When New York Governor Kathy Hochul executed the 2022-2023 State Budget, it included a 10-year extension to the State’s Brownfield Cleanup Program (“BCP” or “Program).  The State’s voluntary, incentive-laced, BCP was set to expire on December 31, 2022.  The Program’s extension generally reinforces the State’s commitment to incentivize the remediation and re-use of environmentally-compromised and economically-blighted property.

Applicants can now be accepted into the BCP through December 31, 2032 and be eligible to receive tax-credit benefits if a Certificate of Completion (“COC”), confirming the remedial action objectives for the BCP site have been achieved, is issued on or before December 31, 2036.

In addition to extending the BCP, the Budget included a number of amendments that serve to extend and/or expand and increase the availability of BCP tax credits.  Specifically, the amendments include:

  • A 2-year extension to claim site preparation credits and/or on-site groundwater remediation credits for sites that received a COC between July 1, 2015 and June 24, 2021. The timeframe for claiming the credits was previously 5 tax years from the issuance of a COC, the Budget amends the timeframe to 7 tax years.
  • An extension to the timeframe for sites that received a COC between March 20, 2010 and December 31, 2015 to claim qualified tangible property tax credits (improvement/development costs) to 180 months (15 years) from the issuance of a COC.  Previously, the claims were available for a period of 10 years, with an additional 2-year allowance if it was determined the requirements for the credit would have been met, if not for COVID restrictions.
  • The addition of a 5% increase in available qualified tangible property credits for sites developed as renewable energy facilities or for sites developed in a “disadvantaged community” within a Brownfield Opportunity Area. Qualified tangible property credits can range from 10% to 24% of development costs (subject to certain credit amount caps) based on a number of qualifying factors, including the level of cleanup, and if the project is located within an Environmental Zone or Brownfield Opportunity Area.
  • Expansion of eligibility for qualified tangible property credits to sites located in New York City for renewable energy facilities and sites characterized as a “disadvantaged community” located within a Brownfield Opportunity Area. Prior to the amendment, qualified tangible property credits in NYC were only available to sites that demonstrated (a) at least half of the site is located in an Environmental Zone, (b) the property is upside down or underutilized, or (c) the project is an Affordable Housing Project.
  • Inclusion of stadiums, baseball parks, basketball courts and other athletic facilities and equipment, including sports field turf, lighting and access and entry ways, among other improvements, as qualified tangible property for sites cleaned up to a Track 1 remediation standard beginning in tax year 2022.

In contrast to the expansion and extensions to obtain BCP incentives, the amendments also potentially curtail eligibility of certain benefits for Affordable Housing projects and incorporate a pay-to-play component for projects admitted into the BCP:

  • The amendments modified the definition of Affordable Housing Project to include language authorizing Department of Environmental Conservation (“DEC”), after consultation with the Division of Housing and Community Renewal, to exclude specific benefits.
  • The amendments introduce a non-refundable program fee of $50,000 payable upon admittance into the BCP. The fee is waivable upon a showing of financial hardship.  The fee does not qualify for any of the BCP tax credits.  The amendments require the DEC to establish regulations defining a financial hardship.  The amendments establish the preliminary criteria  for evaluating financial hardship as (a) considering whether an applicant has waived its tax-credit benefit rights, (b) determining if the project is located in a disadvantaged community or if the site is being developed as an Affordable Housing Project, and (c) reveiwing the assets and income of the applicant.

 The amendments achieve the goal of extending the BCP and expanding and/or extending the incentives associated with the BCP.  However, imposing flat, non-refundable fees on all applicants would seemingly curb lower-margin projects, smaller projects and projects located in less dense population areas.

For more information regarding the BCP, please contact Jesse Hiney (631.367.0718).