As we previously discussed, Governor Andrew Cuomo and the Legislature reached an agreement on sweeping reforms to the Brownfield Cleanup Program (BCP) as part of the 2015-16 state budget. Among the significant changes which are scheduled to take effect on July 1st are that sites located in New York City will no longer be eligible to claim the tangible property credit (TPC) tax credit as of right but will have to qualify for one of the four TPC eligibility criteria. Another notable change was that the costs eligible for the Site Preparation (SPC) credit will be significantly curtailed for all applicants.
The July 1st effective date is conditioned on the New York State Department of Environmental Conservation (NYSDEC) publishing a draft rule in the New York State Register that defines the TPC “underutilized” criteria after consulting with the business community and the City of New York. If NYSDEC fails to publish the “underutilized” definition by July 1st, the effective date of the BCP changes would be delayed until the draft rule is published. NYSDEC representatives have indicated that the agency is on track to publish the draft rule (which will also include a definition for the “affordable housing” TPC gate as well as the new brownfield site definition) in accordance with the statutory deadline.
Applicants that receive a notice of acceptance prior to the effective date will be “grandfathered” and be able to claim the brownfield tax credits (BTCs) available under the current framework. What ensued was a scramble by applicants to submit complete applications in time to be published in the May 20th or May 27th Environmental Notice Bulletin (ENB).The reason for the mad dash was that BCP applications must undergo a ten-day “completeness” review and then a 30-day public comment period that begins with a notice in the weekly ENB. The sheer volume of applications nearly overwhelmed NYSDEC’s completeness review staff. At one point, NYSDEC cautioned that it could not be able to finish the completeness review for applications received after May 8th . Somehow, NYSDEC managed to process the unprecedented volume of applications. Indeed, a total of 26 applications were noticed in the May 27th ENB.
Getting published in the ENB was only half the battle. Applicants still have to receive a notice of acceptance by June 30th. The comment period for applications noticed in the May 20th ends on June 19th which gives NYSDEC seven business days to issue a notice of acceptance. However, the public comment period for applications published in the May 27th ends on Friday, June 26th. This means that NYSDEC would only have two business days to issue notices of acceptance. Given the volume of applications that appeared in the May 27th ENB, the last two days of June are going to be a very tense time for many BCP applicants
Since the BCP amendments were announced, brownfield practitioners have been engaged in friendly wagers on how many applications NYSDEC would receive before the July 1st effective date. The most common estimate was two dozen with some setting the over-under number at 40. They were all wrong.
The final tally based on the ENB notices was 46 applications—a record number of applications for a two-month period. Indeed, the number of applications roughly equals the number of Certificates of Completion (COCs) that NYSDEC issued for all of 2014.
Not surprisingly, the overwhelming number of applications were for sites in New York City followed by Buffalo and Westchester. Until the May 20th ENB, Buffalo and Westchester actually led in the number of applications—presumably in response to the severe curtailments in the SPC tax credit since these changes will lower the tangible property tax credit cap.
It is obvious that the May BCP application experience was extremely stressful on both applicants and NYSDEC staff. And now just like Brody, Hooper and Quint in the movie Jaws (which celebrates its 40 anniversary around the effective date of the BCP amendments) after the Orca engines fail, the applicants must sit back and wait…..