By Judy Sheahan
April 25, 2005

Congressman Mike Turner (OH) briefed members of the Municipal Waste Management Association (MWMA) April 14 regarding his brownfields tax proposal that would provide $1 billion in tax incentives to spur private sector investment on brownfields. Conference President Akron Mayor Don Plusquellic testified April 5 before Turner's subcommittee on the need for incentives to encourage private sector investment.

Turner outlined the extent of the brownfields problem which has been described as a federally created problem due to the Superfund law that was passed in 1980. As a result of that law, according to Turner, an environment has been created that discourages owners to find out if their property is contaminated. This has promoted owners of such properties to abandon them, along with general reluctance to sell the property, for fear of liability and their associated costs. Brownfields are defined as abandoned or underutilized properties that are not redeveloped due to the fear of real or perceived environmental contamination.

Turner said that the current Brownfields Law, the Small Business Liability Relief and Brownfields Revitalization Act of 2002 provides some protection against liability but does not address the high redevelopment costs associated with redeveloping brownfield sites and does not provide enough of an incentive for voluntary action.

According to Turner, the current Brownfields program has done a good job at redeveloping what some would describe as the "low hanging fruit," the sites that are either not that contaminated or in places that are highly desirable. However, it is estimated that with the current level of resources it would take 10,000 years to redevelop the estimated 500,000 to 1 million brownfield sites in the United States.

Turner said that the current EPA program is a step in the right direction but that additional tools were needed to spur on more development outside of EPA, particularly private sector funding. He said that he hopes that his bill, H.R. 4480, which will soon be introduced, will be the motivation to encourage private sector investment.

Major components of H.R. 4480 include:

• $1 billion in federal tax credits would be allocated to the states according to population and administered by state development agencies.
• Credits would be allocated to brownfield redevelopment projects where the local government entity includes a census track with poverty in excess of 20 percent.
• States are to give preference to redevelopment projects based on the extent of contamination remediated, poverty at location, jobs created, position of property within central business district, and the owner's financial commitment for redevelopment.
• Tax credits allocated for up to 50 percent of demolition and remediation costs pursuant to a state approved remediation plan.
• Tax credits are transferable and can be sold to third parties such as banks - proceeds of the sale non'taxable.
• Remainder of costs deductible/depreciable by property owner.

"This is a bill that is geared towards economic development and creating jobs," Turner said. "This bill is not set up to create parks and open spaces."

He also hopes that his bill would be the motivation for owners of "mothballed" sites — sites that are held onto by the current owners with no intention of selling or redeveloping the land — to start cleaning up the property and eventually sell or redevelop the site themselves. There is a provision in the bill that allows past contaminators that contribute no less than 25 percent of remediation costs receive liability release for 100 percent of the approved remediation plan demolition and remediation costs. This liability release, however, does not include unexpected or undisclosed contamination.

Turner also clarified that the minimum 25 percent contribution was simply that, a minimum contribution. "If you and your state want to negotiate a higher percent of contribution. That is up to you. We-ve just established the minimum threshold," Turner said.

Sarah Lile, the Environmental Commissioner for the city of Detroit, told the Congressman and meeting participants that the state of Michigan has a similar program which has been extremely successful for the city.

Turner is looking for additional cosponsors of H.R. 4480 before it is officially introduced. "This is when I turn to you and ask for your help," Turner said. "I hope you will encourage your members of Congress to sign onto this bill."

For more information regarding brownfields, check out the Conference's website at usmayors.org.