1. The Laws of New York
  2. Consolidated Laws
  3. Tax
  4. Article 1: Short Title; Definitions; Miscellaneous


Section 21 Brownfield redevelopment tax credit

Tax (TAX)

(a) Allowance of credit. (1) General. A taxpayer subject to tax under article nine, nine-A, twenty-two or thirty-three of this chapter shall be allowed a credit against such tax, pursuant to the provisions referenced in subdivision (f) of this section. Such credit shall be allowed with respect to a qualified site, as such term is defined in paragraph one of subdivision (b) of this section. The amount of the credit in a taxable year shall be the sum of the credit components specified in paragraphs two, three and four of this subdivision applicable in such year.

  (2) Site preparation credit component. The site preparation credit component shall be equal to the applicable percentage of the site preparation costs paid or incurred by the taxpayer with respect to a qualified site. The credit component amount so determined with respect to a site's qualification for a certificate of completion shall be allowed for the taxable year in which the effective date of the certificate of completion occurs. The credit component amount determined other than with respect to such qualification shall be allowed for the taxable year in which the improvement to which the applicable costs apply is placed in service for up to five taxable years after the issuance of such certificate of completion.

  (3) Tangible property credit component.

  (i) The tangible property credit component shall be equal to the applicable percentage of the cost or other basis for federal income tax purposes of tangible personal property and other tangible property, including buildings and structural components of buildings, which constitute qualified tangible property and may include any related party service fee paid; provided that in determining the cost or other basis of such property, the taxpayer shall exclude the acquisition cost of any item of property with respect to which a credit under this section was allowable to another taxpayer. A related party service fee shall be allowed only in the calculation of the tangible property credit component and shall not be allowed in the calculation of the site preparation credit component or the on-site groundwater remediation credit component. The portion of the tangible property credit component which is attributable to related party service fees shall be allowed only as follows: (A) in the taxable year in which the qualified tangible property described in subparagraph (iii) of this paragraph is placed in service, for that portion of the related party service fees which have been earned and actually paid to the related party on or before the last day of such taxable year; and (B) with respect to any other taxable year for which the tangible property credit component may be claimed under this subparagraph and in which the amount of any additional related party service fees are actually paid by the taxpayer to the related party, the tangible property credit component for such amount shall be allowed in such taxable year. The credit component amount so determined shall be allowed for the taxable year in which such qualified tangible property is first placed in service on a qualified site with respect to which a certificate of completion has been issued to the taxpayer, or for the taxable year in which the certificate of completion is issued if the qualified tangible property is placed in service prior to the issuance of the certificate of completion. This credit component shall only be allowed for up to one hundred twenty months after the date of the issuance of such certificate of completion.

  (ii) The tangible property credit component shall be allowed with respect to property leased to a second party only if such second party is either (A) not a party responsible for the disposal of hazardous waste or the discharge of petroleum at the site according to applicable principles of statutory or common law liability, or (B) a party responsible according to applicable principles of statutory or common law liability if such party's liability arises solely from operation of the site subsequent to the disposal of hazardous waste or the discharge of petroleum, and is so certified by the commissioner of environmental conservation at the request of the taxpayer, pursuant to section 27-1419 of the environmental conservation law. Notwithstanding any other provision of law to the contrary, in the case of allowance of credit under this section to such a lessor, the commissioner shall have the authority to reveal to such lessor any information, with respect to the issue of qualified use of property by the lessee, which is the basis for the denial in whole or in part, or for the recapture, of the credit claimed by such lessor. For purposes of the tangible property credit component allowed under this section the taxpayer to whom the certificate of completion is issued, as provided for under subdivision five of section 27-1419 of the environmental conservation law, may transfer the benefits and burdens of the certificate of completion, which run with the land and to the applicant's successors or assigns upon transfer or sale of all or any portion of an interest or estate in the qualified site. However, the taxpayer to whom certificate's benefits and burdens are transferred shall not include the cost of acquiring all or any portion of an interest or estate in the site and the amounts included in the cost or other basis for federal income tax purposes of qualified tangible property already claimed by the previous taxpayer pursuant to this section.

