Since the establishment of the Brownfield Cleanup Program (BCP) in 2003, over 715 contaminated sites have been cleaned up 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 and 2022 to extend the program and to curtail the excessive credits.
For more information, see Brownfield redevelopment tax credit.
The following provisions apply to sites accepted into the BCP after July 1, 2015:
- Sites will have until December 31, 2036 to receive a certificate of completion. (Deadline extended from March 31, 2026 through a 2022 legislative amendment to the BCP).
- 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.
- The project is within a Disadvantaged Community within a designated Brownfield Opportunity Area, and meets the conformance determinations*; or
- The project is being developed as a renewable energy facility site.*
*Per an April 2022 Taw Law update [Part LL of chapter 58 of the Laws of 2022; Tax Law §§ 21, 187-g, 210-B(17), 606(dd), and 1511(u)]
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 those listed in the above section.
- All sites outside of New York City will be eligible for the Tangible Property Credit without being subject to the new tests. All sites, regardless of location, will be ineligible for Tangible Property Credit if the following is found:
- Contamination in groundwater or soil vapor is solely emanating from off-site, and
- The property has 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.
BCP Application Requirements for "Underutilized" Determination
Underutilized Property:
If an Applicant requests a determination that a Brownfield Cleanup Program (BCP) site, located in a city with a population of one million or more, is eligible for Tangible Property Tax Credits as an underutilized property, the property must be underutilized as of the date of the application. In addition, documentation must be submitted to demonstrate that the property meets the definition of "Underutilized" set forth in 6 NYCRR 375-3.2(l) at the time of application.
For the Department to make a determination of underutilization, the following criteria apply, and the Applicant should be guided by the information below:
For sites where the anticipated future use is at least 75 percent industrial (The Applicant must include the proposed use in the BCP application):
No more than fifty percent of the permissible floor area of the building or buildings is certified by the applicant to have been used under the applicable base zoning for at least three years prior to the application which zoning has been in effect
Documentation Requirement: The Applicant should provide an affidavit from the current owner of the property that, within the last three years, no more than fifty percent of the permissible floor area of the on-site building(s) was being used. If a new owner, the Applicant must provide an affidavit from the previous owner(s) attesting that, within the last three years, no more than fifty percent of the permissible floor area of the on-site building was being used.
For all other sites, the following criteria and documentation requirements apply:
No more than fifty percent of the permissible floor area of the building or buildings is certified by the applicant to have been used under the applicable base zoning for at least three years prior to the application which zoning has been in effect
Documentation Requirement: The Applicant should provide an affidavit from the current owner of the property that within the last three years no more than fifty percent of the permissible floor area of the on-site building(s) was being used. If a new owner, the Applicant must provide an affidavit from the previous owner(s) attesting that within the last three years no more than fifty percent of the permissible floor area of the on-site building was being used.
The proposed use is at least 75 percent for commercial or commercial and industrial uses
Documentation Requirement: The Applicant should include the proposed use in the BCP application.
The proposed development could not take place without substantial government assistance, as certified by the municipality in which the site is located
Documentation Requirement: At the time of application, the Applicant should supply a certification from the appropriate municipality stating that the proposed development could not take place without substantial government assistance. Certification from the municipality may require an independent financial analysis by a financial expert.
Note: for Region 2 sites, the municipal certification shall come from the New York City Office of Environmental Remediation.- One or more of following conditions exists, as certified by the Applicant:
Property tax payments have been in arrears for at least five years immediately prior to the BCP application
Documentation Requirement: The Applicant should provide property tax records from the municipality in which the site is located.
A building is presently condemned, or presently exhibits documented structural deficiencies, as certified by a professional engineer, which present a public health or safety hazard
Documentation Requirement: The Applicant should provide the municipality's citation or other notice of condemnation with the BCP application. If the building is not condemned, the Applicant should provide a report, certified by a New York State registered and licensed professional engineer, with photographs and thorough analysis, that the structural deficiencies in the building(s) in question present a public health or safety hazard.
There are no structures
Documentation Requirement: The Applicant should provide photographs illustrating the vacant lot with the BCP Application.
Brownfield redevelopment tax credit rate structure
For the site preparation, on-site groundwater remediation, and tangible property credit components.
The tax credit for each component is computed by multiplying the qualified eligible costs by the applicable rate given below in percentages.
These percentages are based on the acceptance date of qualified sites in the Brownfield Cleanup Program (BCP).
Additional information is provided by NYS Dept. of Taxation and Finance.
