New York State Extends Brownfield Cleanup Program

Practical Law Legal Update 4-609-5245 (Approx. 3 pages)

New York State Extends Brownfield Cleanup Program

by Practical Law Real Estate

Brownfield Site Identification and Related Cleanup Fees

The new BCP legislation makes the following changes affecting the sites that are eligible to participate:

New definition of "Brownfield Site." To reduce uncertainty regarding site eligibility, the definition of "Brownfield site" was amended to include any site that has contamination that exceeds acceptable levels set by the Department of Environmental Conservation based on the reasonably anticipated use of the property.
Class Two sites. Sites that pose a significant threat to public health or to the environment (known as Class Two sites) are now eligible to enroll in the BCP if cleanup is performed by a volunteer who is not responsible for original contamination and the state Department of Conservation has not identified a viable responsible party to pay for the cleanup.

Under the new legislation, the Department of Environmental Conservation's usual oversight fees are waived for volunteers. Fees are also waived for cleanups ordered under the federal Superfund law and other mandatory cleanups within a municipality, under an agreement between the municipality and the Department of Environmental Conservation.

Changes to Tax Credit Eligibility

The new legislation also changes the availability of tax credits available as part of the BCP:

"BCP-EZ" program. The new version of the BCP creates a new expedited liability release only cleanup, called the BCP-EZ, for those sites that are not seeking tax credits.
Sites remaining subject to the existing tax credit scheme. Sites enrolled before June 23, 2008 will remain subject to the existing tax credit scheme if they obtain their Certificate of Completion by December 31, 2017. Other sites currently enrolled in the BCP and those that enroll before December 31, 2022 will be eligible for the new tax credit scheme provided they obtain their Certificates of Completion before March 31, 2026.
Sites in New York City. Sites within New York City that are newly enrolled or fail to obtain a Certificate of Completion before the applicable deadline must meet one or more of the following conditions to be grandfathered into the existing tax credit scheme:
- the site must be located in an Environmental Zone, which is an area marked by high poverty and unemployment rates;
- the site must satisfy the definition of affordable housing;
- the projected cost of investigation and remediation must exceed 75% of the value of the property, assuming the property was uncontaminated; and
- the site must qualify as underutilized under Department of Environmental Conservation regulations (expected to be released on or before October 1, 2015).
New limits on tax credits. Under the new legislation, development tax credits for site preparation costs and groundwater remediation costs now include only those costs that are necessary to the site's cleanup and the issuance of a certificate of completion. Other changes to the available tax credits for development include:
- a limitation on tax credits for the costs of foundations to the extent those costs exceed cap requirements under applicable regulations; and
- new limits on payments to affiliated parties (with affiliation defined as common ownership of more than 10%).
Increased credits. The legislation increases tax credits for development for sites that satisfy one or more of the following criteria:
- they are located in officially defined Environmental Zones or Brownfield Opportunity Areas;
- they are remediated to a standard permitting unrestricted use;
- they are developed with affordable housing; or
- they are employed primarily for manufacturing.

New York State Extends Brownfield Cleanup Program | Practical Law