Budget Battles Begin – Brownfield ox gored

17 Feb 2011

Tax credit exiting the stage?

The governor announced his budget priorities today and clearly no one is happy.  The local municipalities, schools, universities, seniors, retirees, filmmakers, well, the list goes on and on.  As I predicted, the Governor had tough decisions to make involving brownfields and it appears that the brownfield credit is on the chopping block.

I still think this is a bad decision.  The economy is important and driving development, particularly into core areas to create synergies that can foster more growth is a high priority for our State.  This was a unique program that competed well with other states.  Reportedly, these projects have generated over $6 Billion in investment in the State, new property taxes and many jobs – at a cost of about 10%.  This was not the State picking winners and losers -this program was open to anyone who had a qualifying site and a qualifying project, as long as the allocated credits were available. 

While the brownfield tax increment financing (TIF) program appears to be safe (the budget details are still rolling out), that program allows developments to pay for their own cleanups out of the tax increment that they create – often over up to 30 years! 

However, unlike the TIF program, the brownfield credit was almost an immediate rebate – build something, spend money, create value, document that expenditure and get a credit that you can then turn into cash.  Many times, those credits were all that stood between a project going and not going forward.  The Legislature needs to approve this but if the credit cannot be salvaged, I will be working toward some substitute incentive that encourages these redevelopments.

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