New York Overhauls Brownfields Effort
On April 13, 2015, New York Governor Andrew M. Cuomo (D) signed legislation April 13 to revamp the state’s Brownfield Cleanup Program (BCP), extending it for 10 years and changing the terms of the program’s tax credits (S. 2006), thus, confirming the BCP is here to stay. The bill scales back the program’s tangible property tax credit, limits the remediation tax credit to the actual cleanup costs for remediating a site and amends the statutory definition of a brownfield (46 ER 1044, 4/3/15). It also establishes a fast-track option to provide a liability release without tax credits for certain sites and expands eligibility for the program from sites that are classified as Class 1 under the state superfund program to include Class 2 sites and sites covered by the Resource Conservation and Recovery Act.
According to The National Law Review1, the limit on “tangible property” tax credit, which is the credit based on a percentage of the cost of constructing a new development on a Brownfield site, to (i) properties located in an environmental zone, (ii) properties to be utilized for affordable housing, or (iii) “upside down” properties – where the remediation of the property is projected to cost more than the value of the remediated property will apply only to properties located in New York City. In other words, outside of New York City, eligibility for the tangible property tax credit will remain available to all developers that otherwise qualify under the BCP, as per existing law. There is now a fourth category of properties eligible for the tangible property tax credit for underutilized properties and the criteria for upside down properties was changed so that a property can qualify if the remediation is project to cost over 75 percent, rather than 100 percent) of the value of the remediated property. There still remains significant tax incentives to developers seeking remediation and redevelopment of contaminated sites.
Briefly, other changes are summarized below.
- All sites currently in the BCP and any site admitted prior to December 31, 2022, will be eligible for tax credits if obtain Certificate of Completion (COC) by March 31, 2026.
- Sites admitted on or after the later of July 1, 2015, or the date on which the New York Department of Environmental Conservation (DEC) proposes regulations defining “underutilized” will be subject to newly-enacted limits on tangible property (development) credits.
- Sites admitted prior to June 23, 2008, are “grandfathered” into the existing tax credit scheme if obtain COC by December 31, 2017.
- Sites admitted from June 23, 2008, until the later of July 1, 2015, or the date on which the DEC proposes regulations defining “underutilized” will be “grandfathered” if obtain COC by December 31, 2019.
- Applicants will not be able to count expenses of foundations that exceed the cost of cover system requirements under applicable regulations.
- Qualifying sites that are in Environmental Zones or Brownfield Opportunity Areas, achieve Track 1 cleanup standards, provide affordable housing, or are used primarily for manufacturing activities will see development credits increased.
- “Brownfield site” will be newly defined as a site which has contamination in excess of standards set by DEC based on the reasonably anticipated use of the property.
- Sites willing to forego tax credits can pursue a new, streamlined cleanup program.
- RCRA Class 2 (significant threat) sites will be eligible for entry into the BCP if being cleaned up by a Volunteer (a party not responsible for the original contamination) and DEC has not identified a viable responsible party who can pay for the cleanup.
- Fees can be waived or negotiated for:
- DEC oversight fees waived for Volunteers.
- DEC is authorized to negotiate reasonable flat fee arrangements for other BCP participants.
- State hazardous waste disposal taxes and fees waived for U.S. Environmental Protection Agency or court-ordered cleanups under the federal Superfund law.
- State hazardous waste disposal taxes and fees waived for cleanups under written agreements with a municipality having a memorandum of agreement with DEC.
Text of the bill is available at http://open.nysenate.gov/legislation/bill/S2006B-2015.
1Authors Steven C. Russo and Robert M. Rosenthal, Greenberg Traurig, LLP posted Tuesday, March 31, 2015 to http://www.natlawreview.com/article/new-york-lawmakers-agree-brownfield-law-extension-less-drastic-changes-to-tax-credit