The New York Brownfield Cleanup Program (BCP)
The BCP was enacted in 2003, and amended in 2008 and 2015. The BCP replaced the NYSDEC administrative voluntary cleanup program. In addition to providing liability releases, the BCP offers the most generous tax credits in the country. Applicants can claim three types of tax credits. The BCP tax credits are refundable so to the extent that the brownfield tax credits exceeds the applicant’s tax liability, the tax credit is treated as a tax overpayment and the state cuts a check. Only those entities named on the brownfield cleanup agreement (BCA) may claim the brownfield tax credits so it is important that the correct entities are named on the BCA.
See our blog post for examples of common BCP mistakes.
We have worked on over 80 BCP projects. For most of the projects, we have guided clients from the pre-application phase to obtaining regulatory signoff. However, we have also helped clients buy or sell BCP sites during the remedial process, transferring sites after the cleanup has been completed as well as negotiating constructing or permanent financing for the projects. For a list of BCP projects we have worked on, click Here.
The first tax credit is known as the Site Preparation Cost (Site Prep). It includes all costs necessary incurred to make the property ready for development. The Site Prep credit includes not only cleanup costs but also costs of demolition, excavation, soil disposal, sheeting, shoring and dewatering. The amount of the Site Prep tax credit that may be claimed depends on the level of cleanup and ranges from 28% to 50% of the costs. The Site Prep tax credit may be claimed in the tax year following the issuance of the Certificate of Completion (COC). The buildings on BCP sites do not have to be constructed or occupied to claim the Site Prep tax credit. Instead, only the remedy has to be completed and a COC issued to be able to claim the Site Prep tax credit.
Note that BCP was Amended in 2015 so that the costs eligible for the Site Prep tax credit only include those expenses incurred to qualify the site for a COC. The critical documents for identifying those costs will be the Decision Document where NYSDEC approves the remedial action for the brownfield site and the Final Engineering Report (FER) that discusses the implementation of the remedy. For example, NYSDEC may exclude areas of soil excavation or portions of the foundation from the scope of the approved remedy in these documents. As a result, it is important for counsel to review these documents to determine potential tax credit impacts
The second tax credit is available for post-COC groundwater monitoring costs at the same percentage of the Site Prep tax credit. This credit may be claimed annually for the five year period following the issuance of the COC.
The third (and most valuable) BCP tax credit that is available is the qualified tangible property (QTP) tax credit which ranges from 10% to 24% of the value of the improvements constructed on the brownfield site subject to a cap of $35MM or 3 times the Site Prep costs (whichever is less). BCP applicants have ten years from the issuance of the COC to put the building into service and claim the tangible property tax credit. For example, a $200MM project with $10MM in Site Prep costs (mainly from excavation) could be eligible for $5MM in Site Prep costs for a track 1 (unrestricted) cleanup and $30MM in tangible property tax credit (3x $10MM) for a total of $35MM in BCP tax credits.
Note that BCP was Amended in 2015 so that brownfield sites located in New York City that are accepted into the BCP on or after July 1, 2015 will not longer be entitled to the QTP as of right. To qualify for the QTP, sites will have to fall into one of four categories: Affordable Housing Projects, sites located within an Environmental Zone, sites that are “upside-down” or sites that meet the regulatory definition of “Underutilized”.
Use this link to access information about the NY BCP
- For a list of the NYSDEC BCP projects we have worked on, click Here
Other New York Environmental Laws
- Use this link to access NYSDEC Regulations
Use the links below to key NYSDEC Guidance and Policy Documents