New York State Brownfield / Bond Act Program

Brownfield sites are abandoned commercial and industrial properties that have been passed over for redevelopment because of issues pertaining to environmental quality. Some of these sites are large industrial complexes at which operations have contaminated large volumes of soil and/or regional groundwater. Other sites are as inane as the empty corner gasoline service station with leaking storage tank systems.

Contaminated and abandoned properties exist in big cities, small towns, sprawling suburbs and the countryside. Left untouched, Brownfields pose environmental, legal and financial burdens on a community and its taxpayers. However, after cleanup, the value of these sites can be restored to they can become powerful engines for economic vitality, jobs and community pride.

In 2003, New York State established the Brownfield Cleanup Program (BCP). Administered by both the New York State Department of Environmental Conservation (NYSDEC) and NYS Department of State, this program fosters environmental cleanup (remediation) initiatives as well as spurring economic redevelopment by providing developers with tax credits for the development or adaptive reuse of contaminated sites. A key component of the BCP is that the site does not need to be restored to ambient (pre-spill) conditions, rather, developers can opt to work with Engineering or Institutional Controls to minimize the environmental and health impacts of residual contamination.

Upon completion of a remediation under the BCP program, the Brownfield developer receives liability limitations for hazardous waste and/or petroleum emanating from the site under Environmental Conservation Law Section 27-1421; and is eligible for three separate tax credits. To be eligible for these tax credits (pursuant to Title 14 of Article 27 of the Environmental Conservation Law), a Brownfield developer must have been issued a Certificate of Completion from the Commissioner of the NYSDEC (referenced as a Remediation Certificate in the tax code).

The first and most significant tax credit is The Brownfield Redevelopment Credit. A credit of 10% to 22% of the costs incurred in the following three areas:

• Site preparation costs (expenses related to qualification for a remediation certificate or preparing a site for development)
• Tangible property costs (similar to ITC credit, covering all capitalized expenses, such as buildings and structural components)
• On-site groundwater costs (remediation of groundwater contamination)

The second tax credit, the Remediated Brownfield credit for Real Property Taxes, is a yearly credit. This credit is for developers bringing employment to the developed site. Based on number of employees as well as location of the site, the tax credit can be up to 100% of the eligible yearly real property taxes paid with a limitation equal to the number of employees time $10,000. For instance, if the developed site pays $50,000 in real property taxes and employs 100 employees, the tax credit could be up to $50,000 per year. Further, improving the developers return on investment.

The third tax credit is the Environmental Remediation Insurance Credit. This is for premiums paid for Environmental Remediation Insurance (Section 3447 of the Insurance Law) up to $30,000 or 50% of the premium.

1996 Clean Water / Clean Air Bond Act (Environmental Restoration Projects - Title 5)

The New York State Clean Water/Clean Air Bond Act authorizes $200 million for the funding of the investigation and cleanup of Environmental Restoration Projects.

A municipality is eligible for an Environmental Restoration Project grant if it is the owner of a property (ownership must be demonstrated before receiving the grant but not necessarily at the time of application) that may be contaminated with hazardous substances or petroleum. However, there are two important limitations. First, a municipality is not eligible if it was responsible for the hazardous substance or petroleum contamination. Second, a municipality is not eligible if the property is listed as Class 1 or 2 on the New York State Registry of Inactive Hazardous Waste Sites.

The term "hazardous substances" is defined in the Bond Act legislation (ECL 56-0101.11) as "substances found on the list of substances hazardous to the public health, safety or the environment promulgated pursuant to article 37 of this chapter and petroleum, as that term is defined in subdivision fifteen of section one hundred seventy-two of the navigation law." The cleanup requirements are also found in the Bond Act (ECL 56-0505.3) which states that the cleanup "shall meet the same standard for protection of public health and the environment that applies to remedial actions undertaken pursuant to section 27-1313 of this chapter." The law does not differentiate between petroleum and non-petroleum so they must follow the same approach.

