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Wednesday, February 17, 2016

NYS Government Dysfunction Strikes Greenburgh - The Controversial Brownfields Cleanup Law Part 2

In 2003, legislation was signed into law by then Governor George Pataki whose purpose was to turn unproductive brownfields, to wit, contaminated sites left behind when industry was globalized, found mostly in upstate New York, often in low-income neighborhoods, communities of color, and on formerly industrial waterways, into job machines. This was to be accomplished by giving tax credits to developers to recover their costs for both environmental cleanup and subsequent construction at the site to be remediated. Some of the thinking behind the brownfield cleanup law was to relieve development pressure on “greenfields” such as farmlands and other undeveloped land in order to preserve open space, stop urban sprawl and spur re-development of these former industrial sites.

The plan sounded wonderful. A proverbial “win win.”

The 2003 law came after a decade long battle in New York’s legislature to address various issues regarding the cleanup of New York State’s thousands of brownfield sites. When the law was signed, Governor Pataki, as reported by The New York Times said: ''This historic legislation represents a victory for all New Yorkers. By taking steps to protect our environment, this legislation will generate new opportunities for economic growth, bringing new jobs into communities around the state, while protecting the health of all New Yorkers.''

Hopeful notes were sounded by members of the legislature as also reported in the same New York Times article on September 17, 2003:

''If we can energize Rochester, Troy, Syracuse, Buffalo, Albany, New York City, all of the cities with brownfields in the inner cities, and get those inner cores of these cities back working, this will be huge,'' said Senator Carl L. Marcellino, the chairman of the environmental committee in the Senate.

But it didn’t turn out that way. Now Ardsley, its school district, the nearby villages of Dobbs Ferry and Hastings-on-Hudson and the Town of Greenburgh are caught in the cross-fire of Albany’s typical dysfunction in creating a program that, by and large, has failed to meet its stated goals of cleaning up toxic sites and getting New York State’s cities back to work. Instead, as with The Jefferson, New York’s brownfield law continues to subsidize luxury development in an area of the State that suffers neither high unemployment nor economic distress.

In the 2013 study of New York state tax credits (discussed in Part 1 about New York’s Controversial Brownfields Cleanup Law), researchers Donald Boyd of the Nelson A. Rockefeller Institute of Government and Marilyn Marks Rubin of John Jay College, found that in almost 10 years after the 2003 law was signed, only 133 of the state’s estimated 10,000 brownfields sites were cleaned up through the tax incentives. The report concluded that “The brownfield credits were intended to remediate and restore blighted land, but they have functioned more as a real estate development program.”

In 2014, Katherine Nadeau, the policy director of Environmental Advocates of New York, in testifying about the impact of Governor Andrew Cuomo’s proposed executive budget elaborated further:

“Tens of thousands of toxic sites blight our neighborhoods statewide – they can be found in nearly every county, municipality and legislative district. Brownfields create an unsafe environment, hinder our ability to attract new industry, and reduce property values.

The State’s Brownfields Cleanup Program was designed to clean up these sites while directing development away from ‘green fields’ and investing in communities. Unfortunately, it has not produced results for areas most in need of public funding – particularly Upstate, communities of color, or those with high unemployment or poverty rates. In fact, an Environmental Advocates’ November 2013 analysis found that New York State had cut checks totaling more than $1.14 billion to clean up just 131 sites. Locations were often in wealthy areas with a robust building market, and many of these projects would have occurred based on the site’s attractive real estate value regardless of the existence of the Brownfields tax credit.”

Notably in the 2013 Boyd/Rubin report, the following startling observations were made:

“Fewer sites have been remediated under the (2013) brownfield program than under the earlier Voluntary Cleanup Program that did not offer tax credits. In almost ten years, 133 sites have been remediated at a cost of more than $900 million, compared with 212 sites remediated under the voluntary program. Despite reforms that were enacted in 2008, the credit will continue to cost hundreds of millions of dollars annually. The amount of expected credits not yet used exceeds $3.3 billion and will be a drag on future budgets. Credit-claiming is likely to remain highly concentrated and disproportionately focused in the downstate region.”

Of course, readers might notice the inherent tension in any brownfield cleanup law – is its chief purpose cleaning up contaminated land or one of stimulating economic activity?

To give just one illustration why New York State’s Brownfield tax credit program is controversial, the Boyd/Rubin report notes:

In 2013, the two largest credit programs — brownfield and film production unevenly benefited economic activity in New York City and other parts of “Downstate” New York. Approximately 59 percent of brownfield credits claimed between 2008 and 2012 were for projects in NYC where 44 percent of the state’s nonfarm jobs are located. Seventeen percent of brownfield credits were for projects in Westchester where (together with Putnam and Rockland Counties) six percent of NYS’s nonfarm jobs are located. The remaining 24 percent of brownfield credits were claimed for projects in the rest of the state where 50 percent of the jobs are located.

Not only are the NYS’ business tax credits concentrated among a few industries that are granted preferential treatment (film and brownfields accounting for at least 50% of the tax credits), they are also concentrated among a small number of taxpayers who account for the vast majority of tax credits claimed (i.e., essentially of the millions of tax returns filed in New York State, only a minuscule number of returns claimed the business tax credits).

Boyd and Rubin then cited several reasons why NYS’ Brownfield Cleanup Law was going to be both expensive and not meet its dual goals of promoting environmental clean-up and economic development which included, but were not limited to, the following:

1) Eligibility for credits was not limited to economically struggling areas of the state, or to projects that seemed unlikely to occur without the credits.

2) Unlike credits in most other states, they were not limited to a percentage of clean-up costs, but instead extended to virtually all site preparation costs and costs of buildings and equipment.

