Is the State’s Brownfield Cleanup Program a “giveaway” to developers?

Watchdog groups and elected officials like State Senator Liz Krueger think so. They are supporting Governor Cuomo’s effort to reform the program as part of this year’s budget negotiations.

The Brownfield Cleanup Program provides state tax credits to developers to encourage “private-sector cleanups of brownfields and to reduce development pressure on ‘greenfields’,” says the State.

Brownfield sites are land which is “complicated by the presence or potential presence of…contaminants [such as] hazardous waste and/or petroleum.”

Critics call the program “corporate welfare.” They claim that the high development pressure in places like New York City makes the incentive all but unnecessary, and the funds would be better used to clean up sites in more economically-disadvantaged parts of the state.

“Nearly every inch of Manhattan Island is coveted for high yield development, regardless of the need to mitigate brownfields,” Senator Krueger said in a statement last week.

“Some of the most unjustifiable credits were paid out on my own island of Manhattan—$187 million in costs to the State since 2010, for just six projects.”

According to a new report by Albany watchdog group Environmental Advocates, New York State has used more than $1.4 billion in taxpayer dollars to “pay a small number of developers” to clean up 170 brownfield sites.

“Meanwhile, thousands of contaminated sites await remediation,” says the group.

Double Dipping?

One key problem, reports Environmental Advocates, is that developers can receive tax credits for both the cleanup of a brownfield and for its redevelopment. These redevelopment credits are the main target of reform.

EA notes that since 2008, tax credits issued for cleanup assistance totaled $122 million. Comparatively, over six times as much, almost $800 million, has been paid to developers in brownfield redevelopment credits.

“They [the credits] are a needless giveaway to developers who do not need further encouragement to build in already competitive real estate markets,” the group concluded.

Ripe for Reform

Governor Andrew Cuomo has proposed broad reforms to the Brownfield Cleanup Program in his 2015 Executive Budget.

The changes, which are detailed in the Environmental Advocates report, Ripe for Reform, include:

  • Targeting tax incentives to communities most in need of public investment.
  • Establishing the following redevelopment tax credit eligibility criteria: a site must be located in an economically disadvantaged area, cleanup costs must exceed the post-cleanup value of the property, or the project must provide a substantial amount of affordable housing.