Monday, January 19, 2015

New York’s Brownfields Cleanup Program: Back From the Landfill?

By: Jason Yots

Like most Rust Belt states, New York has its version of a brownfields cleanup program (BCP) that offers financial assistance to developers willing to remediate and redevelop environmentally contaminated land and buildings.  In New York, that assistance is provided largely in the form of reimbursement-based state tax credits.  The last iteration of the BCP legislation was set to sunset at the end of 2015, prompting renewal negotiations in Albany last year.

At issue in those negotiations were perceived abuses (mostly downstate) of the redevelopment component of the program.  Critics argued that, despite prior rebalancing, the BCP still was too light on remediation results and too heavy on redevelopment upside (for which, goes the argument, there are other incentives, if needed, or the private market itself).  Proponents of the program argue that in hard-to-develop areas like upstate New York, the BCP is a critical component of the bundle of economic development incentives required to plug the funding “gap” that plagues most real estate redevelopment projects.

Backing critics, New York Governor Andrew Cuomo recently vetoed the legislative renewal of the BCP, casting a cloud over numerous upstate projects that would have relied on the program in the coming years.  But there may be a silver lining:  The Buffalo News reported today that Governor Cuomo is stepping back from his prior veto in exchange for more changes to the program during the budget process.[1] 

The most significant change for historic rehabilitation projects may be that the redevelopment component of the BCP would be available only if at least one of three criteria is satisfied:

1.            The area surrounding the project is “economically distressed” (to be defined, but presumably will take a cue from similar provisions in New York’s rehabilitation tax credit law).

2.            The project involves “affordable housing” (generally meaning households earning less than 60% of the area’s median income).

3.            The project is “upside down” (meaning that the cost of the remediation exceeds the current market value of the building).

Will these new requirements constrict the overall flow of projects toward the BCP?  Potentially.  But most upstate New York projects enjoy the dubious benefit of satisfying one, if not all, of the new criteria.  Hopefully, that will mean that the BCP - which has become so critical to the feasibility of historic rehabilitation projects in upstate New York - will remain fully available and funded.

[1] “Cuomo Plans Changes for Brownfields Tax Breaks”, The Buffalo News, January 19, 2015 (

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