  (iii) The term "related party service fee" shall mean any fee or other monetary compensation earned by a related party and calculated as a percentage of project and/or acquisition costs, in consideration of services rendered to or for the benefit of the taxpayer placing qualified tangible property in service in connection with the acquisition and development of such property. For purposes of this subparagraph, "related party" shall have the same meaning as related person as defined in subparagraph (c) of paragraph three of subdivision (b) of section four hundred sixty-five of the internal revenue code.

  (iv) Eligible costs for the tangible property credit component are limited to costs for tangible property that has a depreciable life for federal income tax purposes of fifteen years or more, costs associated with demolition and excavation on the site and the foundation of any buildings constructed as part of the site cover that are not properly included in the site preparation component and costs associated with non-portable equipment, machinery and associated fixtures and appurtenances used exclusively on the site, whether or not such property has a depreciable life for federal income tax purposes of fifteen years or more.

  (v) With respect to any qualified site for which the department of environmental conservation has issued a notice to the taxpayer on or after July first, two thousand fifteen or the date of publication in the state register of proposed regulations defining "underutilized" as provided in subdivision thirty of section 27-1405 of the environmental conservation law, whichever shall be later, that its request for participation has been accepted under subdivision six of section 27-1407 of the environmental conservation law, and the site is eligible for the tangible property credit component because it is an affordable housing project pursuant to subdivision one-a of section 27-1407 of the environmental conservation law, the portion of eligible costs to be included in the calculation of the tangible property credit component will be determined by multiplying the total costs qualified for the tangible property credit component by a fraction, the numerator of which shall be the square footage of space of the affordable housing units dedicated to residential occupancy and the denominator of which shall be the total square footage of the building.

  (3-a) (A) Notwithstanding any other provision of law to the contrary, the tangible property credit component available for any qualified site pursuant to paragraph three of this subdivision shall not exceed thirty-five million dollars or three times the sum of the costs included in the calculation of the site preparation credit component and the on-site groundwater remediation credit component under paragraphs two and four, respectively, of this subdivision, and the costs that would have been included in the calculation of such components if not treated as an expense and deducted pursuant to section one hundred ninety-eight of the internal revenue code, whichever is less; provided, however, that: (1) in the case of a qualified site to be used primarily for manufacturing activities, the tangible property credit component available for any qualified site pursuant to paragraph three of this subdivision shall not exceed forty-five million dollars or six times the sum of the costs included in the calculation of the site preparation credit component and the on-site groundwater remediation credit component under paragraphs two and four, respectively, of this subdivision, and the costs that would have been included in the calculation of such components if not treated as an expense and deducted pursuant to section one hundred ninety-eight of the internal revenue code, whichever is less; and (2) the provisions of this paragraph shall not apply to any qualified site for which the department of environmental conservation has issued a notice to the taxpayer before June twenty-third, two thousand eight that its request for participation has been accepted under subdivision six of section 27-1407 of the environmental conservation law.

  (B) For the purposes of this paragraph, the term "manufacturing activities" means the production of goods by manufacturing, processing, assembling, refining, mining, extracting, farming, agriculture, horticulture, floriculture, viticulture or commercial fishing; provided however, that the generation and distribution of electricity, the distribution of natural gas, and the production of steam associated with the generation of electricity, shall not constitute manufacturing activities.

  (C) In order to properly administer the credits set forth in this subdivision, the department may disclose information about the calculation and the amounts of the credits claimed under this subdivision on a taxpayer's return to the department of environmental conservation and other taxpayers claiming tax credits under this section with respect to the same qualifying site.

