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Credit program made its first allocations in 1999 and has been used to bring about the cleanup of nearly 50 sites around the
state, ranging from $20,000 to almost $6.5 million with about the same number still in process.
Geotechnology Inc. has just received approval for $6.9 million in tax credits for the cleanup of a property in St. Louis
County, according to Michael Roark, project manager for Geotechnology.
Illinois has no program to deal with these large-scale remediation projects.
The Missouri program, operated through the Department of Economic Development, issues state tax credits that can be sold to
a third party. The proceeds of the sale provide the funds to pay for the cleanup. The tax credits are available to both public
and private sector developers. There is no hard dollar ceiling as to how much can be awarded, either to an individual project
or in the aggregate.
The key feature of the tax credits, according to Roark, is that the applicant has to show that there is a net positive
benefit to the state.
"The net positive benefit means that after the state allocates the tax credits that the benefit to the state through the
creation of jobs, tax revenue etc. will be greater than the amount of tax credits granted," said Roark. "MODED actually does
an analysis and comes up with that net benefit calculation. The amount of tax credits available is based on that. You can get
up to 100 percent of the remediation costs in tax credits, but limited to the amount of net benefit."
The tax credits are allotted in two phases. Upon approval of the project by MODED, 75 percent is awarded.
"At the end of the remediation and issuance of a certificate by MDNR (Missouri Department of Natural Resources), the client
will get the remaining 25 percent," Roark said. "It's basically a hold back until that 'clean letter' comes from the state."
According to Roark, the market for the tax credits varies.
"I've heard everything from 75 cents to 88 cents on the dollar," he said. "It varies widely depending on what the market's
like and who you're selling to."
Matthew Robinson, president of Environmental Operations Inc., says he's even aware of cases where they have been sold for
100 percent of the tax credit's value.
"Most of these tax credits are sold to a clearing house or some type of end user," said Robinson. "The rule of thumb is
that you get about 85 cents on the dollar. Sometimes you'll see some of the larger corporate citizens step forward and buy
them for as much as dollar for dollar," he added.
The tax credits have been used for everything from the redevelopment of the St. Louis Arena site to the extensive
conversion of turn-of-the-century commercial and warehouse buildings in downtown St. Louis into loft condominiums and
apartments.
Such assistance is essential to cleaning up these kinds of sites and buildings, according to Robinson.
"You just flat wouldn't get these projects done without the Brownfield Tax Credit program," he said.
In fact, according to Roark, the applicant has to show that the project would not occur without the assistance of the tax
credits.
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"The developer does a pro forma without the tax credits and one pro forma with the tax credits and shows the return on
investment," Roark said. "And without those tax credits, they just don't work."
By contrast, Illinois has committed a little more than $16 million to its brownfields programs and most of that is in the
form of relatively small grants to municipalities for site investigation.
According to Thomas Miller, project manager for the Illinois Environmental Protection Agency's Bureau of Land, $14 million
has been allocated to 112 communities across the state since 1999 through the Municipal Brownfield Redevelopment Grant
program. Up to $240,000 is available to each community through the program. It used to be restricted to site investigation
work.
"About two or three years ago we changed the program because municipalities were telling us that once they understood what
was there, they had no money for cleanup," Miller said. "So we expanded the program to allow some of the money to be used for
remediation as long as we had a phase one and a phase two (site investigation) and the site was involved in our voluntary
cleanup program."
According to Miller, 12 communities in Southern Illinois have gotten grants under the program since 1999 for a total of
$910,000.
While Robinson says that the Illinois program has been successful, he admits that brownfield projects are tougher to get
done in Illinois.
"In Illinois you have to convince the municipality to get behind the project and then do the application," he said. "The
limit has been raised from $120,000 to $240,000, but it's still low. $240,000 on a contaminated site just doesn't go very
far."
Because of the low limit of the Illinois program, it's most useful in cleaning up small sites like former service stations
or dry cleaners, according to environmental engineers. The redevelopment of a property by the Alta Sita Neighbors Inc. in East
St. Louis that was used as a dry cleaning business back in the 1940s and 1950s was stymied until it brought in SCI Engineering
Inc.
SCI worked with the city and IEPA to acquire a grant, do the site investigation work, pull two underground storage tanks
and further remediate the site in order to get a "no further action" letter from the IEPA. The letter certified that the
remediation was complete. "We're about 95 percent finished," said Philip Morris, project engineer for SCI.
There are two other brownfields programs offered by Illinois according to Stephen Colantino, IEPA's Office of Brownfields
manager.
The Brownfield Cleanup Revolving Loan Fund provides loans of up to $425,000 to municipalities for cleanup projects. There's
a total of $3.5 million available. Approximately $1.5 million has been lent since it began in 2000.
And the Brownfield Site Restoration Program provides grants of up to $750,000 to both public and private sector parties. So
far, two projects for a total of $820,000 have been approved out of the $2 million fund.
While Illinois' programs are meager compared to Missouri, Robinson says that Illinois was on the forefront at setting
realistic clean up goals and getting owners certification that the site was clean. "That wasn't Missouri's focus five to 10
years ago so the tax credit program really became the stimulus for redevelopment of contaminated sites," he said. "In
Illinois, the site remediation program and voluntary cleanup program became the stimulus to turn around these sites.
Missouri's got one of the best programs in the United States," Robinson said.
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