Thought your property had to be contaminated to be considered for Brownfield funding or qualify for tax incentives? Think again.
Though a significant portion of governmental tax incentives are for remediation of contaminated/impacted sites, there are additional incentives in place that consider metrics other than environmental ones, such as job creation, blighted or obsolete property reuse and historic credits.
Each state packages tax incentives in various ways. A majority of the transactions PM Environmental is involved with contain incentives for remediation of impacted sites, such as building materials and impacted soil or groundwater. However, there are additional incentives in place for new and existing businesses, which consider metrics other than environmental factors. For example, tax credits and exemptions are also available after a certain number of jobs have been generated or a specific dollar amount of new equipment has been purchased.
PM Environmental helps clients work through these incentives to determine if they are eligible, what goals they would need to reach to trigger incentives, and also help them with the data to apply. They can also help clients ask the right questions to determine which specific incentives make sense on a project-by-project basis.
PM Environmental recently encountered asbestos and mold issues while working on an old building in a small Mississippi community. “The cost to renovate it into a museum was too low to be attractive for the grant and incentive programs we typically use,” said John Hargraves, PM Environmental Regional Brownfield Group Manager. “The revenue generated by the museum would not work well for those credits, and because of the age and history of the building we steered the non-profit facilitating the project toward a historic preservation tax credit program for rehabilitation.”
The museum is in the midst of completion. It will draw tourists into the downtown area and likely will generate other tax dollars in the neighboring restaurants and stores.
The Historic Tax Credits involve an application for review and approval by the State’s Historic Commission. The building has to fit certain architectural/age criteria to be deemed as historically significant. Once approved, the applicant is able to take a 10 percent tax credit on the renovation budget approved in the application.
Properties do not necessarily have to be contaminated to qualify for incentives or to be considered for Brownfield funding. For example, “In Michigan, if a property is a historic building, located in a historic district, functionally obsolete or considered blighted it is also considered a Brownfield property,” said Jessica DeBone, PM Environmental Brownfield and economic incentives consultant.
Job Creation & Investment
There are also several tax abatements that company owners can take advantage of for properties that will see significant job growth and private investment.
Tax credits and exemptions are also available after a certain number of jobs have been generated or a specific dollar amount of new equipment has been purchased. For example, New York's ICAP program offers abatements for property taxes for periods of up to 25 years on industrial and commercial buildings have been built, modernized, expanded, or otherwise physically improved.
There are other surprising funding sources. PM recently worked on a site where the client approached the local Chamber of Commerce. The Chamber was interested enough to have the business relocate, so they offered incentive money to help pay for the assessment, which was about 1/3 of the total budget “The deal ultimately fell through, but the due diligence work paved the way for a new deal several months later that added 1,500 new jobs to the community,” said Hargraves.
This incentive was provided simply by asking on the part of the potential buyer of the property. Sometimes economic development organizations have a small set-aside of funds for this type of request. You won’t know until someone asks.
There are numerous ways to qualify for incentive programs, whether it’s for a newer building with some minor electrical issues or a blighted, historic building. It’s just imperative to work with a company, like PM, that knows the realm of tax incentives and which incentives are best suited for your project and business.