The Commonwealth of Massachusetts first created the BrownfieldsTax Credit in 1998 and amended the legislation in 2006 to allow the credits to be transferred, sold or assigned.
This credit provides an incentive to developers to cleanup qualifying sites in the form of tax credits useable against Massachusetts income tax.
Purchase of the credits affords its investors an opportunity to save on state taxes, while supporting environmental cleanups in the state. These investments are short term, very safe and high yielding.
Brownfields are sites that have been contaminated by former industrial or commercial use. They are often in or adjacent to urban areas, and their redevelopment offers extraordinary opportunity to developers and communities alike. Brownfields redevelopment can be more complicated than building on greenfields, since it requires cleanup efforts, but it typically offers two benefits unmatched by greenfields: location and heritage.
Brownfields can provide developers with large plots in prime locations, enabling them to take advantage of greater proximity to the twin engines of urban economies, namely density and diversity. Communities also profit from brownfields redevelopment, as it activates dead space and reinvigorates entire neighborhoods. Because of its numerous benefits, brownfields redevelopment is eligible for many state and federal tax credits.
Who is Eligible?
Eligible properties must meet the following three conditions: (1) the property is owned or leased by the taxpayer for business purposes, (2) the property has been reported to the Massachusetts Department of Environmental Protection (“MassDEP”) and (3) the property is located in an economically distress area (Economic Target Area qualifies).
Amount of the Brownfields Tax Credits
If an Activity and Use Limitation (“AUL”) is used, the credit amount is 25% of the net response and removal costs. If an AUL is not, the credit amount is 50% of the net response and removal coast.
Criteria for Application
1. The site was cleaned up under the guidance of a Massachusetts Licensed Site Professional (LSP). 2. The party conducting the investigation/remediation did not cause or contribute to the contamination, i.e. they were not responsible for the environmental issue to begin with. 3. The environmental cleanup costs must exceed 15% of the assessed value of the property prior to the response action on or before remediation. 4. Costs must have been incurred since August 1, 1998 and through January 1, 2012. 5. The amount of any federal or state funds or grants is deducted from the expense base for which the credit is available.