New Oregon Brownfield Loan Program to Watch

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Schwabe, Williamson & Wyatt PC

Revitalizing Brownfields has long been considered a centerpiece for community efforts to encourage growth and development of properties impacted by contamination.  In 2021, Oregon’s Legislature passed HB 2518, which seeks to enhance Brownfield development by making forgivable loans available to assist with the cleanup of blighted properties.  

“Brownfields” are properties where “expansion or redevelopment is complicated by actual or perceived environmental contamination.” HB 2518 creates a new fund, the Oregon Brownfield Properties Revitalization Fund (“the Fund”), that will be used to provide forgivable loans for environmental work on Brownfields.  The Fund will be managed by the Oregon Business Development Department (“the Department”), and could fund 50% (up to $500,000) of cleanup costs per Brownfield site. 

Two kinds of loans are available under the new program.  The first are loans available to any Brownfield project for half of the cost of cleanup activities (up to a single-loan maximum of $250,000). 

Additional “enhancement” loans are also available for projects involving: 

  • Publicly accessible electric vehicle charging stations;
  • Affordable housing;
  • Development in rural, “distressed,” or high poverty areas;
  • A designated permanent natural area or public park on at least half the Brownfield;
  • A hospital or health care facilities in communities with “unmet healthcare needs”; and 
  • Sites that are Brownfields because of wildfire.

“Enhancement” loans also pay for 50% of cleanup costs (up to an additional maximum of $250,000).  Therefore, the total loan amount available to any project under the Fund (including “enhancement” loans) is $500,000. 

Applicants for loans must enter into some sort of agreement with the Department of Environmental Quality (DEQ) related to the property. This agreement could be as informal as a cost-recovery agreement to pay DEQ’s oversight expenses, or as formal as a Consent Judgment filed with a Circuit Court outlining DEQ’s expectations for a cleanup. And presumably, the program would apply to parties that purchased a property under DEQ’s Prospective Purchaser Agreement program.  

If the loan application is approved, loan forgiveness is mandatory when the cleanup is done properly and the applicant has not otherwise been reimbursed for costs from other parties, such as an insurance company or responsible third parties. Any loan amounts not forgiven can be repaid over five years at an interest rate matching the current primary credit rate set by the Fed. 

Although HB 2185 went into effect on September 25th, the Department still needs to promulgate rules to implement the program. Public comment on such rules is expected to begin in December, and implementing rules are anticipated in early 2022. Those rules 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 a very popular program. Whether it will fulfill its intended purpose of driving development to contaminated properties in a hot real estate market remains to be seen. But, for parties looking for some relief on the often expensive prospect of cleaning up legacy contamination, the Fund provides a welcome source of potential resources to assist with those efforts.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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