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Brownfields  Tax  Incentive
  EPA's Brownfields Program is designed to empower states, communities, and other stakeholders in economic redevelopment to
  work together in a timely manner to prevent, assess, safely clean up, and sustainably reuse brownfields. A brownfield is a property,
  the expansion, redevelopment, or reuse of which may be complicated  by the presence or potential presence of a hazardous
  substance, pollutant, or contaminant. EPA's Brownfields Program provides financial and technical assistance for brownfields
  revitalization, including grants for environmental assessment, cleanup, and job training.
OVERVIEW

The Brownfields Tax Incentive is intended to remove many
of the financial disincentives preventing the cleanup and reuse
of blighted property. The Brownfields  Tax  Incentive
encourages brownfields redevelopment by allowing taxpayers
to immediately reduce their taxable income by the cost of
their eligible  cleanup expenses. This incentive  creates an
immediate tax advantage from these expenses, helping to
offset short-term cleanup costs.
Originally signed into law in August 1997, the Taxpayer Relief
Act (Public Law 105-34) included a tax incentive to spur the
cleanup and redevelopment of brownfields in distressed urban
and rural areas. The Brownfields Tax Incentive was amended
in December 2000 (as part of Public Law 106-554). Now, a
wider range of properties can qualify for this incentive.

BACKGROUND

Federal tax law generally requires that  those expenditures
that increase the value or extend the useful life of a property—
or those  that adapt the property to a  different use—be
capitalized; and, if the property is depreciable, that the costs
be depreciated over the life of the property.  This means that
the full cost cannot be deducted from income in the year that
the  expenditure occurs. This capitalization treatment also
applies to the cost of acquiring property.  In contrast, repair
and maintenance expenditures generally can be deducted from
income in the year incurred. Prior to the Brownfields Tax
Incentive, many environmental remediation expenditures fell
under these restrictions, and had to be capitalized over time.
In 1994, the Internal Revenue Service (IRS) issued a ruling
stating that certain  costs incurred to clean up land and
                          groundwater could be deducted as business expenses in that
                          same year. However, the ruling only addressed cleanup costs
                          incurred by the same taxpayer that contaminated the land. It
                          therefore did not apply to cleanup costs incurred by a party
                          that had purchased  contaminated property, or to an owner
                          interested in putting the land to new use. In addition, the IRS
                          ruling was unclear as to whether other remediation costs not
                          specifically addressed in the ruling would be deductible in the
                          year incurred or would have to be capitalized.
                          These unresolved issues created potential financial obstacles
                          in the contaminated properties market.  Specifically, owners
                          of contaminated property could remediate their property and
                          sell the clean property at its full market value, enabling them
                          to fully recover the  costs of remediation.  However,
                          prospective purchasers of contaminated property had to
                          purchase the property at its impaired value, and then capitalize
                          any cleanup costs. This often left prospective purchasers of
                          contaminated land—many of whom wished to return the land
                          to productive use—at a financial disadvantage. Additionally,
                          property owners who wanted to remediate their property and
                          put it to a different use were at a disadvantage because they
                          were not able to fully deduct their remediation costs in the
                          year incurred.

                          THE TAX INCENTIVE

                          Under the Brownfields Tax Incentive, environmental cleanup
                          costs are fully deductible in the year they are incurred, rather
                          than having to be capitalized. The government estimates that
                          while  the tax incentive costs approximately $300 million in
                          annual tax revenue,  the tax incentive is expected to leverage
                          $3.4 billion in private investment and return 8,000 brownfields
                          to productive use. This ability to spur investment in blighted

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properties and revitalize communities makes the tax incentive
a valuable tool for restoring brownfields.

To satisfy the land use requirement, the property must be
held by the taxpayer incurring the eligible expenses for use in
a trade or business or for the production of income; or, the
property must be properly included in the taxpayer's inventory.
To  satisfy the contamination requirement,  hazardous
substances  must be present or potentially  present on the
property. In addition, taxpayers must obtain a statement from a
designated state agency verifying eligibility for the tax incentive.
State contacts  can be found  on EPA's  web  site  at
http://www.epagov/brownfields/stxcntct.htm Sites listed, or
proposed for listing, on EPA's National Priorities List are not
eligible for the tax incentive.

The Brownfields Tax Incentive was initially  applicable to
properties  that met specific land use, geographic, and
contamination requirements.  The geographic requirements
were removed on December 21, 2000, leaving only land use
and contamination qualifications for expenditures on or after
December 21, 2000.

While amended tax returns may be filed to deduct expenditures
from prior tax years, costs incurred after August 5,1997, the
effective date of the initial tax incentive law, and prior to
December 21,2000,  can only be deducted in the same year if
the  property qualifies  under the tax  incentive's  original
geographic criteria.

To meet the geographic requirement, the property must be
located in one of the following areas:
•   EPA Brownfields Assessment Pilot areas  designated
    prior to February 1997;
•   Census tracts where 20 percent or more of the population
    is below the poverty level;

•   Census tracts that have a population of less than 2,000,
    have 75 percent or more of their land zoned for industrial
    or commercial use, and are adjacent to one or more
    census tracts with a poverty rate of 20 percent or more;
    and
•   Any federally designated Empowerment Zone or
    Enterprise Community.
The Brownfields was extended in October 2004 in the
Working Families Tax Relief Act to cover qualifying
expenditures from the original date of the incentive's
enactment until midnight of December 31, 2005.
CONTACT
U.S. EPA-OSWER
Office of Brownfields Cleanup and Redevelopment
(202) 566-2777

For additional information on EPA's Brownfields Program, visit
the EPA Brownfields web site at:

http://www.epa.gov/brownfields/
Bzrwifielck Ehct Stest
                                                and Bnsrgsncy
                                                        (5105)
                                       EPA 500-F-03-223
                                              Jure 2003

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United States          Office of Solid Waste &      EPA 500-F-01-338
Environmental Protection      Emergency Response       August 2001
Agency            (5105)             www.epa.gov/brownfields
Brownfields Tax
Incentive Guidelines

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Background

The U.S. Environmental Protection Agency (EPA) is committed to helping clean up and revitalize former industrial or commercial
areas that were abandoned due to concerns about environmental contamination. EPA and its federal partners believe that, with the
right incentives, these former engines of industrial growth can once again generate value for both the private and public sectors.

These areas are "brownfields," which EPA defines as "abandoned, idled, or under-used industrial and commercial facilities where
expansion or redevelopment is complicated by real or perceived contamination."  These properties may be large or small; urban or
rural; former factories or warehouses. They have all been left idle due to concerns about cleanup costs and legal liabilities.

On the public sector side,  economic development officials recognize that redevelopment can lead to a wide variety of public
benefits, including reduced blight, new jobs, lower crime rates and higher tax revenues. Private sector companies have also seen the
advantages of brownfields redevelopment. Many of these sites are located in areas with strong infrastructure, transportation, and
urban markets.

To encourage this new interest in brownfields, EPA, the Department of the Treasury, and its other federal partners have created
incentives for potential developers. One of these is the Brownfields Tax Incentive, signed into law as part of the Taxpayer Relief
Act on August 5, 1997, and amended on December 21, 2000. Under the tax incentive, certain environmental cleanup costs at
targeted sites may be fully deducted by eligible taxpayers in the year in which they are incurred, rather than having to be capitalized
over time. The Treasury Department estimates that the $300 million incentive will leverage $3.4 billion in private investment and
return some  8,000 brownfields to productive use.

This tax incentive is one of many federal initiatives to encourage business development and commercial economic revitalization.
Programs exist that address a multitude of brownfields issues, including expanding access to  capital, small business technical
assistance, and workforce training and hiring incentives. Business owners should review the full range of initiatives available to help
turn a brownfield into an attractive business location.

An Introduction to Tax Incentives

The Brownfields Tax Incentive is not a tax credit, but reduces your tax burden indirectly by lowering your taxable income. The
incentive does this by allowing you to claim eligible cleanup costs as a current expense, rather than capitalizing them as long-
term assets.  Companies prefer deductions because these substantially reduce their current income, allowing them to capture the tax
savings now rather than later.

The Brownfields Tax Incentive encourages brownfields cleanup and redevelopment by allowing taxpayers to immediately reduce
their taxable income by the cost of their eligible cleanup expenses. The incentive creates an immediate tax advantage from these
expenses, helping to offset short-term cleanup costs.  Additionally, companies operating at a loss in the  first years of business may
use the tax incentive to establish a "net operating loss" that may be applied in future taxable years.

What's in These Guidelines

The next few pages of this guide will help you determine whether your property may be eligible to take advantage of the
Brownfields Tax Incentive.  This step-by-step guide covers:

•  A fictional case study to show you the potential benefits of the incentive;
•  A description of the types of taxpayers that may use the tax incentive;
•  Guidelines on the types of eligible cleanup deductions you may take;
•  A description of additional criteria for qualifying expenditures between August 5, 1997 and December 21, 2000; and
•  Instructions on how to seek state verification of property and contamination eligibility.

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The Brownfields  Tax Incentive;  A Fictional Case Study

The following fictional example is designed to show you how the Brownfields Tax Incentive could create value for your company.
In the short run, eligible companies that use the incentive can gain a large cash infusion up front, which can be used to finance the
cleanup or generate higher long-term returns because they have opted to reinvest some of their savings into other projects.
Companies can also realize long-term benefits from the tax incentive. By changing the timing of their tax payments, companies that
use the incentive can reduce their total tax burden in real terms.

