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By Charlie Bartsch |
Key issues are in motion at this early point in the 109th Congress, with both direct and indirect impacts on the brownfield market.
EPA’s Brownfield Program
As previously reported, the president’s total $210 million request for
EPA brownfield programs is $43 million more than Congress provided for fiscal
2005, although this amount still falls short of the $250 million authorized
for the program.
The fiscal 2005 omnibus appropriation that funded EPA included language allowing communities that took ownership of sites prior to January 2002 to be eligible for fiscal 2005 brownfield grant funds. Unfortunately, this fix applies only to current-year funding. No proposals have yet been advanced to address this issue, although local governments have pushed for a permanent clarification.
By law, brownfield grant and cooperative agreement recipients can not use any of the proceeds for administrative purposes to help carry out the programs and projects, which has hampered communities and other recipients in numerous ways, including their ability to promote working partnerships aimed at brownfield reuse. The brownfield program is the only program within EPA so restricted, although no proposals have yet been advanced to change this.
Federal Tax Incentives
The Bush administration has proposed a permanent extension of tax expensing
for brownfield remediation costs, which allows site owners to write off all
cleanup and related costs in the year they incur them rather than over the depreciable
life of the property. This is the only existing federal incentive targeted directly
to private site owners and will expire on December 31, 2005.
While no bills have yet been introduced to make it permanent, there is considerable interest on the Hill. Last year, bills in the House and Senate also addressed two shortcomings of the expensing incentive: making petroleum sites eligible for expensing (the original language was adopted before the 2002 brownfield law included their eligibility); and limiting recapture penalties to allow developers who do not intend to be the site’s end users to be able to take advantage of this incentive.
In the 108th Congress, Rep. Mike Turner (R-OH) introduced a bill to authorize cleanup tax credits and he is in the process of preparing a version of this proposal for the 109th Congress.
Several offices have indicated that they will be exploring additional tax-related brownfield legislative proposals, including modifying the existing rehabilitation tax credit to make it more advantageous for brownfield projects and authorizing a new “brownfield IRA” to encourage site owners to put aside money for future cleanup needs.
Economic and Community Development
Programs
AAs reported in the April issue, President Bush, in his budget, proposed the
most sweeping change in the way in which federal economic development programs
are structured and delivered in more than three decades. It would consolidate
18 programs from five federal agencies, with a total fiscal 2005 funding of
$5.665 billion, into a single “Strengthening America’s Communities
Program” funded at $3.71 billion, some 34.5 percent less than existing
funding levels.
Led by the Department of Commerce, the administration is currently preparing
a legislative package to carry out these changes. An advisory group has been
convened to comment on the legislation, but no local government or community
development organizations — which oppose the proposal — have chosen
to participate.
The magnitude of this proposal has not discouraged members of Congress from
developing bills to address long-time federal program issues. Already:
Overall, the message to be conveyed by NBA state chapter executive team members to public officials at the second annual NBA Brownfield Leadership Summit link to NBA page about D.C. summit in Washington, D.C., is, “Federal programs and federal brownfield revitalization incentives can encourage substantial private-sector investment, resulting in significant public benefits.”
Charlie Bartsch is a senior policy analyst at the Northeast Midwest Institute.
Read an OP/ED by Rep. Turner on why you should support his bill.
Read Charlie’s April 2005 article
on Bush’s brownfield budget requests.