New York State Brownfield Cleanup Program

A Developer’s Perspective to Redeveloping Tough Sites

Krog – Brownfield Project Experience

CertainTeed – 1ST COC in NY State, 277,000 sf Architectural Products

Riverwalk Medical Office – 85,000 sf Medical Facility

Cobey – 90,000 sf Engineered Products Manufacturer

Hydro-Air – 150,000 sf HVAC Products Manufacturer

Watkins Glen Harbor Hotel – 104 Room Four Diamond Boutique Hotel

Welded Tube – 110,000 sf OCTG Pipe Manufacturer

1000 Islands Harbor Hotel – 105 Room Four Diamond Boutique Hotel

Olean Gateway – Proposed Destination Retail/Hotel Project and Solar Farm

Krog – Brownfield Project Experience

Krog – Brownfield Project Experience

Trico Building – 480,000 sf Mixed-Use, $85 Million

Extended Stay Hotel

Market-Rate Apartments

Commercial

Indoor Parking

70 + Acres, Multi-Owner, Commercial and Solar redevelopment of former

refinery site in Buffalo, NY

Indoor Vertical Farming/hi-tech growing facility 70,000 sf building on the

former Bethlehem Steel site

On the Drawing Board

Site Selection

Getting from This….

Site Selection

To This….

And This

Site Selection

Site Selection

Tough Redevelopment Site Challenges

Property Sale/Acquisition Complications: Environmental condition Negative Stigma Substantial Risk Factors

Cost Uncertainty Long-term Liability Long-term OM&M

Physical constraint Abandoned infrastructure Parcel sizes Subsurface conditions and obstructions

Regulatory Uncertainty Program changes Tax & Finance audit risk

Site Selection

Why consider a Brownfield Site

Same due diligence as “greenfield” sites Transportation Labor pool Utility availability and capacity Proximity to low-cost power Geotechnical Land cost

Environmental Conditions Impacted soil Impacted groundwater Structural remediation and demolition Long-term operation and maintenance of remedial

measures Soil vapor extraction Sub-slab depressurization Groundwater pump & treat Engineering oversight

Site Selection

Benefits of a Brownfield Site

Land availability Most of the largest tracts in urban

areas have had prior use, especially those with multi-modal transportation access

Lower land cost due to remediation/rehabilitation costs

NYS Brownfield Cleanup Program Site Prep Tax Credit

offsetting remediation

NYS Brownfield Cleanup Program Tangible Tax Credit

offsetting vertical construction

NYS Brownfield Cleanup Program Liability release

Leveraging other incentives Local, State, Federal and

Utility Company

Brownfield Cleanup Program

Economic Incentives – 2015 Reforms

Site Preparation Tax Credit - Refundable Tangible Property Tax Credit - Refundable

• Baseline 10% • En-Zone +5%• BOA +5%• Track 1 Cleanup +5%• Maximum 24%• Capped at 3 or 6 x Site Prep Cost or $35M/$45M

(non-manufacturing v. manufacturing) 10 Year Eligibility Limited Liability Release Eliminates DEC Oversight Costs

Buyer/Seller Liability Protections

Environmental Liability Release

Upon issue of COC, State releases the COC holder and previous owners from liability arising out of the presence of contamination at the Site

This release extends to successors and assigns and is transferable to future owners

Transfer of property often includes environmental liability transfer Preferred Purchaser indemnifies seller of future environmental liability Pollution Legal Liability insurance for third party claims and unknown conditions

Brownfield Cleanup Program

Brownfield Cleanup Program

Developer’s Perspective What’s working?

• WNY Continuing to benefit from redevelopment of numerous brownfield properties

• Key component to the revitalization of downtown Buffalo and Upstate NewYork

• Increased controls to BCP entry limit the State’s exposure• Lenders understand and monetize tax credits

What could be better?• NYSDEC and DOH reviews delay project schedules• NYSDTF delays refunding the tax credits• Federal income taxes applied to State tax credit

What’s next?• Provide a similar program at the Federal level

Utilizing the Brownfield Cleanup Program and Other Incentives to Redevelop Tough Sites

A Developer’s Perspective