BILL NUMBER:A9377

TITLE OF BILL:  An act to amend the tax law, in relation to a brownfield
redevelopment tax credit

PURPOSE:
This bill would cap the tax credits available for the redevelopment of
Brownfield sites whose request for participation in the Brownfield
Cleanup Program (BCP) was denied by the Department of Environmental
Conservation (DEC), but the denial was overturned in Court.

SUMMARY OF PROVISIONS:
Section 1 would amend subparagraph (A) of paragraph 3-a of subdivision
(a) of section 21 of the tax law to provide that any site which has been
denied access into the Brownfield Cleanup Program, but the denial was
overturned in court, will be eligible for the tax credits as capped by
Chapter 390 of the laws of 2008.

EXISTING LAW:
The current statute awards tax credits based on the date that DEC grants
eligibility, leaving some ambiguity as to the relevant date for court
ordered access.

JUSTIFICATION:
Under this proposal, the State's exposure in cases being litigated due
to the Department's denial of an application to the Brownfield Cleanup
              

Program (BCP) would be limited to the cap contained in Chapter 390 of
the Laws of 2008 -- $45 million for a manufacturing site and $35 million
for others. To receive the redevelopment credits the property must have
a Certificate of Completion (COC) though credits may be claimed over a
period of 10 years following issuance of the COC.

Chapter 390 of the Laws of 2008 capped the amount of the tangible prop-
erty tax credit (redevelopment credits) available under the Brownfield
Cleanup Program (BCP). This was an important step in reforming the BCP,
in that it placed a limit on the lucrative refundable tax credits for
individual projects. There is now a maximum brownfield redevelopment
benefit of $45 million for manufacturing projects and $35 million for
all others. The effective date of Chapter 390 provided that the revised
system of tax credits would apply to sites acquired on or after April 1,
2005. This proposal is an attempt to address the State's fiscal vulner-
ability represented by a number of court cases challenging the eligibil-
ity requirements of the BCP. To the extent that the recently enacted
caps on brownfield tax credits will help reduce the dramatic outlays of
cash rewards going forward, the state is currently in litigation over
several very costly projects that were denied access to the program and,
thus, to the immense pre-2008 reform financial benefits. Since the
inception of the Brownfield Cleanup Program in 2003, DEC has interpreted
the statute and used its discretion in such a way as to exclude sites
where the degree of contamination or other factors did not justify the
investment of significant state resources.

LEGISLATIVE HISTORY:
New bill 2009 (Bradley)

FISCAL IMPLICATIONS:
While it is impossible to know how all of the litigation will be ulti-
mately decided, if, hypothetically, all cases were resolved against the
State, the cost to New York taxpayers will likely exceed one billion
dollars. In light of the legislative action taken last year, it is
reasonable to statutorily limit the amount of the court awards allowable
to conform with the 2008 reform bill that caps the tax credits.

LOCAL FISCAL IMPLICATIONS:
None noted.

EFFECTIVE DATE:
Immediately and shall be deemed to have been in full force and effect on
and after July 21, 2008.