2007 CPEO Brownfields List Archive

From: "Mathy Stanislaus" <mstanislaus@allegianceresources.com>
Date: 29 May 2007 21:42:22 -0000
Reply: cpeo-brownfields
Subject: RE: [CPEO-BIF] BCP Data
 

Last week New Partners for Community Revitalization issued a report entitled: “Missing the Target: Making the Brownfields Tax Credit Work for Communities.”  The report can be obtained at   NPCR’s website: www.npcr.net.  The report recommends delinking eligibility for the Brownfield Cleanup Program from the Brownfield Tax Credit and targeting the Brownfield Tax Credit based on cleanup costs, and type of development  project. 

 

 


From: brownfields-bounces@list.cpeo.org [mailto:brownfields-bounces@list.cpeo.org] On Behalf Of LSchnapf@aol.com
Sent: Tuesday, May 29, 2007 1:22 PM
To: brownfields@list.cpeo.org
Subject: [CPEO-BIF] BCP Data

 

In response to Peter's question, we tried to determine the percentage of costs relative to the development costs because some were suggesting that a percentage could be used to identify projects that were worthy of the BCP or that the the amount of tax credits that a developer could claim should be based on the percentage of the costs.  It seems like some might have been looking to the percentage as a surrogate metric for the quality or amount of the cleanup, or perhaps the validity of the project as a brownfield site. 

 

What we found was that the percentage had little relationship to the quality of the cleanup. Large developments tended to remove the source materials more frequently than smaller projects because of the depth of excavation. The fact that the cleanup costs only represented say 1% of the project costs does not mean that the project was not a valid brownfield project or that the contamination did not complicate the reuse. In many cases, the BCP was the factor that tipped the developer towards going forward with its project and assuming the risk of the cleanup. 

 

In contrast, if the BCP project was a one-story retail building that was formerly a gas station, a risk-based  cleanup that leaves residual contamination might range 20% to 40% percent of the total project. Did a fairly simple petroleum cleanup representing 20% of the project costs complicate the reuse more than the $10 million remediation that represented 1% of a that total project?. It depends on the site-specific factors. Certainly, the massive cleanup at a large project poses significantly more risk to a developer because of uncertainty of costs, the numerous variables that can change the scope of the cleanup and the associated project delays which can be extremely costly than a site where there are less variable and less things to go wrong since the developer only has to pull out some tanks, remove contaminated soil and do some groundwater monitoring for a few years. 

 

My point was that the percentage by its own does not serve as a good surrogate or barometer of a project's value. We collected the information because we felt it was an important piece of information to have but when we looked at the results, it was fairly clear to us that this alone should not be used to determine if a site should be admitted into a brownfield program or what tax credits it should be allowed to claim. 

 

My personal opinion is that It might be more useful to establish a cap or have a sliding scale of tax credits set at a certain amount of cleanup dollars spent on a project with perhaps a higher level allowed for affordable housing projects, than use a percentage of cleanup approach since this will have an adverse impact on larger sites that are taking on greater cleanup risk.  

 

With respect to excavation costs, the normal excavation costs would be based on how much soil would have to be removed based on the project design and geology, and then what it would cost to dispose of non-contaminated soil. If additional soil has to be removed because it is contaminated or if the soil that would normally be excavated is contaminated, there would be additional costs for properly managing that impacted soil either as "contaminated or special waste" or as "hazardous waste". This "delta" or additional costs are the costs that we used in our calculations.

 

A more tricky question to when the project would only normally excavate say 15 feet and this would be acceptable from an environmental standpoint but the developer wants to be able to achieve an unrestricted residential cleanup since this would eliminate the need for filing deed restrictions and also allow them to claim an extra 2% in tax credits so they dig down to bedrock at 20 feet. Is this costs to excavate the additional five feet the environmental"delta" of extra costs or is it just the normal costs of construction since this was not REQUIRED. One could argue this particular issue either way and I would be delighted to read your responses.

 

Larry 

 

 

Lawrence P. Schnapf, Esq.
55 E.87th Street #8B
New York, NY 10128
212-756-2205 (office)
212-876-3189 (home office)
203-263-5212 (weekends)
212-593-5955 (fax)
LSchnapf@environmental-law.net
www.environmental-law.net (website)




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