Municipality means a local public authority or public benefit corporation, a county, city, town, village, school district, supervisory district, district corporation, improvement district within a county, city, town or village, or Indian nation or tribe recognized by the state or the United States with a reservation wholly or partly within the boundaries of New York State, or any combination of the above. For the purposes of this title, the term municipality includes a municipality acting in partnership with a community based organization (CBO).

A CBO means a not-for-profit corporation, exempt from taxation under section 501(c)(3) of the internal revenue code whose stated mission is promoting reuse of Brownfield sites within a specified geographic area in which the CBO is located. The CBO must have twenty-five percent or more of its board of directors residing in the community in such area; and represent a community with a demonstrated financial need. By statute, a CBO does not include any not-for-profit corporation that has caused or contributed to the release or threatened release of a hazardous waste or petroleum from or onto the brownfield site.

The ownership must be in free title, or the municipality must qualify as a "temporary owner" as a result of foreclosure on a tax lien, as described in ECL 56-0508. The law prohibits grants for Class 2 Inactive Hazardous Waste Disposal Registry Sites. However, the municipality would receive the liability limitation by virtue of completing the investigation and would not be obligated to remediate the property, as long as the property was not used. The Class 2 property might then be cleaned up under the State Superfund Program.

A municipality would be required to enter into a contract with the State to expeditiously investigate or remediate an eligible property, implement a public participation plan, place an environmental easement on the property, if needed and comply with the terms of the contract.

The municipality would complete the application form and all associated materials provided by the Department. As part of the application, the municipality must identify the environmental benefit to be derived from the project and either the economic benefit also to be derived or the public recreational use to which the property will be placed once it is remediated.

Complete applications for investigations which satisfy the four eligibility criteria described in ECL 56-0505 will be approved on a first-come, first-served basis. Generally, complete applications for remediations will be evaluated in groups based on when they are received. The Department will score each application according to the Environmental Restoration Project prioritization criteria. If the project's score meets or exceeds the minimum score required for eligibility, and there are sufficient funds, then the project will be approved. If available funds are insufficient, the Department will approve the complete applications in accordance with their rank. Once funds become available, complete applications will be reconsidered for funding.

Projects are prioritized based on the benefit to the environment, the economic benefit to the State, the opportunity for the property to be used for public or recreational purposes, and the opportunity for other funding sources to remediate such property.

The Bond Act provides grants for reimbursement of up to 90% of the eligible on-site costs and 100% of the eligible off-site costs for the investigation or cleanup of a Brownfields site. While most cleanup costs are reimbursed at the full percentage of the eligible costs, indoor asbestos abatement and demolition of structures will usually be reimbursed at 50% unless that material must be disposed in a RCRA "C" landfill.

Private monies received for a property or project can be leverage to pay the municipal share, except for responsible party payments. Responsible party payments are subtracted from the eligible costs before State assistance is calculated.

The remediation objective of Bond Act or Brownsfield cleanups meet the same standard of protection that applies to the remedial actions taken under the State's Inactive Hazardous Waste Disposal Site Remediation program described in 6 NYCRR 375 (November 2005 – draft). That will require an evaluation of whether it is feasible to cleanup to unrestricted use of the property. If it is not feasible to cleanup to that level, then environmental easements could be required and a higher cleanup level may be allowed based on feasibility.

The municipality can sell the property prior to completion of the cleanup, However, the property cannot be used for any new purpose until the cleanup is complete on the property.

A municipality is required to prepare and implement a public participation plan prior to remedial activities at a property. This includes communication between the public and municipality prior to the selection of a course of action, disclosure of information, public notice of the availability of a draft remedial plan, a 45-day comment period, technical assistance, and a public hearing if substantive issues are raised.

If a municipality is applying for a grant to undertake an investigation, then the provisions of SEQRA do not apply. Data collection and research of properties are Type II actions (6NYCRR Section 617.5(c)(18)) and, as such, are not subject to the procedural requirements under SEQRA.

