Federal Brownfields Tax Incentive:
The Lawrence Gateway Project
Lawrence, Massachusetts
Overview
The Federal Brownfields Tax Incentive
encourages brownfields redevelopment by
allowing taxpayers to reduce their taxable
income by the cost of their eligible
cleanup expenses. The Incentive was
originally signed into law in August 1997
as part of the Taxpayer Relief Act. It was
renewed in October 2004 through the
Working Families Tax Relief Act of 2004
and continues until December 2005. To
qualify for the Tax Incentive, three criteria
must be met:
The property must be held by the
taxpayer incurring the cleanup cost
for use in a trade or business;
Hazardous substances must be
present or potentially present on
the property; and
The taxpayer must obtain a
statement from a designated state
agency verifying eligibility for the
Tax Incentive.
Designed to spur investment in blighted
properties and assist in revitalizing
communities, the Federal Brownfields Tax
Incentive can serve as a critical tool in
brownfields cleanup and redevelopment
efforts.
MASSACHUSETTS
Project Highlights
The Federal Brownfields Tax
Incentive was instrumental in
enabling GenCorp to clean up and
redevelop an 8.6-acre
contaminated former industrial
property in the economically
distressed city of Lawrence, MA.
This redevelopment project
promotes the revitalization of
surrounding mills and nearby
Lawrence General Hospital.
The Federal Brownfields Tax
Incentive provided GenCorp with
approximately $2.4 million in
returned cash flow in a single year.
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Project Background
The City of Lawrence, a mid-sized city on the Merrimack River in northeast Massachusetts, has
an industrial history that covers more than 150 years, including periods of great expansion
and, more recently, decline. At the entrance to the city stands an 8.6-acre property used for
industry for more than a century. Originally home to a machinery plant, the site was later
used to produce textiles, rubber, and plastics. Today, the property is at the center of the
Lawrence Gateway Project, a program to improve the entrance to the city which is itself part
of a broader initiative to revitalize the City of Lawrence.
The 8.6-acre site at Lawrence's gateway closed its operations in 1981, and by that time its soil
and groundwater were contaminated with PCBs, solvents, oils, metals, and other industrial
materials. In addition, contaminants were found to be migrating from adjacent industrial
properties onto this site.
Since 1987, the property's owner, GenCorp, has been working with federal, state and local
government agencies and community groups to clean up and redevelop the property. The
former factory will be converted into landscaped surface parking to serve surrounding mills,
hospital and a new park—all on properties adjacent to the GenCorp property.
Benefits of the Tax Incentive
When GenCorp looked into cleaning up its property, the company was faced with significant
expenses related to the demolition of numerous buildings, excavation of subsurface
materials and soils, temporary capping, removal of concrete slabs, the sealing of drainage
pathways, and the reconfiguration of draining systems. Ultimately, cleanup and
redevelopment of the site would exceed $80 million.
The Federal BrownfieldsTax Incentive was one of the key components of this project,
allowing GenCorp to expense the costs of cleanup for each year in which they were incurred
rather than having to capitalize each year's cost over multiple years. In 1998 alone, these tax
advantages provided GenCorp with $2.4 million in returned cash-flow. "The Tax Incentive
allows us to create economic value and to get the job done faster, which is helpful," said
Robert Devaney, GenCorp's manager for the Lawrence Gateway Project. "Time is always
money in this business."
Process for Utilizing the Tax Incentive
Through the longstanding involvement with the U.S. EPA Brownfields Program, GenCorp
became aware of the Federal Brownfields Tax Incentive when it was passed into law in 1997
and quickly moved to take advantage of it. Proof of the site's eligibility only required a letter
to the Massachusetts Department of Environmental Protection (DEP); the confirmation
response was received approximately a month afterward. "It's a very effective and fast way to
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get this done," said Devaney. 'The state had been involved with the [Lawrence Gateway] task
force, so we didn't have to recreate information for them. They knew what was going on."
Because the process only required working with Massachusetts DEP—an existing
knowledgeable partner—it required minimal effort and created significant benefit. Indeed,
GenCorp's success using the Brownfields Tax Incentive has encouraged others in Lawrence to
use it, according to Devaney.
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An artist's rendering of the redeveloped GenCorp property and its surroundings.
Community Impact of the Brownfields Tax Incentive
The decision to redevelop the property into much-needed parking was a shared decision
between the City of Lawrence, MassDevelopment (Massachusetts' Economic Development
Authority), and community stakeholders. Because Lawrence is a dense, industrial city, there
has long been a shortage of available parking; new parking, currently under construction, in
this convenient location will enable neighboring institutions and industries to thrive. The
plan for the GenCorp property also contains an option for a future conversion of a section of
the site into a multi-story parking structure, if the demand for parking continues to grow.
As mentioned, the cleanup and redevelopment of the GenCorp property is part of a larger
effort to revive Lawrence. According to the Lawrence Gateway Project's vision statement, its
goal is to "revitalize, integrate, and sustain [a] cleaner, healthier, and more vibrant corridor" at
the heart of the city. In addition to redevelopment of the GenCorp property, the Gateway
project includes the conversion of a landfill along the Merrimack River into a recreational
facility, the cleanup of another industrial property, the creation of a park, improvements to
the city's transportation infrastructure, and civic programs to support the city's impoverished
communities. In addition to the cleanup of its own property, GenCorp contributed directly to
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the broader initiative, funding a portion of the cleanup of the nearby Oxford Paper property
and funding the salary of a project director for the entire Lawrence Gateway Project.
Continuing Success
"We are at a critical point-at third base, trying to get home," said Devaney. "For the first time in a
while, people are buying mills and putting in money. And you need that private investment in
order to get things done." The Federal Brownfields Tax Incentive has encouraged this private
investment, which is playing a vital role in creating a new future for Lawrence.
For more information about the Federal Brownfields Tax Incentive, please visit
http://www.epa.gov/brownfields/bftaxinc.htm.
For more information on requirements for using the Federal Brownfields Tax Incentive in
Massachusetts, please visit http://www.mass.gov/dep/bwsc/files/brown/certap13.htm.
Federal Brownfields Tax Incentive Solid Waste EPA 560-F-05-227
Case Study and Emergency May 2005
Lawrence Gateway Project Response (5105T) www.epa.gov/brownfields
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