Both the scenarios and the assumptions used in the following fictional case have been simplified to provide readers with an easy
analysis of the types of returns that could be achieved through use of the incentive.  Your project will have different levels of
savings, depending on your circumstances.
         Acme Company
         The fictional Acme Company wants to locate its new factory on a plot of land in an inner- city
         neighborhood. The Company hopes to employ local workers at the facility, generating both new jobs
         and income for the community. While the plot is large enough for the new factory, it is contaminated
         with PCBs.  If one assumes that the Company will clean up its property at a particular cost, and that
         this cost may be "expensed" in the year in which it is incurred, then the Company will save dollars
         commensurate with its corporate tax rate.
Scenario 1 -  Up-front Cash Infusion

Expensing cleanup costs in the year incurred will reduce the net income on which tax is paid. In this way, a smaller portion of
Acme's profit will go to pay taxes. The savings incurred can then be used to defray the costs of the new factory and/or additional
investment in company infrastructure and productivity.

From an economist's perspective, the value of Acme's redevelopment project is increased by the first year savings and earnings on
this savings as measured by the time value of money. Even if the savings could be realized over time, today's dollars are worth
more than future dollars.

Additionally, a new company with large up-front costs or an ongoing concern contemplating a significant investment may use the
tax incentive to create a net operating loss.  The net operating loss can be deducted by carrying the loss back 2 years when the
business had profits or forward 20 years and deducted from future profits.
Scenario 2 - Lower Real Tax Burden

Another way to view Acme Company's savings is by realizing that the actual value of the taxes paid is affected by when the
payments are made. Thus, by realizing tax savings in the first year, Acme's savings will be impacted over the usable life of the
improved property by inflation. Due to inflation, dollars saved in the present year are worth more than would be the dollars saved
in the future years if the costs were amortized rather than expensed.  Thus, Acme's tax burden, in real terms, is lower if it uses the
incentive.
Step 1;  Determine whether you meet the taxpayer requirements.
    The property must be "held by the taxpayer." This definition includes outright ownership. However, some types of long-
    term lease arrangements may qualify. If there is a question, taxpayers should consult with their tax counsel to determine

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    whether their circumstances qualify.  A list of state Brownfields Tax Incentive contacts can be found at:
    http://www.epa.gov/swerosps/bf/stxcntct.htm .

    The taxpayer must hold the property for business or income generation purposes. This may include trade or
    business property, investment property, or property held as inventory. This does not include personal use property.
Step 2;  Find out which cleanup costs may be deducted.

In general, a property is eligible for the tax incentive if it is an area at or on which there has been:

    A release or threat of release of a hazardous substance; or
    Disposal of a hazardous substance.

However, the property must not be listed or proposed for listing on EPA's Superfund National Priorities List.  The expenses
associated with the cleanup must occur after August 4, 1997 and before January 1, 2006.

What constitutes a release or a threat of release?

A release under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) includes spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing of hazardous
substances into the environment.  The "environment"  under CERCLA includes surface water, ground water, ambient air, and land,
but does not include indoor areas. Therefore, for a release or a threat of release to exist, it must involve or threaten the outdoor
environment.

What is a hazardous substance?

The Brownfields Tax Incentive defines "hazardous substance" as any substance that is defined under CERCLA. The list of
CERCLA hazardous substances can be found at 40 CFR §302.4, Table 302.4. However, the Brownfields Tax Incentive excludes
products that are part of the structure of a building and result in exposure within that building (e.g., interior lead-based paint or
asbestos that results in indoor exposure) from its definition of a "hazardous substance," even if that substance is listed on Table
302.4. In addition, petroleum is not a "hazardous substance."

To determine whether a particular substance is a "hazardous substance," you should consult an environmental attorney. U.S. EPA
Regional offices may be a source of information on defining a hazardous substance.

What expenses are eligible?

Generally, taxpayers may deduct those expenses that  are paid or incurred in connection with the abatement or control of hazardous
substances. For example, the costs of building an access road could be eligible if they were paid or incurred in connection with the
abatement or control of hazardous substances, but not if they would just speed construction of a new building.  If a taxpayer
acquires otherwise depreciable property in connection with such an activity, the property's cost will not be immediately
deductible, but may be expensed over the life of the property. Absent the Brownfields Tax Incentive, such depreciation would not
be allowed.

Types of eligible expenses include:

    Site assessment and investigation;
    Site monitoring;
    Cleanup costs;

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    Operations and maintenance costs;
    State voluntary cleanup program oversight fees; and
    Removal of demolition debris.

Step 3;  Ask your state for a statement that you are eligible for the tax
incentive.

Before the IRS  will accept the deduction, a designated state agency must provide you with a statement that there has been a
release,  threat of release, or disposal of a hazardous substance at or on the property.  You can find your
state's designated agency by visiting EPA's web site at:
http://www.epa.gov/swerosps/bf/stxcntct.htm.  You may also call EPA's Brownfields Office at (202) 566-2777.
Each state agency will have a different application process and documentation requirements. Please note that the designated state
agencies do not determine whether a given expenditure is eligible. Taxpayers should work with their tax counsel on the matter of
eligible expenses. Taxpayers should also be aware that states are not precluded from using information provided by a taxpayer to
take action at a property under state cleanup or enforcement authorities.

Step 4;   Additional criteria for qualifying expenditures between August 5.
1997 and  December 21. 2000.

As mentioned in the "Background"  section of these guidelines, the Brownfield Tax Incentive's geographic requirements for
property eligibility have been eliminated for expenditures on or after December 21, 2000. While amended tax returns may be
filed to deduct expenditures from prior tax years (provided that the costs were incurred after August 5,  1997, the
effective date of the initial tax incentive law), costs incurred prior to December 21,2000 can only be deducted in the
same year if the property meets any  of the following geographic criteria:
         •                 Census tracts with poverty rates of 20 percent or more;
         •                 Census tracts with populations of less than 2,000 where more than 75 percent of the tract is
                          zoned for commercial or industrial use, and the tracts are adjacent to one or more census
                          tract(s) with poverty rates of 20 percent or more;
         •                 Federally designated Empowerment Zones (EZ) or Enterprise Communities (EC); and
         •                 EPA-designated Brownfields Pilot sites announced before February  1, 1997.

         If the costs were incurred between the applicable dates, the taxpayer should work with their state
         environmental agency and their tax counsel to ensure that the property lies within an eligible area. The
         taxpayer will have to obtain a statement from the state environmental agency that the property is within an
         eligible area (and that it is a property at or on which there has been a release, threat of release, or
         disposal  of a hazardous substance at or on the property- see Step 3). Sites on EPA's Superfund
         National Priorities List (NPL) are not eligible for the Incentive.

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                                                 Other Resources

These guidelines were prepared in partnership with Department of Treasury, Department of Commerce's Economic Development
Administration, Department of Housing and Urban Development, and the Small Business Administration.  Taxpayers should also
consider the following resources for information on the Brownfields Tax Incentive.
   Internal Revenue Service publications.  Further information is available in IRS publication 954, "Tax Incentives for
   Empowerment Zones and Other Distressed Communities" at http://www.irs.gov/pub/irs-pdf/p954.pdf
   To confirm whether property or expenses are eligible for deduction under the tax incentive, taxpayers should consult with tax
   counsel. It may also be useful to consult with an environmental attorney. In addition, the identified state contacts listed on the
   next page may provide needed technical assistance on using the tax incentive.
   U.S. Environmental Protection Agency. Additional fact sheets on the Brownfields Tax Incentive are available at
   www.epa.gov/brownflelds/ or by calling (202) 566-2777.
•   HUD's Community Connections Service. You can receive technical assistance and printed materials on the Brownfields Tax
   Incentive by calling (800) 998-9999.
   U.S. EPA's Enviromapper. This web-based database enables a user to map various types of environmental information,
   including air releases, drinking water, toxic releases, hazardous wastes, water discharge permits, and Superfund sites.
   Enviromapper can be accessed at http://www.epa.gov/enviro/html/em/index.html.
                               Contact List for States and Territories	
                           List available on the Internet at www. epa.sov/brawnfields/stxcntct. htm

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                               BROWNFIELDS TAX INCENTIVE
                              FREQUENTLY ASKED QUESTIONS

This document provides answers to some of the most frequently asked questions (FAQs) about the
federal Brownfields Tax Incentive. The questions are divided into the following sections:

 I.     Background on the Brownfields Tax Incentive
 II.    Meeting the Contamination Criteria
 III.   Determining Eligible Expenses
 IV.   Meeting the Ownership Criteria
 V.    Meeting the Geographic Criteria
 VI.   Securing State Eligibility Statements

I.      BACKGROUND ON THE BROWNFIELDS TAX INCENTIVE

       Ql:    When was the Brownfields Tax Incentive passed and why?

       Al:    The Brownfields Tax Incentive was passed as part of the Taxpayer Relief Act (Public
       Law 105-34), which was signed into law on August 5, 1997.  EPA  and the Department of the
       Treasury worked with lawmakers to create the Incentive, which was needed to spur the cleanup
       and redevelopment of brownfields in distressed areas.  The Brownfields Tax Incentive was
       enacted, in part, to level the playing field between taxpayers who caused environmental
       contamination at certain properties and those who did not.

