Liabilities Turned Opportunities: Transforming Brownfields and Toxic Waste Sites

1
Liabilities Turned Opportunities Transforming
Brownfields and Toxic Waste Sites

• By Kenneth S. Kamlet
• Director of Legal Affairs
• Newman Development Group, LLC, Vestal, NY

Unifying Economic Development and the Environment
Burgundy Basin Inn, Pittsford, NY
888888888888888888888888888 Finger Lakes
Institute at Hobart and William Smith Colleges
and Finger Lakes Lake Ontario Watershed
Protection Alliance
2
Outline of Presentation

• Introduction to Brownfields and the 4-year-old
  BCP law
• Proposals to scale back the BF redevelop-ment tax
  credit
• BF successes and pitfalls in Upstate New York
• Beneficial impacts of BF revitalization
• Resources to facilitate BF redevelopment
• Lessons learned and words to the wise

3
INTRODUCTION
What are brownfields?

• EPA Definition Abandoned, idled, or
  under-used industrial and commercial facilities
  where expansion or redevelopmentis
  complicated by real or perceived environmental
  contamination.

• NYS Definition Any real property,
• the redevelopment or reuse of which may be
  complicated by the presence or potential presence
  of a hazardous waste, petroleum, pollutant or
  contaminant.

4
(No Transcript)
5
BCP Law2

• Main Positive Features
• Financial incentives (tax credits, including BF
  redevelopment tax credit priority assistance for
  sites in BOAs)
• Improvements to Environmental Restoration Program
  ability to stay judicial foreclosure
  proceedings
• Incorporation of federal liability exemptions
• Workable cleanup goal use-based cleanup track
  (track 4)
• Relaxed liability for current owners
• Liability release binding on State, not just DEC
• Greater certainty and finality

6
BCP Law-3

• Fallacies of current attacks on the program
• Use-based cleanups are a key underpinning of
  VCP programs
• Imposing Superfund-level cleanups at BF sites
  would deter any cleanups at many sites
• Limiting BF tax credits to investigation and
  cleanup costs and/or to only the most complete
  Track 1 cleanups will destroy incentives for
  non-residential redevelopment projectsespecially
  in Upstate NY

7
Proposals to Scale Back BF Redevelopment Tax
Credit-1

• The redevelopment tax credit is a key feature of
  NYSs BF law
• Refundable credit of 10 to 22 for eligible
  redevelopment projects
• NYSDEC established eligibility guidance to
  limit projects under BCP (and tax credit
  eligibility) to projects with significant enough
  contamination and cleanup liability to
  complicate site redevelopment without a tax
  credit

8
Proposals to Scale Back BF Redevelopment Tax
Credit2

• On June 5, 2007, Governor Spitzer proposed
  legislation to sharply curtail the BF
  redevelopment tax creditespecially for Track 4
  (non-residential) risk-based cleanups
• Such a credit is needed to offset the high risk
  of redeveloping contaminated sites
• The proposed changes will create more empty
  parking lots than beneficial reuse projects and
  sharply curtail voluntary cleanups

9
Proposals to Scale Back BF Redevelopment Tax
Credit3

• The Governors proposed changes were developed
  without consulting affected user groups and are
  seriously flawed
• The State Legislature ENCON chairs (Marcellino in
  the Senate and Sweeney in the Assembly) are
  holding field hearings (e.g., one in Albany on
  Tuesday the 25th) to gather input on what if any
  legislative changes are needed

The Gannett project, which has been a great boon
to the Greater Binghamton area, is an example of
a project that would not have gone forward if the
proposed tax credit changes had been on the
books!!!
10
BF Successes and Pitfalls in Upstate New York-1

• Because of lower real estate values, Upstate
  projects depend more heavily on financial
  incentives to offset environmental risks
• Downstate projects are less likely to be
  complicated by the presence of contamination
  and the prospect of high cleanup costs
• Downstate projects with high BF redevelopment tax
  credits have poisoned the well for projects
  across the state

11
BF Successes and Pitfalls in Upstate New York-2

• NYSDEC, to stem tax credit impacts on the
  Treasury, has adopted an overly narrow definition
  of eligible sites, insisting on proof of
  significant contamination
• DEC also excludes sites with contaminated
  historic fill and where contamination is of
  offsite origin
• Certain petroleum-contaminated sites are likewise
  being discouraged from applying

12
BF Successes and Pitfalls in Upstate New York-3

• DEC has imposed an administrative freeze on VCP
  sitesprecluding prospective purchasers from
  participating in the BCP
• The changing eligibility criteria and uncertainty
  over potential tax credit changes have
  discouraged developers from using the program
• Sites which are not eligible under the BCP, but
  not contaminated enough to be addressed under
  state Superfund, fall through the cracks and have
  no mechanism for DEC-approved cleanups

13
E-J Ranger Paracord SiteJohnson City, NYa clear
success story
14
Overview of Ranger Paracord Site
CFJ Park
Southern limit of Gannett Parcel
NYSEG-Related Area
15
Site Factoids

