The state’s program to provide tax credits for developers whose projects lead to the cleanup of contaminated property doesn’t expire until next year, but local developers and economic development officials are pushing the Cuomo administration and state legislators to extend the programs before the end of this month.
The state’s Brownfield Cleanup Program has been an important subsidy for developers who tackle projects that often involve millions of dollars in added costs associated with remediating sites that have been contaminated from previous uses, often linked to the Buffalo Niagara region’s industrial past.
The Brownfield Cleanup Program works for Western New York,” said Brian T. McMahon, the executive director of the New York State Economic Development Council, which represents development agencies across the state. “Without the Brownfield Cleanup Program, future sites will not be redeveloped because our cities and towns don’t have the resources” to do it on their own.
Because it takes almost four years between the time a project is accepted into the brownfield program and it is completed, supporters said the Legislature needs to act quickly so developers will know whether those incentives will continue to be available or if their value will be reduced in the future.
“Reauthorization needs to be a priority,” said Dottie Gallagher-Cohen, the president of the Buffalo Niagara Partnership, during a news conference Tuesday at the former F.N. Burt factory in Buffalo, which is being converted into offices and apartments with aid from the brownfield program. “Development stops now if we don’t get this reauthorized” before the current Legislative session ends at the end of this month.
But the program has come under criticism in the past year for providing more than $1.1 billion in tax credits for 146 projects that have been completed since the incentives were first offered. Many of the most controversial sites are linked to downstate projects – from a Ritz-Carlton Hotel in White Plains to the $220 million East River Plaza project in Manhattan – as that entered the program before 2008 reforms that limited the scope of the incentives.
Supporters of the tax credit said the 2008 reforms, which limited the incentives to $35 million for non-industrial projects and $45 million for manufacturers, have worked well and refocused the program on upstate projects that aim to revive old industrial sites with environmental problems.
Of the 20 projects that received the biggest tax credits under the program, all came in before the benefit caps were put into place six years ago. Those 20 projects received about 75 percent of all the tax credits that have been issued under the program.
“Upstate has benefitted far more than downstate” since the reforms took effect in 2008, McMahon said.
In the Buffalo Niagara region, the brownfield tax credits have been used on more than three dozen projects since 2008, from the Welded Tube factory on the former Bethlehem Steel site to the conversion of the former Donovan State Office Building in to the One Canalside hotel and office project.
The Cuomo administration is seeking further changes to the program. Cuomo wants to allow remediation tax credits only for “actual cleanup costs.” Redevelopment credits would be “rationalized” to cover sites only according to a newly crafted set of guidelines.
Cuomo’s proposal also would limit eligibility for the “tangible property tax credit” to:
• Properties that have been vacant for at least 15 years or vacant and tax-delinquent for 10 years or more.
• “Upside down” properties where the property’s value is less than overall cleanup costs.
• “Priority” economic-development projects.
“If cost is an issue, we could support some modest reductions” in the scope of the incentives, McMahon said.
“We’re not here to highlight differences. We think the program works extremely well. We think it’s structured properly,” he said. “We’re not interested in horse trading.”