       Since 1994,  the Internal Revenue Service (IRS) has ruled that certain costs incurred to assess
       and clean up soil and groundwater could be deducted as business expenses in the year incurred
       (rather than having to be capitalized over time).  The IRS ruling, however, only addressed cleanup
       costs incurred by taxpayers who had contaminated the property. It did not address cleanup costs
       incurred by taxpayers who had purchased previously contaminated  property. These parties had
       to capitalize over several years the expenses incurred to clean up the property.  The new tax law
       provided a powerful incentive to motivate taxpayers to purchase, clean up, and redevelop
       brownfields  in distressed areas.

       The Brownfields Tax Incentive originally only covered expenditures at properties that met
       specific land use, geographic, and contamination  requirements.  To  expand the use of the tax
       incentive, the geographic requirements were eliminated when Public Law 105-34 was amended
       on December 21, 2000 (Public Law 106-554), leaving only land use and contamination
       qualifications for expenditures on or after December 21, 2000. However, expenditures prior to
       that date (and on or after the incentive's effective date of August 5, 1997) must have been paid
       or incurred at properties that also meet the geographic conditions.

       Q2:    Why is the Brownfields Tax Incentive  beneficial?

       A2:    The Incentive permits a taxpayer to treat any "qualified environmental remediation
       expense" as  a deductible expense in the year incurred, rather than charging the expense to
       a capital account.  Deductible expenses reduce a taxpayer's taxable income and thus
       generally reduce his or her income tax liability.  Without the Brownfields Tax Incentive,

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BROWNFIELDS TAX INCENTIVE FAQs (AUGUST 2001)                                                  PAGE 2

        new property owners had to capitalize, i.e., add to basis, the cost of their land remediation
        expenditures. These taxpayers could not recover these costs for tax purposes until they
        sold the land.

        Q3:    What properties are eligible for the Brownfields Tax Incentive?

        A3:     The Brownfields Tax Incentive was initially applicable to properties that met
        specific land use, geographic, and contamination requirements.  The geographic
        requirements were removed in December 2000, leaving only land use and contamination
        qualifications for expenditures on or after December 21, 2000.  To satisfy the land use
        requirement, the property must be held by the taxpayer incurring the eligible expenses for
        use in a trade or business or for the production of income; or the property must be included
        in the taxpayer's inventory. To satisfy the contamination requirement,  the taxpayer must
        demonstrate that there has been a release, threat of release, or disposal of a hazardous
        substance at the property.

        Amended tax returns may be filed to deduct expenditures from prior tax years,  provided
        that the costs were incurred after August 5, 1997, the effective date of the initial tax
        incentive law. However, costs incurred prior to December 21, 2000 can be deducted in  the
        same year only if the property also met the geographic criteria.  The taxpayer should work
        with their state environmental agency to ensure that the property lies within an  eligible area.

        Applying only to expenditures incurred between August 5, 1997 and December 21, 2000, the four
        geographic  areas of eligibility include:

        •       Census tracts with poverty rates of 20 percent or more;
        •       Census tracts with populations of less than 2,000 where more than 75 percent of the
                tract is zoned for commercial or industrial use, and the tracts are adjacent to one or
                more census tract(s) with poverty rates of 20 percent or more;
        •       Federally designated Empowerment Zones  (EZ) and Enterprise Communities (EC);
                and
        •       EPA-designated Brownfields Pilot sites announced before  February 1,  1997.

        Sites listed, or proposed for listing, on EPA's Superfund National Priorities List  (NPL) are
        not eligible for the Incentive.  Only expenses that are paid or incurred in connection with
        the abatement or control of a hazardous substance qualify for the Incentive.  Taxpayers
        should consult with their tax counsel to determine which expenses are eligible.  Taxpayers
        must also consult with their appropriate state Brownfields Tax Incentive contact to verify a
        property's eligibility  and obtain the required state property eligibility statement.  A list of
        state Brownfields Tax Incentive contacts can be found at:
        http://www.epa.gov/brownfields/contacts.htm.

        Q4:    Must the property meet all or only one of the listed  "targeted area"  (i.e.,
        geographic) criteria?

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BROWNFIELDS TAX INCENTIVE FAQs (AUGUST 2001)                                                 PAGE 3

       A4:    For expenses incurred between August 5, 1997 and December 21, 2000, the eligible
       property need only meet one of the four listed criteria.  For expenses incurred on or after
       December 21, 2000, the property is not subject to the geographic requirements.

       Q5:    Are taxpayers who cause contamination eligible for the Brownfields Tax
       Incentive?
       AS:    Responsible parties who contaminate and remediate a property without changing its
       use have always been able to deduct environmental cleanup costs.  The Brownfields Tax
       Incentive broadens this allowance by permitting these same property owners to also
       expense these costs if they are changing the use of the property.  As noted in Answer 1, the
       Brownfields Tax Incentive seeks to "level the playing field" between polluting and non-
       polluting parties by providing both with the same advantages.

II.     MEETING THE CONTAMINATION CRITERIA

       Q6:    Does "hazardous substance" as defined in the Brownfields Tax Incentive exclude
       contamination from oil and/or mixtures with oil?

       A6:    The definition of "hazardous substance" in the tax provision is in large part based
       on Section  101(14) of the Comprehensive Environmental Response, Compensation, and
       Liability Act (CERCLA). Section 101(14)..contains  a qualified exclusion for petroleum,
       including crude oil and its fractions.  However, hazardous substances that are mixed with
       petroleum products may be included in the scope of CERCLA and may also be included
       under the Brownfields Tax Incentive.

       Q7:    Does the Brownfields Tax Incentive distinguish between hazardous wastes and
       hazardous substances?

       A7:    The definition of "hazardous substance" in CERCLA Section 101(14) includes
       certain "hazardous wastes."  For example, the CERCLA definition of hazardous substances
       includes wastes that EPA lists..under RCRA or hazardous wastes that are ignitable,
       corrosive, reactive, or toxic.

       Q8:    Can EPA clarify "a release or threat of a release"?

       A8:    CERCLA 101(22) defines the term "release" to include, "any spilling, leaking, pumping,
       pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into
       the environment." Much case law exists on what constitutes a release or threat of a release that
       should help the states in making this determination.   Taxpayers should consult with tax counsel
       and their appropriate state agency contact to clarify whether the circumstances at their property
       qualify as a release or threat of release under the Tax Incentive.  A list of state contacts be found
       at: http://www.epa.gov/brownfields/contacts.htm.

       Q9:    What documentation must taxpayers provide to their state to show that there
       has been a release or a threat of release?

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BROWNFIELDS TAX INCENTIVE FAQs (AUGUST 2001)                                                 PAGE 4

        A9:    Taxpayers and/or their tax counsel should contact their designated state agency to
        determine what documentation the state will require in order to provide the state property
        eligibility statement. A list of state contacts be found at:
        http://www.epa.gov/swerosps^f/stxcntct.htm
III.     DETERMINING ELIGIBLE EXPENSES

        Q10:   What is the difference between incurring and paying for an expenditure? If the
        taxpayer incurs an allowable expenditure in one tax year, but pays for it in another tax
        year, does the taxpayer get to elect in which tax year to take the deduction?

        A10:   Generally, the year in which the taxpayer may take a deduction will depend on the
        taxpayer's accounting method. Taxpayers should consult with tax counsel to determine when
        specific expenditures must be taken into account for tax purposes.

        Qll:   Referring to Section 198(b)(l)(A) of the Brownfields Tax Incentive, what does it
        mean to be "otherwise chargeable to  capital account?"  What are  allowable expenses?

        All:   The Brownfields Tax Incentive was created to permit a taxpayer to obtain a current
        deduction for certain environmental remediation costs, rather than delay the deduction to a future
        year. Certain environmental  remediation costs must be capitalized, i.e., included in the cost of the
        taxpayer's property and recovered as the property is used, sold, or otherwise disposed of. Other
        environmental remediation costs may be expensed during the year in which they were paid for or
        incurred.  The Brownfields Tax Incentive  only seeks to impact the former category.  If an
        expense is already deductible within the year it was incurred, there is no need to invoke the
        provisions of this Incentive.

        The category of allowable expenses under the Brownfields Tax Incentive is broad. Taxpayers
        should consult with tax counsel to determine whether specific cost items are allowable expenses.

        Q12:   Can the expenditures from the  removal of asbestos or lead from a building be
        deducted under the Brownfields Tax  Incentive?

        A12:   Section 198(d) of the Brownfields Tax Incentive excludes expenditures associated with
        substances for which a removal or remedial action would not be permitted under CERCLA
        §104(a)(3).  CERCLA §104(a)(3) generally provides that a removal or remedial action cannot be
        taken to address products that are part of the building structure and result in exposure within
        residential buildings or business or community structures (e.g., interior  lead-based paint
        contamination or asbestos which results in indoor exposure).  Taxpayers should consult with tax
        counsel and their appropriate state agency contact to determine the circumstances in which a
        taxpayer's activities may  qualify for deduction.  A list of state contacts  be found at:
        http://www.epa.gov/swerosps^f/stxcntct.htm.

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BROWNFIELDS TAX INCENTIVE FAQs (AUGUST 2001)                                                 PAGE 5

        Q13:   Do costs for site assessment and investigation activities qualify as remediation
        expenditures under the Brownfields Tax Incentive?

        A13:   Yes. Site assessment and investigation activities are qualified environmental
        remediation expenditures if incurred "in connection with the abatement or control of
        hazardous substances at a qualified contaminated site."  Site assessment efforts must,
        therefore, be part of a larger abatement or control effort to qualify under the Tax Incentive.

