New York State Governor Andrew Cuomo and the New York State Legislature have agreed to extend and modify the financial incentives under New York’s Brownfield Cleanup Program (BCP) as part of the 2015-2016 State budget, which was signed into law on April 13, 2015. Important program changes to the BCP are also included in the legislation, along with the creation of a streamlined “BCP-EZ” program without tax incentives. This BCP extension and modification act (referred to below as “BEMA”) resolves lingering uncertainty over the future of the statewide program for cleaning up and redeveloping properties blighted by contamination, often referred to as “brownfields.”
In January, the Governor proposed changes to the BCP, along with significant curtailment of the tax incentives that have been part of the BCP since its adoption in 2003. Those proposals followed his unsuccessful attempt to modify and extend the program in the 2014-15 budget. Our prior alerts regarding the January proposal and the 2014 proposal can be found at www.bhlawpllc.com/brownfields.
The BCP’s tax incentives were to sunset for brownfield sites that do not receive a certificate of completion (CoC) from the NYS Department of Environmental Conservation (DEC) by December 31, 2015. During the 2014 legislative session, the Legislature passed a 15-month extension of that sunset date, but that extension was ultimately vetoed by the Governor.
Under current law, taxpayers may earn refundable New York State income/franchise tax credits for remediation and redevelopment activities, property taxes and on-site employment, and environmental insurance premiums for their BCP sites. The credit for remediation and redevelopment activities, known as the Brownfield Redevelopment Tax Credit (BRTC), is the focus of the proposed changes. BEMA will phase out the other two credits (the credit for real property taxes based on employment and the credit for environmental insurance premiums) for sites which have not been accepted into the BCP by the Effective Date noted on the attached Legal Alert.
The BRTC has three components that are currently calculated based on whether the site was accepted into the BCP before, or after, the BCP credits were overhauled in June 2008. The 2008 law change limited the BRTC component for redevelopment costs (including buildings) to a multiple of eligible cleanup costs and an overall limit of $35 million, or $45 million for sites primarily used in manufacturing. In addition to the 2008 changes, BEMA introduces new eligibility criteria and incentives for sites accepted into the BCP after the effective date.
For a complete review of the BCP extension and modifications, please download the attached Legal Alert.