Federal Omnibus Funding Bill: BUILD Act Brings Good News for Brownfields

“For years policy brownfielders have lobbied for a brownfield authorization and modernization. Over a similar period, the Federal Reserve has begged for fiscal stimulation. The 2018 omnibus bill gave us both.” ~Dan French, CEO, Brownfield Listings, LLC

On Friday, March 23rd, President Trump signed the Consolidated Appropriations Act of 2018 into law. The “2018 Omnibus Bill,” as its name suggests, is a sweeping spending measure that implements a wide range of funding and policy changes across all levels of government. Within the 2,000+-page document are promising developments for any environmental professionals whose business supports the assessment and redevelopment of brownfields.

At last May’s EDR PRISM conference in Charlotte, Dan French, CEO of Brownfield Listings, LLC, opined on what the Trump Administration may mean for the future of brownfields spending. But that was back when we could only speculate about how federal spending bills would shake out. Last week we got more certainty. Lucky for us, French saved us the trouble of sifting through the massive omnibus bill, specifically its Brownfields Utilization, Investment and Local Development Act of 2018 component—or the 2018 BUILD Act, to find out exactly what the $1.3 trillion spending plan means for opportunities in the brownfields sector. The good news is that the BUILD Act:

  1. More than doubles funding for the brownfield program to:
    1. $200 million appropriated each FY through 2023; and
    2. an additional $50 million per year for state response program funding (see chart).
  2. Incentivizes clean energy development on brownfields and revitalization of waterfront sites.
  3. Expands the eligibility for brownfield grants for nonprofit organizations to include certain nonprofit organizations, limited liability corporations, limited partnerships and community development entities.
  4. Increases the funding limit for remediation grants to $500,000 for each site (with some exceptions for higher funding), and authorizes multi-purpose grants up to $1 million, which provide greater certainty for long-term project financing.
  5. Relieves state and local governments from liability under certain circumstances if they own a contaminated site, but did not cause the contamination.

“Through the omnibus bill, the 2018 BUILD Act sets a new, reliable course for the U.S. redevelopment space for the next 5 years at least. More than doubling down on a program proven to leverage nearly $18 for every public dollar invested seems like a prudent investment, especially at a time of such tremendous evolution in real estate. Brownfield redevelopments are perpetually starved for capital, so additional public seed funding (via site assessment, testing and cleanup) will help feed deals. And additional public capital is particularly helpful in the brownfield space because these grants help accomplish early-stage critical path due diligence tasks that make it possible for public and private sector dealmakers to then assemble normal capital stacks that would otherwise be unfinanceable.” ~Dan French, CEO Brownfield Listings

Worth Noting

The omnibus bill codified into law concepts that have been negotiated for many years—the end result of specific compromises among various brownfield bills that made their way to Capitol Hill. Ultimately, bipartisan consensus “rejected many of the cuts originally proposed by the Trump administration’s prior budgetary proposals,” and increased funding to priority national investments.

With a special carve out, the 2018 BUILD Act officially supports the market’s trend toward waterfront redevelopment and renewable energy development—“two of the hottest segments at the forefront of redevelopment activity today and for the foreseeable future.”

The hope is that a new proactive redevelopment era of brownfield redevelopment has begun. Many of the BUILD Act’s policy changes will have lasting effects, particularly for proactive municipalities, nonprofits, CDCs and even (some) private developers. These entities received something even better than additional brownfield capital—bona fide purchaser liability protection. Granting liability relief to states and municipalities acquiring contaminated property clears the way for cities to take action and acquire properties without fear of taking on environmental liability. This could unleash more activity redeveloping legacy sites at the local level, especially in smaller cities.

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NOTE TO READERS

EDR Insight wishes to thank Dan French, Founder/CEO of Brownfield Listings for granting permission to share out BL’s timely analysis of this complex spending package with exciting implications for opportunities in the site assessment and redevelopment space.