Like a number of tax-incentive programs over the years, the state’s brownfield program has come under increasing criticism for diverging from its original goal to clean up aging industrial sites in blighted neighborhoods.
Most of the tax breaks have gone downstate, where developers received them for everything from upscale condominiums to office towers in Midtown Manhattan for projects that would have gone forward regardless of the aid, critics and Gov. Andrew M. Cuomo say.
Among the most cited abuses: Brownfield tax breaks were awarded to build a Ritz-Carlton Hotel in White Plains, where a 1,900-square-foot suite is available for $2,000 and its steakhouse boasts a 12-ounce American Wagyu ribeye for $92.
From 2006 to 2012, the state’s Brownfield Cleanup Program has cost $1.14 billion in tax credits, with only 131 sites getting cleaned up, according to Environmental Advocates of New York. The group pointed to the East River Plaza in Manhattan, which cost $220 million to build and received $44 million in brownfields credits.
Now the Cuomo administration is seeking changes in where cleanup aid for brownfields goes. 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.
“Gov. Cuomo has recognized the state’s brownfields program is critical to community revitalization and that for too long it has been an albatross for taxpayers, too costly and off-target for many areas,” said Peter M. Iwanowicz, executive director of Environmental Advocates, which has worked with the Cuomo administration on the brownfield proposals.
Iwanowicz said that “thousands of toxic sites” need cleanup statewide and that the program has “not produced results for areas most in need of public investment – particularly upstate, communities of color or with high unemployment or poverty rates.” He believes that the reforms should help correct that.
In Buffalo, once-contaminated sites have benefited from significant reinvestment under the brownfield program since the program was established in 2003: the Buffalo Lakeside Commerce Park, Union Ship Canal, Buffalo River Corridor and the Larkin District. The revitalization of sites such as these in the Buffalo Niagara region would continue, but under different guidelines, according to the brownfield program that Cuomo proposed in his 2014-15 executive budget.
The brownfield program is designed to “enhance private-sector cleanups” of contaminated industrial sites by providing tax credits.
The tax credit program is essential in places such as Buffalo, Mayor Byron W. Brown has said.
Brown has urged state legislators to resist the governor’s package of changes, saying the city might not be able to attract enough developers otherwise.
“It might cause a lot of these projects to hang out for a long time in Buffalo,” Brown said last month.
The key change proposed for the brownfield program, which requires approval from the State Legislature, calls for continued tax credits for developers through 2025 but would limit credits that developers can claim on the costs of buildings and other improvements after the site is cleaned up, according to state Budget Division spokesman Morris Peters.
Eligibility for the “tangible property credit” under Cuomo’s proposal would be open to:
• Properties 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.
Brownfields dot the Western New York landscape. Buffalo’s waterfront, now attractive for development, has numerous contaminated sites requiring some level of remediation before they can be built upon.
To what extent the proposed changes will affect the 73 or so overall brownfield sites in Erie, Niagara and Cattaraugus counties remains to be seen, but officials remain hopeful that Buffalo Niagara will see its fair share.
“Any increase in funding would be welcome in Buffalo,” said Rep. Brian Higgins, D-Buffalo. “No one region in New York State has more inactive hazardous-waste sites than the Buffalo region. This has been a barrier to redeveloping historically industrial sites.”
Erie County alone had 31 Brownfield Cleanup Program sites, the most of any county in the state. Many of them are found on what would otherwise be some of the region’s most valuable real estate.
“Our region’s waterfront is dominated by hundreds of acres of brownfields and is one of the largest environmental challenges to overcome as we continue our revitalization,” said Jill Jedlicka, executive director of Buffalo Niagara Riverkeeper.
The proposed legislation, as Cuomo’s budget presents it, would “focus the tax credits on sites and areas of the state that need it the most,” according to Peters. Also included, he said, is a “fast-track option” without tax credits but one that would provide “streamlined state oversight of site cleanup.”
The governor’s spending plan also includes $10 million to address “municipally owned brownfields” that would be made through the state’s Environmental Restoration Program.
Jedlicka did not take a position on Cuomo’s proposals, but she said she believes that the Brownfield Cleanup Program, with its public- and private-sector collaboration, “can be leveraged and deliver multiple benefits to the communities in which they are implemented – jobs, clean water, restored ecosystems and reconnections to our waterfront.”
“We have tremendous examples of brownfield redevelopment potential,” Jedlicka said. “Both the RiverBend and Buffalo Color sites on the Buffalo River have been remediated and are undergoing simultaneous ecosystem restoration and redevelopment.”
She added that the future availability of brownfield funding could “accelerate the revitalization of Buffalo’s outer harbor and quickly re-establish a healthy connection of our community back to Lake Erie.”
Since its start 10 years ago, the program has been used to help clean up more than 150 contaminated sites statewide, state officials said.
But some projects, state officials say, went for developments that arguably would have proceeded without state financial assistance.
That’s why the state Tax Reform and Fairness Commission called for the changes put forth in Cuomo’s budget. Properties in the New York City metro area might be rehabilitated more out of necessity, because of the density of population and lack of open space, as opposed to upstate, where land is more spread out, Higgins said.