Brownfield Cleanup Program Tax Credit Eligibility and Rates

Since the establishment of the Brownfield Cleanup Program (BCP) in 2003, over 650 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. 

The legislative reforms address many issues with the BCP as follows:

2022 Legislative Amendment to the BCP

Brownfield redevelopment tax credit (Articles 9, 9-A, 22, and 33) (see also link: Summary of 2022 corporation tax and personal income tax changes (ny.gov)

In 2022, several amendments were made to the brownfield redevelopment tax credit, as summarized below:

• The credit was extended for sites accepted into the Brownfield Cleanup Program prior to January 1, 2033 that have received a Certificate of Completion (COC) prior to January 1, 2037. The extension supports economic development opportunities and the redevelopment of brownfield sites, rather than new development on “greenfields” with appropriate environmental cleanup and State oversight. In addition, the burden on the State-funded Superfund cleanup program continues to be reduced through these private- sector cleanups.
• The period to claim the on-site groundwater remediation credit component has been extended to seven years after the COC was issued, for qualified sites issued a COC on or after July 1, 2015, but on or before June 24, 2021.
• The period to claim the tangible property component has been extended to 15 years after the COC was issued, for qualified sites issued a COC on or after March 20, 2010, but before December 31, 2015.
• The period to claim the site preparation credit component has been extended to seven years after the COC was issued, for qualified sites issued a COC on or after July 1, 2015, but on or before June 24, 2021.
• Site preparation costs for a site issued a notice of acceptance on or after July 1, 2015, but on or before June 24, 2021, includes all costs paid or incurred within 84 months after the last day of the tax year in which the COC is issued.
• Starting in tax year 2022, stadiums, baseball parks, basketball courts, and other athletic facilities are considered buildings provided they comply with track 1 remediation standards [as defined in NYCRR section 375-3.8(e)(1)]. Components of such sites (including sports field turf, site lighting, sidewalks, access and entry ways, and other improvements added to land) are considered structural components of buildings under the Internal Revenue Code and are included in the definition of tangible property for the purposes of this section.
• Adds two new designations eligible for an increased tangible property credit components for sites accepted into the Brownfield Cleanup Program on or after January 1, 2023.
  • A disadvantaged community as defined in Environmental Conservation Law section 27-1405
  • A renewable energy facility as defined in Environmental Conservation Law section 27-1405

For more information, see Brownfield redevelopment tax credit.

[Part LL of Chapter 58 of the Laws of 2022; Tax Law §§ 21, 187-g, 210-B(17), 606(dd), and 1511(u)]

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 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):

1. 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:

1. 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.

2. 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.

3. 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.

4. One or more of following conditions exists, as certified by the Applicant:

   1. 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.

   2. 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.

   3. There are no structures

      Documentation Requirement: The Applicant should provide photographs illustrating the vacant lot with the BCP Application.
       

BCP Tangible Property Tax Credits

¹Please see "BCP Generations and Required Completion Dates", below for some exceptions to the required end dates.

² Only applicable to sites receiving a Certificate of Completion on or after January 1, 2023.

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