States are Leading the Way on Brownfields: Georgia’s Efforts to Incentivize Redevelopment

By John Niedzwiecki, Staff Contributor

I. Brownfields are a large and growing problem for the environment. The Federal and state governments have responded in different ways to the calls for redevelopment.

As America’s commercial and industrial properties age and the need for redevelopment grows, developers and local communities are being challenged by the scope of the contamination to the environment. The Federal government has encouraged redevelopment, particularly since the 1990s, but many states have experimented with new, exciting public policy tools to address the problem of brownfields with differing degrees of success.

Brownfields are pieces of property “the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant.”[1] The EPA estimates that there are over 450,000 brownfields nationwide, and local communities must find ways to address these sites’ effects on local environments and economies.[2] Brownfields are properties like “abandoned gas stations and dry cleaners, railroad properties, factories and close military bases” and many more.[3] Brownfields can be harmful to the environment and the economy, and these contaminated sites may devalue over $2 trillion worth of property.[4] However, cleaning up brownfield properties can limit the effects of environmental contamination, boost the local economy, and preserve historic or culturally valuable buildings.

While the Federal government has tried to address brownfields, states are leading the way to fix the problems that brownfields cause by harnessing the power of state resources as well as local communities and private enterprise. Some states have gone beyond the limited Federal efforts by adding powerful tools to the fight against brownfields. This article will discuss the actions that the Federal and state governments have taken to address brownfields. The state of Georgia serve as a case study to demonstrate how states have introduced new statutory and regulatory measures in the field of brownfield redevelopment. Georgia is a fitting example of state action, because it has one of the most robust brownfield programs in the country and has produced tangible results.

II. The Federal and state governments tried to address brownfields together, but the Federal government has acknowledged that the states can lead brownfield redevelopment projects.

A. The Federal government has stepped back and uses the Brownfields Act to encourage states to take leadership over issues related to brownfields.

Congress has regulated brownfield redevelopment since the 1980s and has imposed strong liability provisions that hinder the redevelopment of otherwise appealing sites.[5] In 2001, Congress passed the Brownfields Act that limited Federal liability for purchasers and developers of contaminated sites that participated in state cleanup programs and allocated some funding for state and local brownfield programs.[6] States responded to the Brownfields Act by creating new programs, expanding the existing programs, and trying to attract new developers.[7] However, the Federal grants proved to be competitive, and the Federal grant application process can take over a year to complete.[8]

B. State governments across the country have recognized that Federal programs will not work for or be available to all the brownfields within their jurisdictions and have taken steps to change their statutory and regulatory regimes.

States have crafted new strategies to lure developers and owners into their jurisdictions. Some states have created new definitions of “brownfield” to tailor their responses to either expand or limit categories of properties.[9] Other strategies have focused on redeveloping or reusing brownfield properties instead of on the cleanup process, which is distinct from CERCLA’s requirements.[10] Other states are expanding the pool of eligible participants to include prospective purchasers, owners, or even the parties that are responsible for the contamination to draw more people into the process and increase the number of brownfields.[11]

Most states limit liability for developers or new owners who voluntarily cleanup their sites.[12] Furthermore, the majority of states with a brownfield program offer other incentives to participants, oftentimes which can be of greater value than comparable Federal incentives.[13] These incentives can include low or no interest loans, tax incentives to offset cleanup costs, and job creation bonuses or tax credits.[14] Georgia uses a combination of these options in an attempt to maximize their impact on the environments and economies of localities within the state.

III. Georgia limits the liability of developers that take over brownfields and incentivizes growth with a tax credit.

A. Georgia’s statutory regime consists of a brownfields law and a tax incentive program.

Georgia responded to the new incentives in the Brownfields Act and the growth of interest in brownfield redevelopment by passing two pieces of legislation: the Georgia Hazardous Site Reuse and Redevelopment Act[15] (the “Brownfields Law”) and a tax incentive under the Ad Valorem Taxation of Property[16] (the “tax incentive.”)[17] The Brownfields Law requires prospective purchasers to investigate and clean up any contaminant releases on the site.[18] Once cleanup has been completed, the purchaser is relieved of liability for groundwater contamination and third party claims from earlier releases of contaminants.[19] The tax incentive provides tax relief for properties where costs were incurred to obtain a brownfields limitation of liability.[20]

B. The Brownfields program has several requirements that applicants must satisfy before the benefits of participation come into effect.

