N EW Y ORK S TATE D EPARTMENT OF E NVIRONMENTAL C ONSERVATION Governor’s Budget Bill Proposals for the Brownfield Cleanup, State Superfund and Environmental.

NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION

Governor’s Budget Bill Proposals for the Brownfield

Cleanup, State Superfund and

Environmental Restoration Programs

Eugene Leff, Deputy CommissionerOffice of Remediation & Materials ManagementNYS Department of Environmental Conservation

January 30, 2014


Background

In the ten years since it was established, the Brownfield Cleanup Program (BCP) has:

• catalyzed the cleanup of over 150 contaminated sites statewide, incentivizing redevelopment

• resulted in a program that awarded in hundreds of millions in unnecessary and excessive tax creditsThe BCP tax credits are scheduled to sunset on

December 31, 2015


Purpose of the Bill

This bill will: • extend the brownfield cleanup program tax

credits for 10 years, • further reform the program and • modify the Environmental Restoration

Program (ERP) and exemptions for hazardous waste fees and special assessments


Need for Reform

• The New York State Tax Reform and Fairness Commission found that eligibility for the BCP Tangible Property Credit needed to be amended to prevent development that would have gone forward without tax credits from taking advantage of the program

Julie Tighe

not sure i would include this


Issue 1: BCP tax credits will sunset on December 31, 2015

• If they sunset, potential economic development will be lost

• Brownfield sites will remain fallow or be developed without appropriate environmental cleanup and oversight

• A greater burden will be placed on the State-funded Superfund cleanup program, instead of being cleaned up by the private sector


Solution: Continue tax credits for 10 years with program reforms

• Will continue successful private cleanups under state oversight

• Will limit state’s expensive cleanup burden • Will provide certainty to developers


Issue 2 : All projects get “tangible property” tax credits for development

costs• Not focused on sites in blighted or low-income

neighborhoods or otherwise needing tax credits to advance

• Windfalls can go to projects that do not need state assistance to advance and are in strong real estate markets


Solution: Separate BCP eligibility & Tangible Property

Credit eligibility

• Limit eligibility for redevelopment credits to:– Properties vacant for at least 15 years (e.g., a

vacant lot or a property with an empty building) or vacant and tax delinquent for 10+ years

– “Upside down” properties (where the property value is less than the cost of cleanup)

– Priority economic development projects that create jobs and meet prescribed criteria to be set by Empire State Development


Issue 3: Site Preparation Credits cover more than cost of remediation

• Currently, any costs associated with preparing a site are eligible for the Site Preparation Credit

• This credit should be limited to cleanup costs• Site preparation costs are the basis for

calculating the cap on the Tangible Property (redevelopment) Credit, so that cap is higher than it should be


Solution 3: Limit eligible costs to those needed for remediation, reducing cap

• Moving the costs not associated with remediation of the site from the site prep/ remediation credit to the tangible property credit will reduce the site prep/remediation credit appropriately

• This will also reduce the maximum tangible property tax credit since the cap is 3 times the site’s eligible site prep costs (or 6 times if the use will be manufacturing)


Issue 4: Current BCP is the only path to a liability release from the State

• For many sites, a liability release is needed to get financing for the redevelopment

• Stakeholders have signaled that tax credits are less important than the release of liability at some sites


Solution: Re-establish a voluntary cleanup option with no tax credits

• The Bill creates a BCP-EZ option• In exchange for waiving any right to tax

credits, lightly contaminated sites will be able to enter a streamlined program with State oversight

• BCP-EZ will enable sites to get critical liability release and obtain financing


Issue 5: Many sites with NO cap on tax credits still have not been cleaned up

• Approximately 100 sites started in the BCP before 2008 when the caps were imposed and are still in the program but have not completed cleanup

• Many are likely to go beyond the current Dec. 2015 sunset date and remain eligible for unlimited tax credits


Solution: Terminate these sites from BCP if not cleaned up by 12/31/15

• There has been enough time for these (pre- 2008) sites to have finished the program and received a COC which would allow them to claim unlimited tax credits

• This will incentivize timely redevelopment• These terminated sites will be allowed to

reenter the new BCP subject to the reformed eligibility criteria and new tax credit structure


Post-2008 Cap Sites

• Sites that entered the BCP after June 2008 subject to current caps will:–be required to complete their remedial

programs and receive a COC by Dec. 2017 or –be terminated and allowed to re-enter the

reformed BCP


Superfund/ERP

In addition, the Executive Budget:• Authorizes an additional $100M for State

Superfund which, together with existing appropriations, is expected to fund the Program for three more years

• Allows $10M of these funds to be used for the Environmental Restoration Program, which funds investigation and remediation of municipally owned Brownfield sites

N EW Y ORK S TATE D EPARTMENT OF E NVIRONMENTAL C ONSERVATION Governor’s Budget Bill Proposals for the Brownfield Cleanup, State Superfund and Environmental.

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