To amend the Environmental Remediation Program regulations that pertain to the Brownfield Cleanup Program.
Public hearing(s) will be held at:
1:00 p.m., July 29, 2015 at 1235 Worth St., New York, NY.
Interpreter Service:
Interpreter services will be made available to hearing impaired persons, at no charge, upon written request submitted within reasonable time prior to the scheduled public hearing. The written request must be addressed to the agency representative designated in the paragraph below.
Accessibility:
All public hearings have been scheduled at places reasonably accessible to persons with a mobility impairment.
Text of proposed rule:
6 NYCRR PART 375 is amended to read as follows:
(Existing Table of Contents remains unchanged.)
Subpart 375-1 General Remedial Program Requirements
(Existing section 375-1.1 through subdivision 375-1.2(a) remain unchanged.)
Existing subdivision 375-1.2(b) is amended to read as follows:
(b) “Brownfield site” means any real property[, the redevelopment or reuse of which may be complicated by the presence or potential presence of] where a contaminant is present at levels exceeding the soil cleanup objectives or other health-based or environmental standards, criteria or guidance adopted by the Department that are applicable based on the reasonably anticipated use of the property, in accordance with applicable regulations. Such term shall not include real property identified in subdivision 375-3.3(b).
(Existing subdivision 375-1.2(c) through section 375-1.12 remain unchanged.)
(Existing Subpart 375-2 remains unchanged.)
Subpart 375-3 Brownfield Cleanup Program
(Existing section 375-3.1 remains unchanged.)
Existing subdivisions 375-3.2(a) through 375-3.2(j) are renumbered 375-3.2(b) through (k).
A new subdivision 375-3.2(a) is adopted to read as follows:
(a) “Affordable housing project” means, for purposes of this part, title fourteen of article twenty seven of the environmental conservation law and section twenty-one of the tax law only, a project that is developed for residential use or mixed residential use that must include affordable residential rental units and/or affordable home ownership units.
(1) Affordable residential rental projects under this subdivision must be subject to a federal, state, or local government housing agency’s affordable housing program, or a local government’s regulatory agreement or legally binding restriction, that defines (i) a percentage of the residential rental units in the affordable housing project to be dedicated to (ii) tenants at a defined maximum percentage of the area median income based on the occupants’ households annual gross income.
(2) Affordable home ownership projects under this subdivision must be subject to a federal, state, or local government housing agency’s affordable housing program, or a local government’s regulatory agreement or legally binding restriction, that sets affordable units aside for tenants at a defined maximum percentage of the area median income.
(3) “Area median income” means, for purposes of this subdivision, the area median income for the primary metropolitan statistical area, or for the county if located outside a metropolitan statistical area, as determined by the United States department of housing and urban development, or its successor, for a family of four, as adjusted for family size.
A new subdivision 375-3.2(l) is adopted to read as follows:
(l) “Underutilized” means, as of the date of application, real property:
(1) on which a building or buildings, can be certified by the municipality in which the site is located, to have for at least five years used no more than fifty percent of the permissible floor area under the applicable base zoning immediately prior to the application which has been in effect for at least five years;
(2) at which the proposed development is solely for a use other than residential or restricted residential;
(3) which could not be developed without substantial government assistance, as certified by the municipality in which the site is located; and
(4) which is subject to one or more of the following conditions, as certified by the municipal department responsible for such determinations of the municipality in which the site is located:
(i) property tax payments have been in arrears for at least five years immediately prior to the application;
(ii) contains a building that is presently condemned, or presently exhibits documented structural deficiencies, as certified by a professional engineer, which present a public health or safety hazard; or
(iii) the proposed use is in whole or in substantial part for industrial uses.
"Substantial government assistance" shall mean a substantial loan, grant, land purchase subsidy, or land purchase cost exemption or waiver, from a governmental entity; or for properties to be developed in whole or in part for industrial uses, a substantial loan, grant, land purchase subsidy, land purchase cost exemption or waiver, or a tax credit, from a governmental entity, or a low-cost loan from an industrial fund managed by the municipality and partner financial institutions.
(i) there must be confirmed contamination on the property or a reasonable basis to believe that contamination is likely to be present on the property; and
(ii) there must be a reasonable basis to believe that the contamination or potential presence of contamination may be complicating the development, use or re-use of the property.]
Existing paragraphs 375-3.3(a)(2) through 375-3.3(a)(4) are renumbered 375-3.3(a)(1) through 375-3.3(a)(3).
(Existing subdivision 375-3.3(b) through section 375-3.11 remain unchanged.)
