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The Existing Program
New York, like nearly all states, has instituted a regulatory program to address concerns with liability, which is one of the primary barriers to brownfields development. The Voluntary Cleanup Program (“VCP”) limits liability for private parties who enter into cleanup agreements under the supervision of the New York State Department of Environmental Conservation (“DEC”) and Department of Health (“DOH”). This program is not a statutory program, however, and the State offers few financial incentives to encourage redevelopment.
The Clean Air/Clean Water Bond Act of 1996 is New York State’s primary brownfields redevelopment funding source. Bond Act proceeds are available for municipalities only. Funding for developers other than municipalities is available through indirect sources only. Additionally, given the absence of an office dedicated to brownfields development such as the one in New Jersey, the DEC’s efforts to guide potential redevelopers through the process and facilitate redevelopment appear to be minimal.
Most of the State’s financial assistance for private and non-profit developers—such as Community Development Block Grants, NYS Affordable Housing Corporation Affordable Home Ownership Development Program, Highway Safety Grants Program—is offered through agencies other than the DEC. Restrictions on the eligibility and scope of these programs—e.g., the funds can only be used for residential development, for development on waterfronts, or for highway development—limit their usefulness to a potential brownfields redeveloper. The DEC’s Clean Water State Revolving Fund offers low interest loans, but it is limited to projects which protect water quality. The lack of useful financial incentives and public outreach to promote brownfields redevelopment has likely resulted in far fewer brownfields remediations than would have occurred had New York adopted some of the incentives available in other states.
The Pending Legislation
New York appear to be on the brink of enacting “compromise legislation” when the legislature reconvenes in September.
The pending legislation refinances and expands the state Superfund program (the definition of hazardous “waste” has been expanded to include hazardous “substances”) and the Clean Air/Clean Water Bond Act (increases the maximum Bond Act grant for municipal entities from 75 to 90 percent of the cost of a cleanup). It also codifies the Voluntary Cleanup Program by extending liability protection to parties not responsible for contamination at brownfield sites, provides for flexible cleanup standards, and offers tax credits and targeted financial incentives for designated redevelopment areas.
The legislation is a vast improvement over the current New York program in its attempts to involve communities in the planning or redevelopment of, particularly, distressed urban areas. The legislation gives preferences and priority to redevelopment projects in “brownfield opportunity areas,” areas most associated with low-income communities. The legislation also allows bond funds to be awarded not only to municipalities but also to community based organizations acting “in partnership with” a municipality.
Despite those notable improvements, the bill falters on a key element—community outreach and participation—that strikes right at the heart of any effort to promote urban revitalization through brownfield redevelopment policy. As indicated previously, revitalization is a “bottom-up” community-based process which depends heavily on mechanisms which build capacity and mobilize resources to align redevelopment with community needs. The legislation provides for technical assistance grants to encourage participation in the redevelopment process. Yet, remarkably, it then fails to ensure participatory mechanisms necessary to enable community concerns and needs to be incorporated into the final redevelopment vision.
Below is a summary of the key provisions of the proposed legislation, along with an assessment of how well these provisions promote successful brownfield redevelopment and urban revitalization.
Liability Relief
Liability can be a powerful disincentive for a party to remediate and redevelop contaminated land. For this reason, all brownfield programs must contain clear liability rules and releases for parties interested in cleanup and redevelopment of contaminated land. The key elements of the proposed legislation’s liability provisions are:
• Responsible versus Non-Responsible Parties: Draws a distinction between “participants” and “volunteers.” Current owners who acquired property after its contamination are treated as “volunteers” and will not be held legally responsible for the contamination, provided they exercise “appropriate care” with respect to the contamination. On the other hand, the DEC will bring an enforcement action against “participants”—those known or suspected to be responsible for contamination (subject to existing statutory and common law liability principles)—where the site poses a significant threat to the public.
• Liability Release: Once a developer remediates the property, and DEC has issued a “certificate of completion,” that developer (and its successors) cannot be held liable by the state for any hazardous substances emanating from that site. However, the developer is subject to federal liability for natural resources damages and the DEC may also pursue other responsible parties not covered by the liability release.
• Liability Exemptions: Exemptions from legal liability are clearly provided for lenders, fiduciaries, municipalities, and industrial development authorities. These parties may be legally connected to a brownfield site yet innocent of any role in its contamination.
