Reform brownfields law

First published in the Albany Times Union , March 28, 2008

Five years ago, state lawmakers passed a brownfields law with the best of intentions -- namely, to encourage developers to build on contaminated sites throughout New York, particularly in urban and upstate areas, and bring jobs and economic stimulus to local economies. At least that's how it was supposed to work. Instead, the program has become a bonanza for a few wealthy developers. A relatively few brownfields projects, almost all downstate, have qualified for a staggering $1 billion in state tax credits. Meanwhile, upstate has been largely ignored.

It's easy to see why. The program all but invites developers to build in expensive areas, while spending the least amount of money on cleaning up brownfield sites and as much as possible on the projects themselves.

For example, if a developer spends, say, $1 million to clean up a brownfield site and then builds a $300 million office tower on it, the tax credit is based on $301 million. Thus, the less spent on cleanup, the more tax credit available for the project itself. If a developer doesn't have a high enough income to use all of the tax credit immediately, the state will send him a check for the difference, rather than apply the credit over future earning years.

Not surprisingly, most of the redevelopment conducted under this program has occurred in Manhattan, where land prices are sky high and multimillion-dollar projects are commonplace. But those land values in New York City all but guarantee that development will take place there, with or without tax credits. At the same time, builders shy away from upstate projects because they cannot reap the high tax credits that are available with downstate redevelopment.

This makes no sense. Fortunately, Pete Grannis, the state environmental commissioner, is putting forth a reform proposal that, if approved by the Legislature, would end the current program's excesses, while also encouraging more redevelopment upstate.

The proposed law stipulates that no projects would qualify for tax credits if redevelopment is likely to occur without them. It also caps the total tax credit at $15 million to ensure that a few top-dollar projects won't hinder the state's capacity to encourage redevelopment in all regions, including upstate.

Finally, the tax credits would be calculated to encourage developers to conduct the best possible cleanup, rather than skimp on that expense so that most of the tax credits will be applied to the project's costs.

There's simply no justification for the current program. And now, with the state facing tough times, Mr. Grannis' reform is more critical than ever.

THE ISSUE: A state law has become a huge giveaway program.

THE STAKES: Without reform, the budget squeeze will only worsen.