• 1854-1911 Brigham Wells Brickyard 57 years
• 1913-1993 Manufacture of shoes, boots, rubber by
  Endicott-Johnson Corporation 80 years
• Location Airport Road interchange of SR-17
  (future I-86) corner CFJ Blvd. Lester Ave.,
  Village of Johnson City, Broome Co. good access
  to I-81 and I-88
• Size 27.41 acres (11.56 15.85 acres)
• Contained 6 industrial buildings Pavilion
• Nearby land uses residential (E,N), park (W,N),
  commercial (S), industrial (S,W)
• Over U.S. EPA sole source aquifer
• Susquehanna River is 2-1/2 mi. to SSW

16
Gannett Project Overview-3

• Keys to resolving the negatives
• Brownfield redevelopment tax credits (12 x 48
  million)
• Environmental insurance (12-M aggregate, 5-year
  Pollution Legal Liability coverage)
• Assumption of most cleanup and site preparation
  risks by Newman (costs could be passed through to
  Gannett only to defined not-to-exceed limits and
  only with DEC No Further Action letter)
• IDA sale-leaseback and payment-in-lieu of taxes
  (Pilot) arrangment
• NYSEG electric utility infrastructure costs to
  Gannett had to be pared down from about 1
  million to about 150K
• New access road needed to be paid for with public
  funds and then dedicated to the Village as a
  public road

17
Gannett Project Overview-5

• 48M development project
• High-tech, state-of-art printing press from
  Wurzberg, Germany
• Housed in 96,000-sf bldg. to height of 6 stories
• Consolidated publication and distribution of the
  Gannett papers in Binghamton, Ithaca, and Elmira
• Initially employed 115 employees
• Net benefit to local economy after 15 years
  93M
• Will occupy 11.56 acres of the 27.41-acre site,
  leaving 15.85 acres to be redeveloped by NDG

18
Press Building Today
19
The Shoppes at Vestal
View of Meatball Factory from Vestal Parkway
20
Vestal Lowes
Petroleum Tank Farms
Town Square Mall
21
Parkway Plaza
Former Ozalid Factory --looking southeast
22
Chenango Plaza
23
Chenango Plaza / Lowes
24
BFs in Greater Binghamton-Overview Related
Findings Recommendations of BC Plan

• Shortage of developable land in Broome County
• Engage in corridor-based land use improvements
• Strategically redevelop brownfield sites
• Expand infrastructure to underutilized sites
• Transform CBDs into vibrant community cores

Begin with the end in mind. Have a plan.
25
Beneficial impacts of BF Redevelopment-1

• 10 to 100 for every 1 spent by State
• 2.48 in leveraged private investment for every
  1 of federal spending
• 4.5 acres (avg.) of preserved open space for
  every 1 acre redeveloped
• Enhanced value of nearby commercial and
  industrial properties (4? for industrial props.
  to 62? for hotel sites)

Leveraged economic impacts and enhancement of
nearby property values
26
Beneficial impacts of BF Redevelopment-2

• BF sites are disproportionately located in
  economically depressed areas
• BF tax credits increase by 8 in En-Zones
• Poverty rate of at least 20
• Unemployment rate of at least 1.25 times the
  statewide unemployment rate

Poorest neighborhoods benefit the most from BF
revitalization
27
Beneficial impacts of BF Redevelopment-3

• BF redevelopment incentives promote voluntary
  private sector BF cleanups
• Recycling of previously used land preserves open
  space, minimizes new infrastructure costs, and
  reduces sprawl development
• BF revitalization rejuvenates central business
  districts and reduces dependence on the automobile

Although voluntary cleanup programs allow less
complete, risk-based cleanups, they promote
multiple environmental and public health
objectives
28
Resources to Facilitate BF Redevelopment

• New York State
• BF tax credits for eligible BCP sites
• ERP grants for municipally owned sites
• Brownfield Opportunity Area (BOA) grants
• RestoreNY funding for blighted sites
• Tax Increment Financing (TIFs)
• Federal
• BF Pilot Assessment grants
• BF Revolving Loan Fund
• HUD 108 and BEDI grants

29
Lessons Learned and Words to the Wise-1

• With acknowledgements to the NALGEP/Northeast-Midw
  est Institute report
• Unlocking Brownfields Keys to Community
  Revitalization (Sept. 30, 2004).
• Field a strong brownfields team with leadership
  from the top
• Connect BFs with community revitalization
  priorities
• Begin with the end in mind
• Involve citizens from the start
• Engage the private sector and reduce its risk
• Make cleanups work for you
• Leverage the funding

30
Lessons Learned and Words to the Wise-2

• Join forces with the State
• Partner with key federal agencies
• Nothing succeeds like success

The Gannett BF project was a major Southern Tier
success storythat will inspire future successes
if counter-productive changes to the BCP Law
dont curtail critical redevelopment incentives