(Existing Subparts 375-4 through 375-6 remain unchanged.)
Text of proposed rule and any required statements and analyses may be obtained from:
Michael Ryan, NYS Department of Environmental Conservation, 625 Broadway, Albany, NY 12233-7011, (518) 402-9706, email: derweb@dec.ny.gov
Data, views or arguments may be submitted to:
Same as above.
Public comment will be received until:
Five days after the last scheduled public hearing.
Additional matter required by statute:
Negative Declaration, Short Environmental Assessment Form, and Coastal Assessment Form have been completed for this proposed rule making.
Regulatory Impact Statement
1. Statutory Authority
In 2003, the New York State (State) Legislature created the Brownfield Cleanup Program (BCP) to promote environmental and public health as well as the economic vitality of the State through the cleanup and redevelopment of brownfields. Brownfields were defined by statute as “real property, the redevelopment or reuse of which may be complicated by the presence or potential presence of contamination.” The BCP offers parties two separate categories of refundable tax credits for the cost of (1) site cleanup and (2) redevelopment, the latter of which are described as tangible property tax credits.
The Legislature amended the BCP law in April 2015. Part BB of Chapter 56 of the Laws of 2015 amended and added new language to Environmental Conservation Law (ECL) Article 27, Title 14 (BCP) and Section 21 of the Tax Law. Some of these amendments provided new requirements for sites in New York City to qualify for tangible property tax credits. These requirements provide that, in order to qualify for tangible property tax credits, New York City sites need to be in an environmental zone, need to be “upside down,” need to be “underutilized,” or must constitute an “affordable housing project.”
While the Legislature defined the environmental zone and “upside down” requirements, ECL § 27-1405(29) and (30) of the BCP law directs New York State Department of Environmental Conservation (DEC) to define the terms “affordable housing project” and “underutilized” by regulation. DEC needs to publish proposed regulations regarding the “underutilized” definition in the State Register in order for the changes to the BCP to become effective by the later of the publication date of the proposal or July 1, 2015. DEC then must adopt a final regulation containing the “underutilized” definition by October 1, 2015. In addition, section 45(f) of the law calls for DEC to publish the “affordable housing project” definition in the State Register on or before June 8, 2015.
The 2015 amendments also redefined “brownfield site,” which is a term originally defined in regulation per the 2003 statute. Thus, as part of this rule making, DEC is replacing the current regulatory definition of “brownfield site” with the statutory definition found in ECL § 27-1405(2), as amended by Part BB of Chapter 56 of the Laws of 2015.
Finally, DEC recognizes that many of the 2015 amendments to the BCP law require the agency to propose additional regulatory changes which will apply state-wide. Following the publication of this rule making, which will trigger the 2015 amendments becoming effective, DEC will undertake another rule making in order to make the required additional changes to the regulations.
2. Legislative Objectives
ECL § 27-1403 states the objectives of the BCP, including the advancement of “the policy of the state of New York to conserve, improve, and protect its natural resources and environment and control water, land, and air pollution in order to enhance the health, safety, and welfare of the people of the state and their overall economic and social well-being,” finding that, “it is appropriate to adopt this act to encourage persons to voluntarily remediate brownfield sites for reuse and redevelopment.”
The 2015 amendments to the BCP reflect an intent to reduce the amount of tangible property tax credits available to applicants for brownfield sites in high-value real estate markets while further incentivizing development on brownfields where certain project criteria are met. These amendments also clarify the definition of “brownfield site” such that DEC-identified standards may be used to determine program eligibility for sites. The amendments restricting the availability of BCP tangible property tax credits apply only to sites in New York City and preclude credits unless the sites are determined to be “upside down,” in an environmental zone, “underutilized,” or used for an “affordable housing project.” For sites that are eligible for tangible property tax credits anywhere in the State, these credits may be increased for projects “in an environmental zone,” “within a designated brownfield opportunity area,” “developed as affordable housing,” “used primarily for manufacturing activities,” or “remediated to Track 1.”
3. Needs and Benefits
The proposed rule making is mandatory and required by statute.
This rule making would amend Part 375 to add to new definitions to 375-3.2, "affordable housing project" and "underutilized," and revise the existing definition of "brownfield site" as specified in statute. Part BB of Chapter 56 of the Laws of 2015 amended and added new language to Environmental Conservation Law (ECL) Article 27, Title 14 (Brownfield Cleanup Program, BCP) and certain other laws. As required by ECL § 27-1405(29) and (30), DEC must define the terms “affordable housing project” and “underutilized” by regulation. The new BCP law directs DEC to publish the “affordable housing project” definition in the State Register on or before June 8, 2015 and to publish proposed regulations regarding the “underutilized” definition in the State Register in order for the changes to the BCP to become effective by the later of the published date or July 1, 2015. DEC will also amend the ‘brownfield site’ definition at 6 NYCRR 375-1.2(b) and delete 6 NYCRR 375-3.3(a)(1) to conform to such definition in the new BCP law.
