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Schimminger Bill--Sponsor's Memo |
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A07512 Memo:TITLE OF BILL: An act to amend the economic development law, in
relation to the creation of a new office for smart development and
brownfield revitalization; to amend the general municipal law, in
relation to state assistance through the department of economic develop-
ment for brownfield site planning, assessment, acquisition and remedi-
ation assistance, enacting the "New York state land re-use opportunity
act"; to amend the New York state urban development corporation act, in
relation to brownfield site assessment, acquisition, and remediation
assistance; to amend the environmental conservation law, in relation to
water pollution, waste, inactive hazardous waste site remediation,
cleanup levels, the voluntary cleanup act, the implementation of the
clean water/clean air bond act of 1996, violations of article 27 of such
law, environmental regulatory program fees; to amend the navigation law,
in relation to liability exclusions in connection with oil spill
prevention, control, and compensation, the disposition of certain monies
of the New York environmental protection and spill compensation fund,
providing for an audit thereof, settlements; to amend the public author-
ities law, in relation to hazardous waste and inactive hazardous waste
disposal sites for purposes of the New York state environmental facili-
ties corporation; to amend the public health law, in relation to inac-
tive hazardous waste disposal sites; to amend the real property law, in
relation to recording certain instruments; to amend the real property
tax law, in relation to exemption from taxation, in certain cases; to
amend the state finance law, in relation to the hazardous waste remedial
fund and the remedial program transfer fund; to amend the tax law, in
relation to the brownfield redevelopment tax credit and tax credits for
remediated brownfields; to amend chapter 83 of the laws of 1995 amending
the state finance law and other laws relating to bonds, notes, and
revenues, in relation to making certain provisions thereof permanent; to
amend chapter 54 of the laws of 2002 enacting the health, mental hygiene
and environmental conservation budget, in relation to appropriations
therein; to amend chapter 81 of the laws of 2002 providing for the
administration of certain funds and accounts related to the 2002-2003
budget, in relation to the allocation of certain funds; to amend the
public authorities law, in relation to state environmental infrastruc-
ture projects; to repeal section 27-1316 of the environmental conserva-
tion law relating to a hazardous substance waste disposal site study; to
repeal section 1389-e of the public health law relating to a hazardous
substance waste disposal site study; and to repeal subdivision 13 of
section 97-b of the state finance law relating to the state superfund
management board
PURPOSE OF THE BILL: The intent of this legislation is to promote the
physical, economic, and social revitalization of communities by elimi-
nating the barriers to the cleanup and redevelopment of contaminated
sites. The experience of other states, and the approach embodied in the
2002 federal Brownfields Revitalization Act, make clear that the econom-
ic revitalization of contaminated real estate, often referred to as
"brownfields", only occurs when a state adopts an economic development,
liability relief and expedited cleanup process, and abandons approaches
that emphasize all-encompassing cleanups and rigid enforcement. The
Superfund enforcement model, with its high cost, long time frames and
pristine cleanup goals, has cost the state billions of dollars, pushed
business to neighboring states, and resulted in relatively few and
incomplete cleanups. If redevelopers are encouraged to come forward by
establishing an attractive voluntary cleanup program, there will be a
dramatic increase in cleanups and economic development projects. A
relentless insistence on pristine cleanups will result in just the oppo-
site because parties will fail to come forward, and contaminated sites
will continue to stagnate and fester. Stimulating the redevelopment of
brownfields sites will stem the public health and environmental threats
posed by unremediated sites, and promote "smart growth" development.
This bill is based on successful sister state programs, the new federal
law, and New York`s successful Oil Spill Program. The bill requires the
Empire State Development Corporation (ESDC) to develop an office of
Smart Development and Brownfield Revitalization to serve as an ombudsman
for the private sector and the Department of Environmental Conservation
(DEC) to establish a voluntary remediation program that encourages the
voluntary cleanup and redevelopment of contaminated property. The legis-
lation also brings State law into compliance with the federal 2002
Brownfields Revitalization Act. The Superfund Program essentially
remains intact for the State`s worst sites with recalcitrant responsible
parties as owners and/or operators other than several newly added amend-
ments to encourage voluntary cleanup on the part of such parties.
SUMMARY OF SPECIFIC PROVISIONS: This legislation creates both economic
and environmental incentives for the remediation and redevelopment of
contaminated property.
SUMMARY OF ECONOMIC DEVELOPMENT INCENTIVES
This legislation contains a "front loaded" economic incentive package
that will help municipalities, community based organizations and even
current private sector owners offset the costs associated with redevel-
opment of brownfield sites. In addition, such parties will have a new
place to go with their questions on economic development incentives and
the State`s brownfield incentive programs in general - the Office of
Smart Development and Brownfields Revitalization in ESDC. Examples of
some of the economic development incentives include:
- Land Re-Use Opportunity Act. This bill section enacts a new Article
18-D in the General Municipal Law ("GML") to establish the "New York
State Land Re-use Opportunity Act", which sets forth criteria under
which geographic areas may be designated as a land re-use opportunity
area ("LROA"). LROAs can overlap with other zones, but are designated
for purposes of having access to special brownfields funding. Other
states have found that municipalities and local organizations often do
not know how to redevelop a brownfield neighborhood, and have learned
that upfront planning money assists these parties plan for "packaging"
the sites for purposes of redevelopment. Competitive grants of $25,000
shall be available for municipalities and community based organizations
("CBOs") to support preplanning studies to develop information necessary
for designating a LROA. Competitive grants of $50,000 shall be available
for planning grants to assist in the development of plans for the LROA.
