Legislative Memo

T 518.465.7511


A.11107 (Sweeney)



Brownfield Tax Credits



June 2, 2008


The Business Council respectfully oppose this legislation, which would modify eligibility standards for, and calculation of, site redevelopment credits under the state's brownfield program.

  1. It would make brownfield program “participants” ineligible for the tangible property (i.e., post-remediation redevelopment) tax credit. The Business Council believes this proposal is counterproductive, as it would eliminate a significant financial incentive for entities that may be under no legal obligation or directive to do site remediation.  Under current law, "participants" are defined as site owners and operators, other than those whose involvement with the site commenced after contamination occurred.  If these sites are state or federal superfund sites, or subject to enforcement orders under the state's hazardous/solid waste or oil spill programs, they would already be ineligible for the state's brownfield program. We believe this program is intended to promote remediation – with state oversight – and redevelopment of these types of sites currently below the state's regulatory “radar,” including remediation and reinvestment by current site owners/operators. This proposed amendment is contrary to that important policy objective, and would make it less likely that these sites are cleaned up and redeveloped through private sector investments.
  2. It would make any site with a final hazardous waste management (RCRA) permit ineligible for the brownfield program.  As RCRA permits for on-site storage of hazardous wastes are among the most common DEC-issued permits, this change would make a significant percentage of New York's industrial sites ineligible for the brownfield program, including sites that are not presently subject to any enforcement authority under New York State law.  The Business Council supports continuation of the existing treatment of RCRA permitted sites, excluding from brownfield program eligibility only those sites subject to an ongoing enforcement action under the state's solid and hazardous waste permitting programs, unless a volunteer were to bring such a site into the program as proposed below. Rather than restricting eligibility, The Business Council believes that eligibility should be expanded to allow a volunteer to cleanup a Class 2 state superfund site – provided that no cleanup is underway or the volunteer is willing to undertake a greater remedial effort than required under an existing order – and allow a volunteer to conduct additional cleanup at a post-closure RCRA corrective action site, and to allow a responsible party to remediate Class 2 sites under the provision of the brownfield act, excluding tax credits.
  3. It eliminates the authority for DEC to negotiate a flat fee for state oversight costs related to a brownfield project.  Rather than eliminating this provision, The Business Council and others have recommended that the DEC make active use of this authority as a means to simplify and add certainty to the extensive administrative/oversight components of the existing brownfield program.   The Department's oversight costs have expanded due to both regional and central office oversight for each brownfield project. Applicants should be allowed to negotiate a flat fee for oversight in order to budget future project costs.
  4. It would establish an environmental lien on any real property owned by an entity against whom the state believes it can recover state superfund expenditures, without any obligation of the state to first demonstrate its rights of recovery against such parties. This provision is wholly unrelated to the issue of brownfield tax credits, and at best should be reserved for a separate discussion of additional state superfund reform measures.
  5. While we understand the interest in providing better data on the program's performance, we strongly oppose the provision requiring disclosure of taxpayer-specific tax liability data.  Not only is this proposal unprecedented in the state's business tax law, it serves absolutely no programmatic purpose.  In our view, the purpose of this proposed report is to identify the overall level of tax credits provided, their cost-effectiveness, and their impact on the state's financial plan.   The detailed reporting proposed here suggests that this report is intended to somehow support a reassessment the appropriateness of tax credits based on the tax status of their recipients, an approach that has no basis in the brownfield tax credit program.

The bill contains several policy initiatives that, with modification, could be supported by The Business Council.  For example,

  1. It authorizes entry into the brownfield program for the purpose of obtaining liability protection, but not tax credits.  The Business Council and other stakeholders have urge the creation of a brownfield cleanup “stipulation” program that would provide for state oversight of, and a state liability release for, site cleanups where the applicant is not seeking brownfield tax credits.  However, the bill remains silent on the state's authority to establish such a program.  Importantly, we believe a stipulation program should also have an expedited review process as well.
  2. It would retain the “as of right” nature of redevelopment tax credits for the majority of brownfield projects in the state.  The Business Council and other many other stakeholders opposed the unreasonable cap on redevelopment tax credits proposed in this and last year's Executive Budget.  At most, any consideration of a cap should only apply to major projects, that are likely to be subject to a broader state economic assistance package.

Finally, we believe any revisiting of the state's brownfield program should consider other reform issues that will make the program more attractive to potential developers. These include making the administrative process more certain and less burdensome, addressing additional eligibility criteria as discussed above, adopting a more certain definition of “brownfield sites” and others.
The Business Council agrees that legislative – and administrative – changes are necessary to make the state's brownfield program a more effective, more efficient environmental and economic development tool.  While there are some positive elements in this bill, we believe that overall it would impeded, rather than improve, performance of the state's brownfield program.

For these reasons, The Business Council opposes approval of A.11107.