To participate in the Brownfields program, applicants must pay a $3,000 fee, and the Department of Natural Resources may charge additional fees if the review process costs more than $3,000.[21] Applicants must submit for review properties with pre-existing releases of hazardous materials and properties that are not already undergoing remediation through a Federal program.[22] The purchaser must have “clean hands” (i.e. did not contribute to the release of the contaminants at the site and is not related to someone who did).[23] Finally, the purchaser must submit a plan of corrective action or a compliance report to limit their liability for the site.[24] Once the approved plan is completed and the state certifies compliance, the purchasers are not liable for claims arising from pre-existing releases.[25]

C. Like the Brownfields program, the tax incentive program requires that applicants meet a statutory threshold before credits and incentives take effect.

To participate in the tax incentive program, a purchaser must own a property where hazardous material was released and the purchaser incurred costs from a remediation plan approved under the Brownfields program.[26] The purchaser will receive preferential treatment for ad valorem assessment of property value and costs incurred.[27] Not all costs will be credited on a purchaser’s tax statement, such as materials not specifically purchased pursuant to a Brownfield program corrective plan, medical expenses, and legal expenses.[28]

D. The Brownfields program and the tax incentive program have been a success across Georgia and have positively changed urban, suburban, and rural regions of the state. Sites with significant contamination have been cleaned up and now provide a significant boost to local economies.

1. Atlantic Station, previously an eyesore in the middle of Atlanta, has been transformed into a new urban center and home to prominent businesses.

 

The Atlantic Station site, formerly home to a 100-year-old steel mill that closed in 1998, was a scar in Midtown Atlanta (a prosperous neighborhood that is home to many of Atlanta’s major businesses) with high levels of contamination.[29] After participating in the state and Federal brownfield programs and receiving a $2 billion investment, the site was redeveloped into 138 acres of “retail, residential, commercial, and public space” and which contained over 13 million square feet of space.[30] With these programs, Georgia was able to resolve a major threat to the environment and rehabilitate a broken, but important, portion of Atlanta.

2. Ponce City Market has evolved from a former baseball field to a powerful symbol of progress in the Old Fourth Ward neighborhood of Atlanta.

Another prominent success story was the redevelopment of Ponce City Market. Originally a Sears Hardware Store built in 1926, the Ponce City Market site was transformed from a baseball field to a retail store until it was later abandoned. In the 1990s, it become a warehouse for Atlanta City Hall’s surplus files and served as additional office space for city workers, until it was finally redeveloped in the early 2010s.[31] A developer applied to participate in Georgia’s Brownfield program to limit the liability from groundwater contamination, among other redevelopment incentives, and rebuilt over 1.1 million square feet of retail, commercial, and residential space in the rapidly growing city.[32] Now, Ponce City Market is one of the most popular destinations in Atlanta for tourists and residents to enjoy new eateries, shops, and public space.

3. The Atlanta Beltline, formerly an idea proposed in a graduate student’s thesis, has taken abandoned rail corridors and turned it into Atlanta’s “Emerald Necklace.”[33]

When Atlanta was first built, there was a network of railroads that cut through and around the city.[34] The railroad network eventually fell into disuse and left behind contaminated areas in otherwise desirable parts of the city. Beginning in 1999, a Georgia Tech graduate student’s thesis envisioned a new park system based on this old network of rail corridors, and now the Beltline has grown into a redevelopment project that will connect virtually the entire city in a loop of parks.[35] These parks may eventually support streetcars, which hopefully would reduce the number of vehicles in the core of the city.[36] While the entire Beltline is not eligible to participate in the Georgia Brownfields program, nearly 123 acres are eligible and enrolled, providing the Beltline more funds for redevelopment.[37] The body in charge of development of the Beltline is aggressively pursuing the benefits from participating in the Brownfields program by applying frequently for different phases of development. With an estimated 1,100 acres of brownfields left within the Beltline’s anticipated path, the program can have an important impact on Atlanta’s future.[38]

IV. Georgia has led the way to address brownfields and is a bright example of how states should experiment with new ways to leverage the strength of their developers and local communities.