New York’s proposed brownfield program abolishes a key disincentive—liability fears—for potential developers, and clearly demarcates the line between those responsible for contamination and those that are not. Also, by explicitly exempting local governments and other public authorities, the legislation creates more opportunities for the public sector to play a crucial role in brownfield redevelopment, as it has in many other states.
Financial Incentives (Tax Credits)
Financial incentives and direct funding are also crucial to making brownfields as attractive to developers as greenfields. In addition to its provisions for direct funding of municipalities that cleanup brownfields (up to 90% of their cleanup costs), the legislation offers tax credits for private developers who wish to redevelop a site.
• Brownfield Redevelopment Tax Credit: Developers who undertake remediation efforts will receive a Brownfield Redevelopment Tax Credit. The credit is based on three separate components: a site preparation credit, a tangible property credit, and an on-site groundwater remediation credit. The developer is eligible to receive 12 percent of its cost for each component. Developers receive the most credit—14 percent—when the property is cleaned up according to “track 1” standards (see below). Additionally, the tax credit is increased, by 8 percent where at least 50 percent of the redeveloped property is located in an “environmental zone”—i.e., one with a poverty rate of at least 20 percent and an unemployment rate of at least 125 percent the statewide unemployment rate.
• Remediated Brownfield Tax Credit: In addition to the redevelopment tax credit, the bill also offers private developers a real property tax credit once a site has been successfully remediated (indicated by receipt of a “remediation certificate” by the DEC). Unlike the New Jersey tax incentive program, however, the proposed tax credit is not structured to allow a developer to recoup a simple percentage of their remediation costs. Instead, it offers a tax credit of 25 percent of developer’s real property taxes (in the year the property was remediated) multiplied by an “employment factor” (the number of jobs created by the project). The credit is subject to a cap equaling 10,000 times the number of average full-time employees employed at the site. The bill, however, requires developers to choose between either the existing Qualified Empire Zone Enterprise (QEZE) program credit or the proposed remediated brownfield tax credit.
The legislation thus follows the example of other states (e.g., New Jersey) in offering additional targeted tax incentives for brownfields in certain socioeconomically distressed areas and those most in need of development. The legislation offers generous financial incentives that also can protect community health and safety—by conditioning the highest credit percentages to the strictest of clean up standards—and encourage redevelopment of projects that result in beneficial end uses for the host communities (because the tax credit can be increased depending on the number of jobs created).
However, it is unclear whether these incentives will actually achieve the type of jobs and reuses of brownfields that will truly benefit the surrounding community. Revitalization, as it has been defined in this paper, does not concern itself solely with economic development for its own sake. Rather, it is concerned with the quality of development, particularly the needs of neglected communities. Thus, while developers will be rewarded for increasing the number of jobs in the community, the incentives are agnostic about the quality of those jobs (living wage versus minimum wage) and whether the employing industry is one that is consistent with the needs of the community.
In short, not every community will prefer a Home Depot or WalMart over a day care center or medical services complex. The former may bring many minimum income jobs and maximize the economic incentive for the developer, but the latter may provide more sustainable jobs for residents and fulfill critical community needs. A package of financial incentives more tailored to community needs as defined by communities would better promote their revitalization.
Flexible Cleanup Standards and State Oversight
A significant barrier to brownfield remediation has been the absence of clear cleanup standards. The legislation therefore sets clear, but flexible cleanup goals and standards. It requires all remedies to be “fully protective of public health and the environment” with a preference for remedies that achieve a “permanent cleanup.”
On the other hand, similar to the approach employed by New Jersey and other states, the legislation allows for flexibility in cleanups using engineering and/or institutional controls. But the New York legislation goes further by proposing to give developers another, less stringent, “use-based” cleanup option and does not require more clean-up than what is “feasible” (as judged against available technology, site conditions, implementability, and cost effectiveness). However, cleanup standards at municipal brownfield sites are not relaxed. Notably, this is a significant change from the previous versions of the Assembly and Senate bills, passed in the Spring of 2003, neither of which contained a use-based cleanup option (each offered the first 3 tracks described below).
State oversight is retained over remediated brownfield sites through an “environmental easement”—a restriction on the future use of the land that is not fully decontaminated. This ensures that brownfields cleaned up only for commercial or industrial use cannot be converted to a purpose (e.g., residential use) for which it is unsuitable because of residual contamination.
