, which have been certified as shovel-ready for an economic development project. ESD provides matching fund grants of up to $50,000 for pre-permitting and related development costs. (Initial applications were due June 13, 2000.) Municipalities can apply for brownfield sites under their control. Private site owners can also apply if they are working in close cooperation with their municipality. Sites must be at least 25 acres—or at least 15 acres in certain densely populated counties. Optimal sites will offer good infrastructure, access to transportation, and skilled labor. Sites should be zoned to be suitable for redevelopment as industrial, distribution, or business park facilities. ReBuild will not pay for site remediation. It will only pay for site investigation and negotiation of a Voluntary Cleanup Agreement with DEC.
12. EPA Brownfields Assessment Demonstration Pilots: Funded through cooperative agreements of up to $200,000 each for a 2-year period. Explore innovative approaches to solving brownfields problems and providing a growing knowledge base to help direct the Brownfields Initiative. New York State pilot projects include: Rochester, New York City, Buffalo, Glen Cove, Yonkers, Ulster County, North Hempstead, Elmira, Seneca Nation, Johnstown, Albany, Troy, Schenectady, Glen Falls, Syracuse, Utica, Rome, Niagara Falls, Watertown, and Ogdensburg. Applications for supplemental assistance due by Jan. 8, 2001, and for new awards by Jan. 12, 2001 (to be awarded by April 2001). May apply for up to $150K for continuance and expansion of brownfield assessment efforts. May seek an additional $50K to assess brownfield sites that will be used for “greenspace” purposes (i.e., parks, playgrounds, trails, gardens, habitat restoration, open space, and/or greenspace preservation). EPA expects to make up to 10 supplemental awards and 35 new awards. For proposal guidelines, call 1-800-424-9346.
13. EPA Job Training and Development Demonstration Pilots: To facilitate cleanup of brownfields sites and to prepare trainees for employment in the environmental field, including training in alternative or innovative treatment technologies. EPA will select 10 projects to fund by December 2000. Colleges, universities, non-profit training centers, community-based job-training organizations, states, cities, towns, counties, U.S. territories, and Federally recognized Indian Tribes are eligible to apply for funds. Applicants must be located within or near one of 362 communities that EPA has previously funded as brownfields assessment pilot communities. Funds must be used to cleanup and revitalize abandoned, contaminated or potentially contaminated sites and prepare trainees for future employment in the environmental field. Applications due by October 16, 2000.
14. EPA Brownfields Cleanup Revolving Loan Fund (BCRLF) Demonstration Pilot program: Designed to enable eligible states, cities, towns, counties and tribes to capitalized revolving loan funds that will be used to safely clean up brownfields to facilitate their sustainable reuse. EPA provides financial assistance to an eligible entity to establish its own revolving loan fund that will be used to make loans for authorized purposes. EPA anticipated awarding up to 35 new pilots at up to $1 million each in FY 2000. EPA may fund as many as 35 cleanup pilots in FY 2001 to the tune of up to $1,000,000 apiece. States, cities, townships, counties, or federally recognized Indian tribes must submit their proposal to EPA by December 18, 2000. Eligible entities must demonstrate an existing commitment to brownfields; an ability to manage a revolving loan fund and environmental cleanups, a need for cleanup funds, commitment to making loans to creative leveraging of EPA funds with public-private partnerships and in-kind services, and a clear plan for sustaining the environmental protection and related economic development.
15. EPA’s Targeted Brownfields Assessment (TBA) program: Designed to help states, tribes, and municipalities—especially those without EPA Brownfields Assessment Demonstration Pilots— minimize the uncertainties of contamination often associated with brownfields. Under this program, EPA provides funding or technical assistance for environmental assessments at brownfield sites throughout the U.S.. A TBA may encompass one or more of the following: a Phase I ESA, a full (Phase II) assessment, including sampling, and/or establishment of cleanup options and cost estimates based redevelopment plans and future site uses. Eligible sites: must be contaminated or suspected to be contaminated with hazardous substances (not petroleum only). Site owner must not be responsible for the contamination.
16. EPA RCRA/Brownfields Prevention Initiative: To prevent future brownfields and Superfund sites by helping expedite cleanup, closure, and redevelopment. In 2000, EPA announced the first four pilots under this program. Four to 6 more pilots are scheduled for 2001.
17. EPA Superfund Redevelopment Initiative (SRI): 40 new Superfund Redevelopment Pilots were announced on July 13, 2000. Nearly $4 million will be divided to help communities return toxic waste sites to productive use. Are intended to demonstrate how local governments can increase their involvement in determining future land uses for Superfund sites.
18. ICMA Superfund Peer Exchange Program: More experienced mentor communities will be matched with local officials new to the Superfund redevelopment process in order to further their efforts.
