A. 3006-B /S. 2006-B Part BB Brownfield Extender & Modifier
April 1, 2015
Contact: Darren Suarez
The Legislature and the Governor did reach an agreement to extend and modify the brownfield program. The program has been extended for ten years. The superfund program has also been extended for ten years. The final agreement has been amended significantly from the Administration’s proposal two years ago. Below is a quick review of the proposed amendment to the program in black followed by the final outcome in red.
- Changes to definition of "Brownfield site" including eligibility of Class 2 sites for volunteers under some conditions.
Amended: to include certain RCRA sites.
- Establish a BCP-EZ (no tax credits).
Amended: The BCP-EZ was accepted but provisions were amended to restrict eligibility to site determined not to be a “significant threat”.
- Final Engineering Report must include a cost certification as to remedial costs.
- Track 1 sites can have long term controls for groundwater and soil vapor.
- Work plans must be implemented within 90 days.
Amended: Requirement that applicants submit a schedule of any subsequent work plan requirements with every report filled.
- CoC could be revoked if there is a misrepresentation as to TPCC "gate" eligibility.
- Oversight costs eliminated for volunteers; participants can negotiate a flat fee.
- Grandfathering. Sites with notice of acceptance before 4/1/15 would be grandfathered but would need CoC by 12/31/17 or flip to new credit structure and have to apply for tangible property credit component through one of the three new gates; all CoCs must be issued by 12/31/25 and no applicants after 12/31/22 will be eligible for tax credits.
- Applicants after 12/31/22 will not be eligible for tax credits.
- Sites which entered the program prior to 6/23/08 will be grandfathered until 12/31/17.
- Sites which entered the program after 6/23/08 and before 7/1/15 will be grandfathered until 12/31/19.
- Sites will be grandfather if the notice of acceptance is published before 7/1/15 or the publication of the definition of “underutilized”, whichever shall be later.
- All COCs must be issued prior to 3/31/2026.
- Two-gate approach. Three gates for tangible property credit component.
Amended: Sites located outside of NYC are not subject to the tangible property credit gates.
- upside-down cleanup cost must exceed appraised FMV of the site absent contamination.
Amended: cleanup cost must be greater than 75% of the hypothetical condition that property is not contaminated.
- >50% in EnZone (new definition of EnZone, see below)
- affordable housing project – 50% market units / 30% units @ 130% AMI / 20% units at 90% AMI.
Amended: The definition of affordable housing will be issued by regulation by DHCR by 6/8/15.
Amended: New fourth gate “underutilized” will be issued by regulation by DEC by 7/1/15.
- To be eligible for the tangible property credit a site located in a BOA must conform to BOA plan.
- Eliminate other credits. Would eliminate the credits for insurance and for property taxes/employment.
- Site prep/on-site groundwater remediation cost changes:
- Site Prep costs would include activities under NYSDOL oversight relating to asbestos, lead, and PCBs in buildings that will remain on site.
- For bldg foundations, only "costs equivalent to the cost of a site cover" would count (rest go to tangible component)
Amended: To include soft costs
- would exclude costs paid to related parties (10% common ownership)
Includes a definition of related party services, and precludes related party services from the site preparation credit and the groundwater credit
- (iii) The term "related party service fee" shall mean any fee or other monetary compensation earned by a related party and calculated as a percentage of project and/or acquisition costs, in consideration of services rendered to or for the benefit of the taxpayer placing qualified tangible property in service in connection with the acquisition and development of such property. For purposes of this subparagraph, "related party" shall have the same meaning as related person as defined in subparagraph (c) of paragraph three of subdivision (b) of section four hundred sixty-five of the internal revenue code.
- only costs paid within 6 months of being incurred would count
- Tangible Property Credit Component (TPCC) changes:
- Would retain the floating 5-year window for the TPCC which was first introduced in last year's budget. TPCC would be allowed "for up to five consecutive taxable years from the start of redevelopment" and all credits must be claimed within 10 years of CoC issue date.
Amended: TPCC would be allowed for 120 months after the issuance of the CoC.
- Would allow TPCC for property placed in service prior to CoC (codifies NYSDTF administrative practice).
- Costs deducted under 198 would be allowed to count in calculating the 3X/6X TPCC limits
- Eligible TPCC costs limited to "costs associated with actual construction of tangible property incorporated as part of the physical structure" as well as "foundation costs constructed as part of the site cover that are not properly included in the site preparation component".
- The definition of eligible costs was amended to address concerns regarding furnishings.
- (iv) Eligible costs for the tangible property credit component are limited to costs for tangible property that has a depreciable life for federal income tax purposes of fifteen years or more, costs associated with demolition and excavation on the site and the foundation of any buildings constructed as part of the site cover that are not properly included in the site preparation component and costs associated with non-portable equipment, machinery and associated fixtures and appurtenances used exclusively on the site, whether or not such property has a depreciable life for federal income tax purposes of fifteen years or more.
- Would exclude costs paid to related parties (10% common ownership)
- Only costs paid within 6 months of being incurred would count
- New applicable percentages for the TPCC:
- 10% base (eliminates the 12% base for corporate taxpayers) plus the following additions (total not to exceed 24%):
- 5% for EnZone
- 5% for sites primarily used in manufacturing (defined in current law)
- 5% for sites in a designated BOA (must provide NYSDOS certification of conformity with BOA plan under GML 970-r)
- 5% for a site developed as affordable housing.
Amended: To included 5% bump-up for Track 1 site cleanups
- EnZone changes
- Would retains the poverty/unemployment measure and reinstate the expired poverty measure, by census tract
- Would use the 2009-13 American Community Survey estimate to determine which tracts are EnZones;
- NYSDOL would have 90 days from enactment to identify the EnZone tracts
- Developer Report DTF-70 eliminated