• Clean-Up “Tracks”: The bill’s cleanup provisions center largely around four cleanup tracks, which developers may choose from in crafting the remedial plan for a site. Track 1 allows for the unrestricted future use of the property without the use of institutional or engineering controls. Track 2 cleanups achieve the same contaminant-specific soil cleanup objectives as Track 1, but with restrictions on site use or reliance on long-term engineering and institutional controls. Track 3 allows the developer to use site-specific data to determine soil cleanup objectives at the site. Track 4 allows a cleanup level tailored to the site’s “current, intended or reasonably anticipated residential, commercial, or industrial use” with reliance on long term institutional or engineering controls to achieve such level.
However, developers proposing to perform any cleanup less stringent than Track 1 (unrestricted use), must perform an “alternatives analysis” comparing the costs and benefits of the proposed cleanup to Track 1. The DEC retains the discretion to require the a Track 1 cleanup for any site that poses a “significant threat.” DEC also retains the discretion to require a Track 2 cleanup for even those sites determined to pose a “non-significant threat.”
• Target Risk Level: For all remedies, the target level of risk for all individual carcinogenic contaminants (and for cumulative “residual contamination”) cannot exceed an excess cancer risk of one in a one million. The legislation mandates a risk level less than a hazard index of one for non-cancer contaminants, taking into account those contaminants which act through similar toxicological mechanisms or which have the potential for additive and/or synergistic effects, and exposure to the same contaminant or group of contaminants from other routes. In any case, where the cleanup level for a specific contaminant at a specific site (in the absence of institutional or engineering controls) exceeds these thresholds, there must be a “site specific finding” by the DEC, in consultation with and the commissioner of health, that this level will be protective of human health and the environment
• Remedy Selection Criteria: The proposed law adopts a set of remedy selection factors that mirror the federal Superfund approach, but additionally requires consideration of: “the current, intended and reasonably anticipated future land uses of the site and its surroundings”; current and historical development patterns; applicable community master and waterfront revitalization plans; and proximity to other property uses (commercial, residential, etc), and public comments. Specific consideration of environmental justice concerns is also required—including the extent to which the proposed use may cause or increase a disproportionate burden on the community where the site is located.
• Environmental Easements: This provision requires developers at sites where institutional or engineering controls are required to grant the state DEC an environmental easement. This easement is enforceable by the state or any affected local government. However, local governments are prohibited from approving a “building permit or any other application affecting land use development” on land subject to the easement without DEC approval.
In allowing for cleanups using engineering and institutional controls, the legislation promises to add flexibility and create opportunities for redevelopment where cleanup to background levels or soil cleanup criteria would be too costly and would otherwise not be redeveloped. The codification of standardized cleanup options relieves much of the uncertainty associated with brownfields remediation and will aid in making brownfields a more attractive development option than greenfields.
Equally important, as discussed above, is the protection of community health and state oversight of the process to ensure this protection. On the one hand, the legislation contains the most protective risk standard for residual contamination on brownfield sites—a one in a million cancer risk—used by the Environmental Protection Agency under the federal superfund law. Additionally, the legislation holds out the promise of continued state oversight of areas not cleaned up to Track 1 standards through the grant of an environmental easement.
Nevertheless, ultimately the choice of remedy at a particular site, and its ongoing monitoring, should be subject to democratic accountability by the community that must bear the health risks of these choices. The traditional pattern of development strongly favors developer choices by virtue of decision making mechanisms which allow developers to “capture” the process—i.e., they have superior access and influence on state and local decision makers. Thus, much of the alleviation of risks inherent in use-based, and other less stringent cleanups, will depend upon the quality and extent of public involvement. As discussed below, the legislation does not provide aggressive enough mechanisms for public input in possible choices for remediation and development, thus putting surrounding communities at risk and undermining revitalization efforts.
Public/Private Partnerships and Community-Based Planning
The most effective way to bring about brownfield redevelopment that is both profitable and meets the needs of communities is through incentives for community-based organizations to undertake redevelopment on their own or to partner with local governments and private developers. Notably, the legislation offers to such communities and localities an areawide, collaborative planning approach to brownfield redevelopment and neighborhood revitalization through the provision of financial and technical resources to community based organizations and their municipal partners.
• Brownfield Opportunity Area Grants: Community based organizations and municipalities are eligible for grants for the establishment of Brownfield Opportunity Areas— geographical areas with a high concentration of brownfield sites. Preference for such designation are given to those areas that have indicators of economic distress (including low resident incomes, high unemployment, high commercial vacancy rates and depressed property values) and that present strategic opportunities for development and revitalization. Grants can be used for the identification, preparation, creation, development and assembly of information necessary to nominate an area for designation of a brownfield opportunity area. Geographic areas established as a “brownfield opportunity area” receive preference for bond and other relevant government funding to reemediate and redevelop brownfields within the designated area.
