Late last month, New York State's Comptroller, Thomas P. DiNapoli, issued a report reviewing options for modifying the way the state incentivizes and administers cleanups of its thousands of remaining brownfield sites. The Report has special significance in light of Mr. DiNapoli's expertise in this area: he is a former Chair of the State Assembly's Environmental Conservation Committee and one of the architects of the state’s Brownfield Cleanup Act, passed in 2003.
The urgency of updating the Act is accelerating with every month. The Act’s tax credits--which, for many participants, are the most powerful incentives to enroll a site in the state’s Brownfield Cleanup Program (BCP)--expire as of December 31, 2015 for all sites which have not received their Certification Of Completion (COC) by that date. It generally takes two to three years from enrollment in the BCP to receipt of a COC. Accordingly, sites entering the BCP now are increasingly at risk of not obtaining their COCs prior to the sunsetting of these tax credits.
As Mr. DiNapoli acknowledges, his review builds on the recommendations of other commentators, including the New York State Bar Association Environmental Section's Brownfield Task Force. The options evaluated in the Report include:
- Extending or removing the sunset date for expiration of tax credits for sites currently enrolled in the BCP.
- Maintaining broad eligibility for entry into the BCP and for qualifying for the tax credits for cleanup costs. As-of-right credits for such costs range from 22% to 50%, depending on the extent of cleanup and the anticipated site use. The tax credits are refundable--i.e., to the extent they exceed the tax obligation of the qualifying entity, that entity receives a refund check from the state.
- Enhancing state funding for Phase I and Phase II site assessments, which are currently not eligible for tax credit treatment when performed prior to a site’s being enrolled in the BCP.
- Imposing additional requirements for sites to qualify for tax credits for build-out expenses (i.e., the “above-ground” costs of developing the site). At present, these credits are as-of-right for all sites accepted into the BCP and range from 10% to 22%, subject to caps based on the amount of cleanup costs expended and an overall per site dollar limit. Under one option evaluated by the Report, sites would henceforth have to show a special need for development credits based on site conditions and/or economic circumstances.
- Authorizing a new Voluntary Cleanup Program that, like the BCP, would provide state oversight and liability protection, but would do so with more streamlined procedures and without offering tax credits.
- Enhancing funding for the state’s two other cleanup programs, the Environmental Restoration Program (whose available funds are fully obligated) and the State Superfund Program.
- Reducing administrative burdens by modifying the extensive public participation requirements under the BCP and/or by reducing or eliminating state oversight fees.
- Partnering with municipalities by allowing those with sufficient technical capacity to run their own brownfield cleanup programs, as New York City is currently doing under a Memorandum of Agreement with the state.
- Providing authority for enforcing the obligation of tax credit recipients to file reports required under the BCP.
- Enhancing the state’s database of brownfield sites.
The Report is careful not to choose among the various options reviewed. But, Mr. DiNapoli’s selection of issues to highlight is significant, especially given his expertise in this area and his personal relationships with key players in the Legislature and the Governor’s office. Because of this, and because it skillfully draws on the recommendations of other knowledgeable commentors, the Report will no doubt be influential in the continuing debate on how to revitalize efforts to clean up New York State’s brownfields.
David J. Freeman is a Director in the Gibbons Real Property & Environmental Department.