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3 colleges say they’re owed $17m in tax credits

A trio of colleges and universities is suing the Massachusetts Department of Revenue, claiming the state agency unfairly denied them millions of dollars in tax credits for environmental cleanup work done on contaminated properties.

In a complaint filed this month in Superior Court, Northeastern University, Boston University, and Wellesley College said the state essentially changed its own rules when it rejected the schools’ applications for the credit.

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“The university has incurred expenses to clean up environmental contamination,” BU spokesman Colin Riley said. “The statute says the university is entitled to apply for and receive the tax credit.”

The Department of Revenue declined to comment, noting that it has not yet filed its response to the complaint with the court.

The lawsuit centers on the state’s Brownfields Tax Incentive program, which offers tax credits to property owners who perform environmental cleanup work on former commercial and industrial properties left contaminated by the previous occupants. The credits are worth between 25 and 50 percent of the costs incurred in the cleanup.

In 2012, the latest year for which data are available, the state issued $17.8 million in brownfields tax credits. In 2011, $51.4 million in credits was issued.

The program was created in 1998. In 2006, the Legislature amended it to allow nonprofit organizations, such as colleges and universities, to claim the credit. Nonprofits do not pay taxes, but they can claim these credits and sell them to companies or individuals looking to reduce the taxes they owe in Massachusetts.

Northeastern had applied for $6.4 million in credits, related to the redevelopment of the western side of the campus, said Daryl Lapp, a lawyer at the Boston firm Edwards Wildman, which is representing the three schools.

BU applied for $4.4 million in credits following its cleanup of properties along Commonwealth Avenue, an area once home to many car dealerships and service stations.

Wellesley requested $6.25 million in credits for environmental improvements made along Lake Waban on the site of a former paint factory.

The schools applied in late 2012 and early 2013. They included in their calculations costs incurred before the law was changed in 2006, under the belief that these expenses would be eligible for the credit.

Other nonprofits — at least eight, according to the complaint — had successfully claimed the credit for work conducted in that period.

In November 2013, however, the state issued a directive specifying that nonprofits may not claim the brownfields credit for work started before June 24, 2006. Shortly thereafter, the three schools were informed their applications had been denied. They appealed, but the Department of Revenue upheld the rejections.

The lawsuit calls the 2013 decree a contradiction of the law’s intent and “an unlawful retroactive change in long-standing department policy.”

The complaint was filed Aug. 18. The state has until Nov. 17 to respond.

Sarah Shemkus can be reached at seshemkus@gmail.com.
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