• Brownfield Site Assessment Grants: Community based organizations and municipalities are eligible to receive grants to conduct brownfield site assessments. Grants can cover up to 90 percent of the costs of such assessments. Eligible brownfield site assessment activity can include the testing properties to determine the extent of contamination, environmental assessments, the development of proposed remediation strategies, and other activities deemed appropriate by DEC.
Since the public sector often plays a crucial role in the development of brownfields across the country, particularly local governments, it is significant that the legislation provides valuable funding sources for municipalities as well as community based organizations. Such financing is also important to encourage redevelopment in economically depressed areas and to promote community-based development. This approach is more likely to result in redevelopment that targets the sites the community most cares about and uses that community residents find most beneficial.
Both grants require applicants (community based organizations and/or municipalities) to consider the views of residents of the proposed brownfield opportunity area, the views of local organizations representing such residents, as well as the views of state and local officials elected to represent such residents. It is not clear how seriously the views of local residents and organizations will be “considered,” however. In the past, many communities have felt virtually excluded, despite similar legal dictates to consider their views, in other important environmental land use decisions. Without stronger legislative and administrative mandates and guidance for meaningful community influence in remedial and reuse choices, many communities will continue to be inadequately consulted, yet left to assume whatever health and other risks that result from these decisionmaking choices.
Community Outreach
As various examples across the country illustrate, public outreach can garner community support and align the developer’s and the community’s interests.
The proposed legislation outlines several principles for “meaningful citizen participation,” including the value of early public involvement, the importance of incorporating a diversity of interests and perspectives in the decision making process, and full and accessible disclosure of the necessary information to promote public participation. Toward this end, the legislation expands public notification requirements throughout the remediation process, directs the DEC to prepare a “citizen participation handbook” outlining opportunities and recommended methods for effective public participation, and provides technical grants to community groups representing the interests of residents in the communities. Notably, however, the legislation is silent on community participation in other phases of redevelopment such as re-use and monitoring of the site after the remedy selection has been made.
• Public Notice: Public Notification and a public comment period is required when a developer requests to participate in the brownfield program, when the work plan for site investigation is finalized, upon completion of the investigation, and upon finalization of the cleanup plan. At each of these junctures, the DEC is required to publish a notice in a newspaper and to specifically notify individuals, groups, and organizations that have expressed an interest or would be affected by the work. Developers must also notify the public (but there is no requirement for public comment) when a certification of completion is issued at sites utilizing institutional or engineering controls, and when construction is commenced on the site. A public hearing is only required for brownfield sites posing a “significant threat” and only when a hearing is specifically requested by members of the public.
• Technical Assistance Grants: Perhaps most importantly, the bill provides for “technical assistance grants” of up to $50,000 to any non-profit organization or community group affected by a brownfield site project. The grants are designed to be used to obtain assistance interpreting information about the nature of hazards emanating from the site and the development of a remedial program. The grants may also be used to hire health and safety experts to advise affected residents.
Although the legislation embraces early notice and (written) comment procedures for community involvement in decisions on a site-by-site basis, it does not go embrace the type of meaningful community collaboration necessary to promote true revitalization and environmental justice. “Notice and comment” procedures provide only a bare minimum for public input, and do not ensure that the community will have meaningful influence in shaping the redevelopment visions—i.e. remediation and reuse decisions—that will fundamentally affect their health and environment.
Ironically, the provision of technical assistance grants is the very type of capacity-building mechanism that enables community interests to operate on a level playing field when negotiating the most feasible remediation and reuse options for brownfields in their communities. However, this capacity-building mechanism can be at odds with the lack of opportunities for collaboration and negotiation between the community, state and local decision makers and the developer. Such assistance simply creates the illusion of community involvement and influence, without offering mechanisms to achieve it. In other words, what the legislation gives in one hand, it takes away in the other.
Ideally, as in New Jersey and other states, community capacity mechanisms (like technical assistance grants) need to be combined with opportunities for broad participation (e.g., public notice, written comment, public hearings) and opportunities for on-going collaborative involvement (e.g., advisory committees) in all aspects of the redevelopment process. Without this combination, the legislation’s promise of “meaningful” participation rings hollow.
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