On December 29, 2014, Governor Andrew Cuomo vetoed a bill that would have extended the availability of tax credits under New York State’s Brownfield Cleanup Program (BCP) until March 31, 2017.
The BCP was created to promote private-sector cleanup and redevelopment of contaminated properties. A taxpayer that enters the BCP and incurs costs to remediate a Brownfield site is eligible for certain tax credits based on the level of cleanup and subsequent redevelopment work. The tax credits available are the brownfield redevelopment tax credit (which includes the site preparation, tangible property, and on-site groundwater remediation components), the remediated brownfield credit for real property taxes, and the environmental remediation insurance credit.
Currently, only those BCP sites that receive a Certificate of Completion (COC) before December 31, 2015 qualify for the BCP tax credits. However, the legislation passed by the New York State Legislature in June 2014 (Bill Number A 10135/S 7878) would have extended that deadline to March 31, 2017. It also authorized refinancing the State Superfund Program by granting an additional $300 million in bonding authority until March 31, 2017, and it appropriated $100 million for fiscal year 2014-15 for the State Superfund Program.
In his message to the Assembly, the Governor advised that he vetoed this bill because it conflicted with the State Superfund and BCP funding proposed in the 2014-15 Executive Budget that was not included in the enacted budget. In the Executive Budget, the Governor had proposed legislation that would have extended the availability of BCP tax credits to 2025, but also would have changed the credits developers could receive. The stated purpose of these reforms was to protect taxpayers, particularly those in Upstate New York. Under the reformed BCP in the Governor’s proposed legislation, the tax credits for cleanup costs would cover only actual cleanup costs, while those for redevelopment costs would be "rationalized" to cover only sites that have been either vacant for over a decade, are worth less than the cleanup costs, or are "priority" economic development projects. The proposal also provided a new $100 million appropriation to extend the State Superfund Program to address municipally-owned Brownfields.
However, the Legislature rejected these proposals and instead passed its own bill with different appropriations and time frames for the BCP and the State Superfund, which were not accounted for in the enacted budget for 2014-15. The Governor stated that the legislation passed by the Legislature "would now have an unplanned, direct impact on the current State fiscal plan. This is not the way to enact such legislation. For that reason, I am vetoing this bill."
As a result of the Governor’s veto, only those remediating BCP sites who receive their COC by December 31, 2015 will be sure to receive the current BCP tax credits. However, the Governor indicated in his veto message that he intends to again propose extending the BCP with appropriate reforms. Given the current sunset provision, we expect that there will be a heightened urgency to address the various BCP issues in the next legislative session.
