Negotiators Still Trying to Resolve Brownfield Cleanup

Thu July 03, 2008 - Northeast Edition
Michael Virtanen - ASSOCIATED PRESS



ALBANY, N.Y. (AP) With the state comptroller identifying a potential $3 billion liability and a moratorium on new projects set to expire in July, negotiators have been trying to hammer out revisions to New York’s brownfield cleanup program, which gives tax credits to contractors who clean up polluted sites for commercial re-use.

Gov. David Paterson, the Senate’s Republican majority and Assembly Democrats each have introduced differing measures.

“Most of the squabbling is over: How do you minimize the financial impact right now?’’ said Rob Moore, executive director of Environmental Advocates. “This is a tough one. We’re talking about massive financial exposure to the state that is already riding on a very significant budget deficit.’’

“The state is looking at exposure of over $1 billion for 53 sites. I think they’re already guaranteed tax credits,’’ Moore said. There are thousands more brownfield sites, including many in upstate areas and New York City’s outer boroughs that aren’t getting done, he said.

The program stalled after several developers sued the state Department of Environmental Conservation when the agency rejected their proposed brownfield projects, and courts issued conflicting decisions about the DEC’s eligibility requirements.

In April, the Legislature passed a 90-day moratorium on approving new projects to allow itself time to come up with reforms.

One concern was that, because the program’s tax breaks are based on the real estate value of a project, rather than the cleanup portion or benefit to the community, too many tax breaks were going to lucrative hotel developments in Manhattan and Westchester rather than replacing crumbling factories with affordable housing in upstate cities.

In the brownfields package proposed by Paterson, cleanup and development costs are separated rather than lumped together under the current formula, which provides the developer with tax credits of up to 10 percent of project costs, which in one case topped $100 million.

While Paterson has proposed a hard cap on tax credits of $15 million, the Assembly has proposed a $50 million cap and the Senate proposal has another formula without a hard cap, Moore said.

Meanwhile, New York City officials have sought another provision that would permit developers to simply go forward and get the certificate from the DEC that a site has been cleaned up, thereby protecting the developer from getting sued, but without tax credits for moderately polluted sites. “Basically it costs a lot of money and the state doesn’t have it,’’ said Jeff Kay, who heads the mayor’s Office of Operations.

“Some projects, they may just want the certificate,’’ Kay said. Then developers can clean up a site, get it certified, find investors and then develop it. “You can’t do that now. The state program doesn’t allow you to do that,’’ he said.

In his June 13 report, Comptroller Thomas DiNapoli said the program has had some success the past four years in cleaning up former industrial sites, but other states have done more using tighter tax credits. “Right now, New York faces a potential $3.1 billion tax credit liability for brownfields clean up and redevelopment. The State needs to target these tax credits to make sure we get the right bang for all those bucks,’’ he said.