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Summary of Assessment of Public Comment - Amendments to 6 NYCRR Part 375

Environmental Remediation Programs - Revisions to BCP Regulations

This assessment of public comment summarizes and responds to the comments received on the revised proposed regulations for the amendment of 6 NYCRR Subparts 375-1 and 375-3. On June 10, 2015, the New York State Department of Environmental Conservation (DEC) released for public comment proposed regulations to define "affordable housing project," "underutilized," and "brownfield site," under the Brownfield Cleanup Program (BCP). The statutory authority for such regulations is governed under Article 27, Title 14 of the Environmental Conservation Law. A public hearing was held on these definitions on July 29, 2015 and the comment period ended on August 5, 2015. Comments were received, both in writing and at the public hearing, from 11 separate entities. Subsequently, on March 9, 2016, DEC released for public comment revised proposed regulations which addressed comments received on the proposed regulations. No public hearing was required for the revised rule making. Written comments were received from eight separate entities.

DEC received comments from business organizations, the City of New York, the New York State private environmental bar association, the New York State Business Council, private environmental consultants, and individuals. During preparation of the revised rule making, DEC incorporated suggestions made by the public based on the comments received. Seven comments received pertained to additional concerns with the "underutilized" definition as proposed. One commenter provided comments related to eligibility requirements, which will be addressed in a future rule making, and were not relevant to the proposed rule making which is limited to the definition provisions.

Based on comments received on the "underutilized" definition, DEC made a minor clarification to the language pertaining to substantial government assistance which would allow for a combination of different types of assistance in order to meet the requirement for substantial government assistance. No changes were made to the "affordable housing project" or "brownfield site" definitions which remain as published for public comment in the State Register on March 9, 2016. The proposed Express Terms have also been posted on DEC's web site.

All documents submitted to DEC are available to the public, subject to exceptions in the Freedom of Information Law.

The comments pertaining to the "underutilized" definition, while acknowledging improvement from the June 10, 2015 proposed version, indicated that the definition was still restrictive and relies too heavily on anticipated future uses of the property as commercial or industrial development. DEC points out that this revised definition of "underutilized' provides for mixed use development, with up to 25 percent restricted residential uses. Additionally, brownfields that are better suited for different types of development can still qualify for Tangible Property Tax Credits (TPCs) if they are located in an EnZone, are upside down, or provide affordable housing.

There was also the concern that few sites in New York City (NYC) would quality as 'underutilized' through the Tax-in-Arrears Test because of tax delinquency policies and procedures, and that few buildings would be deemed condemned or as having acute structural deficiencies because of building code violations. DEC believes that these criteria are valid indicators of underutilization and the regulations provide objective tests with clear parameters. DEC included these criteria to broaden the definition in response to comments received during the initial comment period.

Again, one commenter suggested using existing definitions of underutilized from outside New York or from various NYC laws or regulations in place of the DEC proposal. During the development of the statute, the Executive and Legislature evaluated the use of existing definitions of "underutilized" and did not come to the conclusion that any of those definitions were appropriate for eligibility for the TPCs associated with the BCP. DEC also reviewed other state and city laws, as well as other states' definitions and determined that these definitions did not provide a workable definition in the context of the BCP. In many circumstances, the definitions in other laws are subjective and it is clear that in this area having the most objective criteria possible minimizes risk both for applicants and the State.

Another commenter indicated the need for substantial government assistance should be a factor for consideration, but not a requirement, and they also thought it was unclear which governmental entity would make this determination. The statute directs DEC to consider substantial government assistance in developing the regulatory definition of "underutilized." Economic development agencies often assess projects to determine if state assistance is needed. DEC also consulted with NYC, who in many instances would certify that the proposed development requires substantial government assistance, and DEC would consider that certification in its determination on eligibility for TPCs for underutilized properties.

Two commenters suggested that the time limit for the Tax-in-Arrears test should be revised to either one or three years rather than be five years. DEC believes that the five year limit is appropriate to demonstrate underutilization. One year is too short of a timeframe to be a legitimate indicator of underutilization and it could have the perverse effect of encouraging entities to stop paying property tax specifically for the purpose of qualifying for TPCs.

DEC does not agree that the revised "underutilized" definition is unduly restrictive. Under the amendments to the BCP, it was clearly the intent of the Legislature to limit eligibility for TPCs in cities with a population of a million or more, as evidenced by the statutory restrictions adopted. Nonetheless, in response to concerns raised by the definition proposed on June 10, 2015, DEC significantly broadened the definition and increased the number of sites eligible for TPCs by revising the definition to allow for commercial use in addition to industrial use, with up to 25 percent restricted residential uses for "underutilized" properties. Yet the revised definition responds to the Legislative mandate to limit the number of sites that are eligible for TPCs.

It should also be noted that any site meeting the definition of a "brownfield" remains eligible to participate in the site preparation tax credits and release of liability offered by the BCP, and, once additional regulations are adopted, the newly created BCP-EZ program. Only sites seeking the TPCs would be subject to the underutilized definition, if not otherwise eligible under one of the other gateways.

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