Tennessee Expands Brownfields Redevelopment Incentives

SBO271 Legislative Summary

Tennessee Governor, Bill Lee, signed SB0271 into law on March 31, 2023.  SB0271 has been assigned Public Chapter Number 86 by the Secretary of State.

This legislation:

  • Amends brownfield redevelopment laws related to franchise and excise (F&E) tax credits and tax increment financing (TIF).
  • 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

S&ME Environmental Service Line Leader, Sam Watts, tells us, “Brownfields incentives promote conservation of the state’s agricultural, recreational, and open space lands by encouraging environmentally sound redevelopment of urban properties blighted by contamination.  This legislation provides another tool for S&ME’s Tennessee teams to partner with developers, and local community leaders, to assess and remediate contaminated sites, paving the way for sustainable economic growth and environmental protection for the state of Tennessee.”

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

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.

Grant Program

SB0271 also establishes a Brownfield Redevelopment Area Fund to be administered by the Tennessee Department of Environment and Conservation (TDEC). TDEC will use the fund to award grants to eligible entities for the remediation costs and reasonable administrative expenses related to brownfield redevelopment.

Tennessee’s new brownfield redevelopment grant program provides the opportunity for developers to receive direct brownfields funding from the state rather than through the US Environmental Protection Agency.

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

Contact Us

For more information on environmental services, please contact Sam Watts at swatts@smeinc.com.