Brownfields are a large and growing problem throughout the country, and they pose a major threat to the environmental well-being of neighborhoods and cities everywhere. Contaminated properties threaten the health, economic wellbeing, and livability of communities throughout the country. The Federal government has taken some action with the Brownfields Act to encourage states to experiment with new ideas to address the problem, but the states recognize that Federal support and funding will not meet every need. As a result, states have been forced to come up with creative solutions that leverage the power of the private sector, the needs of local communities, and the experience from previous redevelopment attempts. States have incentivized redevelopment by limiting the liability of new owners of contaminated sites, creating new tax credits for the costs of cleanup, and keeping the costs of participation low.

Georgia in particular has been a leader in the redevelopment effort through its Brownfields program and tax incentive package. As long as developers and new owners come into the process with “clean hands” by not having contributed to existing contamination and cleaning up the existing problems at the sites they buy, they can take advantage of the generous benefits. As a result, Georgia has been a success story with several severely contaminated sites changing into exciting, new components of local communities. The Atlantic Station, Ponce City Market, and Beltline projects are attracting new residents to the city and provide critically needed new urban retail, residential, and commercial spaces in the core of Atlanta. While urban areas like Atlanta have seen the clear benefits from the brownfields program, suburban and rural areas across the state could just as easily benefit. If Georgia continues to support and expand its brownfields programs, smart growth can tackle old environmental problems while building a new, eco-friendly landscape. States around the country are taking similar steps to address the threat of brownfields to the environment, with varying degrees of success.[39] With the decline in Federal revenues and the seeming inability of Federal agencies to expand their footprint for the foreseeable future, states will have to take charge of cleanup, and they should look to Georgia, and the powerful examples in Atlanta, as they decide what statutory framework to adopt.

 

[1] EPA, Overview of the Brownfields Program (2017), https://www.epa.gov/brownfields/overview-brownfields-program.

[2] Id.

[3] James T. O’Reilly, Chapter 2: The Brownfields Lawyer, § 2:1 The Brownfields basics, in 1 Superfund & Brownfields Cleanup (2017).

[4] Id.

[5] Tara Disy Allden et al., Brownfields to Green: A Proposal for Redevelopment of Brownfields Property for Natural Resource Value, 46 Entvtl. L. Rep. News & Analysis 10855, 10855 (2016) (owners of brownfield properties may be held liable for remediation costs even if they had no involvement in the acts that caused the contamination).

[6] Melissa A. Orien & Ellie B. Word, State Brownfields Law, 27 Construction Law. 38, 38 (2007) (the Brownfields Act’s full name is the Small Business Liability Relief and Brownfields Revitalization Act).

[7] Id. (States tried to “broaden eligibility to participate, increase funding or tax incentive options, limit liability for developers and purchasers, generate greater public participation, and improve public record databases.”)

[8] Allden, supra note 5, at 10856.

[9] James T. O’Reilly, Chapter 2: The Brownfields Lawyer, § 2:2 State responses, in 1 Superfund & Brownfields Cleanup (2017) (New Jersey has defined “brownfields” as “Any former or current commercial or industrial site that is currently vacant or under-utilized and on which there has been, or there is suspected to have been, a discharge of contamination.” New York’s Court of Appeals has broadened the definition of “brownfields” even wider and has held that a site qualifies as long as “(a) contamination is actually or potentially present, and (b) such contamination “may complicate” reuse or redevelopment.”)

[10] Orien & Word, supra note 6, at 38 (CERCLA “imposes the same cleanup standard regardless of any intended future use” while some states have allowed a “lower cleanup standard [for industrial properties] than properties that will have a residential use.”)