Once designated, LROAs shall be entitled to seek grants for remediation
assistance, infrastructure development, capital development, human
resource development, business assistance, job training, and job place-
ment. These funding programs shall be coordinated with existing state
funding programs already in place by the new office of Smart Growth and
Brownfield Revitalization. This new office can be staffed with existing
personnel.
- Tax Increment Financing Authority. This section authorizes the estab-
lishment of local tax increment funds by which local taxing authorities
may segregate tax revenues associated with the incremental value created
by the establishment of a LROA, and the implementation of a development
plan for such area. Incremental revenues can then be used for financial
incentives and grants or loans to implement the development plan for
such area.
- Urban Development Corporation Brownfield Site Assessment, Acquisition,
and Remediation assistance programs. A new Section 16-n of the Urban
Development Corporation Act authorizes the establishment of a program of
grants to municipal governments and community based organizations for
the acquisition, assessment, remediation or planning of qualified brown-
field sites, and establishment of a revolving loan fund for $100,000
loans to assist private sector owners of qualifying brownfield sites in
the assessment or remediation of their site. It also provides start-up
capital grants for the establishment of three New York not-for-profit
land re-use foundations to facilitate brownfield projects, establishment
of brownfields redevelopment tax credit purchase agreements for the
purchase of tax credits created by other provisions of this legislation
from taxpayers who wish to sell such credits rather than use them to
reduce the taxpayers tax liability, establishment of a new Reclaim New
York sector specific grant program to provide grants to owners of quali-
fied brownfield sites where such sites are likely to be used by indus-
trial or commercial sectors of the economy which have been identified as
such by ESDC; and special assistance for the creation of community
facilities on former brownfield sites.
- Cancellation or Reduction of Delinquent Taxes for Certain Brownfield
Sites. A new section 1185 has been added to the Real Property Tax Law
authorizing taxing authorities to reduce or eliminate delinquent taxes
owed on properties which are remediated pursuant to the new voluntary
cleanup program.
- Real Property Taxes. Municipalities are given authority to provide a
real property tax exemption for 100 percent of the increased value of a
parcel for the first three years of a parcel post-remediation, and on a
sliding scale from 60 to 100 percent for the next seven years. Munici-
palities can opt in or out of this exemption program. Also, tax
districts are given explicit authority to cancel or reduce back taxes on
properties that are subject to voluntary remediation agreements with the
DEC.
- Tax Credits. A tax credit program is established for sites that have
undergone environmental remediation pursuant to the new voluntary clean-
up program.
SUMMARY OF ENVIRONMENTAL REMEDIATION PROGRAM CHANGES
- Environmental Restoration Projects. The bill also modifies the 1996
Bond Act Program (ECL Part 56) to allow the commissioner to enter into
contracts with municipalities to provide 90% rather than 75% state
assistance to municipalities willing to undertake an environmental
restoration project, which will benefit the environment by investigation
and/or remediation of the proposed property. Other amendments to the
Bond Act program are also included.
- New Voluntary Cleanup Program.
Scope - Any eligible party is encouraged to conduct cleanups and rede-
velopment projects under the new voluntary cleanup program, including
some that would be considered "responsible parties". The program can be
used to address any type of contaminated site ( including hazardous
waste, hazardous substance, solid waste and petroleum). The major exclu-
sions are Class 1 and Class 2 Inactive Hazardous Waste Site Registry
sites through the entire state superfund process and Resource Conserva-
tion Recovery Act (RCRA) sites through the entire corrective action
process. Incentives allowing responsible parties to participate during
an initial six month grace period are coupled with disincentives for
failure to participate by requiring surface soil residential cleanups on
sites that remain in the state Superfund program and where the site is
not redeveloped but "mothballed" by the responsible party owners.
Cleanup Approach - For too long, New York brownfields legislation has
been "hung up" on the "how clean is clean" issue. This bill, unlike any
previously introduced brownfields bill, makes statutorily-defined
"source removal" a mandatory requirement before use-based cleanup stand-
ards can be applied to residual contamination. The Department, with the
assistance of a technical advisory panel, is directed to develop use
based cleanup numbers for residual contamination as an end point for the
remediation process after which a liability release is issued. A manda-
tory and well-defined source removal requirement eliminates the concern
that cleanup standards can be met simply by paving a site with asphalt
to meet a number. The bill requires the DEC to adopt a three-tiered
approach (industrial, commercial, residential) to establishing cleanup
standards that address both human health and ecological risks. These
tiers must include concentration tables established by the Department
for specific contaminants and affected environmental media as well as
provide for calculations which allow modifications based on unique site-
specific information and a detailed analysis. Volunteers shall be enti-
tled to receive the incentives authorized for LROA areas, and a liabil-
ity release with only a fraud reopener if they electively choose to
select a cleanup remedy designed to achieve an unrestricted residential
cleanup standard.