Brownfield redevelopment tax credit rate structure: For the site preparation, on-site groundwater remediation, and tangible property credit components | ||||
| Rate structure | Sites accepted into BCP prior to 6/23/081 | Sites accepted on or after 6/23/08 but before 7/1/152 | Sites accepted into BCP on or after 7/1/15 but before 1/1/233 | Sites accepted into BCP on or after 1/1/233 |
| Tangible property component 4 | ||||
| Base rate | 10%/12%5 | 10%/12%5 | 10% | 10% |
| Track 1 remediation11 | +2% | +2% | +5% | +5% |
| 50%+ of site in Environmental Zone (En-Zone)6 | +8% | +8% | +5% | +5% |
| Brownfield Opportunity Area (BOA)7,8 | +2% | +5% | +5% | |
| Affordable housing9 | +5% | +5% | ||
| Manufacturing | +5% | +5% | ||
| Sites located in disadvantaged communities10 | +5% | |||
| Renewable energy facility sites10 | +5% | |||
| Site preparation/groundwater remediation components | ||||
| Unrestricted use | The rates above apply to all 3 components; there are no separate rates for these categories | 50% | 50% | 50% |
| Residential use | 40% | 40% | 40% | |
| Commercial use | 33% | 33% | 33% | |
| Industrial use | 27% | 27% | 27% | |
| Residential – track 4 | 28% | 28% | 28% | |
| Commercial – track 4 | 25% | 25% | 25% | |
| Industrial – track 4 | 22% | 22% | 22% | |
1Any site for which a Brownfield Cleanup Agreement (BCA) with the Department of Environmental Conservation (DEC) was entered into prior to June 23, 2008, and which has not received a Certificate of Completion (COC) by December 31, 2017, will only be eligible for brownfield redevelopment tax credits as if the site was accepted into the BCP on or after July 1, 2015.
2Any site accepted into the BCP on or after June 23, 2008, and prior to July 1, 2015, and which has not received a COC by December 31, 2019, will only be eligible for brownfield redevelopment tax credits as if the site was accepted into the BCP on or after July 1, 2015.
3Maximum tangible property component rate capped at 24%.
4The tangible property component for sites accepted on/after 6/23/08 is capped at the lesser of:
- $35 million or 3x site prep/groundwater costs; or
- $45 million or 6x site prep/groundwater costs if the site is primarily used in manufacturing.
510% is the personal income tax rate; 12% is the corporate rate.
6En-Zones are areas designated by the New York Department of Labor that meet certain poverty and unemployment standards.
7BOAs (Brownfield Opportunity Areas) are determined by the New York Department of State.
8The BOA project category for sites accepted into the BCP on or after January 1, 2023, has been amended to include sites located in a city having a population of one million or more that have submitted sufficient information to demonstrate their eligibility. These sites must meet the conformance determinations pursuant to General Municipal Law §970-r(10). These determinations are guided by, but not limited to, the following considerations:
- how the proposed use and development advances the designated brownfield opportunity area plan's vision statement, goals and objectives for revitalization;
- how the density of development and associated buildings and structures advances the plan's objectives, desired redevelopment and priorities for investment; and
- how the project complies with zoning and other local laws and standards to guide and ensure appropriate use of the project site.
9The DEC’s definition of affordable housing for sites accepted into the BCP on or after January 1, 2023, was amended to include a brownfield site that demonstrates it will qualify for benefits or be eligible under an affordable housing program. A project must provide a certificate of compliance or other evidence of eligibility issued by a federal, state, or local government affordable housing agency to qualify for the 5% affordable housing rate bonus.
10For sites located in a city having a population of one million or more, the redevelopment use limits for tangible property credit eligibility have been expanded to include these additional project categories (ECL 27-1407(1-a)). The redevelopment use limits include:
- at least half of the site area is located in an environmental zone as defined in section 21 of the Tax Law
- the property is upside down or underutilized
- the project is an affordable housing project
- the project is within a disadvantaged community, within a brownfield opportunity area, and meets the conformance determinations pursuant to subdivision 10 of section 970-r of the general municipal law; or
- the project is being developed as a renewable energy facility site.
11Starting in taxable year 2022, for sites complying with track one remediation standards, athletic facilities and their components will be considered buildings and structural components under the Internal Revenue Code for purposes of this credit. Athletic facilities include stadiums, baseball parks, basketball courts, and other athletic facilities. Their components include sports turf, site lighting, sidewalks, access and entry ways, and other improvements added to land.
