New Florida Law Signed

By Roger Register and Teri L. Donaldson

On June 22, 2006, Governor Bush signed legislation overhauling Florida’s brownfield program and, in doing so, placed Florida first in the nation in terms of the amount of corporate income tax credits available for the redevelopment of brownfields.

Under the new program, developers who incur costs cleaning up a site can recover as much as $1 million in tax credits in the final year of cleanup, with additional perks for redevelopment that results in affordable housing. With housing costs on the rise and land increasingly scarce in metropolitan areas, the new legislation could mean much needed relief for many communities throughout Florida.   

Since the enactment of Florida’s original legislation, Florida has designated 125 areas as brownfields. From those areas alone, brownfield redevelopment has generated more than 12,000 new jobs and approximately $547 million of capital investment. 

Although the results are impressive, many states have witnessed even greater gains.  Moreover, there are still thousands of properties in Florida that could benefit from brownfield redevelopment. 

With this in mind, the 2006 legislature overhauled the Florida brownfield program and improved the available incentives. The most significant enhancement is in the amount of tax credits available to cover the costs of cleanup. A developer can now recover up to 50 percent of its cleanup costs per year subject to a maximum of $500,000, or 75 percent if the project involves the development of affordable housing. In the final year of cleanup, a developer may also recover 25 percent of its total cleanup costs for all years of the project, up to a maximum of $500,000. 

In other words, if a developer spends $1 million per year in cleaning up a contaminated site and completes the project in the second year, the developer could recover $500,000 the first year, and $1 million the second — or 75 percent of its total costs. No other state offers a tax credit program with those percentages and available amounts of recovery. 

Another key improvement is that lenders will now be more willing to fund redevelopment projects in designated brownfield areas because the legislature increased the amount of the existing loan guarantee from 10 percent to 50 percent on loans for cleanup and redevelopment activities. The loan guarantee is further increased by an additional 25 percent where redevelopment results in the creation of affordable housing. 

The new legislation also features several other improvements, such as improving local property tax credit incentives, addressing the cleanup of sites impacted by solid waste, allowing applicants to recover initial assessment costs, and allowing incentives for a greater number of projects.

With the new legislation in place, the only real obstacle to brownfield redevelopment is making sure that businesses and communities are aware of the program and know how to take advantage of the valuable opportunities it creates. BFN

Roger B. Register is the director for the TBE Group in its Tallahassee branch office. Teri L. Donaldson is the lead partner for Tew Cardenas LLP’s Environment, Energy & Resources practice group. Both worked closely with members of the Florida Legislature and key stakeholders to successfully advocate for the passage of the new legislation.