11 WAYS TO REFORM
THE NEW YORK STATE
BROWNFIELD CLEANUP
PROGRAM
David J. Freeman
Gibbons P.C.
February 19, 2015
Newark
New York
Trenton
Philadelphia
Wilmington
BACKGROUND
Tax credits sunset as of December 31, 2015
Governor, Senate, Assembly proposals in 2014
No consensus
Senate and Assembly passed extender until March 31,
2017
Governor vetoed
Newark
New York
Trenton
Philadelphia
Wilmington
BACKGROUND
2003 Tax credit scheme
10% for cleanup expenses
10% for most development expenses
Add 8% for En-Zone, 2% for Track 1 cleanups
2008 Tax credit scheme
Sliding scale for cleanup expenses
50% for track 1
27% - 40% track 2
22% - 28% track 4
Newark
New York
Trenton
Philadelphia
Wilmington
BACKGROUND
2008 tax credit scheme (continued)
Maintain 10% for most development expenses
Bonuses for En-Zone (8%), Track 1 cleanup (2%), BOA
(2%)
Caps 3X cleanup cost for non-industrial sites
6X cleanup cost for industrial sites
Caps of $35 Million for non-industrial sites
$45 Million for industrial sites
Newark
New York
Trenton
Philadelphia
Wilmington
BACKGROUND
Effect of 2008 Amendments
Sites smaller, more geographically diverse, more likely to
have affordable housing or industrial end use
Less expensive to State (average tax credit cost $1 million
vs. $14 million)
Greater percentage of tax credits for cleanup costs (74% vs.
7%)
$1 billion tax credits  $8 billion of direct investment
Total economic activity of $15.5 billion
Newark
New York
Trenton
Philadelphia
Wilmington
BACKGROUND
State Bar active on commenting on Brownfield Cleanup
Program since 1999
Convened stakeholder group last fall
Wide spectrum of participants
New York League of Conservation Voters
Environmental Defense Fund
Real Estate Board of New York
New York State Business Council
New Partners for Community Revitalization
New York City Office of Environmental Remediation
New York City Brownfield Partnership
Newark
New York
Trenton
Philadelphia
Wilmington
BACKGROUND
State Bar took input from participants
Came up with series of recommendations
Recommendations passed State Environmental Law
Section Executive Committee unanimously (49 – 0)
Newark
New York
Trenton
Philadelphia
Wilmington
1. DEFINITION OF BROWNFIELD SITE
NOW:
Site which may be “complicated” by presence or potential
presence of contaminant
GOVERNOR AND STATE BAR RECOMMENDATION:
Property where contaminant is present at levels exceeding
cleanup standards for intended use
Who decides use?
Urban fill
Onsite source
Newark
New York
Trenton
Philadelphia
Wilmington
2. EXTEND DEADLINE FOR TAX CREDITS
NOW:
December 31, 2015
GOVERNOR:
December 31, 2025
Must be admitted by December 31, 2022
Current sites must obtain by December 31, 2017 to be
grandfathered for current tax scheme
STATE BAR RECOMMENDATION:
December 31, 2025
10 year max between admission and COC
Grandfathered based on admission to program,
not date of COC
Newark
New York
Trenton
Philadelphia
Wilmington
3. ADJUST TANGIBLE PROPERTY TAX
CREDIT
NOW:
As of right for all sites in program
10% of development costs
Capped at 3X cleanup costs, or $35 million for non-industrial
sites
GOVERNOR: Only eligible if:
50% or more in En-Zone
“Upside down”
Affordable housing (and only for proportion of site that
represents such housing)
Newark
New York
Trenton
Philadelphia
Wilmington
3. ADJUST TANGIBLE PROPERTY TAX
CREDIT
STATE BAR RECOMMENDATION:
Continue as of right, at 10% (with bump-ups)
No separate criteria to qualify
Adjust caps to increase for certain types of projects
Affordable housing
LEED
En-Zone / BOA
Transit-oriented development
Reduce caps for other sites (e.g., to $15 million)
Newark
New York
Trenton
Philadelphia
Wilmington
4. ADJUSTING DEFINITION OF ELIGIBLE
SITE COSTS
NOW:
Broadly defined as any expense that prepares site to
receive COC
GOVERNOR:
Only if directly tied to remediation-related construction
STATE BAR RECOMMENDATION:
Retain broad definition but limit eligible costs for foundation
construction
Newark
New York
Trenton
Philadelphia
Wilmington
5. CREATION OF NON-TAX CREDIT VCP
NOW:
None
GOVERNOR:
Establishes, for sites which waive tax credits
DEC to set rules
STATE BAR RECOMMENDATION:
Same as Governor’s proposal
Statute should establish rules
Newark
New York
Trenton
Philadelphia
Wilmington
6. MAKE CLASS 2 SITES ELIGIBLE
NOW:
Ineligible
GOVERNOR:
Eligible if being cleaned up by Volunteer and no viable party
available to pay for or perform cleanup
STATE BAR RECOMMENDATION:
Eligible if being cleaned up by Volunteer. State retains right
to pursue viable party
Newark
New York
Trenton
Philadelphia
Wilmington
7. ELIMINATE HAZARDOUS WASTE PROGRAM
FEES AND SPECIAL ASSESSMENTS
NOW:
Significant taxes and fees unless being cleaned up under
specific state programs
GOVERNOR:
Eliminate if cleaned up under municipal program having
Memorandum of Understanding with DEC
STATE BAR RECOMMENDATION:
Same
Newark
New York
Trenton
Philadelphia
Wilmington
8. EXPENDITURES PAID TO RELATED
PARTIES
NOW:
Qualify for tax credits
GOVERNOR:
Eliminate eligibility for costs paid to parties with 10% or
more common ownership
STATE BAR RECOMMENDATION:
Retain eligibility, except for costs which are incurred but not
paid
Newark
New York
Trenton
Philadelphia
Wilmington
9. STATE OVERSIGHT COSTS
NOW:
Payable
GOVERNOR:
Eliminate for Volunteers. Reasonable flat fee for others
STATE BAR RECOMMENDATION:
Same
Newark
New York
Trenton
Philadelphia
Wilmington
10. MUNICIPAL ACCESS TO SITES
NOW:
Municipality must foreclose on property in order to get
benefit of statutory exemption of liability to investigate
environmental conditions
GOVERNOR:
No change
STATE BAR RECOMMENDATION:
Municipality can sell tax lien, without foreclosing, and still
obtain benefit of statutory exemption
Newark
New York
Trenton
Philadelphia
Wilmington
11. BROWNFIELD OPPORTUNITY AREAS
NOW:
Lots of promise, but little actual accomplishment
GOVERNOR:
Eligible for enhanced development tax credit, but only if
meet other criteria
STATE BAR RECOMMENDATION:
Eligible for enhanced tax credit
More transparent designation
More publicly available information re: BOAs
Provide sufficient funding for implementation of
pre-development activities
Newark
New York
Trenton
Philadelphia
Wilmington
CONCLUSION
Valuable program
Needs to be extended
Significant degree of consensus on types
of changes that are needed
Stay tuned!
Newark
New York
Trenton
Philadelphia
Wilmington