New York State's Controversial Brownfield Cleanup Law - Part 1

 At the last night's scoping session before the Greenburgh Town Board, several issues were raised about the brownfield nature of the site where JPI/TDI seeks to build The Jefferson. A “brownfield” is a term used in urban planning to describe land previously used for industrial purposes which has been contaminated with hazardous substances as a result of prior polluting operations at the location. This accurately describes the site where the Jefferson is scheduled to be built.          

 As noted in an earlier blog post, it was revealed the developer will be entitled to certain tax credits from New York State in connection with the cost to bring One Lawrence Street up to environmental standards suitable for residential purposes as well as also being entitled to additional credits depending on its final project construction costs. 

Of course, this was not disclosed on their website which only announced they will be spending millions to clean up the site. While this may be true (and to date JPI/TDI has not started its investigation of the location to determine the scope of the contamination, a process that will take many months), all New York State taxpayers will be reimbursing a portion of these costs to the developer under New York State’s Brownfield Cleanup Law (“BCL”) (which is administered by the New York State Department of Environmental Conservation ("DEC").  To help understand the brownfield issues at The Jefferson site, we will, over several posts, and as the need arises, provide information about New York's controversial Brownfield Cleanup Law.

Introduction:

After the second scoping session was closed (subject to two (2) additional weeks to kept the record open for further comments from the public regarding the scoping document), Bob Bernstein, the president of the Edgemont Community Council spoke at length about “Xposure," an after school project funded by the taxpayers who live in the unincorporated section of the Town of Greenburgh such as Edgemont. As noted by Mr. Bernstein, no one was questioning the value of the Xposure program which, according to a New York Times article posted on Xposure's website, is a practical business program that exposes children to job interviewing skills, work etiquette, how to make investments and otherwise introduces them to the world of finance. 

What makes the Xposure program controversial is that, among other things, it is apparently serving only one school district in the Town of Greenburgh, Greenburgh Central. (Greenburgh, including the districts named after the villages, has eleven school districts). Mr. Bernstein's central point was that Town tax dollars should not be spent this way and he suggested the proper way to fund Xposure was to obtain grants from various agencies. In fact, the Xposure program in Greenburgh was originally funded primarily by grants from the Lanza Family Foundation, a local charity founded by philanthropist Patrica Lanza of Eastchester. However, when Mrs. Lanza passed away in 2014, the grants ceased. The Town then stepped in and fully funded the program which includes providing free buses from the Greenburgh Central School District to the Theodore T. Young Community Center (which is near Town Hall) where the Xposure classes are held.

On a historical yet clearly topical note, Mr. Bernstein's comments are well grounded. Along these lines, the Preamble to the United Stated Constitution (written in 1787) (and now taught in 5th grade under the Common Core), contains the following purpose: "To promote the general welfare." Even our framers were cognizant that government spending should serve all persons and not a select group. 

How taxes should be allocated was also on the mind of the late David M. Glixon, a noted editor and book reviewer, who lived on Prospect Avenue in Ardsley, when in a letter dated October 5, 1966 and published in the October 9, 1966 edition of The New York Times, he wrote the following to the newspaper’s editor concerning the then burning issue of the Vietnam War:

"According to a plan just approved by the Senate Finance Committee, taxpayers would indicate on their returns whether they wish a portion of their tax to be allocated to Presidential campaign funds. 

It is indeed high time we had a say on the use of our money. But why stop at campaign funds? How about a box to be checked if the taxpayer prefers that his taxes not be used to finance an undeclared war?"

What are Tax Credits and Are they Effective? 
In November 2013, a report was prepared for the New York State Tax Reform and Fairness Commission entitled: New York State Business Tax Credits: Analysis and Evaluation. A tax credit is a tax incentive which allows certain taxpayers to subtract the amount of the credit from the total tax they owe the State. The report's main focus was an analysis of New York State's two largest tax credit incentives - the most expensive one being its brownfield cleanup program followed by the film industry.

In the Executive Summary the following appears: 

           "In the 2013 tax year, New York State (NYS) provided an estimated $1.7 billion in 50 business tax credits to encourage taxpayers to engage in specific activities. Business tax credits and other incentives have laudable goals such as encouraging economic development statewide; promoting job growth in distressed areas; and furthering the state’s social, housing, and environmental policies. Economic development officials value business tax incentives as tools needed to compete with other states. There is, however, no conclusive evidence from research studies conducted since the mid-1950s to show that business tax incentives have an impact on net economic gains . . . above and beyond the level that would have been attained absent the incentives." (bold supplied). 

What prompted the 2103 report was a concern that the number and costs of the tax credits offered by New York State were escalating and the need for reform was apparent especially in light of several highly questionable uses of, for example, brownfield cleanup credits in conjunction with the development of luxury housing in New York City and Westchester County, such as the Ritz Carlton in White Plains.

However, and in line with the observations on tax policy made in the Introduction by Messrs. Bernstein and Glixon, the report's proposed reforms were directed at the credits themselves, not the underlying activity they were seeking to address. The question for the legislature (and in fact the taxpayers) is whether these goals the credits sought to address are best implemented through the tax code by the use of business tax credits including tax credits for cleaning up brownfields. Of course, as the Executive Summary indicated, despite a half century of experience, there was no conclusive evidence that tax credits were either economically sound or good public policy. In other words, it seemed that the tax credits, by and large, ended up subsidizing select forms of business activity that would have occurred regardless of the tax credits.

The Jefferson at Saw Mill and the BCL

The first time the public heard of The Jefferson at Saw Mill and its connection with New York’s Brownfield Cleanup Program was found in a Public Notice published in the Journal News (reproduced below). Did you see it?  While it appears this notice complies with BCL regulations, the posting of a public notice in a newspaper that doesn't focus on Greenburgh (such as either the Rivertowns Enterprise or the Scarsdale Inquirer) about the proposed clean up of a hazardous waste site will undoubtedly give rise to head shaking.  

Not surprisingly, the DEC’s Project Remediation Bureau did not receive any comments to The Jefferson’s application to enter the Brownfield Cleanup Program.  Perhaps the Bureau might have been advised of JPI/TDI’s consent decree with the United States Justice Department regarding their violations of the federal fair housing law and the payment of a record fine in that case.   But we cannot fault the developer if they followed the law as it exists. 

Here, JPI/TDI is no different from any other property developer including presidential candidate Donald Trump, who, at the outset of the Republican presidential primary debate process, when asked about the serial filing for protection under the federal Bankruptcy laws by his companies, unapologetically declared "Four times I've taken advantage of the laws, and frankly so has everyone else in my position."