[updated March 31st]
In January, Governor Cuomo proposed sweeping reforms to the Brownfield Cleanup Program (BCP). The proposed changes rattled the real estate industry and caused a surge of BCP applications filed by developers who wanted to enroll in the BCP before the proposed tax changes too effect.
On Wednesday morning, though, stakeholders involved in the BCP reform negotiations began receiving messages from the Governor’s office that he had changed his mind and that BCP reform would not be part of the final budget agreement. One stakeholder was told that the brownfield tax credits (BTCs) and the refinancing of the Superfund refinancing were not viewed as issue for 2014/15 fiscal year and therefore it was not urgent to deal with BCP reform in the waning days of the budget negotiations.
This was an interesting statement since it seems to undercut the very rationale that was at the heart of the Governor’s BCP proposal-namely that the BCP was too expensive. If the BCP is not impacting the state budget, the logical conclusion would seem to be that the tax credits structure does not have to be overhauled and all that is required is a mere extension of the BTCs.
With the budget now finalized, BCP reform could be addressed before the Legislative adjourns in the middle of June. However, without the pressure of the budget deadline, many stakeholders are concerned that the Legislature will not be sufficiently motivated to address BCP reform because the BTCs will not expire until 12/31/15 and 18 months is an eternity in the life of a politician.
Such inaction would essentially amount to a de facto freeze of the BCP because there are very few projects that could be accepted this year and obtain a COC by the end of 2015. This would also put many current projects in limbo if they cannot obtain a COC by the end 12/31/15. Under the Governor’s proposal, these projects would have had until 12/31/17 to complete their cleanups and obtain a COC.
If the Governor sticks with his position to punt BCP reform to the post-budget period, it is imperative that the Legislature and the Executive make BCP reform a priority….or simply extend the BTCs given their apparent lack of significant impact on the state budget.