Legislation that provides a new way to spur redevelopment with obsolete or contaminated properties could be passed by the Iowa Senate by the end of the week and head to the governor’s desk.

New tax credits for two types of properties, grayfield and brownfield sites, are being debated at the Capitol. Brownfield sites, are defined in the bill as properties that are complicated by real or perceived environmental contamination; and grayfield sites, which need to meet an array of different requirements, are defined as properties that are 25 years or older and are vacant, obsolete or underutilized. Properties in both categories could get a redevelopment boost from the state.

“Basically in a nutshell, the brownfield and grayfield tax credits have been set up to make redevelopment more economically feasible in urban areas,” said Jay Byers of the Greater Des Moines Partnership, who has worked on the bill.

Byers said the tax credits are based on a tiered system. Brownfield sites could receive credits equaling 24 to 30 percent of the taxpayer’s qualifying investment; and grayfield sites could receive credits equaling 12 to 15 percent of the taxpayer’s qualifying investment, with the level of credits depending upon the amount of green development involved in the project.

The bill, which passed the House 98-2 on April 17, would be the first legislation in the nation to provide tax credits for grayfield sites.

“We are very excited that we’ve gotten as far as we have already, to be honest.” Byers said. “In many ways it’s a real revolutionary approach to dealing with issues of redevelopment and trying to make redevelopment more competitive in terms of getting more properties back on the tax rolls.”

The program would be capped at $3 million from the state. The final language of the bill is still in a subcommittee at the Capitol. The Greater Des Moines Partnership has been working in conjunction with the Downtown Community Alliance, the city of Des Moines, the Professional Developers of Iowa, the Iowa League of Cities and other metro areas in the state on the new set of tax credits.

“We have really strong support,” Byers said. “There is no one I am aware of that is registered against the bill; right now it’s just dealing with the budget.”

The grayfield tax credits will differ from the historic tax credits that are already available. Byers said projects have to be on the National Historic Register of Historic Places to receive historic tax credits, along with meeting other requirements. The grayfield tax credits will include projects that might not qualify for historic tax credits.

Tim Leach of the Downtown Community Alliance sees a lot of applications for Des Moines if the tax credits are made into law. Leach points to the proposed redevelopment of Walnut Street as an example of where the new tax credits could be applied.

“All of the developers that have looked at it see the cost of development and so much market risk it needs some sort of tax credits,” he said. “These new tax credits could be the tool to break it loose.”

Byer added that there is a brownfield program in Iowa that has existed for a while, but said it’s severely underfunded. In the last couple of years it has received only $500,000 and the money has gone to communities for cleanup, he said. The proposed tax credits would not be related to the current program.