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Brownfield Cleanup Program Tax Credit Eligibility and Rates

In the first ten years since it was established, the Brownfield Cleanup Program (BCP) cleaned up more than 190 contaminated sites statewide and incentivized redevelopment. However, it also resulted in the awarding of unnecessary and excessive tax credits. To address this issue, reforms to the program were implemented in 2015 to extend the BCP, and to ensure the program is fair to the state's taxpayers by targeting tax incentives in New York City only to those sites that would not otherwise be attractive to developers.

The reforms address many issues with the current BCP. Specifically, the legislation:

Continues tax credits for 10 years with program reforms. The BCP tax credits were scheduled to expire on December 31, 2015. If they had been allowed to sunset, potential economic development opportunities could have been lost and brownfield sites would have remained fallow or been developed without appropriate environmental cleanup and oversight. In addition, a greater burden would have been placed on the State-funded Superfund cleanup program, instead of being cleaned up by the private sector.

The following provisions apply to sites accepted into the BCP after July 1, 2015:

  • Sites will have until March 31, 2026 to receive a certificate of completion.
  • Redevelopment credits in New York City are limited to:
    • Properties which are located in Environmental Zones (En-Zones), which are areas with high poverty and/or unemployment levels;
    • "Upside down" properties, where the cost of cleanup is 75 percent or more of the property value as if uncontaminated, or "underutilized" properties, which DEC has defined by regulation; or
    • Sites that will be redeveloped for affordable housing projects, as defined by DEC in consultation with the Division of Housing and Community Renewal.

Separates BCP eligibility and Redevelopment (Tangible Property) Credit eligibility in New York City. Under the old rules, all projects get redevelopment tax credits for development costs. Credits were not focused on sites in blighted or low-income neighborhoods or on projects that are otherwise in need of tax credits to advance. In addition, windfalls could go to projects that are in strong real estate markets where state assistance for redevelopment is not necessary.

This reform focuses tax credits on blighted areas and sites by limiting eligibility for redevelopment credits in New York City to:

  • All sites outside of New York City will be eligible for the Tangible Property Credit without being subject to the new tests, provided that:
    • Contamination in groundwater or soil vapor is not solely emanating from off-site, and
    • The property has not been previously remediated under the RCRA, Superfund, Brownfield or Environmental Restoration or Spill Response programs for its then-intended use.
  • The only remediation costs eligible for the Site Preparation Credit are those associated with investigation, remediation or are necessary to obtain a certificate of completion for the site. The costs associated with building demolition and for remediating asbestos, PCBs and lead in structures at the site also qualify for the Site Preparation Credit. The costs of foundations which exceed the equivalent of a site cover system do not qualify for the Site Preparation Credit.
  • Redevelopment credits are limited to property with a useful life of at least 15 years, and non-portable equipment, machinery, and associated fixtures and appurtenances on the site. Payments for related party service fees (developer fees) can only be claimed when they are actually paid and cannot be claimed under the site preparation or groundwater credits.

Below is a chart showing the various tangible property credit structures:

BCP Tangible Property Tax Credits
Tangible Property Tax Credits Accepted Prior to June 23, 2008 and Completed by December 31, 2017 Accepted after June 23, 2008 and Completed by December 31, 2019* Accepted after July 1, 2015 and Completed by March 31, 2026
Baseline (Based on Tax Status)* 10-12% 10-12% 10%
Plus the sum of the following:
Environmental Zone: At least 50% of the site is located in an EN-zone (high poverty and unemployment rates) 8% 8% 5%
Track 1 Cleanup: Unrestricted soil and groundwater cleanup 2% 2% 5%
Brownfield Opportunity Areas: Development conforms with the goals and priorities of the designated Brownfield Opportunity Area (BOA) in which the site is located N/A 2% 5%
Affordable Housing N/A N/A 5%
Manufacturing N/A N/A 5%
Maximum Percentage 22% 24% 24%
Cap Non-Manufacturing N/A $35M or 3X Site Prep $35M or 3X Site Prep
Cap Manufacturing N/A $45M or 6X Site Prep $45M or 6X Site Prep

*Please see "BCP Generations and Required Completion Dates", below for some exceptions to the required end dates.

BCP Generations and Required Completion Dates (PDF, 47 KB)