Proposed Definition of “Underutilized” for Brownfield Cleanup Act Amendments Draws Many Comments

Numerous organizations and individuals have submitted comments on the proposed definition of “underutilized” published by the New York State Department of Environmental Conservation (NYSDEC) on March 9, 2016, pursuant to the 2015 Brownfield Cleanup Act Amendments. The Amendments require NYSDEC to propose a definition for “underutilized,” one of the few remaining ways for New York City sites to qualify for tangible property tax credits under the State’s Brownfield Cleanup Program (BCP). As such, this definition is seen by many as crucial to the continued viability of the BCP as a cleanup mechanism for brownfield properties in New York City.

NYSDEC proposed a definition last June but withdrew its proposal after widespread public criticism. The new definition is an attempt to cure the deficiencies of the earlier proposal.

Commenters on the new proposed definition include New York City, the Environmental Law Section of the New York State Bar Association, the New York City Brownfield Partnership, the South Bronx Overall Economic Development Corporation (SoBRO), the Real Estate Board of New York, the New York State Business Council, and the law firm of Knauf Shaw.

While New York City’s comments are generally supportive of the new definition, the consensus of the other comments noted above is that NYSDEC’s attempt to address the shortcomings of the prior definition was largely unsuccessful.

The comments critical of the new proposal focus on the following:

• It requires a site’s future use to be primarily either commercial or industrial in order to qualify as “underutilized.” In the commenters’ views, basing eligibility on a site’s future use, rather than on its current status or condition, is contrary to statutory language and the clear intent of the Legislature;
• it ignores pre-existing, commonly accepted definitions of “underutilized” in similar New York City and New York State laws and regulations without an adequate explanation for doing so; and
• it incorporates criteria which either are difficult to administer or under which virtually no sites will qualify.

The conclusions of most of these commenters are reflected in the State Bar’s Environmental Law Section’s observation: the proposed definition “remains extraordinarily narrow and will allow very few, if any, sites into the BCP as ‘underutilized’”; and that since the purpose of the statutory provision was to supplement other methods to qualify for tangible property tax credits, such a restrictive definition “is inconsistent with the spirit and plain language of the BCP Amendments.”

NYSDEC will be considering these and other public comments and will presumably promulgate a final definition shortly.