        Q14:   Can expenditures for assessment or monitoring inside a building qualify for the
        Brownfields Tax Incentive?

        A14:   These expenditures may qualify for the Brownfields Tax Incentive if the costs can
        be characterized as environmental remediation costs and were used in connection with the
        abatement or control of a release or a threat of release of a hazardous substance. However,
        see Question 12 regarding limitations on expenditures associated with indoor
        contamination.

        Q15:   Do the costs related to construction of access roads and operations and
        maintenance (O&M) qualify as remediation expenditures?

        A15:   Yes, if the access road or O&M activity is paid or incurred in connection with the
        abatement or control of a release, threat of release, or disposal of a hazardous substance at
        the property.

        Q16:   Do state voluntary cleanup program (VCP)  oversight fees qualify as remediation
        expenditures?

        A16:   Yes, if these costs are used in connection with the abatement or control of a release,
        threat of release, or disposal of a hazardous substance at the property.

        Q17:   Can taxpayers deduct and/or depreciate the remediation expenditures under the
        Brownfields Tax Incentive if they are going to reuse the property for a park or open
        space?

        A17:   No, the taxpayer must hold the property for use in trade or business  or for the
        production of income to qualify for the Brownfields Tax Incentive.

        Q18:   How would the Brownfields Tax Incentive apply in a situation where a taxpayer
        capped soil contamination with a parking lot?

        A18:   The service costs related to the soil remediation and cap construction would be
        deductible.  The portion of the parking lot truly functioning as the cap (underneath the
        asphalt) may qualify as a deductible expense under the Incentive.

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BROWNFIELDS TAX INCENTIVE FAQs (AUGUST 2001)                                                 PAGE 6

        Q19:   Assume a responsible party settled with a state, and the state uses these
        settlement funds to conduct remediation activities over the next few years.  Can the
        taxpayer claim these expenditures under the Brownfields Tax Incentive?

        A19:   Qualified settlement funds were not addressed in the legislation.  It is unlikely that
        the taxpayer would be able to claim these expenses since the funds have already been
        turned over to the state.

        Q20:   Does the IRS plan to issue regulations listing those costs that qualify as eligible
        expenses under the Brownfields Tax Incentive and those that do not?

        A20:   No. At this point, the IRS does not plan to issue regulations about the Brownfields
        Tax Incentive.

        Q21:   What is the effective date of the tax law that triggers when a taxpayer's
        assessment and cleanup expenditures can be eligible for deduction under the Tax
        Incentive?

        A21:   The Brownfields Tax Incentive became law on August 5, 1997.  Any expenditures paid
        for or incurred on or after that date and prior to the law's expiration on January  1, 2006 , and that
        meet all other criteria, are eligible for the Tax Incentive. Please note that the geographic
        requirements are applicable only for expenses incurred between August 5, 1997 and
        December  21, 2000.

IV.     MEETING THE OWNERSHIP CRITERIA

        Q22:   With regard to the definition  of "qualified contaminated site" in Section
        198(c)(l)(A) of the Brownfields Tax Incentive, what types of uses constitute "a trade or
        business or for the production of income, or which is property described in section
        1221(1) in the hands of the taxpayer?"

        A22:   Each of these terms is a term of art in the tax world.  Generally, any property used for
        non-personal purposes will be considered qualified under this portion of the law.  Section 1221(1)
        properties are generally inventory properties or properties held by the taxpayer for sale in the
        course of his or her trade or business.

        Q23:   Does an environmental assessment paid for by a prospective purchaser of a
        qualified contaminated site qualify as an environmental remediation cost?

        A23: Generally, these costs are not eligible for the Tax Incentive since the law requires that
        the property must be "held by the taxpayer."  Taxpayers should consult with tax counsel to
        determine circumstances in which property is considered "held by the taxpayer" for
        purposes of determining whether it is a "qualified contaminated site."

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BROWNFIELDS TAX INCENTIVE FAQs (AUGUST 2001)                                                PAGE 7

        Q24:   Can investment properties and properties held by a developer for future sale
        qualify for the Tax Incentive?

        A24:   Yes. Properties held by the taxpayer for use in trade or business or for the
        production of income, including investment properties and properties held by a developer
        for future sale, can qualify for the Brownfields Tax Incentive.

        Q25:   Are properties owned by a municipality, and leased to a taxpayer, eligible for
        the Brownfields Tax Incentive?

        A25:   The answer depends upon whether the property is considered "held by the
        taxpayer." There are conceivable circumstances where a municipally owned property
        might be considered a qualified contaminated property and where environmental
        remediation costs might qualify for the Incentive.  A taxpayer who pays for remediation at
        a property for which he or she has a long-term lease (e.g., 99 years) on municipally owned
        property might qualify for the Incentive.  Taxpayers should consult with tax counsel to
        determine circumstances in which a taxpayer's property may qualify for the Incentive.

        Q26:   Are there any circumstances where leased or rented properties would meet the
        criteria "held by the taxpayer?" For example, if a historic land trust specifically
        prevents ownership and the tenant operates on repeating 3-year leases, would the
        tenancy qualify as being held by the taxpayer-tenant?

        A26:   Again, the answer depends upon whether the property is considered "held by the
        taxpayer." There are conceivable circumstances where a leased property might qualify for
        the Incentive. A taxpayer who pays for remediation at a property for which he or she has a
        long-term lease (e.g., 99 years) might qualify for the Incentive. Short-term leases,
        including  3-year leases, would probably not qualify unless there was a continuing
        commitment to renew the lease year after year. Taxpayers should consult with tax counsel
        to determine circumstances in which the taxpayer's property may qualify.

V.      MEETING THE GEOGRAPHIC CRITERIA (REQUIRED ONLY FOR EXPENSES INCURRED
        BETWEEN AUGUST 5. 1997 AND DECEMBER 21. 2000)

        Q27:   What criteria must a property meet to qualify as being located in a "targeted
        area"? (Applicable only for expenses incurred between August 5, 1997 and December 21,
        2000.)

        A27:   Section  198(c)(2)(A) of the Brownfields Tax Incentive states generally that
        properties must be located in one of the following four targeted areas to be eligible:

        •       Census tracts with poverty  rates of 20 percent or more;
        •       Census tracts with populations of less than 2,000 where more than 75 percent of the
               tract is zoned for commercial or industrial use, and the tracts are next to other
               census tract(s) with poverty rates of 20 percent or more;
        •       Federally designated EZs and ECs; and

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BROWNFIELDS TAX INCENTIVE FAQs (AUGUST 2001)                                                  PAGE 8

        •       EPA-designated Brownfields Pilot sites announced before February 1, 1997.

        Sites listed, or proposed for listing, on EPA's Superfund NPL are not eligible for the
        Incentive.

        Q28:   What criteria are used to determine whether the population in a census tract is
        "below the poverty level"?  (Applicable only for expenses incurred between August 5,
        1997 and December 21, 2000.)

        A28:   Poverty level determinations are based on data compiled and published by the
        Bureau of Census.  Determination of poverty depends upon income and family size
        (generally, families of four or more with yearly incomes below $20,000 a year are
        determined to be below the poverty level). Adjustments for regional or area variations in
        income and cost of living are not included in the nationally determined computations.

        This poverty information is publicly accessible via the Internet at several different locations:
        •       The Federal Financial Institutions Examination Council provides an easy-to-use tool for
               looking up census tract numbers for a street address  or zip code at
               http://www.ffiec.gov/geocode/default.htm.
        •       The Census Bureau provides state-by-state lists of census tracts with poverty rates of 20
               percent or more at  http://www.census.gov/ftp/pub/housing/tracts/.
        •       The Census Bureau also provides an electronic tool to look up census tracts, poverty
               rates, and other 1990 census data free of charge.  For more information, visit
               http://www.census.gov/apsd/www/censtats.html.
        •       The Census Bureau provides a consolidated list for resources that includes links to many
               of the sources listed here at http://www.census.gov/geo/www/tractez.html.
        •       Links to these and other Tax Incentive-related web sites will be  added to the EPA
               Brownfields web site (http://www.epa.gov/brownfields/) in the near future.

        Q29:   If a locality does not have zoning, can "land use"  be substituted for "land zoned"
        to meet the eligibility criteria? (Applicable only for expenses incurred between August 5,
        1997 and December 21, 2000.)

        A29:   Yes.  Generally, "land use" is the same as "land zoned," unless a non-conforming
        use is being retained. If the local jurisdiction does not use the term "zoning," the state
        agency will likely use the local equivalent to make an eligibility determination.  However,
        because zoning occurs at the local level, most states do not have zoning designations on a
        statewide basis.

        Q30:   Does eligibility apply beyond federally designated EZs and ECs?  (Applicable
        only for expenses incurred between August 5, 1997 and December 21, 2000.)

        A30:   Only properties, or portions of properties, that lie within federally designated EZs
        and ECs are eligible.  Properties  designated as EZs or ECs by state or local governments are
        not considered targeted under the Tax Incentive law.

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BROWNFIELDS TAX INCENTIVE FAQs (AUGUST 2001)                                                  PAGE 9

        The Department of Housing and Urban Development (HUD) provides an easy-to-use Internet
        tool to check whether a street address is within the boundaries of an EZ or an EC
        (http://www.hud.gov/ezec/locator/).  For a more general listing of EZ/ECs, visit
        http://www.ezec.gov/Communit/index.html.  In addition, links to these and other Tax
        Incentive-related web sites are available on the EPA Brownfields web site
        (http ://www.epa.gov/brownfields/).

