Are you a developer or landowner who has been considering a brownfield designation in order to apply for Voluntary Cleanup Tax Credits ("VCTCs")? Do you already have a brownfield designation and plan to apply for VCTCs for this calendar year? If so, you should consider acting now to make sure you aren't leaving incentive dollars on the table.
I. Background on Florida Brownfields.
A brownfield site is real property, the expansion, redevelopment, or reuse of which may be complicated by actual or perceived environmental contamination. Contiguous brownfield sites can be designated as a brownfield area, even if some or all of the brownfield sites are not actually contaminated.
Before any incentives can be awarded, the property at issue must go through the brownfield designation process with the local government where the property is located. The Brownfield Redevelopment Act provides specific steps for two types of designation: one initiated by a local government, and the other initiated by a person or entity. Both public hearings and community meetings are involved in the designation process.
The person responsible for brownfield site rehabilitation ("PRFBSR") must enter into a brownfield site rehabilitation agreement ("BSRA") with the department or an approved local pollution control program if actual contamination exists on the site. A BSRA generally includes a rehabilitation schedule, commitments by the PRFBSR, and redevelopment plans. After the BSRA is executed, the PRFBSR may apply for various brownfield incentives - federal, state, and local.
The most well-known incentive is the VCTC program, which awards tax credits that offset site rehabilitation or solid waste removal costs for drycleaning solvent contaminated sites and brownfield sites. VCTCs are issued annually for a maximum of 50% of the qualified cleanup costs, not to exceed $500,000 in tax credits. There are several "bonus" VCTCs that can lead to some projects receiving awards for 100% of qualified costs.
II. Make Sure You Aren't Leaving Incentive Dollars on the Table.
Though these incentives can be advantageous for landowners and developers, the application process can be lengthy. It is important to pay attention to specific dates so that application deadlines are not missed. Applications must be submitted by January 31 of the year following the claimed costs. That gives an applicant only
one month to gather all necessary materials, assuming costs are incurred up to December 31 of the previous year.
For those who already have a brownfield designation and an executed BSRA, it is time to start collecting information and documentation for the VCTC application to avoid an end of the year rush. While January 2019 may seem a long way off, our team has found over the years that mid-year preparation is critical to accurate and complete VCTC applications.
Early preparation can protect against costly mistakes, where important documentation is omitted and VCTC applications are denied. Early preparation can also lead to quicker VCTC issuance by minimizing the need for the Florida Department of Environmental Protection ("FDEP") to issue Notices of Deficiency. This is important because some case applications that were compliant with the application requirements were issued VCTCs a year sooner than deficient applications due to the program's yearly allocation limit.
For those who do not yet have both a brownfield designation and an executed BSRA, and who would like both in place by the end of 2018, it is time to get to work. We have seen brownfield designations take as long as six months in some jurisdictions due to local government hearing schedules and other factors. Further, while all BSRAs are based upon template agreements developed by FDEP, these can also be subject to intense negotiation over many months.
This is especially true for anyone who is actively spending money to rehabilitate a property and who plans to apply for VCTCs. These developers and landowners are required by statute to obtain both a brownfield designation and fully-executed BSRA by the end of the year to be eligible to submit a VCTC application for that calendar year. We have heard instances of developers being deemed ineligible to apply for significant amounts of VCTCs because critical prerequisites were delayed, such as not being able to get a designation onto a local government hearing agenda in December, which is always a busy and chaotic time.
Our Land Development, Zoning & Environmental Team can assist clients in all aspects of the brownfield process, including brownfield designation, BSRA negotiation and drafting, and securing incentives. We have dedicated staff who can prepare VCTC applications, and we can also provide support and legal analysis to consultants and developers preparing such applications. For more information, please
contact us.