  (D) With respect to any qualified site for which the department of environmental conservation has issued a notice to the taxpayer before July first, two thousand fifteen or the date of publication in the state register of proposed regulations defining "underutilized" as provided in subdivision thirty of section 27-1405 of the environmental conservation law, whichever shall be later, that its request for participation has been accepted under subdivision six of section 27-1407 of the environmental conservation law, or where the taxpayer has either been issued or received a certificate of completion from another taxpayer under section 27-1419 of the environmental conservation law before July first, two thousand fifteen or the date of publication in the state register of proposed regulations defining "underutilized" as provided in subdivision thirty of section 27-1405 of the environmental conservation law, whichever shall be later, if the qualifying site is located in a brownfield opportunity area and is developed in conformance with the goals and priorities established for that applicable brownfield opportunity area as designated pursuant to section nine hundred seventy-r of the general municipal law, the applicable percentage of the tangible property credit component will be increased by two percent.

  (4) On-site groundwater remediation credit component. The on-site groundwater remediation credit component shall be equal to the applicable percentage of the on-site groundwater remediation costs paid or incurred by the taxpayer with respect to a qualified site (to the extent that such groundwater remediation costs are not included in the determination of the site preparation credit or the cost or other basis included in the determination of the tangible property credit). The credit component so determined for costs incurred and paid with respect to and prior to the issuance of a certificate of completion shall be allowed for the taxable year in which the effective date of the issuance of a certificate of completion occurs. The credit component amount determined in taxable years after the effective date of the issuance of a certificate of completion shall be allowed in the taxable year such qualified costs are incurred and paid for up to five taxable years after the issuance of such certificate of completion.

  (5) Applicable percentage. (A) For purposes of computing the site preparation and on-site groundwater remediation credit components pursuant to paragraphs two and four of this subdivision, with respect to such qualified sites for which the department of environmental conservation has issued a notice to the taxpayer before June twenty-third, two thousand eight that its request for participation has been accepted under subdivision six of section 27-1407 of the environmental conservation law, or where the taxpayer has either been issued or received a certificate of completion from another taxpayer under section 27-1419 of the environmental conservation law for such a site, and, for purposes of computing the tangible property component pursuant to paragraph three of this subdivision with respect to such qualified sites for which the department of environmental conservation has issued a notice to the taxpayer before July first, two thousand fifteen or the date of publication in the state register of proposed regulations defining "underutilized" as provided in subdivision thirty of section 27-1405 of the environmental conservation law, whichever shall be later, that its request for participation has been accepted under subdivision six of section 27-1407 of the environmental conservation law, or where the taxpayer has either been issued or received a certificate of completion from another taxpayer under section 27-1419 of the environmental conservation law for such a site, the applicable percentage shall be twelve percent in the case of credits claimed under article nine, nine-A or thirty-three of this chapter, and ten percent in the case of credits claimed under article twenty-two of this chapter, except that where at least fifty percent of the area of the qualified site relating to the credit provided for in this section is located in an environmental zone as defined in paragraph six of subdivision (b) of this section, the applicable percentage shall be increased by an additional eight percent. Provided, however, as afforded in section 27-1419 of the environmental conservation law, if the certificate of completion indicates that the qualified site has been remediated to Track 1 as that term is described in subdivision four of section 27-1415 of the environmental conservation law, the applicable percentage set forth in the first sentence of this paragraph shall be increased by an additional two percent.

  (B) With respect to such qualified site for which the department of environmental conservation has issued a notice to the taxpayer on or after July first, two thousand fifteen or the date of publication in the state register of proposed regulations defining "underutilized" as provided in subdivision thirty of section 27-1405 of the environmental conservation law, whichever shall be later, that its request for participation has been accepted under subdivision six of section 27-1407 of the environmental conservation law, the applicable percentage for the tangible property credit component of the brownfield redevelopment tax credit pursuant to paragraph three of subdivision (a) of this section shall be the sum of ten percent and the following additional percentages, provided that if the sum is greater than twenty-four percent, the total percentage of the tangible property credit component shall be twenty-four percent and is otherwise subject to the limitations set forth in paragraphs three and three-a of subdivision (a) of this section:

  (i) five percent for a site within an environmental zone;

  (ii) five percent for a site located within a designated brownfield opportunity area and is developed in conformance with the goals and priorities established for that applicable brownfield opportunity area;

  (iii) five percent for a site developed as affordable housing, as defined in section 27-1405 of the environmental conservation law;

  (iv) five percent for a site to be used primarily for manufacturing activities as such term is defined in subparagraph (B) of paragraph three-a of this subdivision; and

  (v) five percent for sites remediated to Track 1 as that term is defined in subdivision four of section 27-1415 of the environmental conservation law.

  (C) The taxpayer shall submit, in the manner prescribed by the commissioner, information sufficient to demonstrate that the site qualifies for any credit components available under subparagraph (B) of this paragraph. If the site is receiving the credit component authorized pursuant to clause (ii) of subparagraph (B) of this paragraph for being located within a designated brownfield opportunity area, the taxpayer shall submit a certification from the secretary of state that the development is in conformance with such brownfield opportunity area plan pursuant to section nine hundred seventy-r of the general municipal law.

  (6) Site preparation costs and on-site groundwater remediation costs paid or incurred by the taxpayer with respect to a qualified site and the cost or other basis for federal income tax purposes of tangible personal property and other tangible property, including buildings and structural components of buildings, which constitute qualified tangible property shall only include costs paid or incurred by the taxpayer on or after the date of the brownfield site cleanup agreement executed by the taxpayer and the department of environmental conservation pursuant to section 27-1409 of the environmental conservation law.

  (7) The amount of any grant received from the federal, state or a local government or an instrumentality or public benefit corporation thereof received by the taxpayer and used to pay for any of the costs described in paragraphs two, three and four of this subdivision, which was not included in the federal gross income of the taxpayer, shall be subtracted in computing the credit components under this section.

  (b) Definitions. As used in this section, the following terms shall have the following meanings:

  (1) Qualified site. A "qualified site" is a site with respect to which a certificate of completion has been issued to the taxpayer by the commissioner of environmental conservation pursuant to section 27-1419 of the environmental conservation law.

  (2) Site preparation costs. The term "site preparation costs" shall mean all amounts properly chargeable to a capital account, which are paid or incurred which are necessary to implement a site's investigation, remediation, or qualification for a certificate of completion, and shall include costs of: excavation; demolition; activities undertaken under the oversight of the department of labor or in accordance with standards established by the department of health to remediate and dispose of regulated materials including asbestos, lead or polychlorinated biphenyls; environmental consulting; engineering; legal costs; transportation, disposal, treatment or containment of contaminated soil; remediation measures taken to address contaminated soil vapor; cover systems consistent with applicable regulations; physical support of excavation; dewatering and other work to facilitate or enable remediation activities; sheeting, shoring, and other engineering controls required to prevent off-site migration of contamination from the qualified site or migrating onto the qualified site; and the costs of fencing, temporary electric wiring, scaffolding, and security facilities until such time as the certificate of completion has been issued. Site preparation shall include all costs paid or incurred within sixty months after the last day of the tax year in which the certificate of completion is issued that are necessary for compliance with the certificate of completion or subsequent modifications thereof, or the remedial program defined in such certificate of completion including but not limited to institutional controls, engineering controls, an approved site management plan, and an environmental easement with respect to the qualified site. Site preparation cost shall not include the costs of foundation systems that exceed the cover system requirements in the regulations applicable to the qualified site.