19. Technical Assistance to Brownfields Communities (TAB) program: Managed by five regional Hazardous Substances Research Centers, which draw upon the technical expertise of faculty at 29 universities throughout the U.S. The HSRC for the northeast is at the New Jersey Institute of Technology. They help communities clean and redevelop properties that have been damaged or undervalued by environmental contamination. Activities: leadership training, risk assessment, brownfields processes, site assessment, and cleanup alternatives.
20. Technical Outreach Services for Communities (TOSC) program: Brings university educational and technical resources to communities affected by hazardous substance contamination. Guides communities through the environmental cleanup and site reuse process. It is a no-cost, technical assistance program provided by the HSRC centers. TOSC provides a toll-free information line, workshops and educational programs in local communities, site assistance, including review of technical documents, assistance in preparing written comments, and participation in public hearings, and public education on hazardous substance issues.
21. NYS Environmental Restoration (Brownfields) Fund as part of the Clean Water/Clean Air Bond Act of 1996: State provides grants to municipalities to reimburse up to 75 percent of eligible costs for site investigation and remediation activities. Once remediated, the property may then be reused for commercial, industrial, residential or public use. Municipality must own the property and cannot be responsible for the contamination. Property cannot be listed as a Class 1 or 2 site on the State Registry of Inactive Hazardous Waste Disposal Sites. Investigation grants and Remediation grants can be provided. Investigation grants are designed to determine the nature and extent of contamination and then determine the appropriate remedy. Investigations follow the same process as the RI/FS under State Superfund. Investigation applications are handled on a first come, first served basis.
22. NYS Clean Water State Revolving Fund (CWSRF): Environmental Facilities Corporation (EFC) can help municipalities finance facilities that reduce or prevent water pollution—including water quality protection portions of Brownfields projects. Can finance the local share of Brownfields investigation and remediation projects with long-term, low-interest loans. There is currently a 50% interest rate subsidy. Some costs which are ineligible for the Brownfields program may be eligible for funding under the CWSRF.
23. NYS Industrial Finance Program: NYS Environmental Facilities Corporation (EFC) can provide private industries with conduit financing for environmental improvement projects in four areas: hazardous waste facilities; solid waste facilities; drinking water facilities; and sewage treatment facilities. This conduit financing is based on the underlying credit of the borrower and is feasible for loans in the amount of $1.5 million or more.
24. Broome County Economic Development Zone (EDZ)—now Empire Zones (parts of Binghamton, Endicott, Johnson City, Town of Union, and Town of Kirkwood): (a) Wage Tax Credit (WTC)—Credit of $750 (or $1,500 in the case of a “targeted worker”) for each new job created by an EDZ-certified business, for up to 5 consecutive years. These amounts double beginning Jan. 1, 2001. (b) Investment Tax Credit (ITC)—Available to an EDZ-certified business which purchases or builds property in a zone. The credit is 10% for a corporation (8% for an individual filer). It may be claimed each time qualified property is acquired or built. (c) Employment Incentive Credit (EIC)—Available to a corporation or personal income tax filer that qualifies for an ITC and creates new employment. The credit equals 30% of the ITC for each of the next three consecutive years following the year in which the ITC is claimed. (d) Sales Tax Refund—A refund of the 4% New York State sales tax is available for the purchase of building materials used in the construction or renovation of industrial or commercial property located in a zone. (Local governments and taxing jurisdictions may elect to allow a similar refund of the local portion of the sales tax.) (e) Real Property Tax Abatement—Provides a 100% abatement on increased assessment as a result of new construction or building improvements. Etc. Governor Pataka announced, in his 1/3/01 State of the State Address, a plan to double the size (from 2 square miles to 4) of 22 Empire Zones. He also announced a proposal to give State tax credits for brownfields redevelopment, particularly for large brownfields, and to give local assistance for redevelopment.
25. EDA’s Public Works Development Facilities Program: Funds brownfields redevelopment and other infrastructure projects to improve opportunities for the successful establishment or expansion of industrial or commercial facilities, assist in creating or retaining private sector jobs. Average grants are $800K+. During FY 2000, EDA will give priority consideration to projects that help communities achieve and sustain economic growth, including “sustainable development programs that will provide long-term economic development benefits while promoting eco-efficiency.” Includes brownfields redevelopment and other projects that increase efficient use of resources without compromising the environment for future generations. Revolving loan funds enhance the local capacity to invest in community-identified commercial development that creates jobs.
