Tennessee Expands Brownfields Redevelopment Incentives

Rural Brownfields Investment Act Update // February 1, 2024

(Public Chapter Number 86) effective July 1, 2023.

Communities in Tennessee have an opportunity to leverage new state legislation to redevelop blighted properties and take a step to put those properties back into productive use.

Tennessee Governor, Bill Lee, signed the Rural Brownfields Investment Act into law on March 31, 2023. The law promotes conservation of Tennessee’s agricultural, recreational, and open space lands by encouraging environmentally sound redevelopment of properties blighted by real or perceived contamination.

This legislation:

  • Establishes Tennessee’s first Brownfield Redevelopment Area Fund
  • Authorizes the Tennessee Department of Environment and Conservation (TDEC) to administer a Brownfield Redevelopment Area Grant Program (BRAG)
  • Amends brownfield redevelopment laws related to franchise and excise (F&E) tax credits and tax increment financing (TIF)

S&ME Brownfields Project Manager, Lydia Birk tells us, “This legislation provides another tool for S&ME’s Tennessee teams to partner with local community leaders and developers to assess and remediate contaminated sites, paving the way for sustainable economic growth and environmental protection for the state of Tennessee.”

The law became effective July 1, 2023, creating new opportunities to incentivize brownfield redevelopment in Tennessee including:

Grant Program Update // February 1, 2024

The legislation establishes a Brownfield Redevelopment Area Grant (BRAG) fund to be administered by the TDEC to award grants to eligible entities for the Identification, Investigation and Remediation of brownfield properties. TDEC rolled out the BRAG Grant Application Manual on Friday, February 9, providing the specific criteria that TDEC will use to evaluate and rank the grant applications for each project type. Grant applications are due by the end of April 2024. TDEC anticipates announcing grant awards in mid to late June 2024.  The available grants will cover reimbursable costs and reasonable (5%) administration expenses for the following categories of brownfields projects.

A summary of the grant categories and grant amounts include:

  • Identification: This grant will reimburse the cost to create an inventory of brownfield sites within the community. The applicant can span multiple locations for the inventory. The grant maximum is $20,000 and the contract term is 12 months.
  • Investigation: This grant will reimburse costs for conducting Phase 1 and Phase 2 Environmental Site Assessments (ESA) for a property that the local government entity would like to see redeveloped. This is particularly helpful if the eligible entity wants to obtain the property from the current owner. After assessment, the property should move into the TDEC Voluntary Brownfield Program known as the VOAP. The grant maximum is $100,000 and the contract term is 24 months.
  • Remediation: This grant will reimburse costs to contain, remove, mitigate or dispose of hazardous substances, pollutants and other contaminants or petroleum products at a brownfield property. The eligible entity must own the property to receive the grant. The grant maximum is $500,000 and the contract term is 24 months.

Tennessee’s new brownfield redevelopment grant program provides the opportunity for local governments and other eligible political subdivisions of the state to receive direct brownfields funding from the state.  Additional funding opportunities for brownfields redevelop are available through  the US Environmental Protection Agency Brownfields Grant Program, the Tennessee Valley Authority INVEST Prep Program and the Tennessee Department of Economic & Community Development Site Development Grant Program.

Franchise and Excise Tax Credit

Brownfield properties are eligible for a credit against the sum of taxes imposed by the Franchise Tax Law of 1999. Tax credits apply against an entity’s combined franchise and excise tax liability. The franchise tax is based on the greater of net worth or the book value of real or tangible personal property owned or used in Tennessee. The excise tax is based on net earnings or income for the tax. The potential F&E credit will depend if a brownfield property is located in a Tier 3 or Tier 4 county, or a Tier 1 or Tier 2 county. Read more details.

Tax Increment Financing (TIF)

TIF allocates increases in tax revenues to finance or reimburse costs associated with development projects. Read more details.

SB0271 makes several important changes to the Brownfield TIF Law:

  1. Removes the previous location restriction so that all brownfield sites are eligible, regardless of location in an urban or economically disadvantaged area (e.g., in an Opportunity Zone).
  2. Broadens the definition of “qualified costs” (i.e., costs eligible for TIF funding) to include costs of acquisition and costs of improvements to the project site.
  3. Expands the definition of “brownfield property” to include properties that have been the subject of mitigation as a brownfield project, in addition to properties that have been the subject of investigation or remediation.

Developers, local community leaders, and economic development professionals should evaluate all opportunities under the amended TIF law, F&E tax credit law, and new grant program. Read more details.

Contact Us

For more information on Brownfields services, please contact Lydia Birk at lbirk@smeinc.com.