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New York State Passes Legislation to Reform the Brownfield Cleanup Act of 2003 - Part I.

On July 23, 2008, Governor David Paterson signed Brownfield Reform Legislation to amend New York State's taxation and environmental conservation laws. These amendments seek to remedy previous problems with the State's law concerning the redevelopment tax credits allowed under the program, and to create oversight programs to monitor the program where none existed before.

The most significant amendments to the law concerned the tax credits available for (1) site preparation costs; and (2) costs of improvements constructed on site (or "qualified tangible property credits").

On July 23, 2008, Governor David Paterson signed Brownfield Reform Legislation to amend New York State's taxation and environmental conservation laws. These amendments seek to remedy previous problems with the State's law concerning the redevelopment tax credits allowed under the program, and to create oversight programs to monitor the program where none existed before.

The most significant amendments to the law concerned the tax credits available for (1) site preparation costs; and (2) costs of improvements constructed on site (or "qualified tangible property credits").

In general, the legislature has increased the amount of credit available for site preparation costs. Under the old law, developers were allowed a 10-22% credit site preparation costs (depending on whether the applicant is an individual or a business, if property was in an en-zone (an area where the poverty rate is 20% and the unemployment rate is at least 1.25 times the statewide unemployment rate or double the rate of the county in which the project is proposed), or if the cleanup was under track 1- unrestricted use). The new law allows tax credits for up to 50% depending only on the clean up level (the most credits go to the most thorough cleanups, that is, for unrestricted use; next comes residential, and the fewest credits go to cleanups where the prospective use of the property is for commercial or industrial use).

The legislature was not, however, so generous with regard to the amount of qualified tangible property credits a developer is eligible to claim.

The prior law allowed a credit of 10-22% of the qualified tangible property credits. The credits under the amendments are calculated in the same manner; however, the legislature has capped the total amount of credits available at the lesser of $35 million or three times the amount of the costs included in the calculation of the site preparation credit component and on-site groundwater remediation credit component.

If the site is used primarily for manufacturing, however, the qualified tangible property credits will be limited to the lesser of $45 million or six times the amount of the costs included in the calculation of the site preparation credit component and on-site groundwater remediation credit component. Additionally, if the site is located in a Brownfield Opportunity Area (BOA) and its development is in conformance with the goals established under the Municipal Law for that BOA, then the applicable percentage of tangible property credit component will be increased by 2%.

In our next post, we will explain the distinct reporting requirements added by the brownfield amendments.

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