Incentives Watch: Cuomo Vetoes Brownfield Extender Bill in New York

Last week, New York Gov. Andrew Cuomo vetoed an extender bill for the tax credit available under the Brownfield Cleanup Program. The tax credit, set to expire Dec. 31, 2015, would have been extended to March 31, 2017. The bill also authorized an additional $300 million for the state’s Superfund Program to clean up hazardous waste sites.

At first glance, the veto seems unusual: it is a fairly routine extension of a credit that the governor has supported in the past. However, Cuomo reiterates his support for the credit in his veto memo. The governor also notes that he included a 10-year extension to the Brownfield Cleanup Program in his 2014-15 proposed budget, which also would have reformed the program. The reforms would have created additional requirements to claim the tax credit. The reforms and extension were not included in the version of the budget that was ultimately passed, and the governor notes in his veto memo that passing an extension outside of the budget bill “is not the way to enact such legislation.” The governor also mentions his plan to reintroduce a credit extension and program reforms in his next proposed budget.

The tax credit available in New York under the Brownfield Cleanup Program in New York is actually three separate credits. One credit is for 12 percent of the site preparation costs, tangible property costs and on-site groundwater remediation costs incurred by the taxpayer in cleaning up a brownfield site. The credit increases to 20 percent if at least 50 percent of the site is located within a designated environmental zone. A second credit is allowed for a remediated brownfield site. The amount of the credit is calculated using various factors, including the amount of property taxes paid and the number of full-time employees employed by the developer at the remediated site. The third credit is for the lesser of $30,000 or 50 percent of the premiums paid for environmental remediation insurance credit.

The veto has halted work on some cleanup projects, due to the uncertainty of whether the bill will be available in the future. Brownfield sites are expensive to clean up and without state tax credits or federal brownfield credits, which expired at the end of 2011, there is less incentive for businesses to undertake a brownfield redevelopment project.

The Brownfield Cleanup Program is not without critics, though. Many of the tax credits go to affluent areas, which may have been redeveloped even without tax incentives. In a statement, the Environmental Advocates of New York said that the brownfield program “costs too much to clean up too little.”

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