        Q31:   Are all properties within the federally designated EZs and ECs eligible?
        (Applicable only for expenses incurred between August 5, 1997 and December 21, 2000.)

        A31:   Yes.  Any property within the boundaries of a federally designated EZ or EC meets
        the EZ/EC criteria.

        Q32:   What if only a portion of the site meets the EZ/EC requirement of the geographic
        criteria? Can appropriate costs be expensed for  the entire property? (Applicable only
       for expenses incurred between August 5, 1997 and December 21, 2000.)

        A32:   The EZ/EC eligibility requirement applies to remediation costs attributable to the portion
        of a property that lays within a federally designated EZ or EC.  If a property is only partially
        located within such a designated area, only remediation expenditures related to the portion of the
        property within that area will qualify for the Brownfields Tax Incentive.

        Q33:   Which of the EPA Brownfields Pilots were announced before February 1, 1997?
        (Applicable only for expenses incurred between August 5, 1997 and December 21, 2000.)

        A33:   Before February 1, 1997, EPA had announced 75 Brownfields Pilots.  The list of
        these 75 Pilots is accessible on the EPA Brownfields web site at
        http://www.epa.gov/brownfields/html-doc/list_st.htm.  In addition, contact information for
        these Pilots is accessible on the web site at http://www.epa.gov/brownfields/contacts.htm.

        Q34:   Are all properties within a Brownfields Pilot's political boundaries eligible for
        the Incentive?  Must the properties be inventoried and/or targeted by the Pilot?
        (Applicable only for expenses incurred between August 5, 1997 and December 21, 2000.)

        A34:   Only those properties within a Brownfields Pilot's political boundaries that are
        actively involved in Pilot activities meet the Brownfields Pilot criteria.  The property does
        not have to be using Pilot funds to be eligible, but must be acknowledged by the Pilot
        project manager as part of the Pilot. Most Brownfields Pilots have targeted specific areas or
        communities, and eligible properties must be in these areas. The designated Pilot project
        manager will provide a certification to the taxpayer and/or designated state agency if a
        property meets this eligibility criterion. Further, only those portions of the property that fall
        within the designated Pilot area boundaries are eligible for the Incentive.  Again, the list of
        these 75 Pilots is accessible on the EPA Brownfields web site at
        http://www.epa.gov^ownfields/html-doc/list_st.htm.

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BROWNFIELDS TAX INCENTIVE FAQs (AUGUST 2001)                                                PAGE 10

       Q35:   Is the entire state eligible for the Brownfields Tax Incentive in statewide
       Brownfields Pilots?  (Applicable only for expenses incurred between August 5, 1997 and
       December 21, 2000.)

       A35:   No. Only those properties officially recognized by the Pilot project manager as part
       of the Pilot are eligible for the Brownfields Pilot certification.  For example, Minnesota
       initially identified approximately 50 properties in its Pilot application.  Only these 50
       properties would meet the Brownfields Pilot criterion.

       Q36:   If an eligible Brownfields Pilot has expanded since its cooperative agreement was
       signed, is the expanded area eligible? (Applicable only for expenses incurred between
       August 5, 1997 and December 21,  2000.)

       A36:   No. Only properties/areas  targeted by the Pilot at the time of its cooperative
       agreement negotiations are eligible.

       Q37:   Will those Pilots  whose cooperative agreements are closed or coming to a close
       still be eligible for the Incentive?  (Applicable only for expenses incurred between August
       5, 1997 and December 21, 2000.)

       A37:   Yes.  The only requirement is that they were designated as a Brownfields Pilot
       before February 1997.

       Q38:   Does the Tax Incentive apply to a Resource Conservation and Recovery Act
       (RCRA) facility meeting all geographic and other property requirements? (Applicable
       only for expenses incurred between August 5,1997 and December 21, 2000.)

       A38:   Yes.

       Q39:   Are assessment and cleanup expenses incurred at NPL sites eligible for the
       Incentive? (Applicable only for expenses incurred between August 5,1997 and
       December 21, 2000.)

       A39:   Sites listed, or proposed for listing, on EPA's NPL are not eligible for the  Incentive.

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BROWNFIELDS TAX INCENTIVE FAQs (AUGUST 2001)                                                  PAGE 11

VI.     SECURING STATE PROPERTY ELIGIBILITY STATEMENTS

        Q40:   What are the states  doing under the new tax law?

        A40:   States address two basic requirements under the Tax Incentive. First, the law required
        that each state designate, within sixty (60) days after the law's enactment (August 5, 1997), a
        lead agency as the "appropriate state environmental agency" to handle inquiries and requests for
        property certifications from its taxpayers. The law authorized EPA to make this designation if
        states did not make it within 60 days.

        Second, the law required that states provide each of their taxpayers, upon request, a written
        statement that a specific property meets the following two elements of the "qualified
        contaminated site" requirement:  (a) the property is within a defined targeted area (applicable
        only for expenses incurred betweenAugust 5,  1997 and December 21, 2000.); and (b) there
        has been a release, threat of release, or disposal of any hazardous substance at or on the
        property.  It is expected that taxpayers will rely upon tax counsel, not their designated state
        agency, for clarification of other issues related to the Brownfields Tax Incentive.

        If contact information at the designated state agency changes, the state should notify EPA of the
        information change.  States can send updated contact information to Ellyn Krevitz Fine at EPA
        Headquarters, or contact her at (202) 566-2775 or krevitz.ellyn@epa.gov. She will make sure the
        information is kept current on the EPA Brownfields  web site. A listing of state contacts  can be
        found here: http://www.epa.gov/brownfields/stxtnctc.htm.

        Q41:   How can a taxpayer verify  that a property is eligible for the Brownfields Tax
        Incentive?

        A41:   Taxpayers need to receive a statement from  their designated  state agency (usually the
        department responsible for environmental protection) that there has been a release, threat of
        release, or disposal of any hazardous  substance at or on the property (note:  for expenditures
        between August 5, 1997 and December 21, 2000, the statement must also indicate that the
        property qualifies under the geographic criteria discussed in  Section V).  Taxpayers and/or
        their tax counsel should contact their  designated state agency to learn what documentation
        the state requires the taxpayer to submit  in order to obtain this statement.  Once the
        statement is issued, the  IRS will consider it valid for the life of the Tax Incentive. To claim
        the deduction, you need simply write "Section 198 Election" on your income tax return
        next to the line where you claim the deduction.  Any written verification received from the
        state should be maintained in the taxpayers records.

        Taxpayers can find contact information for their designated state agencies by accessing the
        EPA Brownfields web site at http://www.epa. gov/brownfields/stxtnctc.htm.  The taxpayer is
        responsible for certifying that he or she holds the property for business purposes and that he
        or  she incurred qualified environmental remediation  expenses.

        Q42:   Do the states require proof of a property's geographic eligibility?  (Applicable
        only for expenses incurred between August 5,1997 and December 21, 2000.)

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BROWNFIELDS TAX INCENTIVE FAQs (AUGUST 2001)                                                  PAGE 12

        A42:   Taxpayers and/or their tax counsel should contact their designated state agency to
        determine what documentation the state requires be submitted in order to obtain the
        property eligibility statement.  Taxpayers can find contact information for their designated
        state agencies by accessing the EPA Brownfields web site at
        http://www.epa.gov/swerosps^f/stxcntct.htm.

        Q43:    How do states verify a property's eligibility?

        A43:    Methods of verifying a property's eligibility vary from state to state.  Wisconsin, for
        example, will require that the applicant attach  a letter from the appropriate municipality
        indicating that the area meets the industrial zoning criteria.  Even if zoning information was
        available in a geographic information system (GIS) at the state level, it would be practically
        impossible to monitor because zoning is conducted at the local level and is constantly
        changing.

        Q44:    How are states designing their property eligibility statement processes?

        A44:    Several states have developed their programs to provide property eligibility statements for
        taxpayers. The Michigan Department of Environmental Quality (DEQ) serves as one example.
        Michigan attempted to develop the quickest, most cost-effective way to collect the essential
        information required to make a property eligibility  decision.  Michigan relies on taxpayers to
        verify that their properties are in a target area (applicable only for expenses incurred between
        August 5, 1997 and December 21, 2000) and that there has been a release or threat of a
        release,  or disposal, of a hazardous substance at or on the property.  Michigan has developed a
        checklist that walks taxpayers through eligibility requirements and provides guidance on the type
        of information they must submit to prove that  a property meets the established criteria. In
        addition, Michigan developed an affidavit template for taxpayers to complete and submit to the
        DEQ.  Once the taxpayer has submitted the  affidavit and supporting documents, Michigan
        conducts a quick desktop review of the materials and either declares  the property eligible or tells
        the taxpayer what sort of additional information is needed.

        Q45:    How long are state property eligibility statements valid? Will the states have to
        issue statements for sites incurring ongoing O&M  costs each year?

        A45:    Property eligibility statements are valid for the applicable life of the Incentive
        (currently scheduled to sunset on January 1, 2003). The IRS, not the  states, has the authority
        to determine whether the ongoing O&M costs are eligible remediation expenditures.

        Q46:    Can a state declare a property eligible before any work has been done on
        abatement and control?