  (3) Qualified tangible property. "Qualified tangible property" is property described in either subparagraph (A) or (B) of this paragraph which:

  (A) (i) is depreciable pursuant to section one hundred sixty-seven of the internal revenue code,

  (ii) has a useful life of four years or more,

  (iii) has been acquired by purchase as defined in section one hundred seventy-nine (d) of the internal revenue code,

  (iv) has a situs on a qualified site in this state, and

  (v) is principally used by the taxpayer for industrial, commercial, recreational or environmental conservation purposes (including the commercial development of residential housing); or

  (B) (i) is, or when occupied becomes, part of a dwelling whose primary ownership structure is covered under either article nine-B of the real property law or meets the requirements of section 216 (b)(1) of the Internal Revenue Code or is part of an affordable housing project as defined in subdivision twenty-nine of section 27-1405 of the environmental conservation law, where units are sold as single family homes or multiple family dwellings;

  (ii) has been acquired by purchase (as defined in section one hundred seventy-nine (d) of the Internal Revenue Code);

  (iii) has a situs on a qualified site in this state; and

  (iv) for purposes of this subparagraph only, and notwithstanding any other section of law to the contrary, property qualifying under this subparagraph shall be deemed to be qualified tangible property for the purposes of paragraph one of subdivision (d) of this section; and in addition, for the purposes of this subdivision only, property qualifying under this subparagraph shall be deemed to have been placed in service for the purposes of paragraph three of subdivision (a) of this section when a certificate of occupancy is issued for such property.

  (4) On-site groundwater remediation costs. The term "on-site groundwater remediation costs" shall mean all amounts properly chargeable to a capital account, which are paid or incurred which are necessary to implement a site's groundwater investigation, remediation, or qualification for a certificate of completion not already covered under site preparation costs, and shall include costs of: environmental consulting; engineering; legal costs; transportation, disposal, treatment or containment of contaminated groundwater; sheeting, shoring, and other engineering controls required to prevent off-site migration of groundwater contamination from the qualified site or migrating onto the qualified site; and the costs of fencing, temporary electric wiring and security facilities until such time as the certificate of completion is issued. On-site groundwater remediation costs shall include all costs paid or incurred within sixty months after the last day of the tax year in which the certificate of completion is issued that are necessary for compliance with the certificate of completion or subsequent modifications thereof, or the groundwater remedial program defined in such certificate of completion including but not limited to institutional controls, engineering controls, an approved site management plan specific to on-site groundwater remediation, and an environmental easement with respect to the qualified site.

  (5) Certificate of completion. A "certificate of completion" issued by the commissioner of environmental conservation pursuant to section 27-1419 of the environmental conservation law.

  (6) Environmental zones (EN-Zones). An "environmental zone" shall mean an area designated as such by the commissioner of labor. Such areas shall be census tracts that satisfy either of the following criteria:

  (A) areas that have both:

  (i) a poverty rate of at least twenty percent based on the most recent five year American Community Survey; and

  (ii) an unemployment rate of at least one and one-quarter times the statewide unemployment rate based on the most recent five year American Community Survey, or;

  (B) areas that have a poverty rate of at least two times the poverty rate for the county in which the areas are located based on the most recent five year American Community Survey.

  Such designation shall be made and a list of all such environmental zones shall be established by the commissioner of labor based on the two thousand nine through two thousand thirteen American Community Survey estimate. Upon request of the commissioner of environmental conservation, the commissioner of labor shall update such designation based on the most recent American Community Survey, or its successor.

  The determination of whether a site is located in an environmental zone shall be based on the date the department of environmental conservation issued a notice to the taxpayer that its request for participation in the brownfield cleanup program has been deemed complete pursuant to subdivision three of section 27-1407 of the environmental conservation law.

  (c) Qualifying property. Property which qualifies for the credit provided for under this section and also for a credit provided for (1) under either subdivision one or subdivision three of section two hundred ten-B of this chapter, or both, or (2) subsection (a) or subsection (j) of section six hundred six of this chapter, or both may be the basis for either the credit provided for under this section or one of the credits enumerated in paragraph one or two of this subdivision, but not both.

