Location:
BROWNFIELDS;
Scope:
Connecticut laws/regulations; Program Description;

OLR Research Report


June 15, 2011

 

2011-R-0240

BROWNFIELD PROGRAMS

By:

John Rappa, Chief Analyst

James Orlando, Associate Analyst

Marcy Picano, Associate Analyst

Evelyn Arnold, Budget Analyst II

You asked for information on state brownfield programs, including program criteria, funding, and any changes from legislation passed during the 2011 session.

SUMMARY

There are several state programs that provide funding through grants, loans, or other forms of assistance for remediating brownfields. Table 1 below provides information about these programs. There are also several programs providing tax incentives for remediating brownfields. These programs are summarized in Table 2.

While eligibility criteria for the programs varies, many of the programs are tailored to projects that will generate significant economic activity or create jobs. Many of the programs are specifically tailored to brownfield remediation (e.g., the Urban Sites Remedial Action Program), but funding may also be available through programs that provide funds for other economic development purposes. The programs are primarily administered by the Department of Economic and Community Development (DECD) and the Department of Environmental Protection (DEP), but the Connecticut Development Authority (CDA), a quasi-public state agency, also operates brownfields funding programs through its subsidiary, the Connecticut Brownfield Remediation Authority (CBRA).

In addition to providing funds for investigating and remediating brownfields, the state provides liability protection and regulatory relief to developers who do not receive funds but still perform these tasks according to state standards. As Table 3 shows, the liability protection programs vary depending on whether the protection applies to state or third party actions or extends to parties that subsequently acquire a property remediated under these programs.

Brownfield redevelopers must apply to participate in these programs to receive their benefits. Participation requires submitting investigation reports and remediation plans and certifying that the remediation met state standards. But, as Table 4 shows, some protections are available as a matter of policy. For example, the law, under certain conditions, protects developers from third party liability for contamination that existed on a property before they acquired it (Third Party Liability Protection, CGS 22a-133ee).

Besides providing liability protection, the law also offers brownfield owners relief from various regulatory requirements. As Table 5 shows, these range from exemptions from DEP fees and the Transfer Act to the use of licensed environmental professionals and covenants not to sue.

Brownfield developers may also benefit from several generic regulatory relief policies and programs we did not include in the tables. For example, DECD's Office of Permit Ombudsman can help developers obtain necessary state permits. They may also benefit from a law requiring the DEP commissioner to adopt regulations specifying goals for completing specific tasks in the permitting process (PA 10-158, codified at CGS 32-376 and 22a-6p, respectively).

More information about many of the programs listed below is available from the website of DECD's Office of Brownfield Remediation and Development: http://www.ctbrownfields.gov/ctbrownfields/site/default.asp. Information about CDA's programs is available at the following link: http://www.ctcda.com/Financing/.

BROWNFIELD PROGRAMS

Table 1: State Brownfield Remediation Funding Programs

Program and Statutory Cite

Administering Agency

Description

Eligibility Criteria

Funding

Urban Sites Remedial Action Program (CGS 22a-133m)

DECD/DEP

Funding for identifying and remediating contaminated sites with commercial potential in distressed municipalities, targeted investment communities, or state-acquired properties

DECD commissioner selects the sites in consultation with the DEP commissioner based on:

1. estimated cost and complexity of evaluating the site,

2. estimated schedule and cost for cleaning up the site,

3. extent to which the restored site will benefit the state's economy,

4. whether the site would be remediated absent the program's assistance, and

5. any other factors the commissioners believe are relevant.

General Obligation (GO)

Bonds:

FY 11 = none

FY 12 = $10.0 million (authorized but not yet allocated)

Special Contaminated Properties Remediation And Insurance Fund (SCPRIF) (CGS 22a-133t, u)

DECD/DEP

Low-interest, five-year loans to towns, businesses, and developers to assess sites, demolish structures, or remediate pollution

DECD-determined criteria, including:

1. property's anticipated commercial value,

2. potential tax revenue and community or economic development benefit to the municipality,

3. environmental or public health risk of the contamination,

4. status of previous loans under the program, and

5. potential for restoration of an abandoned property.

GO bonds, historically

FY 11 and 12: $916,775 balance

Municipal Brownfield Grant Program (CGS 32-9cc)

This was originally a pilot program. As of July 1, 2011, sHB 6526 ( 1-3) makes the program permanent and makes other changes to it.

DECD

Grants for towns (or their economic development agencies) with untreated brownfields that hinder economic development

Innocent third party designation for participants, protecting them from liability to DEP for clean-up costs if they meet specified requirements (see below)

Starting July 1, 2011, the DECD

commissioner selects up to six towns annually to receive the grants, within available appropriations. She must choose four brownfields based on population criteria and two without regard to population.

DECD must consider the following criteria:

1. the economic opportunity that redevelopment and reuse provide,

2. project feasibility,

3. environmental and public health benefits, and

4. contribution to the town's tax base

Effective July 1, 2011, sHB 6526 expands the program from five to six grants per year and extends eligibility to sites (1) with contaminated buildings and (2) where contamination prevents them from being expanded, redeveloped, or reused.