        A46:    Yes. States are responsible for providing a statement that the geographic criteria
        (applicable only for expenses incurred between August 5, 1997 and December 21, 2000)
        have been met and that there has been a release or threat of a release, or disposal, of a
        hazardous substance at or on the property.  States are not responsible for determining
        whether or not any abatement or control activities have taken or will take place.

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BROWNFIELDS TAX INCENTIVE FAQs (AUGUST 2001)                                                 PAGE 13

        Q47:   What if a request for a state property eligibility statement identifies a
        contaminated property of which the state was not previously aware? Do properties
        identified pursuant to the Tax Incentive go on a federal cleanup "list?"

        A47:   If a state learns about a property through its property eligibility process, it may
        determine that the property warrants state involvement. EPA does not believe this will create
        a disincentive to requesting a state property eligibility statement. This does, however, raise
        the point that the taxpayers may want to gather some preliminary information on their
        property before talking to the state about it. Taxpayers can use tools available over the
        Internet, such as census data , to do  this. There is no federally maintained list of properties
        identified under the Brownfields Tax Incentive. States, however, may maintain such a list
        and may choose to refer sites of potential federal interest to EPA.

        Q48:   Can a state that requires taxpayers by law to inform the state of a release or
        threat of a release use the Brownfields Tax Incentive state property eligibility statement
        requests as a form of such notification and require  the owner to undergo cleanup?

        A48:   A state may determine, based on information provided in order to obtain a state property
        eligibility statement, that a release or threat of release warrants state involvement, including a
        state enforcement action. EPA recommends that states that plan on using submitted information
        in this manner inform taxpayers of this possibility on the property eligibility statement application.

        Q49:   How are the Tribal reservations being handled  with regard  to the Brownfields
        Tax Incentive?

        A49:   The statute does not specifically address this issue. The Department of the Treasury
        indicated that this will be handled on a case-by-case basis.

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BROWNFIELDS TAX INCENTIVE FAQs (AUGUST 2001)	PAGE 14
                                                 Other Resources


These guidelines were prepared in partnership with Department of Treasury, Department of Commerce's Economic
Development Administration, Department of Housing and Urban Development, and the Small Business Administration.
Taxpayers should also consider the following resources for information on the Brownfields Tax Incentive.
   Internal Revenue Service publications.  Further information is available in IRS publication 954, "Tax Incentives for
   Empowerment Zones and Other Distressed Communities" athttp://www.irs.gov/pub/irs-pdf/p954.pdf To
   confirm whether property or expenses are eligible for deduction under the tax incentive, taxpayers should consult with tax
   counsel. It may also be useful to consult with an environmental attorney. In addition, the identified state contacts listed
   below may provide needed technical assistance on using the tax incentive.
•   U.S. Environmental Protection Agency.  For more information, please contact headquarters at (202) 566-2777 or your
     Regional Brownfields Coordinator at: http://www.epa.gov/swerosps/bf/corcntct.htm
•   HUD's Community Connections Service.  You can receive technical assistance and printed materials on the Brownfields
   Tax Incentive by calling (800) 998-9999.
   U.S. EPA's Enviromapper. This web-based database enables a user to map various types of environmental information,
   including air releases, drinking water, toxic releases, hazardous wastes, water discharge permits, and Superfund sites.
   Enviromapper can be accessed at http://www.epa.gov/enviro/html/em/index.html.
                                  Contact List for States and Territories
                     List available on the Internet at www.epa.sov/brownfields/stxcntct.htm

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Federal  Brownfields Tax Incentive:
Alliance Environmental
West Chester, Pennsylvania	
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.
Project Highlights
      The Federal Brownfields Tax
      Incentive was instrumental in
      enabling Alliance Environmental to
      clean up and redevelop an 8.5-acre
      former landfill and pharmaceutical
      property in an economically
      distressed neighborhood of West
      Chester, Pennsylvania.

      Now the location of the Good Will
      Business Park, which encompasses
      over 100,000 square feet of retail
      space, the property supports many
      tenants including a local volunteer
      fire department, the West Chester
      Area Senior Center, and a district
      court building.

      The Federal Brownfields Tax
      Incentive provided Alliance
      Environmental with nearly
      $800,000 in tax relief.

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Project Background
Alliance Environmental is a demolition and environmental service company located in West
Chester, Pennsylvania.  In 1997, faced with the need for larger office and storage facilities, the
company was looking to expand its headquarters. The company identified a nearby, 8.5-acre
property with a building that Alliance hoped to renovate. The site's former uses included a
brick quarry, a landfill, and a pharmaceutical manufacturing facility, Wyeth Incorporated.
Wyeth had produced penicillin in the 1970s and '80s and groundwater on the property
remained contaminated from this and other activities. Before any construction  could begin,
Alliance knew that it would have to address the environmental cleanup issues associated
with the property.


Benefits of the Tax Incentive	


Once Alliance identified the contaminated property and saw its potential, the cleanup and
redevelopment process began with Alliance purchasing the property in 1998. Through a
newsletter published by a local environmental consulting firm, Alliance learned about the
Tax Incentive. In analyzing its financial options, the company realized the Tax Incentive's
value. For a small business like Alliance, the Tax Incentive was critical to maintaining
adequate cash flow during cleanup and redevelopment. Alliance was able to expense its
cleanup costs at the end of the year and receive an injection of cash as a tax refund.

Once the site was cleaned up, the existing building was renovated, and other buildings were
constructed from the ground up. The site is now home to the Good Will Business Park.
Income from leasing of the Business Park  has enabled Alliance to expand its revenue base.
The company has also expanded its scope of work from primarily asbestos abatement and
demolition work to include property cleanup and redevelopment. A combination of the
Federal Brownfields Tax Incentive and a local, municipal tax incentive program provided
Alliance with nearly $800,000 in tax relief.
Process for Utilizing the Tax Incentive
While Alliance's accountant was initially hesitant about using the then-new Federal Tax
Incentive, the company found the Incentive's application and approval process to be
straightforward. Senya Isayeff, a principal of Alliance Environmental, also found the process
to be customer-oriented and streamlined.  Isayeff obtained an eligibility statement from the
Pennsylvania Department of Environmental Protection's (DEP) web site and completed the
application in one day. Within a week, DEP had provided Alliance with a letter that approved
the site as qualified for the Tax Incentive. According to Mr. Isayeff, throughout the process,
DEP staff were committed to making the process work, and handled all inquiries with
efficiency and professionalism.

Alliance also made use of local tax incentives for the Good Will Business Park project.  In

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particular, Alliance used a municipal tax extension in Chester county called LERTA, which
offers a three-year abatement for increased value in property taxes. As a result, Alliance only
had to pay taxes on the previously determined value of the property. Alliance was also able
to use state programs to assist with brownfields restoration, which dovetailed well with the
Tax Incentive. The first was the Pennsylvania Act 2 Program, which provides indemnity to the
developer from liability issues; the second was the Pennsylvania Act 3  Program, which
provides indemnity from liability issues to lenders.
Community Impact of the Brownfields Tax Incentive
Both the community of West Chester, as well as the neighborhood around the Good Will
Business Park, have benefitted from Alliance's cleanup and redevelopment of the 8.5-acre
former brownfield. As mentioned, four new tenants have located on the Good Will Park,
bringing new commerce and services to the area. One of the new tenants, the local
volunteer fire department, now has a more central location for responding to emergency
calls. In addition, properties adjacent to and nearby the Good Will Business Park have
increased in value, which their owners attribute to the Alliance project. Within a two block
area of the Good Will property, Habitat for Humanity is constructing 17 new homes and a
12,000 SF retail strip mall was completed and occupied.

The local bank had initially expressed concern about loaning money to Alliance due to
possible environmental liability issues. The use of Pennsylvania Acts 2 and 3, along with the
Federal Brownfields Tax Incentive, eased its worries about liability. According to Mr. Isayeff,
the bank's president eventually saw the advantages of using the Federal Brownfields Tax
Incentive to clean up this property.  A precedent was set within the local lending community
that financing brownfields can be easier than originally perceived. Alliance has since
obtained financing for other cleanup and redevelopment projects in the area.  In October
2003, Alliance purchased a 13.5-acre former concrete plant. Again, the Federal Brownfields
Tax Incentive was utilized to aid in the cleanup process.
                 The new headquarters of the Good Will Fire Department.

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Continuing Success
Alliance is a proponent of the Tax Incentive and has an interest in its continued availability.
Currently, the company is proposing the cleanup and redevelopment of a 114-acre property that
was once the location of the state mental hospital. Once cleanup is completed, Alliance would
convey the property to the municipal government and have it preserved as protected
greenspace for the community to enjoy. In addition, Chester county has asked Alliance to
contact other municipalities in the area to make them aware of brownfields cleanup and
redevelopment tools, including the Federal Brownfields Tax Incentive. Without the Tax Incentive,
the brownfields cleanup and redevelopment projects in West Chester, PA may not have
proceeded. As Senya Isayeff says, "By developing brownfields, we help preserve open space
somewhere else, while also strengthening neighborhoods like this one."

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
Pennsylvania, please visit
http://www.dep.state.pa.us/dep/deputate/airwaste/wm/landrecy/Tax/tax.htm.
Federal Brownfields Tax Incentive                 Solid Waste                         EPA 560-F-05-228
Case Study                                and Emergency                           August 2005
Alliance Environmental                        Response (5105T)               www.epa.gov/brownfields

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Federal  Brownfields Tax Incentive:
Fields Environmental
Bloomington, Indiana	
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.
Project Highlights
      The Federal Brownfields Tax
      Incentive enabled Fields
      Environmental to expense
      approximately $80,000 in cleanup
      costs during the redevelopment of
      a 4-acre abandoned recycling
      center property near Bloomington,
      IN.

