Costs rise. Leverage tightens. The schedule slips. The equity check grows and returns compress—until neither the lender nor the sponsor can justify saying yes.
That’s the point where you stop arguing over line items and start asking if there’s any outside money that changes the math. In many cases, Brownfield credits can. When a site qualifies, they turn certain site costs into refundable value. And because eligibility often shows up in diligence, good sponsors check early—even when a property looks clean at first glance.
So, which properties are eligible for a Brownfield, how do these credits work, and when does a broken piece of real estate stop being a deal-killer and start becoming an opportunity?
What Is a Brownfield?
The Environmental Protection Agency (EPA) defines Brownfields as “real property where expansion, redevelopment, or reuse is complicated by the actual or potential presence of hazardous substances, pollutants, or contaminants.” These sites are often former factories, warehouses, dry cleaners, gas stations, or industrial yards.
Brownfield laws are meant to get stalled properties back into use. Governments understand that without incentives, many contaminated sites would sit vacant forever. At the state level, New York’s Brownfield Cleanup Program (BCP) is one of the most robust examples. The program offers refundable tax credits tied to both cleanup and redevelopment costs. Depending on the project, credits can reach up to 50% of qualified remediation expenses and up to 24% of qualified construction costs. In 2022, the program was extended: sites may be accepted through December 31, 2032, and must receive a Certificate of Completion by December 31, 2036. Since 2003, over 715 sites have been redeveloped through the BCP.
At the federal level, there are additional levers—but they work differently than New York’s refundable credits. Section 198 is an accelerated deduction: it lets you expense certain remediation costs immediately instead of capitalizing them, which can improve early-year cash flow if the project has taxable income to shelter. Separately, the Inflation Reduction Act’s “energy community” rules can treat certain Brownfield sites as eligible for bonus clean-energy credits on projects like solar and storage; those credits may be transferable, which can increase their usable value. These federal tools don’t replace state Brownfield credits—they address different parts of the tax and financing equation.
How Brownfield Credits Change a Developer’s Math
For developers, environmental remediation can be expensive and unpredictable, with costs due upfront, often before construction even begins. Tax credits help absorb that cost and stabilize project returns.
Morris Betesh, Managing Partner at Arrow Real Estate Advisors, a firm that sources debt and equity for developers nationwide, explains that these credits are now a significant part of the overall project calculation. “The primary beneficiary of a Brownfield credit is the property owner; the credit flows through to him,” Betesh explains. He notes that while the construction company incurs the initial costs, they typically cannot access the credits directly.
The “Golden Mean” Projects
In Betesh’s experience, developers seeking support from Brownfield credits rarely pursue sites with massive environmental issues. “The less severe the contamination, the higher the value of the credit,” Betesh observes.
The most common, and often most profitable, use case is when remediation is largely aligned with work the project already requires, such as excavation, soil hauling, or addressing a small, older spill.
Betesh provides an example. “Say a site requires a deep excavation to accommodate a parking garage. The developer may need to dig to allow for multiple underground levels. He can apply for a credit for remediation — the removal of the dirt — most of which he would have been removing anyway. Even if he must excavate hundreds of additional cubic yards of soil to get past the contamination, and dumping the refuse will be more costly, he’s doing the bulk of the job anyway. Incrementally, the cost is not much higher. And he could be looking at a multi-million-dollar credit, making it very worthwhile.”
Because remediation is so common in New York City, he notes, lenders often treat it as a routine part of large construction projects; extensive environmental studies are typically completed before a loan closes, which helps reduce the odds of true surprises.
In New York’s program, the Brownfield benefit is a refundable tax credit—meaning it can generate cash even when the project has little or no tax liability to use it. That matters in real estate, where entities often show early-stage losses and ownership can be complex. In practice, refundability turns the credit into a financing tool, not just a tax attribute.
Critically, these incentives are about more than just money — they influence how developers evaluate risk. They expand the range of sites that can support investment for developers, and steer capital toward properties that would otherwise remain overlooked, while still delivering competitive returns.
Downsides and Constraints
Brownfield credits can be powerful, but they are not simple, and they are not guaranteed.
The regulatory process is demanding; entry into state programs requires environmental investigation, agency approval, and ongoing compliance. Timelines can stretch, and delays can ripple through construction schedules and financing commitments.
The credit structures are also technical and time sensitive. In New York, for example, credit calculations vary depending on when a site entered the program, and legislative changes have altered benefit levels over time. Misunderstanding these rules can materially affect projected returns.
Remediation risk never disappears entirely. Unknown contamination can surface mid-project, increasing costs beyond what credits were designed to offset. However, Betesh says, pre-closing environmental work usually clarifies the contamination level and planned scope, but unexpected conditions can still disrupt budgets and schedules.
Finally, not every site qualifies for a Brownfield credit. Many sites fall outside the rules, and the definitions governing energy community status, allowable expenditures, and documentation leave little room for flexibility. These credits favor developers who prioritize thorough planning and work with experienced advisors; taking shortcuts in the documentation process usually leads to complications.
From Liability to Leverage
Brownfield tax credits reflect a policy shift: contaminated land is no longer a permanent scar but a solvable problem when developers have the right tools.
State programs like New York’s BCP remain stable through the 2030s. Federal clean energy incentives, however, now carry hard deadlines. For renewable projects, the window is closing fast, and construction must begin by mid-2026 to capture Inflation Reduction Act (IRA) benefits.
Opportunities exist across residential, commercial, and renewable sectors. With the right combination of state credits and federal deductions, remediation shifts from liability to leverage.
In a market where clean sites grow scarcer and pricier, Brownfield credits unlock value that others overlook. The challenge is distinguishing truly broken sites from undervalued ones and knowing when to move quickly before the opportunity has passed.
This material has been prepared for informational purposes only, and is not intended to provide or be relied upon for legal or tax advice. If you have any specific legal or tax questions regarding this content or related issues, please consult with your professional legal or tax advisor.
