The cleanup of New York’s thousands of toxic, dangerous and dirty brownfields is crucial – unfortunately, the state’s current Brownfield Cleanup Program is broken.
As Environmental Advocates’ new report Ripe for Reform documents, the current program (while well-intended) has skidded off the rails. So far, it has cost taxpayers $1.4 billion to clean up just 170 sites. In other words, the average cost of a brownfield cleanup in New York State is $8.2 million dollars. That’s absurd.
Even more alarming is that these costs are expected to balloon. In the current program, developers can collect their credits for up to 10 years. The Office of the Comptroller estimates that out-year liability on taxpayers for sites already in the program to be another $3.3 billion.
Structural problems in the law
A key structural problem within existing law is that it incentivizes high value developments in already competitive real estate markets. Not only does the program offset the cost of cleanup, but the incentive known as the “redevelopment” credit is based on the value of the property after completion. To date, fully 86-percent of the payouts of this program have been to developers for the redevelopment credits – costs unrelated to the actual cleanup of the site.
Just 27 of the state’s 62 counties have had any brownfields projects collect credits since 2008. That leaves vast swaths of the state – particularly regions that are most in need of public development incentives – out in the cold. The North Country, for instance, has not benefitted from a single project. And the Southern Tier has only had a couple. Additionally, more than $450 million has gone to projects not located in En-Zones, those Census tract communities actually in need of redevelopment incentives.
While there are pockets of success, such as Erie County, these trends do not carry statewide. In Erie County, local leaders and developers have worked hard to identify priority projects and follow them through completion for the benefit of the community. Since 2010, 17 projects in Erie County have cost taxpayers a total of $15.5 million. Meanwhile, just six projects in Manhattan have cost taxpayers hundreds of millions.
This demonstrates that even when local leaders and developers do their best to make the program work, it remains tremendously lopsided to the benefit of deep-pocketed developers building the most expensive of projects in the most competitive of real estate markets.
There is no denying that incentives are being paid out for projects that would have occurred whether the program existed or not.
That’s not how legislators who championed this initiative in 2003, or its subsequent reforms in 2008, intended.
Opportunity for Reform
Legislators have the unique opportunity in this year’s budget to review a much-needed program, and fix the problems that have arisen in recent years. Environmental Advocates strongly urges legislators to support and build upon Governor Cuomo’s reform plan, which will:
- Target tax incentives to communities most in need of public investment, through different gateways, to drive development to areas with high unemployment rates and those desperate to turn an abundance of brownfields into an economic engine.
- Establish the following redevelopment tax credit eligibility criteria: a site must be located in an economically disadvantaged area, cleanup costs must exceed the post-cleanup value of the property, or the project must provide a substantial amount of affordable housing.
- Separate eligibility for state certified cleanup credits from eligibility for redevelopment tax credits.
- Extend the program for 10 years to provide certainty for developers.
With these reforms, the Legislature and Governor Cuomo will ensure that far more sites – in more of the communities that need public development incentives – benefit. Cleaning up more sites means healthier communities, and a stronger tax base for the state and local governments. Reforming the Brownfield Cleanup Program will ensure it finally becomes the integral piece of the state’s environmental and economic development initiatives that it can be.