26. Empire State Development’s “Wired Building” Initiative: Provides matching grants of up to $75,000 to applicants that propose developing an existing building into a wired business incubator, a critical telecommunication infrastructure facility, or a location for a small technology business. Grant assistance will be targeted for non-Class “A” buildings that, if wired, offer information technology businesses the infrastructure necessary for business growth. A total of $1 million is being provided in ESD funding. Grants can be used to cover design/engineering, material and labor costs associated with upgrading a building’s telecommunications infrastructure to high-speed internet connections. Applications are due by Jan. 15, 2001. Awards will be made by March 2001.
27. EPA USTfields program: Provides grants to states for community pilot projects to plan cleanups of abandoned underground storage tanks, stop contamination of groundwater, and permit future redevelopment of sites. Local governments interested in participating may be eligible for grants in 2001, when EPA plans to select an additional 40 communities for pilot projects. ($1 million was provided to 10 communities in 2000.) EPA contact: Steve McNeely @ 703-603-7164, or Tim R. Smith @ 703-603-7158.
28. EPA EMPACT (Environmental Monitoring for Public Access and Community Tracking) Metro Program: Grants of up to $400,000 available to local governments in the 150 largest MSAs (including Binghamton) to establish pilot projects that emphasize using advanced and innovative technologies to monitor environmental conditions and provide environmental information to citizens. Application deadline is Feb. 21, 2001. Contacts: Dr. Charlotte Cottrill @ 202-564-6771; or Dr. Barbara Karn @ 202-564-6820.
29. NYS Business Development Corp.: Works with banks across the state to provide loans to business for real estate acquisition, building improvements, the purchase of equipment and machinery, and for working capital. Statewide, BDC’s loan portfolio is up to $282 million. In FY 2000, BDC approved 7 loans in the Binghamton region totaling $1.5 million. Recipients included Jones Water Supply Inc. and Hansmann’s Mills.
30. Public-Private Insurance Program: Massachusetts Business Development Corporation (and allied agencies) got together with AIG Environmental and American International Specialty Lines Insurance Company (AISLIC) to create a unique insurance program that can protect developers from escalating costs of unknown legal liability, while at the same time protecting lenders from defaults due to environmental conditions. (Announced by AIG Environmental at EPA’s Brownfields ’99 Conference in Dallas, TX.)
31. Other Empire State Development Programs: ESD can assist businesses through financial incentives (direct loans and grants, interest rate subsidies, and infrastructure assistance); tax incentives (investment tax credit, R&D tax credit, sales tax exemption, real property tax abatement); energy savings(in conjunction with electric and gas utilities), and loan discounts. IDA bonds can help to finance economic development projects. Certain businesses (primarily manufacturers) may receive triple tax exempt financing from IDAs, while others receive exemptions from State and City taxes. Assistance can be provided for site location, new facility construction, and existing facility expansion or modernization.
32. National Park Service Urban Park and Recreation Recovery (UPARR) Program: Provides grants of up to $500,000 to local governments to upgrade urban parks and recreation areas. May be used to fund the rehabilitation of existing neighborhood recreation and facilities. Preapplications are due to NPS by June 18, 2001. Three types of grants are available—for rehabilitation, innovation, and planning. Local governments are required to provide a 30% match for federal funds. NPS will match any state funding provided for the local share. Only cities and urban counties meeting established criteria (of economic distress) are eligible for assistance.
33. U.S. DOT funding to support brownfields redevelopment: Transportation agencies may spend federal transportation funds on the assessment and cleanup of contaminated sites, provided that the activity is part of an “eligible transportation project” and makes “transportation sense”(4/22/98). For example, transportation funds may be used to assess and clean up a brownfield site where a road, walkway, bikeway, or transit facility will be built by a transportation agency. State DOT may use federal highway dollars to fund ramps, roads, bikeways, and walkways that connect a brownfield to an existing road. In addition, transit agencies may enhance their services near residential and employment centers located on former brownfields by building bus or rail stops, and erecting signs and streetlights. Specific funding programs include the following under TEA-21: National Highway System, Surface Transportation Program, Bridges, Transportation Enhancements, Transit Capital Investment Grants and Loans, Urbanized Area Formula Grant program, Rail Rehabilitation and Improvement Financing (RRIF) program, recreational trails, and Transportation and Community and System Preservation (TCSP) Pilot Program. See, Redeveloping Brownfields with Federal Transportation Funds (Feb. 2001). Copies available at (202) 260-7154 or via Internet at http://www.smartgrowth.org/library/brownfield_tea21.html.
34. International City/County Management Association (ICMA) brownfield program: ICMA has an ongoing program of research and information dissemination on brownfields redevelopment and local coordination efforts. It does not provide direct financial assistance, but assists local communities with information and by providing recognition for innovative practices. For 2002 case study initiative, see: http://www.lgean.org/html/whatsnew.cfm?id=349.