3) There was no requirement that the credit be deemed necessary for the redevelopment of a site.

As the Boyd/Rubin report further provides: “Not long after the credit program was enacted, the press noted instances of large credits associated with little remediation, or in areas that were healthy economically, or that were used by firms or people believed to be well connected, or that appeared unnecessary to induce redevelopment. For example, the retailer Ikea redeveloped a former Navy shipyard in Brooklyn and received a $19.8 million credit. The head of real estate for the company was quoted as saying, “From the Ikea point of view, it didn’t really change anything for us. We were going to do the cleanup anyway, the tax breaks are just a nice bonus.””

By 2015, the 2003 law, even after minor tweaks in 2008, was widely recognized as broken. In March 2015, Environmental Advocates of New York (EANY) issued its 4th report on NYS’ brownfield cleanup law Ripe for Reform.

In their Ripe for Reform report, EANY highlighted the key structural problem with New York’s law: “Currently, developers receive tax credits for both the cleanup of a brownfield and for redevelopment. It is the redevelopment credits that, by far, incur the greatest costs of this program. They are a needless giveaway to developers who do not need further encouragement to build in already competitive real estate markets. Since 2008, tax credits awarded solely for site cleanup assistance totaled $122,257,583. Comparatively, $797,946,541 (86-percent of total payouts) has been paid to developers as a percentage on the development value on the remediated sites. The structural deficiencies within the existing law favor costly developments in the state’s most competitive real estate markets over communities that are most in need of these public incentives.”

Among their recommendations for reform was the following:

Targeting tax incentives to communities most in need of public investment, through different gateways, to drive development to areas with high unemployment rates and those desperate to turn an abundance of brownfields into an economic engine.

The report concluded with the following: “In fact, areas of the state that would benefit most from an effective Brownfields Cleanup Program have been left out in the cold, while taxpayers foot the bill for a few high-end luxury developments in areas that would have already been cleaned up and redeveloped anyways.”

The key reform suggested by Environmental Advocates of New York (and seemingly part of Governor Cuomo’s reform package) was never included in the law when it was renewed in 2015. Undoubtedly convicted felons former Assembly and State Senate leaders Sheldon Silver and Dean Skelos, who both had strong ties to New York State’s powerful real estate lobby, were part of that decision.

Further, when the brownfield cleanup law came up for renewal in 2015, after over a decade of disappointing results and a growing concern over the cost, efficiency and fairness of the program, Thomas Abinanti, the New York State Assemblyman representing Ardsley and parts of Greenburgh, a long term supporter of New York’s brownfield cleanup law, who constantly touts his self-described strong environmental record in his newsletters, was otherwise busy promoting a reckless law providing parents with the right to decide whether to vaccinate their children against diseases that had been essentially wiped out in our lifetimes. At the same time he was seeking support for his “choose to vaccinate law,” outbreaks of measles started appearing in California where a similar vaccine refusal law had been passed.

However, while the 2015 renewal of the State’s brownfield cleanup law made a number of changes to address the problems with the law (albeit mostly targeted for developments in New York City and not Westchester County), the developer of The Jefferson filed its project with the Department of Environmental Conservation prior to the changes enacted in 2015. Accordingly, The Jefferson, if built, will receive tax benefits under New York’s pre-existing and highly flawed brownfield cleanup law.

New York’s brownfield cleanup law fails to require any meaningful public input (let alone sufficient public notice) prior to its consideration by the DEC. There is no requirement that a proposed project conform to smart growth principles of sustainable development or be located in an area that is served by adequate transportation networks and facilities. Brownfield development is handled quite differently in other states and other countries. In Germany, brownfields are developed at the outset with extensive public participation (not by using contact lists created by an out of state developer who posts “public” notices in the back of little read newspapers). Initial uses of brownfields are temporary to both maintain (and increase) property values and keep redevelopment options open for permanent use. This helps create positive public perception and place branding. Moreover, the focus of brownfield re-use is on creating new areas of innovation, places for clusters of related businesses, and incubators and connections for small and medium sized businesses which link apprenticeships and workforce training.

These are exactly the type of uses (in conjunction with Greenburgh and Westchester County’s existing biotech and other industries) envisioned in Greenburgh’s draft comprehensive plan for the site where The Jefferson is planned.For example, the nearby biotechnology headquarters of Acorda Therapuetics on Saw Mill River Road in Ardsley, employs several hundred persons.   Instead of this highly desirable use,  our community is being offered something there is no evidence it needs or wants – 272 luxury rental units with 438 parking spaces. Further, the proposed multi-family development will produce far lower taxes than a commercial occupant.  Additionally, the proposed intensive residential use will have adverse consequences for both the Ardsley School District and Greenburgh’s life safety support systems. In short, the proposed singular use of the existing property (depicted below) evidences a wholesale failure of the imagination to turn this location into something of great value for everyone and not just the developer. Instead, we are getting a subsidized Texas sized mess.

While we may never learn if the brownfield tax credits were the driving force behind the proposed development, it is a good assumption that the massive size of the project is linked to the generous tax credits New York State (and thus its taxpayers) gives to developers of brownfields. For example, down the street on Route 9A, on a parcel nearly the same size, but with no brownfield credits, the developer is building only 66 units at The Lofts.

It is a safe bet we are getting the “amenity rich” luxury multifamily development at One Lawrence Street, in part, if not in whole, because of New York’s flawed brownfield cleanup law. Accordingly, it would be more appropriate to name JPI/TDI’s project as The Brownfield at Saw Mill.

In the developer’s Expanded Environmental Assessment filed with the Town of Greenburgh, the tax subsidized Brownfield at Saw Mill is estimated to generate fourteen permanent jobs.

It is unstated if they will ride their bicycles to work.