New York has some interesting programs to be sure. I found this fascinating article in the Albany Business Journal Online
that tells of the “Brownfield Program” that awards tax credits to companies that clean up and develop hazardous sites. Sounds like a worthwhile endeavor. It has been proven true that when the government tries to encourage behavior with tax credits, behaviors definitely are encouraged. The problem is that the behavior they hoped to increase, isn’t always the one that increases.
This article points out one extreme (I assume) example of this. And I quote:
“The brownfield program, created in 2003, awards tax credits for companies to clean and develop hazardous sites… For example, the report cites work on a former BASF
site in Rensselaer, where Empire Generating Co.
has spent about $800,000 cleaning up 34 acres. The report says the developers are scheduled to receive $40.1 million in state tax credits.
“Because tax breaks are based on redevelopment value, rather than cleanup cost, sites with the least contamination and the highest redeveloped value get cleaned up,” the report said, “and contaminated sites that would most benefit from redevelopment are left dirty and undeveloped.”
Not surpisingly, Governor Spitzer is aghast. “This program has proven to be unsustainable,” Spitzer is quoted as saying in the article. “In many cases, millions of dollars in development tax credits are provided to projects with minimal remediation expenses, counter to the intent of this program.”
Spend $800,000 and get back $40Million. Wow.