NYS Brownfield Tax Credit Program Renewed with the Passing of the Budget

In early April, New York State passed a $142 billion budget, which included a 10-year extension of the Brownfield Cleanup Program. The state tax credits for developers who clean up and build on contaminated sites was supposed to expire at the end of this year, but now has the necessary funding to continue.

Additionally, a number of reforms have been made to the program, which state lawmakers hope will inspire developers to keep cleaning up contaminated sites, especially in areas outside of New York City boundaries.

Updates to the Brownfield Cleanup Program

Since its 2003 implementation, the program has provided developers with more than $1 billion to clean up contaminated sites and turn them into something positive for the community. However, environmental groups had been calling for reform for years, as they believed some developers were abusing the system and they wanted to see the funds distributed on a wider basis.

Before the new changes were underway, a report from Environmental Advocates of New York claimed the average tax break was $8.5 million to a total of 70 sites. While there are 62 counties in the state, program credits had been granted for projects in only 27 counties.

“Brownfields cleanup is crucial, particularly in a state with so many polluted sites holding back our communities,” said Peter Iwanowicz, executive director of Environmental Advocates. “But the current program is out of control. It costs taxpayers too much and cleans up too little. While there are certainly pockets of success – like Erie County – these trends do not carry statewide. Taxpayers are footing the bill for an extraordinarily costly and broken system that is in desperate need of reform.”

The average credit was largely inflated by a few exceptionally large tax breaks, such as the $114 million awarded to the Ritz-Carlton hotel and residences in White Plains, which is located in Westchester County.
Since 2010, credits paid for 17 development projects in Erie County totaled $15,562,827, for an average cost of $915,460, notes Environmental Advocates. However, six Manhattan projects during that same time period cost taxpayers $186,618,573, for an average cost of $31,103,096.

The new law regulates specific items that can be claimed under the credit, including excavation work and asbestos removal. The credits are also now more restrictive in New York City, to motivate increased participation in the program upstate. Additionally, the budgetary changes make it much easier for developers to receive approval for their cleanup plan if they aren’t pursuing tax breaks.

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