The 2015 amendments to the BCP law address the large differences in the potential state tax liability between Upstate and Downstate BCP sites. The primary driver for the regional imbalance within the BCP is attributed to high development costs for some Downstate projects, which were reflected in excessive tangible property tax credits. Limiting the eligibility of New York City sites to specific affordable housing projects and underutilized properties through criteria established by regulation should help to target projects in New York City areas with the most need. Finally, to ensure that tangible property tax credits are only afforded to sites with actual contamination rather than potential contamination, the amended definition of “brownfield site” clarifies DEC’s use of an environmental standards-based approach to site eligibility determinations.
4. Costs
a. Costs to Regulated Parties
Since all costs incurred at a site prior to its acceptance to the BCP are ineligible for tax credits, applicants would incur credit-ineligible costs for performing site investigation work prior to the acceptance of a site in order to meet the amended definition of “brownfield site.” Nearly all applicants currently conduct this work, or are required to do so by DEC in the context of the review of their application as set forth at 6 NYCRR 375-3.3(a)(4)(ii), under the original definition. However, following the implementation of the amended statute, every applicant would be required to provide investigatory information sufficient to satisfy DEC’s environmental quality standards prior to acceptance into the BCP.
New York City applicants may incur costs to establish the required criteria for tangible property tax credits, including costs involved with obtaining a certification that a site would not be developed without substantial government assistance as described in the definition of “underutilized.” Should New York City applicants meet the required criteria for tangible property tax credits, the costs that are incurred in the application process would be fully or partially offset through tax credits. There may be similar costs to applicants across the rest of the State attempting to increase tax credits through a certification of an affordable housing project.
b. Costs to DEC, State and Local Governments
DEC, State and local governments would not incur additional costs due to the issuance of the proposed regulations. However, under the statutory amendments DEC will not receive payment of oversight costs from BCP volunteers. DEC costs for BCP application review are ongoing and any changes to DEC’s application review process due to proposed regulations are expected to be de minimis.
5. Local Government Mandates
This is not a mandate on local governments. Local governments have no additional compliance obligations as compared to other subject entities. Also, no additional monitoring, recordkeeping, reporting, or other requirements would be imposed on local governments under this rule making. To the extent that New York City certifications are required for projects to meet the definitions of underutilized or affordable housing, these certification programs are in place or are developed and implemented at the discretion of the local government.
6. Paperwork
The proposed rule making would require environmental investigation data to be submitted with BCP application materials in order to prove status as a “brownfield site.” Applications for New York City sites seeking tangible property tax credits would need to also include documentation of the proposed eligibility criteria for such credits. This information would be added to the current application form that is required for entry into the BCP.
7. Duplication
The proposed rule making does not duplicate, overlap, or conflict with any other State or federal requirements.
8. Alternatives
DEC is directed by the legislature to propose definitions for “affordable housing project” and “underutilized.” A deadline of June 8, 2015 was provided for the former to be published in the State Register for public comment. In addition, if the “underutilized” definition is not published by July 1, 2015, the effective date of the amendments in Part BB of Chapter 56 of Laws of 2015 relative to the BCP would be the date when “underutilized” is published in the State Register with the proposed regulations. Failure to comply with these provisions may result in legal action. While conforming the definition of “brownfield site” in the regulations to the law is not statutorily dictated, failure to do so would result in confusion between the statute and existing DEC BCP regulations with potential legal action.
Because of the statutory mandate to define “affordable housing project” and “underutilized” and the need to conform the statutory definition of “brownfield site” to the regulatory definition, there are no other alternatives for this proposed rule making.
9. Federal Standards
The proposed regulations would not exceed any minimum federal standards.
10. Compliance Schedule
To reflect requirements in statute, the rule must be promulgated by October 1, 2015. Applicants to the BCP should be able to comply with the regulations upon issuance.
Regulatory Flexibility Analysis
1. Effect of Rule
The proposed rule would add or update definitions of the following terms: “brownfield site,” “underutilized,” and “affordable housing project.” These definitions would only affect eligible parties that voluntarily elect to participate in the Brownfield Cleanup Program (BCP). The rule does not impose any mandate to participate. It is unknown how many small businesses or local governments would want to participate in the BCP and thus be affected by the rule.
