New Report Considers Options For Tweaking Brownfields Programs in NY

New York State was among the first to enact programs aimed at remediation and redevelopment of contaminated sites. The goal of such programs is both to promote economic revitalization and to encourage private entities to remediate the state’s contaminated sites. Three such programs, the Voluntary Cleanup Program (“VCP”), the Environmental Restoration Program (ERP), and the Brownfield Cleanup Program (“BCP”), have achieved considerable success, with over 400 sites having been remediated in the past two decades. Nevertheless, policy makers continue to search for ways to make these programs better and more cost efficient. Prompted by the impending expiration of key provisions of the BCP, a report released by the New York State Comptroller’s office in April 2013, provides an assessment of these programs, as well as some options for improvement going forward.

The VCP was New York’s first attempt to address its brownfields problem. It provided participants with limited liability protection, targeted cleanup standards based on the proposed use of the site, and overall a more streamlined process than the State Superfund process. Unlike the other two programs, it did not offer any financial incentives. Nonetheless, 212 sites have been remediated through this program. The ERP supports municipal projects to remediate and redevelop brownfields. Like the VCP, the ERP provides limited liability protection to participating municipalities. Unlike the VCP, however, the ERP provides for 90% of cleanup costs. Since its inception, this program has resulted in the remediation of 68 sites at an average cost to the State of approximately $780,000 per site. The BCP, like the VCP and ERP, offers limited liability protection and a streamlined process. Unlike those programs, however, the BCP offers refundable tax credits of 22% to 50% for cleanup costs and (subject to caps based on cleanup expenses and overall dollar amounts) 10% to 22% for redevelopment costs. Since its adoption, this program has seen the cleanup of 128 sites at an average tax credit cost to the State of $9.4 million per site.

In an effort to make such programs more cost-effective without discouraging the continued cleanup and redevelopment of New York’s brownfields, several options have been proposed. These include tweaking the incentives that are currently offered by, for example, limiting or removing tax incentives entirely, or maintaining credits for cleanup costs while restricting them for development costs. Other options include reducing the administrative burdens of these programs in order to simplify participation, or creating low-cost options for projects that are viable without financial incentives.

One thing is certain: with key provisions of the BCP set to expire in 2015, there is no time for delay in considering how to maintain, and improve, the vitality of such programs in the future.

Adam C. Arnold is an Associate in the Gibbons Real Property & Environmenal Department.
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