The New York Department of Environmental Protection (DEC) has published notice regarding the proposed revisions to the Brownfield Cleanup Program (BCP) regulations.  The revisions provide a minor revision to the term “affordable housing project” and substantive changes to “underutilized” term, both of which terms are derived from legislative changes in 2015.   These terms are relevant to the tangible property tax credits associated with the BCP.  The “brownfield site” definition is unchanged in this rulemaking.

In June, 2015, New York Environmental Conservation Law (ECL) Article 27 Title 14, which sets forth the BCP, was amended by revising the definition of a “brownfield site.” The recently proposed regulatory revisions aim to clarify the sites that qualify for the tangible property tax returns provided for by the BCP for certain redevelopment projects. These rules apply to New York city, and future rulemaking will address this program statewide.  The NYDEC notice stated that the previous amendments in 2015 addressed differences in the potential state tax liability between New York City BCP sites and sites elsewhere in New York.  High development costs in New York City resulted in what was seen as excessive tangible property tax credits. The two new additions are standards of qualification meant to limit the number of eligible New York City sites. Other standards for qualification include the “environmental zone” (to be adopted) and “upside down” designations, and these standards will still apply.

Brownfield Sites

Prior to the June, 2015 amendment, the BCP definition of brownfield sites included those that had the “presence or potential presence” of contamination which was complicating development of the property. The revised definition of brownfield sites was meant to exclude sites that only had potential contamination from receiving the tangible property tax credits. The intention of only awarding these credits to sites with actual contamination is accomplished by altering the definition to include only those “exceeding soil cleanup objectives or other health-based or environmental standards, criteria or guidance adopted by the [DEC].”

Affordable Housing Project

As required by the amendments to ECL §27-1405, the DEC added a definition for affordable housing project to the 6 NYCRR 375 brownfield regulations. The definition defines this term as “a project that is developed for residential use or mixed residential use that must include affordable residential rental units and/or affordable home ownership units.” These two types of units are further defined as those which are included in a federal, state, or local housing agency’s affordable housing program, or subject to local regulation or legally binding agreements that define the minimum number of units set aside for tenants with a household income of no more than a certain percent of the area median income. Area median income is defined as the median income for a family of four, adjusted for family size, of the local metropolitan statistical area or county. The recent revision to the original amendment makes minor technical changes to the language.

Underutilized

The definition of an underutilized site is changed significantly by the currently proposed revisions to the 6 NYCRR 375 amendment. The primary focus of the rulemaking is the application of the term “underutilized” to qualify BCP projects.  The City of New York supported an industrial development focus for the term.  Others objected that potential “mixed use” developments would not qualify using this definitional framework.  Comments received during the public hearings and comment period on the proposed amendment urged the DEC to expand this definition, which is reflected in the revision. The DEP proposes to allow commercial use with some residential component, subject to conditions.  Rather than meeting all required conditions, as originally proposed, the DEC would qualify projects that meet “one or more of three conditions.”  The conditions include: (1) taxes in arrears; (2) building condemnation or structural deficiencies; or (3) that there are no structures on the site.  The last condition is a new standard for qualification.  In addition, a municipality need not certify the structural condition, as previously required.  The applicant may certify any of the conditions, subject to a structural engineer certifying condition (2).  The municipality remains the authority in certifying the “need for substantial government assistance” to qualify.

Public comments regarding this proposed rulemaking must be submitted to the DEC Division of Environmental Remediation no later than April 8, 2016.  See the public notice for details.