2. Compliance Requirements
Since the BCP is a voluntary program and the proposed rule would only be adding or amending definitions, it would not impose any additional compliance requirements. Thus, no small business or local government would be required to undertake reporting, recordkeeping, or other affirmative acts in order to comply with the proposed rule. New York City has volunteered to issue certifications that a property requires “substantial government assistance” described in the definition of “underutilized.” Additionally, New York City already enters into regulatory agreements with developers of affordable housing projects.
3. Professional Services
Since the BCP is a voluntary program and the proposed rule would only add or amend definitions, it would not impose any requirements for professional services. Thus, no small business or local government would require professional services in order to comply with the proposed rule. The New York State Department of Environmental Conservation (DEC) will continue to post information on its website to explain recent changes in the law and to provide information about the proposed rule.
4. Compliance Costs
Since all costs incurred at a site prior to its acceptance to the BCP are ineligible for tax credits, applicants would incur credit-ineligible costs for performing site investigation work prior to the acceptance of a site in order to meet the amended definition of “brownfield site.” Nearly all applicants currently conduct this work, or are required to do so by DEC in the context of the review of their application as set forth at 6 NYCRR 375-3.3(a)(4)(ii), under the original definition. However, following the implementation of the amended statute, every applicant would be required to provide investigatory information sufficient to satisfy DEC’s environmental quality standards prior to acceptance into the BCP.
New York City applicants may incur costs to establish the required criteria for tangible property tax credits or costs involved with obtaining a certification that a site would not be developed without substantial government assistance as described in the definition of “underutilized.” Should New York City applicants meet the required criteria for tangible property tax credits, the costs that are incurred in the application process would be fully or partially offset through tax credits. There may be similar costs to applicants across the rest of the State attempting to increase tax credits through a certification of an affordable housing project.
5. Economic and Technological Feasibility
It is economically and technologically feasible for a small business or local government to comply with the proposed rule. There are financial incentives and liability protections for applicants, including small businesses and local governments, to participate in the BCP.
6. Minimizing Adverse Impact
The rule would have no adverse economic impact on small businesses and local governments.
7. Small Business and Local Government Participation
DEC continues to post relevant information on its website to assist applicants in understanding the requirements of the BCP, some of which may be small businesses or local governments. A public hearing on the proposed rule will be held during the public comment period in New York City. Details about the public hearing and how to submit comments on the proposed rule will be posted on DEC’s website. DEC also maintains a listserv to which persons/entities, including small businesses and local governments, may subscribe so that they can receive information about new developments regarding the BCP.
8. Cure period or Other Opportunity for Ameliorative Action
The rule would only add two new definitions and revise an existing definition to the BCP. Thus, no cure period is needed.
Rural Area Flexibility Analysis
For purposes of this Rural Area Flexibility Analysis (RAFA), “rural area” means those portions of the state so defined by Executive Law section 481(7). SAPA section 102(10). Under Executive Law section 481(7), rural areas are defined as “counties within the state having less than two hundred thousand population, and the municipalities, individuals, institutions, communities, programs and such other entities or resources as are found therein. In counties of two hundred thousand or greater population, ‘rural areas’ means towns with population densities of one hundred fifty persons or less per square mile, and the villages, individuals, institutions, communities, programs and such other entities or resources as are found therein.” There are 44 counties in New York State (State) that have populations of less than 200,000 people and 71 towns in non-rural counties where the population densities are less than 150 people per square mile.
The amendments to the rule would include the addition of definitions for ‘affordable housing project’ and ‘underutilized.’ The definition of ‘affordable housing project’ would apply to projects across the State that are eligible for tax credits. It is anticipated to be utilized in urban areas of the State where affordable housing projects are currently constructed, and thus would not impose any impact on rural areas in the State. The definition of ‘underutilized’ would only apply to prospective projects in New York City and thus would not impose any impact on rural areas in the State. Therefore, a RAFA is not required for this rule making.
Job Impact Statement
In accordance with Section 201-a(2)(a) of the State Administrative Procedures Act (SAPA), a Job Impact Statement has not been prepared for this proposed rule as it is not expected to create a substantial adverse impact on jobs and employment opportunities in New York State (State). The amendments to the rule would include the addition of definitions for ‘affordable housing project’ and ‘underutilized’ and revisions to existing ‘brownfield site’ definition, which do not adversely impact jobs and employment opportunities in the State.
