Brownfield Redevelopment Incentives: A Thing of the Past?

There are many reasons why I continue to think about WALL-E, the sublime, dreamy movie from Pixar, a week after having seen it, not the least of which is because it’s the first brownfields love story ever told on screen. More relevant though is the timely message for those of us who are involved in the difficult, expensive, and many times overwhelming labor of reclaiming polluted land in a way that’s environmentally sustainable and—this is key—economically feasible. When one stops to consider the cost and heartache associated with overcoming technical challenges, limiting legal liability, complying with so called “streamlined” cleanup rules, and managing the expectations and demands of regulators, it’s a wonder that anyone is in this business at all or, once in, stays in past the first project.

The fact that most of us on the private-sector side are here because we want to be—that is, on a voluntary basis—would lead an outsider to question our prudence and our sanity. So what is it that attracts us? As private-sector stakeholders, what is it precisely about the underlying business model that makes brownfields redevelopment viable? Here is where the movie becomes further instructive. Having rendered the Earth completely uninhabitable due to centuries of wanton waste production and careless waste management, the entire population packs it in and heads out to spend the next 700 years on a super-sized spacecraft, leaving our spinning brownfields planet to cute, automated, waste sorting and processing machines (and one bug).

Eventually, though, Earth’s good people roll up their collective sleeves and make the decision to return and undertake voluntary cleanup. Not to give away much more of the movie, but, stated generally, the crux of the matter is this: It took a considerable package of incentives to get the ship turned around and prompt innocent parties with no connection at all to the underlying pollution to, of their own free will, invest time and money in cleanup and incur all measure of risk and sacrifice when they could have just as easily elected to continue with safer pursuits.

In the movie, as in real life, as in our day-to-day brownfields lives, incentives play a powerful and catalyzing role in influencing human behavior, shaping business decisions, and directing capital. Why is it then that the incentive-based approach to catalyzing restoration and reuse appears under attack, to be falling out of favor, or some particularly disturbing combination of the two? Here in Florida, where coalitions of stakeholders have been trying unsuccessfully for the better part of six years to get the state regulators to support an annual increase in the only meaningful financial incentive on the books—the Voluntary Cleanup Tax Credit—putative redevelopers have not only exhausted this year’s anemic allocation of $2 million in tax credits, they’ve eaten into next year’s allocation by 70%. The effect of this is to force those who expected to receive over $1.4 million in tax credits this fiscal year to wait until next year, playing havoc with their pro formas and crippling their projects. More insidiously, that only leaves approximately $600,000 in total tax credits next year for those conducting cleanup this year.

Credit: Adisa/Dreamstime Pollution in natural foresrt

Many long-term observers in Florida expect the program to slow down as it becomes more widely known that our program is, essentially, bankrupt and that Florida’s state regulatory agency doesn’t support a long-term infusion of public funding. But Florida isn’t the only state where the underlying Brownfields paradigm (more carrots, less sticks) is coming under attack. In Destiny USA Dev., LLC v. N.Y. State Dep’t of Envtl. Conserv., No. 08-1015, 2008 WL 2368085 (N.Y. Sup. Ct. June 10, 2008), a New York state court recently took environmental regulators to task for substituting their will (and policy preferences) for that of the Legislature in denying critically needed tax credits to a massive cleanup and redevelopment project.

And in Michigan, money from a brownfields bond issue, first passed in 1998, disappears at the end of this year, with no plan in place to fund the gap. Granted, these are brutal times economically, and legislators and regulators nationwide are being asked to do more with less. However, what is happening is symptomatic of a larger, more troubling dynamic. At a time when greater incentives are needed and not fewer, we see not only a retrenchment, but a losing of faith.

As stakeholders, it’s impingent on us to continue to make the case that, but for the ready availability of meaningful incentives, restoration and reuse simply do not occur, a 15-year record of cleanup and revitalization in this country will sputter, and the redevelopment community’s long love affair with brownfields will come to an end. And no measure of Hollywood magic can put a dreamy spin on that.

Michael Goldstein is an attorney with Akerman Senterfitt who specializes in Environmental Law.

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