In order for a municipality to undertake and/or fund an action, it must comply with the provisions of SEQRA. DEC must comply with SEQRA prior to approving any remediation grants. Since the issues involving brownfield cleanup and redevelopment are primarily local in nature, it is strongly recommended that the municipality assume lead agency status on an action and coordinate review of the action with all involved agencies (including DEC). It is also strongly recommended that coordinated review of an action be conducted and a determination of significance made prior to submitting an application for a grant. Before the Department can issue a grant for remediation, the SEQRA process must be completed. This means that an environmental assessment must be conducted of the "whole action", by the lead agency, i.e., the remediation and redevelopment. If the environmental assessment results in a negative declaration, SEQRA responsibilities end notwithstanding appropriate publication requirements. If a positive declaration is issued by the lead agency, then a Final Environmental Impact Statement and Findings Statements must be prepared before the action can go forward and before DEC can issue the grant. SEQRA determinations must be submitted as part of a complete application.

An environmental assessment of cleanup with no known redevelopment at the time of application could result in a negative declaration since the cleanup should be a net positive benefit to the environment. Redevelopment of the property would be subject to SEQRA with or without this grant program.

Eligible costs include the costs of appraisal, surveying, engineering and architectural services, plans and specifications, consultant, and legal services which are necessary for conducting the approved project, and which are reasonable and properly documented, as determined by the State.

In addition to any limitations imposed by State Finance Law, the following costs generally would not be eligible for State reimbursement: 1)lead abatement projects, 2) costs to redevelop the property that are not necessary to remediate the property; and 3) costs incurred prior to State approval of an investigation application.

Only those costs incurred after State approval of the investigation application are eligible except for preapplication costs associated with storage tank registration, closure, and disposal activities, if those costs are incurred on or after June 6, 1996.

All costs associated with the approval, preparation, issuance and sale of bonds issued by the municipality in support of the project, together with the interest on such bonds or other form of indebtedness, are not eligible for State assistance.

The cost of redeveloping a property for reuse would not be eligible for State assistance under this program. However, it is possible that a municipality could recover its redevelopment costs, for example, upon recovery of money from federal payments, responsible or private party payments, or the sale or lease of the property if the total recoveries exceed the environmental restoration project cost.

A municipality's costs to acquire a property are not eligible costs under the Bond Act. Only costs related to the investigation and remediation of a property are eligible for reimbursement from the State. However, it is possible that a municipality could recover its acquisition costs, for example, upon recovery of money from federal payments, responsible or private party payments, or the sale or lease of the property if the total recoveries exceed the environmental restoration project cost.

The municipality would not be required to recover any of the State's costs but may be asked to assist the State in such recovery by providing information gathered as a result of the project. In the event a municipality does recover monies from the responsible parties, the State would be required to recalculate the State assistance share and the municipality would have to reimburse the sate for the difference.

If the municipality sells or leases the property, it would first offset from such proceeds any taxes owed to the municipality upon acquisition, and its costs for the environmental restoration project. Any surplus proceeds would be used to reimburse the State for the grants provided under the Program. Any remaining proceeds would be retained by the municipality.

During the municipality's compliance with the project's requirements to the State's satisfaction. A municipality shall have the benefits identified in ECL 56-0509 regarding the liability limitation beginning the date of the department's approval of the State assistance application. However, the property cannot be used for any new purpose until the remediation of the property is completed to the Department's satisfaction.

Liability protection starts when the State approves the application. However, if the municipality fails to complete the work to the State's satisfaction, the protection afforded by ECL 56-0509 is suspended until it does complete the work.

If a municipality defaults on a State Assistance Contract, it would assume the liability associated with ownership of the property. There is currently no release from the Federal Government that comes to the municipality because it successfully undertook a project. No. CERCLA §113 contribution protection would require a consent order in addition to a State Assistance Contract.

A municipality which receives a grant for an investigation will receive ECL 56-0509's liability protection provided it completes the investigation to the State's satisfaction and in accordance with the State Assistance Contract. However, the property may not be used for any new purpose until the remediation is implemented to the Department's satisfaction.

Brownfield and Bond Act Site Services

Impact Environmental provides a full range of services for Brownfield and Bond Act Site developers. Working with a diverse swatch of private and municipal developers, Impact Environmental is working on 8 large scale Brownsfield/Bond Act developer sites in New York State. Of these 8, 4 have been completed to the satisfaction of the State.