Is Your Brownfields Property in an Economically Distressed Area?
To qualify for a Massachusetts Brownfields Tax Credit, a property must be located in an “Economically Distressed Area” (EDA). Contrary to what that implies, many of the state’s more affluent towns – including Beacon Hill and Back Bay, Manchester-by-the-Sea, Bolton, Pride’s Crossing, even parts of Belmont and Lexington – are classified as EDAs. Therefore, projects in these locales may be eligible for Brownfields incentives.
The concept of limiting tax credits to properties in EDAs can be traced to the 1998 Brownfields Act, formally known as Chapter 206 of the Acts of 1998. The Brownfields Act itself references MGL c.21E, which defines EDAs as:
- An area or municipality that has been designated as an Economic Target Area (“ETA”),
- An area or municipality that meets one or more of the criteria for ETA designation, but has not actually been designated as an ETA,
- The site of a former manufactured gas plant; or
- The site of a former MBTA or the Executive Office of Transportation and Public Works right-of-way in which the municipality has acquired an interest for purposes of the installation, operation, maintenance, and use of a rail-trail.
The Massachusetts Office of Business Development (MOBD), through its Economic Assistance Coordinating Council (EACC) and the Economic Development Incentive Program (EDIP), is the organization that controls the designations of ETAs and EDAs. The Massachusetts Department of Environmental Protection (DEP) maintains a list of established EDAs that is routinely used as a first step in verifying EDA designation. The list on the DEP website, however, often does not contain all of the eligible towns and cities because it is updated infrequently.
ETA is a state designation based on income, unemployment, and other economic characteristics of the area. The “area” must be comprised of three or more contiguous census tracts or one or more contiguous municipalities. The area must also meet one of 11 requirements. If the Town wishes to be designated as an EDA, an application can be made to the EACC.
Cooperstown Environmental has helped many municipalities obtain designation as an economically distressed area so that brownfield projects in those areas can access the state incentives. Therefore, even if your property is not within one of the EDAs listed on DEP’s web site, you could still be eligible.
An owner with property located in an area designated as an EDA has access to many programs that would not otherwise be available, not only Brownfields Tax Credits but also eligibility for MassDevelopment funding, tax deductions for renovation of an abandoned building, and potential abatements on local property taxes.
A recent experience shows the importance of the EDA designation. A developer contacted Cooperstown Environmental regarding a potential purchase of a former gas station. He was not willing to purchase the property unless it was in an EDA due to the need for funding from the Massachusetts Development Finance Agency (MDFA). The agency, however, had told the potential purchaser that the property was not eligible, based on its review of the list of EDAs on the DEP website. Cooperstown was able to provide evidence that the census tract had recently been granted EDA status, allowing the deal to proceed. Our client is now developing the previously underutilized property, improving the environment and creating much-needed housing in the process: a true win-win for everyone.