Relates to the brownfield redevelopment tax credit

BILL NUMBER:S3112

Title of bill

An act to amend the tax law, in relation to a brownfield redevelopment tax credit

Purpose

This bill would cap the tax credits available for the redevelopment of Brownfield sites whose request for participation in the Brownfield cleanup program (BCP) was denied by the Department of Environmental Conservation (DEC), but the denial was overturned in Court.

Summary of provisions

Section 1 would amend subparagraph (A) of paragraph 3-a of subdivision (a) of section 21 of the tax law to provide that any site which has been denied access into the Brownfield Cleanup program, but the denial was overturned in court, will be eligible for the tax credits as capped by Chapter 390 of the laws of 2008.

Existing law

The current statute awards tax credits based on the date that DEC grants eligibility, leaving some ambiguity as to the relevant date for court ordered access.

Justification

Under this proposal, the State's exposure in cases being litigated due to the Department's denial of an application to the Brownfield Cleanup program (BCP) would be limited to the cap contained in Chapter 390 of the Laws of 2008 -- $45 million for a manufacturing site and $35 million for others. To receive the redevelopment credits the property must have a Certificate of completion (COC) though credits may be claimed over a period of 10 years following issuance of the COC.

Chapter 390 of the Laws of 2008 capped the amount of the tangible property tax credit (redevelopment credits) available under the Brownfield Cleanup Program (BCP). This was an important step in reforming the BCP, in that it placed a limit on the lucrative refundable tax credits for individual projects. There is now a maximum brownfield redevelopment benefit of $45 million for manufacturing projects and $35 million for all others. The effective date of Chapter 390 provided that the revised system of tax credits would apply to sites acquired on or after April 1, 2005. This proposal is an attempt to address the State's fiscal vulnerability represented by a number of court cases challenging the eligibility requirements of the BCP. To the extent that the recently enacted caps on brownfield tax credits will help reduce the dramatic outlays of cash rewards going forward, the state is currently in litigation over several very costly projects that were denied access to the program and, thus, to the immense pre-2008 reform financial benefits. Since the inception of the Brownfield Cleanup Program in 2003, DEC has interpreted the statute and used its discretion in such a way as to exclude sites where the degree of contamination or other factors did not justify the investment of significant state resources.

Fiscal implications

While it is impossible to know how all of the litigation will be ultimately decided, if, hypothetically, all cases were resolved against the State, the cost to New York taxpayers will likely exceed one billion dollars. In light of the legislative action taken last year, it is reasonable to statutorily limit the amount of the court awards allowable to conform with the 2008 reform bill that caps the tax credits.

Local fiscal implications

None noted.

Effective date

Immediately and shall be deemed to have been in full force and effect on and after July 21, 2008.