Brownfield gold - Westfair Communications

With the Yonkers City Council about to start a lengthy and long-awaited public review of a $3.1-billion downtown redevelopment plan, the mayor and the city”™s private partners worry that the project and its incentive tax credits for developers could be buried on another political front before a shovel is in the ground.

“A deal is a deal,” said Joseph V. Apicella, senior vice president at Cappelli Enterprises Inc., one of three companies in Struever Fidelco Cappelli L.L.C. (SFC), the city”™s master developer in the transformation of downtown Yonkers into a retail, office, residential, recreational and transportation hub. He was referring to the state Department of Environmental Conservation”™s approval last year of SFC”™s proposed $850-million River Park Center project in Yonkers for the state”™s Brownfield Cleanup Program.

“We view that as an economic development tool that has a certain value attached to it,” Apicella said of the brownfield program, which uses property tax credits to encourage developers to invest in environmentally and economically blighted areas. That developer”™s tool would be devalued, though, if state lawmakers approve a Democrat-sponsored amendment to the state”™s 2003 Brownfields Law that would greatly curb tax credits.

In Yonkers, where the SFC partners already have spent $17 million in planning their three-phase project, “To pull out the rug from under us will certainly be a problem to us,” Apicella said. Without the anticipated tax credits for the project”™s first phase, “I don”™t know how we could do it, actually. It will cut a huge hole in our budget.”

The existing brownfield program offers developers tax credits ranging from 10 percent to 22 percent of total costs of a project built after clean-up on an environmentally contaminated site. But Gov. Eliot Spitzer and other critics have called for reform of the 4-year-old program, saying it excessively rewards developers at the burdensome expense of taxpayers and the state treasury while some of the worst hazardous-waste and oil-contaminated sites in the state remain neglected or inadequately cleaned.

“We should not be paying developers to build large buildings” with brownfield credits, Â said State Sen. Suzi Oppenheimer, D-37^th District, a co-sponsor of the proposed brownfield law amendment. “The dollars the state finances should go to remediation contractors; it should not go to building developers.”

State legislators this fall are considering a proposed overhaul of the brownfields law that would tie the state”™s payments to the actual costs of site cleanup. Property tax credits for developers on brownfield sites would be capped at either $5 million or $10 million, depending on whether the project is within a designated Brownfield Opportunity Area (BOA). The BOA program, for which the city of Yonkers has applied, has been stalled in Albany since its creation four years ago.

The proposed bill also would create a Brownfield Shovel-Ready program under the auspices of the Empire State Development Corp. to assist expansion-minded manufacturing firms or affordable-housing developers in redeveloping cleanup sites.

Valhalla-based Cappelli Enterprises already has benefited from the brownfield program at two of its recent developments in Westchester County. At Ossining Harbor Square, a mixed-use development, the developer reaped a $13 million tax credit and spent about $4.5 million for environmental remediation work, Apicella said last week. For the approximately $500-million Residences at the Ritz-Carlton project nearing completion in downtown White Plains, Cappelli Enterprises estimates its brownfield tax credit at $75 million to $100 million. The company spent about $50 million to clean up the site, Apicella said.

“From our vantage point, the program has induced us to build hundreds of millions of dollars in mixed-use development properties on sites that we would not otherwise have considered because of significant environmental liabilities,” Apicella said. In Yonkers, the downtown developer plans to apply for an 18 percent tax credit based on the level of cleanup work required at Chicken Island, he said.

The proposed tax credit cap of $5 million to $10 million “is not going to induce anyone to do anything” to develop blighted urban centers, Apicella said. “It works as a reverse incentive” for developers to cut costs for site clean-ups. “It”™s disincentivizing me,” he said.

In Albany, Apicella recently joined Yonkers Mayor Philip Amicone and C. William Struever, CEO of Maryland-based Struever Bros. Eccles & Rouse Inc., a partner in the Yonkers project and developer of Baltimore”™s Inner Harbor, at a joint meeting of the Senate and Assembly committees on environmental conservation to review the state”™s brownfield programs. Amicone and Struever testified against the proposed changes.

Amicone said a direct payback by the state only for cleanup costs “would not motivate the private sector to take on these complicated projects,” which require tax credits as “the necessary incentive” for risk-taking developers to take them on.
“I fear companies like Bill Struever”™s will not be attracted to a city like Yonkers and ultimately the state will lose far more than they claim they are losing now in tax credit payouts if they eliminate the current program in lieu of one that will only create vacant cleaner lots,” the mayor said.

In Yonkers, “Our goal is to be self-sustaining through our own tax base,” he told state lawmakers. Despite the difficulty in developing projects that generate tax revenue, Amicone said Yonkers could reach its goal “if these very important brownfield programs and laws remain in place, were funded with conviction by the state and are efficiently implemented.”

“Who”™s doing the cost-benefit analysis?” Apicella wondered. “You need to look at both sides of the equation,” weighing the cost to the state of brownfield projects against the created jobs and increased tax revenues that result from those developments.

As proposed, the brownfield program changes would apply to any project submitting a remediation work plan after July 1 this year. The SFC project did not meet that deadline, Apicella said, although it was already approved for the brownfield cleanup program (BCP).

“It”™s a very arbitrary threshold,” Apicella said. “I don”™t know why a project with a remediation work plan is any more ready than a project with a BCP agreement.”

“At the very least, let”™s honor the projects that are in the pipeline,” he said.

While Albany lawmakers debate that issue, Apicella said he has been waiting to hear from Yonkers City Council officials on when the public review of SFC”™s 3,000-page draft environmental impact study (DEIS) will begin. “Let”™s get this thing started,” he said.

Yonkers City Council President Chuck Lesnick said the council”™s Real Estate Committee will meet Tuesday to review the city consultant”™s 50-page report on the completeness of the study submitted by SFC. Consultants for the developer and the city then will meet to “hash out details” before the project is aired at the council”™s public hearings. “This is sort of the dance that happens,” Lesnick said.

“By December, we could certainly decide that the (SFC) document is complete and then we begin the DEIS review,” he said. He said the council is required by City Charter to give final approval on a project within one year of the start of that review.

“Obviously, we want this project in Yonkers to go forward and they need brownfield tax credits to do it,” Lesnick said. “This is certainly a worthy project in terms of jobs created and environmental cleanup.”

“Yonkers has a lot of brownfields,” Lesnick said. “We need the brownfield tax credits to the extent that the state can afford it. We need every penny we can get.”