The Town Crier - Legislative Backgrounder

The “Brownfields Redevelopment Incentive Program Act" provides tax credits to compensate developers of redevelopment projects located on brownfield sites for remediation costs.

Some pertinent terms defined in the bill include:

“Brownfield site” Any former or current commercial or industrial site that is currently vacant or underutilized, and where there is or was suspected to have been a discharge of a contaminant or where there is contaminated building material.

“Contaminated building material” Components of a structure where abatement or removal of asbestos or remediation of materials containing hazardous substance defined by N.J.S.A. 58:10-23.11b, is required by applicable federal, state, or local rules.

“Project financing gap” Part of the total remediation cost, including reasonable and appropriate return on investment, that remains to be financed after all other sources of capital have been accounted for, including, but not limited to:

o   Developer contributed capital, not less than 20% of the total remediation cost.

o   Investor or financial entity capital or loans that the developer, after making all good faith efforts to raise additional capital, certifies that cannot be raised from other sources.

The purpose of the Brownfields Redevelopment Incentive Program is to compensate developers of redevelopment projects located on brownfield sites for remediation costs. 

A redevelopment project is eligible for a tax credit only if the developer demonstrates to Economic Development Authority (EDA) and the Department of Environmental Protection at the time of application that:

·       The developer has not started any remediation or clean up at the site of the redevelopment project, except for preliminary assessments and investigations, prior to applying for a tax credit pursuant to this section, but intends to remediate and redevelop the site immediately upon approval of the tax credit.

·       The redevelopment project is located on a brownfield site.

·       Without the tax credit, the redevelopment project is not economically feasible.

·       A project financing gap exists.

·       The developer has obtained and submitted to the authority a letter evidencing support for the redevelopment project from the governing body of the municipality where the redevelopment project is located.

·       Each worker employed to perform remediation or construction at the redevelopment project will be paid at least the minimum rate under the Prevailing Wage Act. The prevailing wage requirements apply to construction work through the completion of the redevelopment project. In the event a redevelopment project, or the aggregate of all redevelopment project approved for an award under the program, constitute a lease of more than 35% of a facility, the prevailing wage requirements apply to the entire facility.

A redevelopment project that received a reimbursement under N.J.S.A. 58:10B-26 through 58:10B-31 is not be eligible to apply for a tax credit under the program. 

In addition to the eligibility criteria listed above, EDA may consider additional factors that may include:

·       The economic feasibility of the remediation project.

·       The benefit of the remediation project to the community in which the remediation project is located.

·       The degree the remediation project enhances and promotes job creation and economic development and addresses environmental concerns of communities that have been historically and disproportionately impacted by environmental hazards.

·       If the developer has a board of directors, the extent that board of directors is diverse and representative of the community where the remediation project is located. 

The authority, in consultation with the DEP, must submit applications to the board for final approval that comply with the eligibility criteria, fulfill the additional factors considered by the authority pursuant to this subsection, satisfy the submission requirements, and provide adequate information for the subject application.

A developer that has commenced remediation or cleanup at the site of a redevelopment project prior to application may still apply for a tax credit under the program, if the developer certifies to the authority that the developer was unaware of the extent of the site contamination when the developer commenced the redevelopment project.

Once the application is approved by EDA, but prior to the start of any remediation or clean up, EDA must enter into a redevelopment agreement with the developer. The agreement must specify the amount of the tax credit to be awarded to the developer, the date the developer must complete the remediation, and the projected project remediation cost. Developers will be required to submit progress reports every six months. The project must comply with the green building manual regarding the use of renewable energy, energy-efficient technology, and non-renewable resources to reduce environmental degradation and encourage long-term cost reduction.

The agreement for a redevelopment project that includes at least one retail establishment with more than 10 employees or at least one distribution center with more than 20 employees must include a precondition that any business that serves as the owner or operator of the retail establishment or distribution center enters into a labor harmony agreement with a labor organization or cooperating labor organizations that represent retail or distribution center employees in the State.

The developer will be required to submit a progress report every six months until the completion of the project.  At the end of the project, the redeveloper must seek certification from DEP that the project is complete, that the redeveloper complied with the oversight documents, and remediation costs were actually and reasonable incurred. This establishes procedure for the allocation of the tax credits.

A developer is permitted to apply for a tax credit transfer certificate.

A state college or university must be retained to prepare a report evaluating the program every two years.

EDA, in consultation with the Commissioner of Environmental Protection, is authorized to adopt regulations for annual reporting by developers that receive tax credits pursuant to the program, require that developers forfeit all tax credits awarded in any year that reports are not received, and to allow the authority to extend, in individual cases, the deadline for any annual reporting or certification requirement established by this bill.