      The restored property, now home
      to the T.R. Thickstun Glass
      Company, includes economic and
      greenspace redevelopment.

      Upon completion of the Glass
      Company project, Fields
      Environmental initiated work on
      two other brownfields cleanup and
      redevelopment projects in and
      around Bloomington. The Federal
      Brownfields Tax Incentive has been
      a cornerstone for both projects.

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Project Background
As a small environmental cleanup business in Bloomington, IN, Fields Environmental is
constantly looking for new opportunities. In 1997, the company became aware of the Federal
Brownfields Tax Incentive through email correspondence with other environmental
consultants. Knowing that Bloomington had several brownfields, Fields saw the chance to
put the Tax Incentive to use. The company identified an abandoned site contaminated with
foundry waste from its former use as a recycling center.  In a purchase that became the first
public/private partnership to use low-interest financing under a recently enacted  state
Brownfields financing program, Fields Environmental purchased the site in a tax sale from
Monroe County.

The company then hired an environmental consulting firm to complete assessments, which
revealed the presence of some hazardous substances. In preparation for redevelopment,
Fields began a cleanup of the site that involved the removal of 60 loads of contaminated soil
and the import of more than 80 loads of new soil and clay. The property is currently home to
a commercial glass company.
Benefits of the Tax Incentive
Fields Environmental's awareness of the Federal Brownfields Tax Incentive greatly assisted its
cleanup and redevelopment operations.  Indeed, the Incentive is an invaluable tool that
allows businesses to perform cleanup and redevelopment projects, as some key expenditures
can be written off as tax breaks. Rudy Fields, the owner of Fields Environmental, stated that
the Tax Incentive "allows a little 'bump' to keep cash coming until the redevelopment occurs.
I have told so many people about the Tax Incentive and how it is really important for smaller
companies." According to Mr. Fields, approximately $80,000 in cleanup costs were able to be
expensed through the Federal Brownfields Tax Incentive.

Once cleanup on the Fields property was complete, the property was leased by the T.R.
Thickstun Glass Company, which created three new jobs. Since then, the Tax Incentive made
it economically feasible for Fields Environmental to initiate cleanup and redevelopment on
two other brownfields in the Bloomington area.
Process for Utilizing the Tax Incentive
Mr. Fields notes that it was a relatively uncomplicated process to have the Indiana
Department of Environmental Management (IDEM) certify that the property qualified for the
Tax Incentive. To certify the property, IDEM required a fully executed affidavit, including
Phase I and II reports.  Fields Environmental sent a letter and supporting documentation to
IDEM, demonstrating that the property was a qualified site. After IDEM issued the
certification, Fields was able to expense the cleanup costs associated with the project
through the Tax Incentive. According to Mr. Fields, the Brownfields staff at IDEM was also
helpful, responding efficiently to all inquiries from Fields Environmental. Utilizing the Federal
Tax Incentive proved so easy for Fields, he went on to use it in additional cleanup and
redevelopment projects.

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           Recently completed headquarters of the T.R. Thickstun Glass Company.
Community Impact of the Brownfields Tax Incentive
Along with the success of the former recycling center project, Fields Environmental's other
brownfields projects continue to offer benefits to the community. On the first of these other
projects, Fields purchased a former plating facility from a federal bankruptcy court sale.
Fields then worked with IDEM to complete Phase I and II assessments, installed four
monitoring wells on the property, and successfully used the Federal Tax Incentive for
expensing cleanup costs. The project was also assisted through a Community Development
Block Grant from the U.S. Department of Housing and Urban Development. While still in
progress, Mr. Fields believes this redevelopment project will produce new jobs when a
manufacturing or production firm chooses to locate on this soon to be cleaned up property.

The second project involved a former junkyard contaminated with lead and PCBs. Fields
Environmental purchased the site and is now conducting Phase I and II environmental
assessments. Once cleanup is complete, these costs will be expensed using the Federal Tax
Incentive. As the property is located in a lower-income area of Bloomington, the city has
taken a particular interest in the project. Following cleanup, the city plans to purchase the
property from Fields and turn it into three residential  lots.  Fields has also expressed interest
in moving his company's headquarters to an existing  building on the property. These
projects have encouraged additional redevelopment in Bloomington's distressed areas and
continue  to improve the outlook for local residents.

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Continuing Success
Fields Environmental plans to continue to use the Federal Brownfields Tax Incentive for business
opportunities that may not be possible otherwise. The Tax Incentive helps small business
owners like Fields keep cash flowing during cleanup activities. IDEM now makes other
stakeholders aware of potential brownfields property sales that they might be able to cleanup
and redevelop, further promoting the reuse of brownfields throughout the State of Indiana.
Fields Environmental continues to spread the word about the Federal Brownfields Tax Incentive
to business owners who stand to benefit from  it.

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 Indiana,
please visit http://www.in.gov/idem/land/brownfields/index.html.
Federal Brownfields Tax Incentive              Solid Waste                             EPA 560-F-05-226
Case Study                             and Emergency                                May 2005
Fields Environmental                       Response (5105T)                   www.epa.gov/brownfields

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New Markets'  "ax Credits
                                                                 Brownfields Solutions Series
                                                                                                      I
   A brownfield is a property on which expansion, redevelopment, or reuse may be complicated by the presence, or perceived
   presence, of contamination. EPA's Brownfields Program provides grants to fund environmental assessment, cleanup, and
   job training activities. Additionally, EPA seeks to strengthen the marketplace and encourages stakeholders to leverage the
   resources needed to clean up and redevelop brownfields.
   This Brownfields Solutions factsheet is intended for brownfields stakeholders interested in how the U.S. Department of the
   Treasury's New Markets Tax Credit (NMTC) Program can be used as a financing mechanism in brownfields cleanup and
   redevelopment. The NMTC Program is a development tool designed to stimulate the economies of low-income communities.
   The Program's tax credits, and the investment spurred by them, help to make brownfields projects in low-income communities
   financially viable.
   What is the New

   Markets Tax Credit

   Program?
   Successful brownfields cleanup and
   redevelopment projects turn idle
   land into thriving centers for busi-
   ness, housing, or industry. While
   brownfields are often located in
   lower-income communities, a site's
   location is not usually a deterrent in
   itself. Financing often presents the
   most significant obstacle; institu-
   tions are sometimes reluctant to
   lend money to a project with poten-
   tial environmental liability issues.
   However, the Community Renewal
   Tax Relief Act of 2000 provides a
   financing option that can benefit
brownfields cleanup and redevelop-
ment projects.
This legislation established the New
Markets Tax Credit (NMTC) Pro-
gram to promote economic devel-
opment in rural and urban low-in-
come communities.  The Program
is a federal tax initiative designed to
increase the amount of investment
capital available to business and
economic development programs in
low-income communities, many of
which are affected by brownfields.
The NMTC is administered by
the Community Development
Financial Institutions (CDFI) Fund
under the U.S. Department of the
Treasury.  The CDFI Fund was cre-
ated for the sole purpose of expand-
ing the availability of credit, invest-
ment capital, and financial services
in distressed urban and rural com-
munities. Each year, tax credits
are allocated for distribution to
certain qualifying entities through
the CDFI Fund. These qualifying
community groups are known as
Community Development Entities,
or CDEs.
Tne $15 billion, NMTC Program
provides private-sector investors
(e.g., banks, insurance companies,
corporations, and individuals) with
federal income tax credits in return
for new investments in eligible busi-
nesses, ranging from small business
startups to real estate development.
Brownfields cleanup and redevelop-
ment projects often fall under these
NMTC qualifications.

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The New Markets

Tax Credit Process
This flowchart illustrates how the
NMTC Program functions in four
stages.
First, an entity applies to the CDFI
Fund, for certification as a CDE.
Entities can apply at any time of
the year.  Once an organization is
certified as a CDE, the designation
will last for the life of the organiza-
tion as long as the CDE continues
to comply with the NMTC Pro-
gram requirements.
Once certified,  the CDE engages in
a competitive application process
for the tax  credit allocation. The
CDFI Fund evaluates NMTC al-
location applications in four areas:
business strategy, capitalization
strategy, management capacity,
and community impact. Certain
criteria also help the CDFI Fund
determine if an entity is well suited
to receive an allocation of credits.
For example, the applying entity
must indicate the percentage of
qualified, low-income community
investments that will be used to
finance activities in certain geo-
graphic areas, including brown-
fields. The higher the percentage of
applicable community  investments
indicated on the application, the
better the applicant will score under
the Community Impact section of
the NMTC Allocation  Application.
The NMTC allocation  applications
are due in the Fall with recipients
being announced the following
Spring.  If the application  is suc-
cessful, the Fund awards a tax credit
allocation to the CDE.
Third, the CDE secures investors
through the sale of stock or issuance
of an equity interest in  exchange for
those tax credits.
Finally, the CDE uses the resulting
investor equity to make investments
in low-income communities.

What is a Qualifying

CDE?

