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April 22, 2013

DiNapoli: State's Brownfield Cleanup Program Needs To Reach More Sites; Be More Cost-Effective

Report Provides Options for Strengthening Cleanup Efforts;
Calls for Separating Clean Up and Development Tax Credits

The New York State Legislature should examine options to restructure the state’s primary program to revitalize contaminated properties — the Brownfield Cleanup Program (BCP) — in order to fully achieve the important economic, public health and environmental goals set when the program was created, according to a report released today by State Comptroller Thomas P. DiNapoli.

“While two decades of efforts to clean up brownfields have delivered some successes, much more can and should be done,” DiNapoli said. “Thousands of contaminated sites in communities across the state continue to pose environmental and health threats and prevent economic development. The state has an opportunity now to improve the cleanup program to encourage more remediation and redevelopment of contaminated properties, and do so in a more cost-effective manner through better targeting of program dollars.”

DiNapoli’s report examined the performance of the BCP and found, as of February, 128 sites have been remediated at a cost of close to $1 billion, mostly in the form of as-of-right tax credits. The credits awarded under the program, widely considered to be among the most generous in the nation, have ranged from a low of $120 to a high of $113.8 million, and an average of $9.4 million per site. Based on an analysis of the 389 sites currently enrolled in the BCP, DiNapoli projects a potential overall tax credit liability to the state of $3.3 billion.

Since 2003, when a bipartisan legislative effort led by DiNapoli and Senator Carl Marcellino created the BCP, the program has attracted a significant number of developers to clean up contaminated properties. At the start of the program, the Division of the Budget projected that average annual program costs would be $135 million. To date, actual average annual costs have totaled nearly $190 million, a figure that is expected to balloon if the program stays on the current path.

To control costs, DiNapoli recommends that the legislature consider maintaining as-of-right tax credits for site clean-ups, but decouple the tax credits for site redevelopment from admission to the program. As-of-right tax credits are automatically granted to enrollees in the program. Incentives needed to encourage development of the reclaimed properties and determinations on appropriate development credits should properly rest with the state’s economic development agencies. This move could reduce the state’s financial liability by focusing the most generous incentives on projects that meet the state’s objectives for economic and community development and that would not otherwise be economically viable.

As the program is currently formulated, financial incentives are predicated on completing site cleanup by the end of 2015. Cleanup projects typically take several years to complete, and the uncertainty over incentive eligibility might already be deterring new projects, according to DiNapoli.

DiNapoli said the impending sunset of the existing program provides a unique opportunity to consider needed reforms to maximize the return on taxpayers’ underwriting of brownfield cleanups by examining the best level of state assistance for municipal remediation efforts. Citing the success of the cleanup program in New York City, the report includes a recommendation that lawmakers identify low-cost options for projects that are viable without financial incentives, as well as exploring ways to ensure long-term financing for the state Superfund.

"Those of us working to revitalize New York's low-income neighborhoods and communities of color, appreciate this thorough analysis by State Comptroller Thomas DiNapoli,” said Jody Kass, executive director of New Partners for Community Revitalization. “The Comptroller's support for projects consistent with a community’s Brownfield Opportunity Area (BOA) plan would strengthen meaningful community engagement. It also provides crucial information about what the state has achieved as a result of the brownfield tax credit subsidies over the past decade. This should inform the policy debate going forward. Rather than simply extending the existing tax credit program again for another year, the state should adopt reforms to increase certainty for developers, as well as maximize the benefits of these valuable programs."

“The Brownfields Cleanup Program’s record on cleaning up contaminated sites and getting them back on tax rolls has fallen short of its multi-billion dollar price tag,” said David VanLuven, policy director with Environmental Advocates of New York. “Comptroller DiNapoli’s informative report digs into the history behind issues within the program, and provides thoughtful guidance on common-sense solutions to make the Brownfields program more effective. The Cuomo Administration has worked hard to clean up New York’s economic development efforts and will find a broad base of willing partners to set this program on a firmer path moving forward.”

Based on an evaluation of the experience with brownfield cleanup programs in New York and neighboring states, the report sets out a series of recommendations to reach more contaminated sites in a more cost effective manner. These include:

  • Maintain tax credits for cleanup costs, provide additional benefits where projects are consistent with local and state economic development priorities, and restrict credits for development costs for projects that can proceed without state assistance.
  • Provide state support from existing revenue sources for the environmental and other assessments that municipalities or project developers currently must undertake before deciding to proceed with a cleanup.
  • Identify potential new sources of financing to support cleanup of municipally owned sites under the existing Environmental Restoration Program.
  • Authorize a new program that provides liability protections and a streamlined cleanup process without financial incentives for sites with limited contamination based on the expired Voluntary Cleanup Program.
  • Reduce administrative burdens to simplify participation in the cleanup programs.
  • Partner with municipalities to increase overall capacity for brownfield remediation.
  • Require detailed public reporting on redevelopment projects, and enhance the state’s database of environmental remediation sites.

For a copy of the report visit:http://www.osc.state.ny.us/reports/environmental/brownfields_restoration13.pdf



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