The New York State Brownfield Cleanup Program is back in business and offering strong incentives

Much of the recent discussion in the environmental movement has focused on how we can make new buildings more energy efficient. However, in addition to focusing on new construction, gains can and should be made by recognizing the opportunities that are presented by sites that are already degraded. By utilizing land that was previously developed and even cleaning up land that was previously polluted, more open spaces can be preserved and redevelopment can positively impact the environment. New York State's Brownfield Cleanup Program is designed to encourage this kind of land use, providing developers with tax credits when they clean up damaged sites. Originally enacted in 2003, the Brownfield Cleanup Program allowed for three different types of tax credits that could, in some instances, prove to be exceedingly beneficial to developers seeking to build on a brownfield site. Due to the large economic cost to the state, the Brownfield Cleanup Program was suspended by the governor's office so that it might be re-evaluated. On July 23, governor Patterson signed into law an amended Brownfield Cleanup Program which, while placing limits on the amount of tax credits developers can claim, continues to offer strong incentives for the continued renewal of degraded sites. When deciding whether or not to enter the New York Brownfield Cleanup Program, a property owner must first determine if the site is eligible. The legislation creating the Brownfield Cleanup Program seeks to provide broad eligibility by defining a brownfield as "any real property, the redevelopment or reuse of which may be complicated by the presence or potential presence of a contaminant." However, the mere presence of contaminants is not sufficient to qualify for the brownfield tax credits. Instead, the New York State Department of Environmental Conservation (NYSDEC) undertakes a case-by-case review of potential brownfield sites. Upon entry into the Brownfield Cleanup Program, parties have the ability to benefit from three different tax credits: 1. Investigation and cleanup costs: A developer may take between 22% and 50% of the investigation and cleanup costs associated with the development of a brownfield site depending on the level of cleanup that is performed. 2. Building development costs: This credit, also known as the tangible property tax credit allows a developer to deduct 10% to 22% of the total site development costs. However, the new legislation recently put into effect limits the amount of recovery to the lesser of $35 million or three times the investigation and cleanup costs for all commercial developments. 3. Real property tax credits: This credit has the effect of reducing the real estate taxes for a brownfield site by 25% to 100% each year for the first ten years of the life of the brownfield project. Entry into the Brownfield Cleanup Program also places obligations on the participant. Specifically, the developer of a brownfield site must continually monitor the pollution on the site and provide the NYSDEC with annual reports. These investigation and reporting requirements can impose a significant cost on developers and, given this fact, the tax credits may not provide sufficient incentives for all property developers. Therefore, individuals interested in developing brownfield sites should carefully analyze the potential risks and rewards prior to undertaking the endeavor. As individuals and the government begin to refocus on the environmental problems that face us today, policies must be altered to take a more comprehensive approach to environmental land use issues. Therefore, it becomes imperative that we not only develop future projects taking into account energy efficiency, but also correct our past mistakes and reclaim lands that were befouled by pollution. New York State's Brownfield Cleanup Program is a positive step towards realizing this goal. Kevin Walsh is an associate in the environmental practice group at Certilman Balin Adler & Hyman, LLP, Hauppauge, N.Y.