ALBANY -- The state's brownfield cleanup program, which gives tax credits to contractors who clean up polluted sites for commercial re-use, will remain in "legal limbo" if action isn't taken before lawmakers end their session on June 23, Environmental Conservation Commissioner Pete Grannis said Monday.

Grannis said the program needs to be revamped to make sure it meets its intended purpose. As it stands, he said, the program gives windfall benefits to big downstate developers rather than spurring urban revitalization across the state.

"So far, not enough cleanup money has found its way into the urban core of our cities where thousands of brownfield sites perpetuate blight, create public health risks and discourage needed investment," Grannis said. "We must reform the brownfield cleanup program to make it smarter, more effective and more accountable to taxpayers."

The program is stalled now after several developers sued DEC when their proposed brownfield projects were rejected by the agency and courts issued conflicting decisions over the DEC's eligibility requirements.

In April, the Legislature passed a 90-day moratorium on approving new projects to allow itself time to come up with reforms to the program. The concern was that, because the program's tax breaks are based on the real estate value of a project rather than the benefit to the community, too many tax breaks were going to lucrative hotel developments in Manhattan and Westchester rather than replacing crumbling factories with affordable housing in upstate cities.

Grannis backs a brownfield package proposed by Gov. David Paterson. Under that proposal, cleanup and development costs are separated rather than lumped together under the current formula.

While the current program gives tax credits of 10 percent to 22 percent of total cost of cleanup and redevelopment, Paterson's proposal would give tax credits of up to 75 percent of cleanup costs and up to 50 percent of development costs. While there's no cap on tax credits now, the proposal would have a cap of $15 million on development cost tax credits but no cap on cleanup credits.

Under the current rules, a $500 million hotel, condominium and retail complex on a site that was polluted by underground petroleum tanks in Westchester County could qualify for a $110 million tax credit, state officials said last year. Under the proposed new formula, officials estimate that it could qualify for about $1 million in tax credits for the cleanup work and $15 million for the development.

Projects with complicated, expensive cleanup work would fare better under the new formula because there's no cap on tax credits for that work.

Ned Sullivan, director of the environmental group Scenic Hudson, said a brownfield program is supposed to encourage developers to clean up and reuse contaminated sites that otherwise would just sit idle. But the way New York's law was written in 2003, it has had the unintended effect of giving millions of dollars to developers of sites that would have been attractive for development even without tax credits, he said.

"New York is wasting precious taxpayer dollars to clean up brownfields in prosperous real estate markets that don't need the added incentive of millions in tax credits to attract developers," said Rob Moore of Environmental Advocates of New York.

It's unclear if the Senate and Assembly will agree on a bill revising the brownfields program before they adjourn in two weeks. The Legislature could postpone action until an expected special session later in the year to consider several issues.