In order to qualify as a CDE, the
entity must be a corporation or
partnership that has a mission of
serving, or providing investment
capital, for low-income communities
or persons. The group must also
maintain accountability to residents
of low-income communities
through resident representation
on governing or advisory boards.
CDEs can include organizations
such as community development
corporations (CDCs), community
development financial institutions,
community development venture
capital funds, small business
development corporations,
community loan funds, specialized
small business investment
companies, and others.  These
organizations are often the catalysts
behind successful brownfields
         How do CDEs use their
         investments?

         After a CDE has received an
         allocation of tax credits, it
         can begin to receive money
         from investors. A CDE can
         use this capital to make loans
         to or investments in qualified
         businesses, invest in or loan to
         other CDEs, purchase qualified
         loans from other CDEs, or
         provide financial counseling
         to businesses or community
         residents. While all of a CDE's
         loans must be targeted to  the
         low-income area  identified by
         the CDE, there is significant
         flexibility in the types of
         businesses and development
         activities that NMTC
         investments can support.
                   Gives Credits to
   CDFI Fund
     Give credits to (against Federal Income tax)\
    Investors
 Community
Development
   Entity
   (CDE)
              stock or capital interest in
 redevelopment projects.  Both
 nonprofit and for-profit groups may
 apply to be certified by the CDFI
 Fund.  These groups are evaluated
 on the same criteria.  However, since
 nonprofit corporations cannot sell
 stock or issue equity, a for-profit
 affiliate will have to be set up in
 order to receive the tax credits.
                    Low-Income
                    Communities
                  Invests in or Lends
                 rto Qualified Active
                  Lower Income
                  Community
                  Businesses (QALICBs)
                   Which May Include
                   Brownfields
                   Redevelopment Projects
Provides Financial
Counseling & Related
Services
                  Purchases Loans
                  from CDEs
                   Which May Include
                   Community Development
                   Loans for Brownfields
                   Redevelopment Projects
                 ^Invests in or Lends
                  to CDEs
                   Which May Finance
                   Brownfields
                   Redevelopment Projects
                  A low-income community generally is a census tract with a poverty rate of at least 20%
                      or with median family income of up to 80% of the area median family income.
                                                   -2-

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How Can

Brownfields

Stakeholders Take

Advantage  of the

New Markets Tax

Credit Program?
The NMTC provides a unique
financing source for brownfields
cleanup and redevelopment.
Brownfields stakeholders have three
primary options to take advantage
of the NMTC Program.
The first option for stakeholders is
to apply to existing CDEs to fund
their projects.  Of the 2004 second
round CDE allocatees,  several have
identified brownfields redevelop-
ment as specific goals for their eco-
nomic development efforts. Brown-
fields stakeholders are encouraged
to access the CDFI Web site for the
location of CDEs in their region.
The Web site also provides profiles
of community revitalization proj-
ects the CDE is targeting and can
guide stakeholders  towards pos-
sible brownfields project financing
(http-.llwww. cdfifund.gov).
The second option is for stakehold-
ers to apply for CDE certification
themselves, apply for an allocation
of tax credits, and offer the tax
credits to potential investors. As a
certified CDE, a brownfields stake-
holder or group can best identify
which cleanup and redevelopment
projects will most help  the local
community. Although this process
may be more complex than the first
option, it is viable for entities com-
mitted to large scale or long-term
brownfields efforts.
The third option for stakeholders is
to apply and become certified as a
CDE, then apply to receive equity
financing from other CDEs, which
have an allocation of New Markets
              CDEs Investing in Brownfields Projects

  Several CDEs are exploring investments in brownfields projects, such as:
  •  Great Lakes Region Sustainability Funds LLC: This CDE will make loans
     and take equity positions in businesses and real estate projects in low-income
     communities in Illinois, Indiana, and Wisconsin. These investments will focus
     on remediating and redeveloping area brownfields. The NMTC will allow Great
     Lakes to offer new products including tenant loans, financing for brownfields
     projects, financing for lead abatement, and technical assistance to low-income
     municipalities and nonprofits.
  •  Shorebank Enterprise Pacific: In order to assist low-income communities
     in the Pacific Northwest, this CDE will subordinate debt and equity to
     environmentally sensitive commercial properties, industrial properties,
     brownfields, and community development real estate projects.
  •  MassDevelopment New Markets LLC: Four real estate development projects
     that are not only on brownfields, but of critical importance to four of the most
     deeply distressed communities in the state, will be financed by this CDE.
  •  Milwaukee Economic Development Corporation: A goal to provide "gap"
     financing for businesses located in distressed areas of the city, including
     abandoned brownfields properties.
  For more information on these or other CDEs, please visit http://www.cdfifund.gov.

Tax Credits. One of the purposes
of a CDE, as defined earlier, can be
to invest in projects of other CDEs.
Investment by one CDE in another
CDE is viable when the proceeds
are used for a qualified low-income
community investments.  This
can include funding to businesses
owned in whole or part by a CDE
or equity investment in, or loan to,
a CDE.

What are  the advantages of the
New Markets Tax Credit Pro-
gram to brownfields stakehold-
ers?
There are several advantages as-
sociated with using the NMTC
Program for brownfields project
funding. For example, a CDE can
structure a  more favorable deal than
traditional lending institutions for
brownfields properties.  Traditional
lending institutions may be more
reluctant to lend to brownfields
projects compared to projects that
are perceived as less risky due to
fewer environmental complications.
In addition, CDEs may offer loans
for pre-development on projects
that are unlikely to secure tradi-
tional funding.  Loans can be used
for pre-development activities such
as land acquisition, environmental
remediation, demolition, site prepa-
ration, construction, renovation,
and infrastructure improvements.
Brownfields stakeholders may also
apply for funding to assist with
cleanup, and additional funding for
redevelopment and construction ac-
tivities. In certain situations CDEs
can also provide technical assistance
for brownfields  cleanup.
Loans from CDEs for brownfields
projects can be structured to pro-
vide more flexibility and lower
interest rates. According to  Donna
Ducharme of the Great Lakes
Region Sustainability Fund, "CDEs
are typically willing to lend at cost
to nonprofits and government enti-
ties."  This is a direct advantage for
local or municipal government or-
ganizations managing a brownfields
project. Ms. Ducharme also notes
that CDE loans for brownfields
                                                  -3-

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       Three Ways Brownfields
       Stakholders Can Access
       the NMTC Program for
          Project Financing

     •  Stakeholders may apply to an
       existing CDE to fund their projects
     •  Stakeholders may apply for CDE
       certification and apply for an
       allocation of New Markets Tax
       Credits
     •  Stakeholders may apply for CDE


     projects are typically structured to
     allow a two-year period for cleanup.
     CDEs involved with brownfields
     cleanup and redevelopment projects
     have reported "packaging"  various
     funding sources together. Low-
     income community development
     projects may be eligible for a wide
     range of federal  and local financ-
     ing credits and incentives, ranging
     from Tax-Increment Financing to
     Community Development Block
     Grants. Funding can also be used
in conjunction with EPA Brown-
fields Grants to complete pre-devel-
opment activities such as cleanup
(http:llwww. epa.gov/brownfields).
Great Lakes and MassDevelopment
New Markets LLC cite examples
of loans including those for retail
centers, mixed-use commercial and
residential properties, cleanup of a
ground water plume on a property
to be used as a recreational-vehicle
park, and cleanup of a property to
be developed into a professional
office park.
A brownfields stakeholder that
is pursuing multiple brownfields
cleanup and redevelopment ef-
forts or projects of significant scale
can benefit from the New Markets
Tax Credits. Whether applying to
become certified as a CDE and ap-
plying for a tax credit allocation, or
applying to receive project funding
from an existing CDE, the NMTC
Program offers unique financing op-
portunities for brownfields cleanup
and redevelopment.
How do Investors Receive Tax
      Credits from a CDE?
The credit provided to the  investor
totals 39% of the investment in a CDE
and is claimed over a seven year credit
allowance period.
For example, the Fund awards a tax credit
allocation of $1 million to a CDE, which
offers the tax credit to investors. Ten
investors each invest $100,000 in return
for the tax credit.  Each  investor can
claim 5%, or $5000 annually from their
federal income tax in years one to three
of the tax credit.
In years four
through seven,
the investors
can claim 6%,
or $6000 per
year. The total
tax credit value to
the investor over
seven years is
$39,000, or 39%.
 YR1:$5000
 YR 2: $5000
 YR 3: $5000
 YR 4: $6000
 YR 5: $6000
 YR 6: $6000
 YR 7: $6000
Total: $39,000
                                                                                       Source: http://www.cdfifund.gov/docs/
                                                                                       nmtc/2005/OutreachPresentation.ppt
                                              For More Information

                    EPA Brownfields Cleanup and Redevelopment - Funding and Financing for Brownfields:
                                       http://www.epa.gov/brownfields/mmatters.htm
The Funding and Financing for Brownfields Web site provides links to additional resources, such as factsheets, guides, and other Web sites, that
                    provide information on financing issues encountered in brownfields cleanup and redevelopment.

                                Community Development Financial Institutions (CDFI) Fund:
                                                httD://www.cdfifund.aov
    The CDFI Fund Web site provides access to CDE and NMTC application materials and workshops, a map of qualified census tracts and
                                   counties, and other information about the NMTC Program.
     Brownfields Solutions Series
     New Markets Tax Credits
          Solid Waste
          and Emergency
          Response (5105T)
             EPA-560-F-05-223
                     June 2005
       www. epa. gov/brownfields/
                                                        -4-

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