Presentation by NYSDEC Deputy Commissioner Eugene Leff at

Report
Governor’s Budget Bill Proposals
for the Brownfield Cleanup,
State Superfund and
Environmental Restoration
Programs
Eugene Leff, Deputy Commissioner
Office of Remediation & Materials Management
NYS Department of Environmental Conservation
January 30, 2014
Background
In the ten years since it was established, the
Brownfield Cleanup Program (BCP) has:
• catalyzed the cleanup of over 150 contaminated
sites statewide, incentivizing redevelopment
• resulted in a program that awarded in hundreds
of millions in unnecessary and excessive tax
credits
The BCP tax credits are scheduled to sunset on
December 31, 2015
Purpose of the Bill
This bill will:
• extend the brownfield cleanup program tax
credits for 10 years,
• further reform the program and
• modify the Environmental Restoration
Program (ERP) and exemptions for hazardous
waste fees and special assessments
Need for Reform
• The New York State Tax Reform and Fairness
Commission found that eligibility for the BCP
Tangible Property Credit needed to be
amended to prevent development that would
have gone forward without tax credits from
taking advantage of the program
Issue 1: BCP tax credits will
sunset on December 31, 2015
• If they sunset, potential economic
development will be lost
• Brownfield sites will remain fallow or be
developed without appropriate environmental
cleanup and oversight
• A greater burden will be placed on the Statefunded Superfund cleanup program, instead
of being cleaned up by the private sector
Solution: Continue tax credits
for 10 years with program
reforms
• Will continue successful private cleanups
under state oversight
• Will limit state’s expensive cleanup burden
• Will provide certainty to developers
Issue 2 : All projects get
“tangible property” tax credits
for development costs
• Not focused on sites in blighted or low-income
neighborhoods or otherwise needing tax
credits to advance
• Windfalls can go to projects that do not need
state assistance to advance and are in strong
real estate markets
Solution: Separate BCP
eligibility & Tangible Property
Credit eligibility
• Limit eligibility for redevelopment credits to:
– Properties vacant for at least 15 years (e.g., a
vacant lot or a property with an empty building)
or vacant and tax delinquent for 10+ years
– “Upside down” properties (where the property
value is less than the cost of cleanup)
– Priority economic development projects that
create jobs and meet prescribed criteria to be set
by Empire State Development
Issue 3: Site Preparation
Credits cover more than cost of
remediation
• Currently, any costs associated with preparing
a site are eligible for the Site Preparation
Credit
• This credit should be limited to cleanup costs
• Site preparation costs are the basis for
calculating the cap on the Tangible Property
(redevelopment) Credit, so that cap is higher
than it should be
Solution 3: Limit eligible costs
to those needed for
remediation, reducing cap
• Moving the costs not associated with
remediation of the site from the site prep/
remediation credit to the tangible property
credit will reduce the site prep/remediation
credit appropriately
• This will also reduce the maximum tangible
property tax credit since the cap is 3 times the
site’s eligible site prep costs (or 6 times if the
use will be manufacturing)
Issue 4: Current BCP is the
only path to a liability release
from the State
• For many sites, a liability release is needed to
get financing for the redevelopment
• Stakeholders have signaled that tax credits are
less important than the release of liability at
some sites
Solution: Re-establish a
voluntary cleanup option with
no tax credits
• The Bill creates a BCP-EZ option
• In exchange for waiving any right to tax
credits, lightly contaminated sites will be able
to enter a streamlined program with State
oversight
• BCP-EZ will enable sites to get critical liability
release and obtain financing
Issue 5: Many sites with NO
cap on tax credits still have not
been cleaned up
• Approximately 100 sites started in the BCP
before 2008 when the caps were imposed and
are still in the program but have not
completed cleanup
• Many are likely to go beyond the current Dec.
2015 sunset date and remain eligible for
unlimited tax credits
Solution: Terminate these sites
from BCP if not cleaned up by
12/31/15
• There has been enough time for these (pre2008) sites to have finished the program and
received a COC which would allow them to
claim unlimited tax credits
• This will incentivize timely redevelopment
• These terminated sites will be allowed to
reenter the new BCP subject to the reformed
eligibility criteria and new tax credit structure
Post-2008 Cap Sites
• Sites that entered the BCP after June
2008 subject to current caps will:
– be required to complete their remedial
programs and receive a COC by Dec. 2017
or
– be terminated and allowed to re-enter the
reformed BCP
Superfund/ERP
In addition, the Executive Budget:
• Authorizes an additional $100M for State
Superfund which, together with existing
appropriations, is expected to fund the
Program for three more years
• Allows $10M of these funds to be used for the
Environmental Restoration Program, which
funds investigation and remediation of
municipally owned Brownfield sites

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