NY Comptroller Urges Brownfields Cleanup Overhaul

New York’s comptroller has called for an overhaul of state programs for restoring thousands of abandoned and contaminated industrial and commercial sites after the state spent nearly $1 billion to clean up 408 brownfields.

However, half the cleanups over two decades were done at no state cost from tax credits, which were added in later versions of the cleanup program.

In a 33-page report Monday, Comptroller Thomas DiNapoli says the state may incur another $3.3 billion in costs from tax credits over the next few years, while uncertainty of program extensions will probably start to deter new projects. He called for limiting or ending tax incentives while extending liability protections and streamlining regulations for developers.

“Thousands of contaminated sites in communities across the state continue to pose environmental and health threats and prevent economic development,” DiNapoli said. “The state has an opportunity now to improve the cleanup program to encourage more remediation and redevelopment of contaminated properties, and do it in a more cost-effective manner through better targeting of program dollars.”

Cleanup projects typically take years to finish, with developers qualifying for tax credits afterward. Key program provisions are set to expire in 2015.

The Department of Environmental Conservation, which administers the program, is working with stakeholders to try to improve the program “and maximize cleaning up of polluted sites across the state,” spokeswoman Lisa King said. Gov. Andrew Cuomo has made cleaning up communities from pollution “a central part” of his administration, she said.

The large tax credits for developers began in Gov. George Pataki’s administration.

“In addition to the potential threat to public health and environmental quality posed by these sites, associated cleanup costs and potential liability were widely perceived as impediments to the economic revitalization of New York’s cities,” the report said. “Many, if not most, of New York’s urban areas contain concentrations of contaminated sites.”

The state has had three versions of cleanup plans:

• The Voluntary Brownfields Cleanup Program first established by the DEC in 1994 took applicants through 2003, offering limited liability protection, cleanup standards that varied with intended re-use and simpler regulatory requirements than for state Superfund sites containing hazardous waste. It cleaned up 212 sites.
• The Environmental Restoration Program created by the state’s Clean Water/Clean Air Bond Act of 1996 authorized $200 million in bonding for municipal brownfields projects. Those funds are fully committed and the program is no longer accepting applicants. It offered limited liability protection for municipalities, state indemnification for third-party liability and 75 percent of cleanup costs, later raised to 90 percent. It has cleanup up 68 sites at an average state cost of $779,176.
• The Brownfield Cleanup Program established in 2003 offers limited liability protection, a shorter process to identify remedies, soil cleanup based on proposed use and refundable tax credits of 10 to 22 percent of cleanup and industrial, commercial or residential redevelopment. Amendments in 2008 capped tax credits at $35 million or three times the site cleanup costs, and $45 million or six times the cleanup costs if the site is to be used for manufacturing. It has cleaned up 128 sites at an average tax credit cost of $9.4 million, with the state potentially on the hook for $3.3 billion for the 389 enrolled sites.

The report said the credits were initially projected to cost about $135 million annually, though in 2011 alone developers claimed $279 million.

“These tax credits are significantly more generous than those in neighboring states and make the BCP the most expensive cleanup program in the state,” the report said.