OLR Research Report

January 8, 2008




By: John Rappa, Principal Analyst

You asked us to compare New York and Connecticut's tax credits for cleaning up and redeveloping brownfields.


New York and Connecticut offer tax credits for cleaning up and redeveloping contaminated property, but, as Table 1 shows, these differ in several respects. New York's credits are based on a portion of the clean-up costs whereas Connecticut's equal the amount of tax revenue the redeveloped property expects to generate. New York offers additional credits for property tax and insurance premium payments whereas Connecticut authorizes property tax abatements and economic development funding for these purposes, respectively.

The states also administer the credits differently. Developers must apply to New York's environmental protection agency for the credits, which awards them only if the developers remediate the property according to its standards and under its supervision. Developers must deal with two agencies to access Connecticut's credits. They must apply to the economic development agency for the credits, which awards them if the redeveloped property will generate significant tax revenues. Developers must then remediate property according to the environmental protection agency's procedures and standards. Table 1 compares the states' credits

Table 1: Comparison of New York and Connecticut Brownfield Clean-up Tax Credits

Comparison Point

New York


Administering Agency




Brownfield Redevelopment Credit:

10% to 22% fully refundable credit for cleaning up and redeveloping contaminated property

Credit amount depends on:

Taxpayer status (individual v. corporate)

Project's location

Remediation standard met

Eligible Activities:

Site Preparation Credit

Tangible Property Credit

On-site Groundwater Remediation Credit

Urban and Industrial Sites Reinvestment Tax Credits:

Up to $100 million in corporate business tax credits for investing in projects cleaning up and redeveloping contaminated property

Investments must exceed specified thresholds

Total credit cannot exceed projected local and state tax revenue from the completed project

Taxpayers may claim a portion of the credit amount according to a 10-year statutory schedule

Real Property Tax Reimbursement

10-year, refundable credit against property taxes paid on cleaned up property

Credit amount based on jobs created at the site and its location

No comparable credit, but towns may:

abate up to 50% of the taxes on property remediated and redeveloped with Urban and Industrial Sites tax credits (CGS 12-81aa) and

forgive back taxes on abandoned, potentially contaminated property (CGS 12-81r )

Refundable Environmental Insurance Credit

Credit amount lesser of $30,000 or 50% of premiums

No comparable credit, but financial assistance for paying environmental insurance premiums is available under the Manufacturing Assistance Act (CGS 32-222 (i))


Credits are available only to developers who investigate, remediate, and redevelop contaminated property and receive a “certificate of completion” under DEC's Brownfield Cleanup Program

Property must be contaminated or the site of a facility that generated hazardous waste and be cleaned up, renovated, or demolished according to DEP standards

Other Benefits

Certificate of Completion releases developer from liability to state if contamination is subsequently discovered at the site

Developers qualify for comparable protections from state liability by applying to DEP for a covenant-not-to-sue


Both states offer tax credits for cleaning up and redeveloping brownfields. New York's credits apply to individual and corporate income taxes and range from 10% to 22% of the clean-up and redevelopment costs. The credit amount depends on the taxpayer's status, the project's location, and the standard to which the property was remediated. (Remediation standards vary depending on how the property will be used. They are higher for residential than business uses.) The state refunds taxpayers for unused credits.

Connecticut's credits equal the amount of tax revenue the redeveloped property expects to generate over 10 years, but cannot exceed $100 million. (The law caps the total value of credits the state can issue at $500 million). Taxpayers must meet minimum investment thresholds to qualify for the credits, which apply only to business taxes. The state does not refund taxpayers for unused credits, but it allows them to sell the credits to other taxpayers. Taxpayers may claim a portion of the credits over 10 years based on a statutory schedule.

(Developers also qualify for Urban and Industrial Sites tax credits for large-scale projects in designated towns, regardless of whether the property is contaminated. The designated towns are the 17 with enterprise zones (i.e., Targeted Investment Communities), the 25 state-designated distressed municipalities, and the five towns with more than 100,000 people.)

New York also offers credits for property tax and environmental insurance premium payments. Connecticut does not offer credits for these costs, but allows towns to provide property tax incentives for remediating contaminated property. It also allows the economic and community development commissioner to use Manufacturing Assistance Act funds to cover a developer's insurance costs.


New York and Connecticut administer their credits differently. The former offers its credits as part of a broader brownfield clean-up program housed entirely in the Department of Environment Conservation (DEC). To access the credits, a developer must investigate, remediate, and redevelop a brownfield under DEC's supervision. DEC awards the credits after the developer completes these steps. In doing so, it releases the developer from liability for any hazardous waste subsequently found at the site.

Connecticut's program has similar elements, but houses them in different agencies. A developer must apply to the Department of Economic and Community Development commissioner for the Urban and Industrial Sites Rememdiation Tax Credits. The property must meet the statutory criteria for a contaminated property and be expected to stimulate new business and creates jobs after its remediation.

The developer must clean up the property according to Department of Environmental Protection's procedures and standards, which include investigating the contamination and certifying its remediation. The certification may include an agreement exempting the developer from remediating any subsequent contamination found at the site (i.e., covenants-not-to-sue).