1. The State of New York’s Tax Credit Program Were the Tax Credits too Lucrative or Was New York Scared of their Success? Where Will NY Go After the Moratorium Linda Shaw, Esq. Knauf Shaw LLP 1125 Crossroads Building 2 State Street Rochester, NY 14614 lshaw@nyenvlaw.com

2. NY’s Tax Credit Program Is Lucrative For Large Projects VOLUNTEER RECEIVES AS A BENEFIT AT THE COMPLETION OF A BROWNFIELD PROJECT AS-OF- RIGHT REFUNDABLE TAX CREDITS –10%-22% OF SITE PREPARATON COSTS (Investigation, Cleanup, Demolition, Asbestos Removal, etc.) –10%-22% OF TANGIBLE PROPERTY COSTS (Cost of Construction) PROGRAM WAS DESIGNED TO COMPETE WITH NY’s EMPIRE ZONE GREENFIELD PROGRAM PROGRAM WORKED VERY WELL! – 250 projects in the program within first 3 years –First 50 projects created $8 billion of development –Even though 65% of projects were upstate, most large projects were downstate (NOTE: If first large projects were upstate, if is questionable if current “problem” would exist)

3. CLASSIC BROWNFIELD SITES INCLUDING THIS YEAR’S PHOENIX AWARD WINNER FOR REGION 2 (ATLAS PARK SITE IN QUEENS)…

4. WERE TRANSFORMED INTO GREAT PROJECTS NOT BEFORE DEVELOPED IN NY

5. CITIES SUCH AS YONKERS, NEWBURGH & NOW BUFFALO WERE BEINGTRANSFORMED

6. REAL PROBLEM vs. BAD PERCEPTION? Several Large Downstate NY Developers were able to secure large tax credits on small sites with costly cleanups ($5M - $20M) but large vertical $300M + development projects Former Governor was Outraged that Four out of the first 50 projects were able to secure large tax credits on projects that may not have “needed” the credits due to as-of-right percentage credits Press articles criticizing the State’s own program were put in newspapers to “out” developers by name and by project and try to “shame” legislature into amendments DEC stopped administering program despite existing law Legislature decided to impose a 3 month moratorium on program to evaluate if tax credits should change

7. Real Problem No.1: Cities such as Yonkers that marketed Program to local developers were relying on this Program to remain; Now their Plans to develop their entire waterfront may be thwarted

8. Real Problem No. 2 - Upstate was just beginning to Take Advantage of Program 40+ Applications are now in “limbo” during moratorium 24 of these applications are for large upstate projects 17 of these applications are for Buffalo / Niagara Falls area sites Several of these sites planned wind farms, ethanol plants and other green energy facilities (8 wind turbines were construct on Bethlehem Steel site but Phase 2 is stalled; large ethanol plant on Union Carbide site stalled) The program, which is only about 4 years old was not given a chance to work Reality – None of the Upstate Projects will continue according to their developers and counsel without this program or another that provides really good incentives

9. Can New York Afford to Destroy this Program? Administration has focused on cost of credits ($1 billion for first 50 projects) but not revenue ($8 billion worth of development will pay back tax credits many times over) Business Community has criticized State for not performing an economic impact analysis of benefits before altering current market driven as-of-right program into a political “needs” based program Should majority of projects that obviously need tax credits be stalled because a few large vertical projects downstate were built? State can develop an eligibility test under current law without destroying this program

10. Where is NY Likely to End Up After Moratorium? Developers are willing to live with less money, but need an as-of-right program (e.g. Per Acre Cap on Credits) and do not want to be treated like the enemy State wants to pick and choose which sites get in based on a needs test and cap overall credits Senate believes program was working and bad perception was created by administration Assembly is still undecided Crystal Ball Predictions –Brownfield Law will remain in Place after July 22, 2008 with new eligibility guidelines –TIF bill may be passed to address infrastructure needs not met by brownfield law

11. As Good as BCP is, it does not Pay for Infrastructure or Exciting Projects such as Daylighting of the Buried Yonkers Saw Mill River

12. NY and Other States Have to Make a Strategic Decision if Brownfield Redevelopment Incentives are Required as an Investment for the Future Many States have both TIF and Tax Credit incentives but programs have many limitations The NY example illustrates that large tax credits do work but the State can become panicked over cost before evaluating both short and long term “up-side” benefits If Brownfields are a priority, then large incentives are necessary to encourage sustainable and valuable large projects that generate jobs, quality of life and revenue If Brownfields are not a priority, then all incentives should be eliminated and urban former industrial area will decade Our industry needs to find a better way to measure success – one brownfield project increases the value of all surrounding properties and improves the quality of life in the community, but these benefits are hard to measure