Earlier this year, the New Jersey Economic Development Authority (“NJEDA”) launched a Brownfields Loan Program (“Loan Program”) which offers loans in amounts ranging from $100,000 to a maximum of $5 million to be used towards the remediation and development of brownfield sites across the state.
The Loan Program is open to potential brownfield site purchasers and current brownfield site owners intending to develop commercial, retail, mixed use developments, expansions or reuses. The parties must: (1) not have contributed to the contamination at the site; (2) be able to demonstrate a path to site control; (3) provide a letter of support from the mayor of the municipality in which the site is located; (4) provide owner equity equal to a minimum of 10% of the appraised value of the property in a remediated state. The project must be economically feasible and demonstrate a funding gap, or that other financing is unavailable. The applicant must have a plan for reuse of the remediated site, and the remediated property must have an appraised value equal to or greater than 100% of all debt financing, including financing through the Loan Program.
Loans have a base interest rate of 3% and a ten-year term. Principal and interest payments are to be deferred for the first two years, during which time interest will accrue. Interest-only payments are to be made in years three and four, with full amortization of the principal balance for the remaining term.
Loan funds can be used for environmental investigation, remediation, hazardous material and waste disposal, long-term groundwater monitoring, and engineering and institutional controls, among other uses. Prevailing Wage and Affirmative Action requirements apply both to the remediation project and the redevelopment project, including subcontractors.
Why Do You Need To Know About This?
If you are a brownfield site owner or a prospective brownfield site purchaser, the Loan program could help finance some of your redevelopment costs. The New Jersey Economic Development Authority (“NJEDA”) is still accepting loan applications until April 13, 2021.
Loan amounts will be determined based on a competitive point system detailed in a checklist available on the EDA’s website. The checklist appears to prioritize projects which will create new small businesses, new residential uses, or foster innovation, such as life science, clean energy, and advanced manufacturing. Additional points are also awarded to developers with experience in conducting revitalization projects, and applicants that have strategic partners with a demonstrated history of successful completion of projects of a similar size and scope.
What Should You Do Now?
If you are looking to take advantage of EDA’s Brownfields Loan Program, start gathering the required submission materials detailed in the EDA checklist in preparation to submit by April 13, 2021. Information used in support of Parts 1 and 2 of the checklist must be submitted by April 13, 2021. The application fee is $2,500, the commitment fee is 0.875% of the loan amount, and the closing fee is 0.875% of the loan amount.
The Loan program presents complex legal issues relating to land use, financial transactions, and environmental law. If you have questions about the Loan program, please contact Robert S. Baranowski at firstname.lastname@example.org or Natalia P. Teekah at email@example.com.