On April 9, 2019, the New Jersey Economic Development Authority (NJEDA) authorized the creation of a revised Brownfields Loan Program (the "Program") to provide low-interest financing to borrowers in an effort to facilitate remediation of vacant or underdeveloped brownfields sites and return such sites to full and productive use, particularly in the under-served communities within the State. The Program is an expansion of the NJEDA's existing Brownfields Loan Program.
The Program will only provide financing for the remedial aspects of a project, and can be applied to a variety of different costs associated with the remediation process, including site investigations, assessments/proposals, and costs of the physical remediation, including work within a building and structural considerations (i.e. asbestos removal in connection with demolition of a building). All proposed projects must include a redevelopment plan for the reuse of the to-be remediated site in order to be considered eligible for the Program. The accompanying redevelopment plans must be for the development of commercial space, and can include manufacturing, retail, mixed-use developments, or expansions of existing uses. For approved projects, the Program will make financing of up to $5,000,000 available. The minimum Program loan amount is $100,000.
Funding is made available through competitive application rounds, and projects that meet the base eligibility described above will then be scored by NJEDA staff in accordance with the specific details of the brownfields site and/or the proposed redevelopment project. Generally, these considerations will include the site location, the length of time the site has been vacant or underutilized, and the quality of the proposed redevelopment plan and its alignment with the local municipality’s overall redevelopment agenda. Funding priority will be determined by the projects that receive the highest scores from NJEDA staff, and the proposed projects must meet a minimum threshold score in order to remain eligible for funding.
To qualify, borrower/applicants must provide owner equity equal to a minimum of 10% of the appraised value of the property after it has been remediated; it must be able to demonstrate site control or a path to site control; and also must include a letter of support from the mayor of the municipality in which the proposed site is located. Parties responsible for contamination of a brownfield site or which are related to a party responsible for contamination of a brownfield site are not eligible for financing under the Program. Moreover, applicants that have indemnified a party responsible for contaminating the brownfield site are ineligible to apply.
Interest Rates; Other Considerations
The Program will include a standard fixed interest rate of 3% for projects that meet the base eligibility requirements. However, NJEDA may, upon review of the proposed redevelopment plans, reduce the interest rate for a project if the redevelopment project demonstrates a commitment to certain community development goals, including mixed-use residential development with an affordable housing element, provisions of food sources in urban "food deserts", primary health care services, tourism projects that support a specific destination, electric vehicle charging stations, and incubators/collaborative workspaces that aid in economic growth and development.
Parker McCay's business, corporate and project finance attorneys have experience in advising clients on utilizing economic development programs designed to foster economic growth throughout the region. If you have questions regarding NJEDA's expanded Brownfields Loan Program, please contact our Corporate Department.
The content of this post is for informational purposes only and should not be construed as legal advice or legal opinion. You should consult a lawyer concerning your specific situation and any specific legal question you may have.