OP-ED: Oregon Law Creates Loan Program to Spur Cleanup Projects
Revitalization of brownfields has long been considered a centerpiece of community efforts to encourage growth and development of properties impacted by contamination. But the additional complexity and cost of addressing pre-existing contamination often sinks projects that might otherwise have positive economic and development potential. This is especially true inside Oregon’s urban growth boundaries.
In 2021, however, the Oregon Legislature passed HB 2518, which seeks to facilitate property development that otherwise might not happen due to environmental issues. The law makes forgivable loans available to assist cleanup of blighted properties with the purpose of enhancing development on brownfields.
Brownfields are properties where “expansion or redevelopment is complicated by actual or perceived environmental contamination.” HB 2518 creates the Oregon Brownfield Properties Revitalization Fund, which will be used to provide loans for environmental work on brownfields. The fund will be managed by the Oregon Business Development Department, and could provide up to $500,000 for cleanup costs per brownfield site.
Two kinds of forgivable loans are available under the new program. The first kind is available to any brownfield project. Such loans would cover up to one half of the cost of cleanup activities up to a maximum of $250,000. For example, if cleanup costs were $400,000, half of that amount could be forgiven under HB 2158.
Supplemental “enhancement” loans up to $250,000 are available in addition for certain projects the Legislature sought to prioritize. These dollars are available for projects involving:
Like the primary loans, these “enhancement” loans also cover one half of qualified costs spent to clean up a site. Combined, the two available loans can cover up to $500,000 in cleanup costs.
To receive funds, applicants must enter into an agreement with the Oregon Department of Environmental Quality related to the property cleanup. This agreement could be as informal as a promise to pay DEQ’s oversight expenses (known as a “cost recovery agreement”) or as formal as a “consent judgment” filed with a circuit court outlining specific expectations from DEQ for the cleanup of a particular site.
Under the law, there are very few technical requirements to overcome in order to qualify for the loans, other than meeting the underlying purpose of redeveloping a brownfield. If the Oregon Business Development Department approves the loan application, loan forgiveness is mandatory as long as the cleanup is done properly and as promised, and the applicant will not otherwise be reimbursed for the same costs, such as from an insurance company or other third parties. Any loan amounts not forgiven must be repaid over five years at an interest rate matching the current primary credit rate set by the Fed.
Although HB 2518 went into effect on Sept. 25, 2021, the Oregon Business Development Department still needs to draft rules to implement the program. The department intends to first put into place temporary rules, which are anticipated to be ready in the first quarter of 2022. Final rules will follow, although the timeline for completing those is murkier. The rules will likely clarify such things as loan application procedures, electric vehicle infrastructure plan requirements, and whether projects covered under other development-friendly programs (like DEQ’s prospective purchase agreement program) will qualify for funding. The rules also will include provisions to encourage participation in the program by minority- owned, women-owned, and emerging small businesses.
The Oregon Brownfield Properties Revitalization Fund is almost certainly destined to become very popular. Whether it will fulfill its intended purpose of driving development of contaminated properties in a hot real estate market remains to be seen. But for parties looking for some relief from the expense of cleaning up legacy contamination, the fund is a welcome source of potential resources.
This article summarizes aspects of the law and does not constitute legal advice. For legal advice for your situation, you should contact an attorney.
Column first appeared in the Oregon Daily Journal of Commerce on January 14, 2022.
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