Finding Creative Solutions to Redevelopment Challenges



Earlier this year, New York State established a brownfield redevelopment plan. The goal of the plan was to encourage the creation of affordable housing. Developers and others were offered grants, tax incentives and other forms of financial assistance for the clean up, clearing and construction of brownfield property. Shortly thereafter, the Iowa State Senate passed a similar bill establishing a redevelopment tax program for brownfield and greyfield sites in that state.

The U.S. Environmental Protection Agency defines a brownfield site as "real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant." A brownfield site is typically the former location of a chemical plant or production facility that made or used potentially toxic substances like industrial cleaning products or fertilizer. A facility may have been abandoned for years, harmful chemicals may still be present in the facility itself and the ground on which it sits. The cost of cleaning brownfield sites can be so high as to prevent them from being developed at all. As a result, the harmful contaminants remain in the environment, posing health risks while the abandoned property simultaneously hinders the neighborhood's economic development.

In contrast, a "greyfield" site rarely poses any environmental or health risks. It is a term that was coined in the early 2000s to describe empty and abandoned commercial and retail property. (The word "greyfield" refers to the often-expansive parking lots that surround the structures.) Because there are no dangerous contaminants to dispose of, the website redevelopment of greyfields generally costs less. In addition, the existing infrastructure (including plumbing and electrical wiring) can actually reduce the cost of development.

A revitalization plan released by the U.S. Department of Housing and Urban Development (HUD) in 2005 suggested greyfields as viable development opportunities because of their often-close proximity to main traffic arteries and public gathering places like sports complexes.

In 2002, President Bush signed into law the Small Business Liability Relief and Brownfields Revitalization Act, which allocated more funding for the clean-up and development of brownfield sites. Because greyfields pose no real environmental or health threats, there is little federal funding allocated specifically for their development.

However, Iowa's recently passed legislation enables the state's Department of Economic Development to apply up to $5 million of its allocated redevelopment tax credits for both brownfield and greyfield sites. The existing redevelopment provision allows for a maximum thirty percent credit, based on the total qualifying investment costs. At minimum, a twelve percent credit is granted for qualifying investment in a greyfield site. If the project also meets the requirements for "green developments," that credit is bumped up to 15 percent. A minimum 24 percent credit is available for brownfield sites, and is increased to 30 percent for green developments. With this new law in place, more money is now available for builders and investors willing to explore development possibilities on property deemed brownfield or greyfield.

Lawmakers hope the new provision provides incentive for developers to use old industrial sites and vacant malls, which are plentiful, rather than seeking to build on previously unused land. Other states are considering similar legislation as they look for creative ways to encourage development while keep costs as low as possible.


Shortly thereafter, the Iowa State Senate passed a similar bill establishing a redevelopment tax program for brownfield and greyfield sites in that state.

Iowa's recently passed legislation enables the state's Department of Economic Development to apply up to $5 million of its allocated redevelopment tax credits for both brownfield and greyfield sites. A minimum 24 percent credit is available for brownfield sites, and is increased to 30 percent for green developments. With this new law in place, more money is now available for builders and investors willing to explore development possibilities on property deemed brownfield or greyfield.

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