Liability Relief Provisions - Persons conducting cleanups under the new
brownfields program will receive: a liability release that is binding on
the State (once applicable cleanup standards are achieved); protection
against contribution suits brought by other responsible parties; and
immunity from natural resource damage claims. The liability release
would not apply to other types of common law claims such as torts or
trespass. The release is transferable to subsequent site owners, except
that it cannot be transferred to a "responsible party" that did not
participate in the remediation agreement. The liability release contains
several narrow "reopeners". Finally, the bill directs the DEC to issue
"no action letters" if it determines that no remediation is warranted at
a site.
Liability Exemptions - The bill provides liability exemptions for muni-
cipalities, lenders, secured creditors, fiduciaries and industrial
development agencies that hold a financial interest in, or hold title
to, a property in instances where they were not involved in the gener-
ation or disposal of contaminants. This exemption would apply both
retrospectively and prospectively for persons holding or taking title to
property, and it extends liability protection to entities who finance
remediation and redevelopment projects under this act. These liability
provisions apply specifically to hazardous waste and petroleum contam-
inated sites.
Public Participation/Departmental Review - The bill provides a defini-
tive, expedited time line for departmental and public review of proposed
cleanup plans. The DEC has fifteen days to determine whether a proposed
project is eligible to participate in this remedial program. Once a
draft voluntary remediation agreement and work plan is submitted to the
DEC, and the DEC agrees that it is in acceptable form, the bill requires
that a notice be published in a local paper, and that notice be given to
municipal officials. The bill provides for a forty-five day public
comment period, and requires the DEC to approve or disapprove a proposed
cleanup plan within fifteen days after the end of the public comment
period. The DEC can require a public hearing if it deems it necessary.
JUSTIFICATION: New York is the last industrialized northeast state to
formally adopt Brownfields legislation. Contaminated property, regard-
less of whether it has been contaminated by hazardous wastes, hazardous
substances, solid wastes, and/or petroleum related substances, can pose
a threat to public health and the environment, and cause economic blight
to the surrounding community, especially in urban areas. The timely
cleanup of contaminated sites by the private sector, whether by the
responsible party, current owner or operator or by an outside party
interested in redeveloping the site, will produce economic and environ-
mental benefits for the local community and the people of the State, and
will reduce the need for public funds for remedial projects. The reme-
diation of such sites will also remove a major barrier to their redevel-
opment, which will produce significant local economic benefits.
While the State`s existing remediation programs, in particular the Oil
Spills Program, have made some progress in addressing contaminated
sites, the State could achieve more timely cleanups through an alterna-
tive expedited approach that standardizes mandatory source removal,
establishes reasonable end-point cleanup standards, provides liability
releases once approved cleanup standards are met, and makes available
economic incentives to flip upside-down properties right-side up. These
approaches to the remediation and redevelopment of "brownfield" sites
have proven effective in a number of other states, and in particular
other northeastern states where they have been adopted. New York, which
has lagged behind our sister northeastern states to adopt this type of
economic incentive based voluntary cleanup legislation must act to
prevent further urban decay of our cities and municipalities.
LEGISLATIVE HISTORY: New Legislation
FISCAL IMPLICATIONS: The costs of oversight by the DEC are covered by
the voluntary cleanup program participants, so there is little impact on
the State in terms of administrative costs. While the financial incen-
tives provided by the legislation may result in some minimal upfront
costs or reduced or delayed tax revenues, the economic benefits of rede-
velopment, and long-term increases in taxable value will more than
offset these reductions. This fact has been proven in states with
successful programs and has been documented by the federal government
through their brownfield grant program.
EFFECTIVE DATE: This act shall take effect immediately; provided that
sections forty-eight, forty-nine, fifty, fifty-two, fifty-three, and
fifty-seven of this act shall apply to taxable years beginning on or
after January 1, 2004, but only to site costs incurred and property
placed in service on or after January 1, 2003; provided further that the
IMB credit for energy taxes under subsection (t-1) of section 606 of the
tax law referenced in sections fifty-one and sixty-one of this act shall
apply to taxable years commencing on and after January 1, 2003 and shall
expire on the same date as provided in subdivision (a) of section 49 of
part Y of chapter 63 of the laws of 2000; and provided further that the
state comptroller shall notify the legislative bill drafting commission
upon the occurrence of the certification provided for in subdivision 16
of section 97b of the state finance law in order that the commission may
maintain an accurate and timely effective data base of the official text
of the laws of the state of New York in furtherance of effecting the
provisions of section 44 of the legislative law and section 70-b of the
public officers law.
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