The Benefits of the Brownfield Cleanup Program

The New York State Brownfield Cleanup Program (BCP) is a major driving force in restoring blighted, underutilized properties across the state while at the same time meeting remediation criteria and benefiting the environment. The BCP gives land developers incentives to reward them for their environmentally conscious efforts. These incentives include tax credits.

Background

You may be wondering, “what is a Brownfield?” – or, more importantly, “how do I get these tax credits?” To put it plainly, a Brownfield site is a piece of property that has been proven to contain contamination exceeding criteria established by the New York State Department of Environmental Conservation (NYSDEC). The process in establishing a site in the Brownfield Program is often lengthy and multifaceted, requiring careful strategy.

The first step in the process is also referred to as the due diligence process. Due diligence begins with the conduction of a Phase I Environmental Site Assessment (ESA). If recognized environmental conditions are identified in Phase I, then a Phase II ESA is conducted by sampling various environmental media. If the Phase II confirms on-site contamination, a BCP application can be completed.

The BCP Process

An application to the BCP may require several iterations of investigation and a pre-application meeting with NYSDEC. After the BCP application is approved, developers and NYSDEC must sign a Brownfield Cleanup Agreement (BCA).

Once remediation is planned and properly executed, a final engineering report and site management plan must be prepared for NYSDEC’s review and approval. Upon finalization of these items, a certificate of completion is issued and the BCP process is complete.

After the certificate of completion is issued, tax credits can be applied for.

Available Tax Credits

Depending on the site’s location, the site owner’s relationship to the property, site use, and the date of remediation, the tangible tax credits one can receive varies. It is important to note that the maximum percentage that can be awarded is set to 24%.

In general, the baseline is set to 10% for sites outside of New York City, but there are multiple parameters that can add to how much extra tax credits you receive. These include:

• 5% if the property is in a disadvantaged community, or at least 50% of the property is in an Environmental Zone;
• 5% for unrestricted use soil and groundwater cleanup;
• 5% if the property is in a Brownfield Opportunity Area (BOA);
• 5% for projects that feature affordable housing;
• 5% for manufacturing facilities; and/or
• 5% if the new development uses renewable energy.

For sites located in New York City, these benefits are constrained to;

• Property in an Environmental Zone (areas with high poverty/unemployment);
• Sites that will be redeveloped as affordable housing;
• Upside down properties (cleanup cost is 75% or more of property value); and/or
• Site is being redeveloped as a renewable energy facility.

Work with Walden!

From Phase I ESAs to final engineering reports, Walden has extensive experience working with clients on Brownfield projects. Contact us at 516-744-5863 to see how we can help you take advantage of the Brownfield Cleanup Program, and download Walden’s Brownfield development guide for additional information.