Hidden Treasures: Value in Brownfields
Most brownfields are not hidden—they tend to be in your face. What is hidden is their value. Instead of sites of blight and despair, these properties can be catalysts for renewal and economic growth. Brownfields can be treasures.
The Missouri Department of Natural Resources (DNR) set out to understand the impact of brownfields redevelopment. More than 300 properties have been successfully cleaned up under the oversight of Missouri's Brownfields/Voluntary Cleanup Program (BVCP), but there has been little opportunity for the department to follow up with projects after they have been put back into use.
In May 2005, the BVCP began to examine 50 properties that have been successfully redeveloped. The purpose of this study was to measure both the economic and environmental impact of cleanup.
The results were astounding. The 50 sites profiled generated $2.23 billion in investments and created about 11,000 full-time jobs. There are 686 acres and 22 historic buildings that have been returned to profitable use. Public safety was enhanced and the environment protected with more than 153,000 tons of contaminated soils and materials removed or treated.
To be included in the study, sites had to be redeveloped and must have received a Certificate of Completion from the BVCP. All 37 sites that received Missouri Brownfields Remediation State Tax Credits were included so as to understand the impact of this important economic development tool. Many of the sites had historic buildings that used one of Missouri's most powerful redevelopment programs: Rehabilitation State Tax Credits for Historic Buildings.
Not all projects include historic buildings or create jobs. However, every brownfield property cleaned up under the department's oversight has improved the environment and the community. Neighbors benefit from the removal of blight and the reuse of land and buildings and are often motivated to invest in their own properties.
Sources of information on the sites included DNR's project databases and files, the Missouri Department of Economic Development, the Environmental Protection Agency, local government web sites, online business journals, newspaper articles, property owners' web sites, site visits, and interviews with property developers.
Data collected included:
- before-and-after pictures of the properties,
- history and current use of the sites,
- quantities of contaminated materials removed or treated,
- number of on-site jobs created after redevelopment,
- total investment in cleanup and redevelopment of the property,
- number of acres returned to productive use, and
- types and amount of financial assistance (government and private) provided.
The 50 projects received a combined $304 million in public assistance from state, federal and local government programs, which leveled the field for the brownfields relative to non-contaminated properties. These properties may never have been considered attractive for investment without assistance programs. The investment-to-public-assistance ratio of 7:1 is an excellent return to taxpayers; developers are more likely to invest because they can recover 20-plus percent of their total investment on most of these projects through these assistance programs.
Missouri assistance programs with the highest contribution to the projects were:
- Rehabilitation State Tax Credits for Historic Buildings—This program provided $97.5 million of restoration cost recovery on 22 of the projects. These tax credits are not exclusive to brownfields, but where the projects have been eligible, the impact of the tax credits has been great.
- Brownfields Remediation State Tax Credits—This program provided $57.4 million in cleanup cost recovery on 37 properties. Both state tax credits are saleable, making them attractive not only to private developers, but also to local governments and nonprofits where there is no state tax liability.
Many projects may qualify for cost recovery through both federal and state tax incentives.
In the Missouri study, federal programs with the highest contribution, paralleled the state's:
- Federal Historic Rehabilitation Tax Credits played a major role in the redevelopment of 20 of the properties. The exact amount of cleanup cost recovery is not available due to Internal Revenue Service restrictions, but a reasonable estimate would exceed $50 million, which would be added to the $304 million documented in the study.
- Federal Brownfields Tax Deductions provided $12.2 million of cleanup cost recovery on one site.
These federal programs are in addition to the state programs.
Tax Increment Financing (TIF) was the largest local government source of assistance at $62.1 million. Local TIFs supported 12 projects, which was not as wide a use as expected. One large state TIF of $54 million helped make the $420 million Branson Landing tourist complex a reality in Branson, Mo. Every TIF supported commercial and retail projects that created jobs, which enhance the communities' economies and vibrancy.
The study documents these and 13 other sources of financial assistance programs that made brownfields cleanup and redevelopment a reality in these 50 projects.
The Missouri Brownfields Initiative is an inter-agency cooperative program. The Department of Natural Resources' BVCP leads the effort in partnership with the department's State Historic Preservation Office, the Missouri Department of Economic Development, Missouri's Environmental Improvement and Energy Resources Authority, and the U.S. Environmental Protection Agency Region 7. All these agencies can provide financial and technical support for redevelopment.
For more information on the Missouri Brownfields Initiative, available financial assistance and the "hidden treasures" study, go to www.missouribrownfields.com.