Relates to the brownfield cleanup program, the environmental restoration program, the brownfield opportunity area program and the brownfields shovel-ready program

Section 2 - This section amends the Environmental Restoration Program (ERP) to encourage meaningful partnerships between community based organizations and municipalities. The 2003 Brownfield Law created a role for community based organizations (CBOs) to partner with local government to advance brownfield reclamation through the ERP, but because the Law was very broad, DEC did not allow CBOs to play a leadership role in that program.

The definition of "contaminant" is also amended to include "historic fill material."

Sections 3, 4, 5 & 6 - These sections amend a number of problems that have stymied the Brownfield Opportunity Area program. These sections:

* Clarify that only one agency, the Department of State, is the agency responsible for administering the BOA program. While the Department of Environmental Conservation (DEC) retains all regulatory responsibility, it removes the DEC from the administration of the BOA program.

* Contain provisions directing the Secretary of State to carry out inter-agency cooperation and other activities aimed at advancing BOA plans. The existing law creates a preference and priority status for projects that are consistent with a BOA plan, allowing for greater access to funding and other incentives. Section 5 directs the Department of State to take steps to ensure that other resources are directed toward BOA plan implementation.

* Suballocate to the Department of State any unexpended funds appropriated to the Department of Environmental Conservation for the BOA program.

Section 7 - Amends section 970-r of the general municipal law to provide that participants in the BOA program may apply to the Chairman of the Empire State Development Corporation (ESDC) for participation in the Brownfields Shovel-Ready Program.

Sections 8 - This section amends section 27-1419 of the environmental conservation law to outline the applicable tax credit percentages including:

Site Preparation credit - maximum of 50% of costs, with no cap. Percentages would be determined based on the level of cleanup of soils and groundwater as follows:

* unrestricted use 50%

* residential use, 40%, except for Track 4 which is 35%

* commercial use, 30%, except for Track 4 which is 25%

* industrial use, 20%, except for track 4 which is 15%

Redevelopment credit (available to volunteers only) minimum of 15% of costs, not to exceed 525 million without the approval of the Departments of Taxation, Environmental Conservation and Economic Development and the completion of a cost benefit analysis. Additional percentages above the minimum would be determined as follows:

* 10% for a site located in an Environmental Zone

* 20% for a site that is consistent with a designated Brownfield Opportunity Area

* 5% for a site in a qualified federal census tract

* 10% available as follows:

* 2.5% for buildings in conformance with green building requirements 5% for buildings that utilize existing water or sewer systems

* 2.5% for development located within a quarter mile of a public transit system.

The new tax credits would only apply to sites for which a certificate of completion is issued on or before the effective date of the bill.

Section 9 -- Amends section 21 of the tax law to provide exclude from the definition of "Qualified Site" a site within a Brownfield Opportunity Area that is developed in a manner inconsistent with an approved brownfield opportunity area plan.

Section 10 -- Adds a new Section 23-a to the Tax Law to require the Tax Department to produce an annual report which discloses information about tax credits claimed under Tax Law §§ 21-23 during the preceding year, including the identity of taxpayers claiming credits, the amounts of credits earned, tax liability before and after application of the credits, and certain project information.

Sections 11 - 14 - Amends the ECL to require applicants to disclose project related information to DEC at various stages of the remediation process, including: (1) costs incurred that may qualify for tax credits; (2) estimated future costs; (3) eligible real property taxes projected to be imposed upon the brownfield site; (4) estimated remediated brownfield credit for real property taxes which can be claimed; (5) estimated credits for the site preparation component of a brownfield redevelopment tax credit, the tangible property component of the brownfield redevelopment tax credit, the on-site groundwater component of the brownfield redevelopment credit, and/or the environmental remediation insurance credit that may be claimed in each year following issuance of the certificate of completion; and (6) any other information DEC deems necessary and appropriate. Section 15 - Establishes the "Brownfields Shovel-Ready Program" under the auspices of the Urban Development Corporation (a.k.a. Empire State Development Corporation (ESDC)). Under this program, ESDC would have the power to purchase contaminated property in underserved communities and finance the acquisition, assessment, cleanup, demolition, and site preparation and construction costs associated with the site's redevelopment. ESDC would give priority to sites located in BOAs.

Section 16 - Amends section 21 of the tax law to establish the timeframe for the implementation of the applicable tax credit percentage and requires financial disclosure and the completion of a cost benefit analysis prior to the approval of a tangible credit above S25 million. The cost benefit analysis would be based on the estimated benefits of the project versus the cost of the state benefits to be provided and could include consideration of factors including the extent and difficulty of remediation and the history of the site.

Existing law

The Brownfield Cleanup Program was created by Chapter I of the Laws of 2003, and is codified in Title l4 of Article 27 of the ECL. The Program is intended to encourage private sector remediation of contaminated property and redevelopment of that property. The State provides tax credits and other incentives to encourage remediation and redevelopment.

