New York is tightening the tax credits for cleanup and redevelopment of contaminated commercial and industrial sites called brownfields, generally limiting the rebuilding credits in New York City to less lucrative property.
Established in 2003, the program will run 10 more years under the deal recently approved by the Legislature and Gov. Andrew Cuomo in the state budget. The budget also extended the state program for cleaning up more polluted Superfund sites for a decade with $1 billion in funding, as well as state support for municipal brownfields cleanups.
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"These new reforms will root out abuses in the program, protect taxpayer dollars and encourage development upstate and in the areas that truly need it the most," Cuomo said.
The Department of Environmental Conservation defines brownfields as property where redevelopment is complicated by hazardous waste, petroleum pollutants or contaminants in the soil, groundwater or air. They can range from closed gas stations to old factories.
The revisions limit the basic state tax credit statewide — up to 50 percent of remediation costs — so it covers only direct cleanup of contaminated areas, according to state officials. That would preclude, for example, claiming costs for digging foundations deeper and wider than those areas.
The additional tax credits for redevelopment — three times the cleanup cost up to $35 million; six times and up to $45 million for manufacturing facilities — will no longer be available in New York City except in four categories. They are: affordable housing, areas of high poverty and unemployment, underutilized sites and those where the cleanup cost equals 75 percent of the property value.
Regulations are expected later this year. The law contains grandfather provisions for earlier applications.
Environmentalists had faulted the existing program, saying it provided $1.4 billion in credits for 170 projects, many to developers of valuable properties that would have been redeveloped anyway. They project that the state is liable for payouts of another $3.3 billion for projects already in the system.
"It seems like they're still going to be allowing generous redevelopment tax credits outside New York City," said Peter Iwanowicz, executive director of Environmental Advocates of New York. "So we're really going to have to maintain a strong presence to watchdog this program."
A third revision in the program is intended to establish a fast track for applications to clean up brownfields where no tax credits are sought, but which would result in faster certifications that a property had been cleaned up and releasing the developer from liability for the pollution.
The Business Council of New York State said it welcomed the agreement.
"We very much like the 10-year extension," said Darren Suarez, council director of government affairs. "Certainty overcomes a lot of barriers. Without it, these sites are really difficult to develop."
"The idea is really to identify places where there is market failure," Suarez added. "Those are areas that need additional investment and development."