  (d) Depreciable property. (1) With respect to qualified tangible property which is depreciable pursuant to section one hundred sixty-seven of the internal revenue code but is not subject to the provisions of section one hundred sixty-eight of such code and which ceases to be in qualified use prior to the end of the taxable year in which the credit is to be taken, the amount of the credit shall be that portion of the credit provided for in this subdivision which represents the ratio which the months of qualified use bear to the months of useful life. If property on which credit has been taken ceases to be in qualified use prior to the end of its useful life, the difference between the credit taken and the credit allowed for actual use must be added back in the year in which the property ceased to be in qualified use. Provided, however, if such property ceases to be in qualified use after it has been in qualified use for more than twelve consecutive years, it shall not be necessary to add back the credit as provided in this paragraph. The amount of credit allowed for actual use shall be determined by multiplying the original credit by the ratio which the months of qualified use bear to the months of useful life. For purposes of this paragraph, the useful life of property shall be the same as the taxpayer uses for depreciation purposes when computing its federal income tax liability.

  (2) Except with respect to that property to which paragraph four of this subdivision applies, with respect to qualified tangible property which is three-year property, as defined in subsection (e) of section one hundred sixty-eight of the internal revenue code, which ceases to be in qualified use prior to the end of the taxable year in which the credit is to be taken, the amount of the credit shall be that portion of the credit provided for in this section which represents the ratio which the months of qualified use bear to thirty-six. If property on which credit has been taken ceases to be in qualified use prior to the end of thirty-six months, the difference between the credit taken and the credit allowed for actual use must be added back in the year in which the property ceased to be in qualified use. The amount of credit allowed for actual use shall be determined by multiplying the original credit by the ratio which the months of qualified use bear to thirty-six.

  (3) Except with respect to that property to which paragraph four of this subdivision applies, with respect to qualified tangible property which is subject to the provisions of section one hundred sixty-eight of the internal revenue code other than three-year property as defined in subsection (e) of such section one hundred sixty-eight which ceases to be in qualified use prior to the end of the taxable year in which the credit is to be taken, the amount of the credit shall be that portion of the credit provided for in this section which represents the ratio which the months of qualified use bear to sixty. If property on which credit has been taken ceases to be in qualified use prior to the end of sixty months, the difference between the credit taken and the credit allowed for actual use must be added back in the year in which the property ceased to be in qualified use. The amount of credit allowed for actual use shall be determined by multiplying the original credit by the ratio which the months of qualified use bear to sixty.

  (4) With respect to any qualified tangible property to which section one hundred sixty-eight of the internal revenue code applies, which is a building or a structural component of a building and which ceases to be in qualified use prior to the end of the taxable year in which the credit is to be taken, the amount of the credit shall be that portion of the credit provided for in this section which represents the ratio which the months of qualified use bear to the total number of months over which the taxpayer chooses to deduct the property under the internal revenue code. If property on which credit has been taken ceases to be in qualified use prior to the end of the period over which the taxpayer chooses to deduct the property under the internal revenue code, the difference between the credit taken and the credit allowed for actual use must be added back in the year in which the property ceased to be in qualified use. Provided, however, if such property ceases to be in qualified use after it has been in qualified use for more than twelve consecutive years, it shall not be necessary to add back the credit as provided in this paragraph. The amount of credit allowed for actual use shall be determined by multiplying the original credit by the ratio which the months of qualified use bear to the total number of months over which the taxpayer chooses to deduct the property under the internal revenue code.

  (e) If the certificate of completion issued to the taxpayer with respect to a qualified site is revoked by a determination issued pursuant to section 27-1419 of the environmental conservation law, the amount of any credit allowed by this section shall be added back in the taxable year in which such determination is final and no longer subject to judicial review.

  (f) Cross-references. For application of the credit provided for in this section, see the following provisions of this chapter:

  (1) Article 9: Section 187-g

  (2) Article 9-A: Section 210-B, subdivision 17

  (3) Article 22: Section 606, subsections (i) and (dd)

  (4) Article 33: Section 1511, subdivision (u).

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