Numerous organizations and individuals have submitted comments on the proposed definition of “underutilized” published by the New York State Department of Environmental Conservation (NYSDEC) on March 9, 2016, pursuant to the 2015 Brownfield Cleanup Act Amendments. The Amendments require NYSDEC to propose a definition for “underutilized,” one of the few remaining ways for New York City sites to qualify for tangible property tax credits under the State’s Brownfield Cleanup Program (BCP). As such, this definition is seen by many as crucial to the continued viability of the BCP as a cleanup mechanism for brownfield properties in New York City.
Author: David J. Freeman
NYSDEC Proposes New Definition of “Underutilized” for Tangible Property Tax Credits at New York City Brownfield Sites
On March 9, 2016, the New York State Department of Environmental Conservation (NYSDEC) proposed a new definition of an “underutilized” site for purposes of claiming tangible property tax credits for sites in New York City under the New York State Brownfield Cleanup Program (BCP). As noted in prior blogs, the 2015 amendments to the BCP established new restrictions on the ability of sites in the five boroughs of New York City to obtain tax credits related to expenditures for site improvements. One of the criteria which would allow a site to qualify for such credits was that the site be “underutilized.” That term was left undefined by the Legislature, with instructions to NYSDEC to finalize a definition by October 1, 2015.
On July 29, 2015, the New York State Department of Environmental Conservation (NYSDEC) conducted a public hearing on its proposed definition of an “underutilized” site for purposes of the 2015 Brownfield Cleanup Act Amendments. As indicated in a prior blog, this definition is critical because being “underutilized” is one of the few ways that a New York City brownfield site can qualify for tangible property credits under the 2015 Amendments.
New York State Governor and Legislature Reach Agreement on Reform and Extension of Brownfield Cleanup Program
Governor Andrew Cuomo and leaders of the New York State Senate and Assembly have reached an agreement with respect to extension and reform of the State’s Brownfield Cleanup Program (BCP), a significant development in view of impending expiration of tax credit eligibility on December 31, 2015. The essential elements of the deal are as follows: All sites currently in the Program, and those which are admitted prior to December 31, 2022, will be eligible for tax credits if they obtain their Certificates of Completion (COCs) by March 31, 2026.
In his budget proposal unveiled on January 21, Governor Andrew Cuomo included recommendations that would significantly change the New York State Brownfield Cleanup Program. Among the revisions he has recommended to the Legislature are the following: The deadline for sites to obtain their Certificates of Completion (COCs) in order to be eligible for tax credits under the Program would be extended until December 31, 2025. However, sites currently in the Program will need to obtain their COCs by December 31, 2017 to qualify for the existing level of tax credits. For sites admitted to the Program after April 2015, tangible property (development) credits would be available only for sites in environmental zones, sites where the projected cost of cleanup exceeds the value of the property as clean, or sites containing affordable housing. For sites meeting these criteria, tax credits would potentially be increased from current levels. However, sites not meeting these criteria would be ineligible for any type of development-related tax credit.
On January 14, the U.S. Court of Appeals for the 5th Circuit ruled that the sale of a useful chemical did not make the seller an “arranger for disposal” under Superfund, even where seller knew that some of that chemical would be spilled during its use. Vine Street LLC v. Borg Warner Corp., 2015 BL 8885, involved the sale of dry cleaning machines and PCE, a dry cleaning fluid, by Norge, a predecessor of Borg Warner. Norge equipped the machines with water separators, which it knew were not 100% effective. It continued to work with the dry cleaner to reduce spillage by modifying the separators’ design. Nonetheless, contamination resulted, and Vine Street, a successor landowner, sued Borg Warner for contribution to the cost of cleanup. The District Court held Borg Warner liable for 75% of the cost of cleanup based on its knowledge that some contamination resulted from these sales.
New York State Brownfield Developments: Governor Cuomo Vetoes Tax Credit Extension; State Bar Recommends Reforms
On December 29, Governor Andrew Cuomo vetoed a bill that would have extended, until March 31, 2017, the deadline for sites in the New York State Brownfield Cleanup Program to finish cleanups in order to qualify for the Program’s tax credits. The current deadline is December 31, 2015. The veto surprised many observers, since the Governor had earlier indicated that he would sign the bill.
In the waning hours of this year’s legislative session, the New York State Assembly and Senate have passed identical bills extending the sunset date for tax credits under the New York State Brownfield Cleanup Program from December 31, 2015 to March 31, 2017. To qualify for such credits, sites must obtain their Certificates of Completion from the New York State Department of Environmental Conservation (DEC) by the sunset date.
New York State Bar Association Environmental Law Section Releases Comments on Brownfield Program Reform Proposals
The Environmental Law Section of the New York State Bar Association has released its Report and Recommendations regarding the proposed extension and reform of the New York State Brownfield Cleanup Program (“BCP” or “Program”). The Report and Recommendations were prepared by the Section’s Brownfield Task Force, co-chaired by David J. Freeman and Lawrence P. Schnapf. The Task Force spent several months reviewing the proposals for reforming the Program made in Governor Andrew Cuomo’s budget bill and draft bill circulated by the staffs of the Senate and Assembly Environmental Conservation Committees.
New York State Brownfield Act reform did not survive the crush of last-minute negotiations over the State’s 2014-15 budget. The Governor’s office, the Senate, and Assembly each introduced their own proposals for accomplishing needed reforms but were not able to reach consensus on a path forward. The attached article reviews the differences among the Governor’s, the Senate’s and the Assembly’s proposals on such key issues as: extending the expiration date for brownfield tax credits; revising the definition of “brownfield site”; restricting tangible property tax credits; redefining costs eligible for tax credit treatment; and establishing a new, streamlined program for sites not seeking tax credits.