Growing Backlog of Tax Credits Owed to Cities

FDEP received record-breaking number of state Voluntary Cleanup Tax Credit applications, highlighting need to address $10M VCTC backlog

FEBRUARY 14, 2014 – The Florida Department of Environmental (“FDEP”) received a record- breaking number of Voluntary Cleanup Tax Credit (“VCTC”) applications for the 2013 cycle for environmental work performed at Brownfield sites across Florida. The record number of VCTC applications demonstrates both the strength of Florida’s Brownfield program but also the need to reduce the substantial backlog of VCTC tax credits approved but not yet issued by the State.

FDEP received 68 applications for VCTC tax credits at Brownfield sites, requesting approximately $6.98 million. Overall, 79 total VCTC applications were submitted and $7.98 million sought, an increase over the total 68 VCTC applications received last year and the more than $6 million sought. The annual VCTC application period ended in January 2014. The VCTC program has an annual state funding limit of $5 million.

“The record number of applications and the amount of tax credits requested demonstrates the success of the VCTC program in attracting parties to voluntary cleanup and redevelop Brownfield sites in Florida. However, as a result of the funding backlog, Brownfield redevelopers completing cleanup activities in 2013 may have to wait until July 2017 or 2018 to receive the tax credits” said Florida Brownfields Association President Michael Sznapstajler. “The Florida Brownfield Association supports legislative efforts designed to reduce the backlog of pending tax credits.”

If FDEP approves more than $5 million in tax credits in a given year, the excess is paid out of the following year’s $5 million funding allocation. Due to the amount of eligible Brownfield cleanup activities exceeding the $5 million annual limit, there is currently a backlog of over $10 million for previously approved tax credits.

The VCTC program provides parties that voluntarily enter into a Brownfield Site Rehabilitation Agreement (“BSRA”) the opportunity to apply for Florida corporate income tax credits equal to a portion the costs to complete cleanup activities at a Brownfield site. When received, the tax credits are transferrable, which allows entities that do not have Florida corporate income tax liability, including non-profits, local governments, and small businesses, to recover portions of their environmental cleanup costs.