68 Contaminated Sites Reap $1 Billion in New York State Tax Credits
Struggling Communities & Communities of Color Missing Out on Cleanup Dollars
ALBANY, NY (June 7, 2012)—Environmental Advocates of New York today released its second in-depth analysis of tax credits doled out to developers under the state’s Brownfield Cleanup Program. A review of Department of Environmental Conservation (DEC) records shows that a total 114 brownfield sites have been remediated since the program began nearly 10 years ago. Department of Taxation & Finance records reveal that the state has paid out $1 billion in tax credits to clean up and redevelop 68 sites, while thousands of sites across the state remain contaminated. The high price tag is largely the result of tax incentives based on the value of the building constructed on the redeveloped site, not cleanup costs. Click here for a list of sites and related tax credits.
“Too much money is lining too few pockets and cleaning up too few sites. New York State has invested $1 billion to redevelop contaminated brownfields, but thanks to a broken tax credit formula, deserving communities across the state remain neglected,” said Alison Jenkins, Fiscal Policy Program Director, Environmental Advocates of New York. “Targeting incentives to bolster struggling neighborhoods would give taxpayers a better return on their investment.”
A 2009 EPA study of other brownfield cleanup programs found that Massachusetts has completed cleanups of more than 33,000 sites; New Jersey and Pennsylvania’s programs have cleaned up thousands of sites.
Not only does New York have far fewer cleanups than other states, the state’s poorly targeted tax credits fail to flow to the communities most in need of investment and cleanup, based on a review of community demographics and tax credit data from the 2008-2011 calendar years. And unlike New York’s other economic development programs, these tax dollars are not attached to accountability measures such as job creation. Sixty percent of projects claiming tax credits are located in areas with unemployment levels of less than 10 percent. Almost two-thirds of projects took place in areas that have less than 20 percent poverty rate among families. Out of 68 projects, only eight took place in predominantly African American and or/Latino neighborhoods.
Environmental Advocates used the DEC’s environmental remediation database to compile a list of projects that have received a certificate of completion and overlaid that list with additional information including detailed 2010 Census statistics on income levels and demographics, and information on tax credits claimed by developers from reports published by the Department of Taxation & Finance.
Unlike most tax credits, brownfield tax credits are refundable, which means that once taxes owed are deducted, the state cuts a check for the rest. Credits can be claimed for up to five years for remediation and up to 10 years for costs related to redevelopment and total millions of dollars.
Governor Cuomo and the State Legislature should reform these broken tax incentives as follows:
• De-link eligibility for the Brownfield Cleanup Program with eligibility for the tax credits;
• Target incentives to focus on neighborhoods in need of cleanup;
• Establish eligibility criteria such as whether the site is being developed to conform to a Brownfield Opportunity Area plan, is located in an environmental zone, or includes affordable housing or energy efficiency components; and
• Allow sites contaminated by historic fill or off-site sources into the program.
“New York may have deferred payments on brownfield tax credits in excess of $2 million until after 2013, but the bill will eventually come due,” added Jenkins.
A brownfield is an abandoned or underused piece of land where redevelopment is complicated by environmental contamination. Brownfields blight communities and pose both health threats and obstacles to economic redevelopment. Unused urban land is a fiscal burden because it is unproductive in terms of job creation, revenue generation, or contribution to the tax base.