[11] Id.

[12] Id. at 39.

[13] Allden, supra note 5, at 10856.

[14] Id.

[15] Ga. Code. Ann. § 12-8-200 et seq. (West 2014).

[16] Ga. Code Ann. § 48-5-1 et seq. (West 2017).

[17] State of Georgia Dept. of Natural Resources, Environmental Protection Division, Brownfields Redevelopment in Georgia – The Georgia Brownfields Program 1, https://www.cclr.org/sites/default/files/Brownfield%20Redevelopment%20in%20Georgia%20Trifold%20Booklet.pdf [hereinafter Georgia Brownfields Program].

[18] Id. at 2.

[19] Id. (limitation of liability is transferred with the property to subsequent owners).

[20] Id. at 1.

[21] Id.; see also Ga. Code Ann. § 12-8-209 (within 30 days of receiving the application, the Department of Natural Resources will inform prospective purchasers of an estimate of the costs of the review).

[22] Ga. Code. Ann. § 12-8-205 (West 2014).

[23] Ga. Code Ann. § 12-8-206 (West 2002).

[24] Ga. Code Ann. § 12-8-207 (West 2014) (under (b)(1) the corrective action must, at minimum, describe the actions the purchaser will take to bring any contaminated source or material into compliance).

[25] Id. at (b)(6).

[26] Ga. Code. Ann. § 48-5-7.6 (West 2017).

[27] Georgia Brownfields Program, supra note 17, at 1 (“preferential brownfield assessment provides tax savings by freezing the ad valorem value of the property for up to ten years…a recent amendment allows extension of preferential assessment…for brownfield properties where construction ceased for 180 days or more and later resumed.”)

[28] Ga. Code Ann. § 48-5-7.6(A)(4)(B)-(E) (West 2017).

[29] Lisa Chamberlain, Building a City within the City of Atlanta, N.Y. Times, May 24, 2006 at C8, http://www.nytimes.com/2006/05/24/realestate/commercial/24atlanta.html?pagewanted=2&_r=1.

[30] Id.

[31] Ponce City Market, History, http://www.poncecitymarket.com/our-story/history/ (last visited on Jan. 29, 2018).

[32] John C. Spinrad, A Case Study in Brownfield Development – Ponce City Market, Georgia Environmental Conference, http://www.georgiaenet.com/wp-content/uploads/2015/01/21Spinrad.pdf.

[33] Project History, Atlanta Beltline (last visited Jan. 31, 2018), https://beltline.org/progress/progress/project-history/.

[34] Atlanta Beltline Overview, Atlanta Beltline (last visited Jan. 31, 2018), https://beltline.org/about/the-atlanta-beltline-project/atlanta-beltline-overview/ (the Beltline “will ultimately collect 45 intown neighborhoods via a 22-mile loop of multi-use trails, modern streetcar, and parks – all based on railroad corridors that formerly encircled Atlanta.”)

[35] Id.

[36] Id.

[37] Brownfield Remediation, Atlanta Beltline (last visited Jan. 31, 2018), https://beltline.org/progress/progress/environmental-progress/initiatives/brownfield-remediation/ (parts of the railroad corridors that are now a part of the Beltline are on sites where the City of Atlanta once owned the property, and there is no clear evidence to prove that the current owner, the City of Atlanta, did not contribute to the contamination. Without “clean hands,” parties are unable to participate in the Brownfields program).

[38] Id. (there may be even more than 1,100 acres of contaminated sites in the Beltline’s path, because “sites that “appear” to be clean may in fact have contamination that isn’t revealed until construction begins.”)

[39] See Brownfields Program, Fla. Dept. of Envtl. Protection (last visited Jan. 31, 2018), https://floridadep.gov/waste/waste-cleanup/content/brownfields-program (Florida’s brownfields program); Brownfields Program, N.C. Dept. of Envtl. Quality (last visited Jan. 31, 2018), https://deq.nc.gov/about/divisions/waste-management/bf (North Carolina’s brownfields program).

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