Justification

Brownfield Opportunity Areas It is the Brownfield Opportunity Area program that sets New York's brownfield program apart and positions New York as an innovator in this nation's smart growth movement. The Brownfield Opportunity Area program offers a tool for reversing the economic and environmental forces that continue to drive our upstate cities from Yonkers to Buffalo into despair and to feed the seemingly inexorable creep of sprawl development. At the same time, it offers the City of New York a ready-made tool to sustainably achieve the Mayor's long term growth goals and address its dwindling land supply while accomplishing environmental justice in low income communities. And in Long Island, Westchester and other wealthy suburban communities, the BOA Program provides a tool that can successfully counter resistance to local development and the growing need for affordable housing.

The centerpiece of the BOA program is this area-wide approach to reclaiming brownfields and revitalizing neighborhoods so that new community anchors are established, creating value and reversing the spiral of deterioration, decline, and decay. The BOA program provides flexible funding for market and infrastructure studies and other activities needed to carry out a constructive visioning process, based not on what is there now or what the real estate market might otherwise attract or resist, but on what the community needs and wants. By looking at the area as a whole, the most productive, innovative and appropriately scaled end uses will be planned, creating new opportunities and helping put properties back on the tax rolls with new job creation, housing, and retail opportunities - catalyzing the reversal of economic decline and disinvestment - which in turn will allow for further community improvement.

Unfortunately, the BOA Program has not yet had a chance to work. While attracting a great deal of interest from communities across the State, the BOA Program has been hampered by unanticipated obstacles, many of them a result of the statute adopted by the Legislature in 2003. It has been stymied by delays, confusion, redundancy, and a lack of clear government accountability. Nevertheless, the program continues to hold tremendous promise.

Brownfield Tax Credits The 2003 Brownfields Law offers Redevelopment Tax Credits to, in effect, reimburse a developer for between 10% and 22% of the total cost of the cleanup and development of a project site. Because the Redevelopment Tax Credits are "refundable," the developer will receive a tax reduction to the extent there is tax liability, and the remainder of the credited amount will be awarded in cash. The percentage of reimbursement varies according to the level of cleanup, whether the developer is an individual or a business, and whether the site is in an Environmental Zone or "En-zone," an area delineated by relatively high unemployment and poverty rates.

So, for example, a corporation that spends $100 million to clean up and redevelop a large brownfield in an En-Zone, could get back $22 million from the State government in the form of tax write-offs and what amounts to outright grants through the Redevelopment Tax Credit.

Unfortunately, the tax credits created by the Brownfield Law have not been working as intended. The principal problem is the way brownfield tax credits are awarded. Essentially, any site that enters the Brownfield Cleanup Program (BCP), regardless of public benefit, relative cost of cleanup compared to development, consistency with economic development objectives, or compatibility with a regional or municipal plan, generates brownfield tax credits as-of-right. Meanwhile, because the incentives are not targeted, the least marketable brownfield sites due to their location or level of contamination - continue to be ignored, effectively eliminating from the Brownfield Law its intended use as a tool for urban revitalization.

This programmatic flaw has also had another insidious consequence. Because the tax credits are so very generous and are available as-of-right to any participating site, the State has sought to limit tax credit outlays by limiting eligibility into the BCP, leaving many sites that belong in a cleanup program - because they contain levels of contamination above existing health-based cleanup standards - in limbo, without a government program to oversee remediation, award liability protection to owners and builders who eliminate health threats, or offer needed financial assistance.

Brownfields Shovel-Ready Program This bill develops a new program under the auspices of the Empire State Development Corporation (ESDC) to specialize in Brownfield recycling and manufacturing-center development. Under the new program, ESDC would assist expansion-minded manufacturing firms or affordable housing developers, in site selection, construction financing, and workforce development.

Under this program, ESDC would have the power to purchase contaminated property in underserved communities and finance the acquisition, assessment, cleanup, demolition, and site preparation and construction costs associated with the site's redevelopment. ESDC would give priority to sites located in BOAs.

Upon completion of the remediation, ESDC would sell parcels of the property to manufacturers and other business for $1 and in return for a clean site sold for $1, manufacturers would agree to:

* build quality buildings (at least $38 a square foot),

* meet the Leadership in Energy and Environmental Design (LEED) Green Building Rating System in the building construction,

* provide new jobs (at least one job per 1,000 square feet of building space),

* pay a living wage (at least $9.50 an hour plus benefits), and

* hire seventy percent of the workforce from the local community.

In the case that a remediated site is sold to an affordable housing developer, the developer shall build housing units in accordance with the State's affordability guidelines.

Legislative history

New bill.

Fiscal implications

The bill would likely save the State money as it caps the tangible property credit under the State's Brownfields program at $25 million. Furthermore, by better incentivizing the State's Brownfields laws, more contaminated property will be cleaned up and placed back on the tax rolls of municipalities around the State.

Local fiscal implications

None.

Effective date

Immediately.