The Florida Brownfields Association (“FBA”) announced the formation of a coalition to encourage the Florida Legislature to clear out the backlog of existing Voluntary Cleanup Tax Credits. If FBA and its partners are successful, the reduced backlog could incentivize more property owners to enter into voluntary cleanup agreements (“VCAs”) to transform impacted sites into productive, developable land.
One of the main vehicles used to encourage the voluntary cleanup of contaminated sites is the VCTC program, which applies to sites impacted with solvents from dry cleaning operations, and to designated brownfield sites.
To take advantage of the program, the property owner enters into a VCA with the State to conduct the cleanup in accordance with a plan approved by the Florida Department of Environmental Protection (“FDEP”). The program entitles the property owner to protection from liability for remediation of the contaminated site, so long as the property owner conducts the site assessment and cleanup as required by the VCA and does not deny FDEP access to the site. Upon completion of a successful cleanup in accordance with the approved plan, FDEP will issue a site rehabilitation completion order, indicating that no further action is required.
In addition to the state law liability protections afforded to a property owner who voluntarily cleans up a contaminated site, Florida law also provides for a tax credit for the voluntary cleanup. The VCTC applies against the state corporate income tax for up to 50 percent of the eligible remediation costs.
Notably, the tax credit program is subject to a statewide cap of $5 million per year. If an eligible applicant is denied the credit in one year because the statewide cap has been reached, the applicant can attempt to receive the credit the following year. Currently, there is a $10 million VCTC backlog, meaning that property owners are waiting approximately two to three years to be awarded tax credits for cleanup costs incurred.