GO bonds

FY 11 and FY 12

$8 million in unallocated funds

Targeted Brownfield Development Loan Program

(CGS 32-9kk(f))

DECD

Low-interest loans (up to $2 million per year for two years) to applicants seeking to develop property for retaining or expanding jobs in the state or for developing housing for first-time home buyers. Loans can be for manufacturing, retail, residential or mixed-use developments, expansions or reuses.

Loan proceeds can be used for any purpose, including site investigation, assessment, remediation, abatement, and numerous others

Program is open to (1) potential brownfield purchasers with no direct or related liability for the site conditions and (2) existing property owners who (a) are in good standing and compliant with the DEP's regulatory programs, (b) demonstrate need for the funding, and (c) cannot retain or expand jobs due to site investigation and remediation costs.

 

Eligibility criteria include:

1. project merit and viability,

2. economic and community development opportunity,

3. municipal support,

4. contribution to community's tax base,

5. number of jobs and commitments to maintain or retain jobs,

6. applicant's experience,

7. compliance history,

8. ability to pay, and

9. other factors set by the commissioner.

GO bonds

FY 11: none

FY 12: $25 million (authorized but not yet allocated)

Dry Cleaning Establishment Remediation Fund (CGS 12-263m)

DECD

Grants to dry cleaning business owners or operators, or owners of sites previously occupied by dry cleaning establishments, for containment, removal, mitigation, or prevention of environmental pollution

Program is open to dry cleaners “engaged in the cleaning of clothing or other fabrics using tetrachlorethylene, Stoddard solvent, or other chemicals" or a business that accepts items to be cleaned by another establishment using such chemicals.

Establishment must have been in business at the site for at least a year, and applicant must be up to date on state and local taxes.

The applicant must (1) demonstrate need; (2) certify that there is no outstanding litigation involving it or its representatives; and (3) identify the responsible party to complete the site investigation and remediation.

Funded through 1% surcharge on dry cleaning gross retail receipts

Program is currently oversubscribed by $450,000 and suspended; it last accepted applications in 2009.

Economic Development and Manufacturing Assistance Act -- Environmental Insurance Program (CGS 32-222)

DECD

Funds for purchasing insurance policies and paying deductibles for insurance policies to cover remediation costs

Open to towns, businesses, and nonprofit developers for manufacturing and other economic base business activities.

A business qualifies based on the types of goods or services it makes or provides, whether it is an economic base business, or whether it belongs to a DECD-designated industry cluster.

GO Bonds provided the Manufacturing Assistance Act (MAA)

Total MAA Funding available

FY 11: $16.23 million

FY 12: $40 million (authorized but not yet allocated)

Underground Storage Tank Petroleum Clean-up Program

(CGS 22a-449a et seq.)

DEP

Reimburses responsible parties for remediation costs they incur because of leaking diesel and gasoline fuel tanks

Federally regulated petroleum underground storage tanks (USTs) for which financial responsibility is required. State-owned petroleum USTs are eligible, while federally-owned USTs are not.

USTs storing heating fuel used on the premises are not eligible.

State Operating Appropriations

FY 11 = $3,156,104

FY 12 = $1,303,410

Connecticut Brownfield Revolving Loan Fund (40 C.F.R. Part 31)

DECD

Grants or loans for environmental clean-up of non-residential properties

Open to non-profit organizations, municipalities, or for-profit businesses. Applicants or owners must not be the responsible party of the contamination.

Priority for properties in distressed municipalities.

Among other criteria, property must have been purchased after September 11, 2002.

Environmental Protection Agency (EPA) Federally funded grants

FY 11 and FY 12: $820,008 balance remaining

CT EPA Site Assessment Program (40 C.F.R. Part 31)

DECD

Funds for environmental assessment and preparation of a work plan so that remediation and redevelopment can occur

Open to municipalities, regional planning commissions, and non-profits that partner with a municipality and are not potentially liable for the contamination or affiliated with any party that is.

EPA Federally funded grants

FY 11 and FY 12: $149,586 balance remaining

Tax Increment Financing (TIF)

(CGS 8-134 and 8-134a, 32-23zz)

CBRA/ CDA

CDA-issued bonds backed by incremental property tax revenues for cleaning up and redeveloping brownfield projects

HB 6221 eliminated the sunset date for this program

Any brownfield site whose remediation will generate future incremental property tax revenues.

Bonds issued by CDA

Direct Loans

(CGS 32-11a)

CBRA/ CDA

Senior and subordinated loans for specified purposes, including brownfield remediation and redevelopment

Economic base businesses that will maintain or create employment. Not available for residential, non-owner occupied real estate, retail or personal services, or non-profits.

Bonds/ CDA operating funds

Loan Guarantees

(CGS 32-11a, 22b)

CBRA/ CDA

Loan guarantees to help private-sector lenders meet their borrower's financing requirements. Available for specified purposes, including brownfield remediation and redevelopment.

Companies that contribute to state's economic base, where the borrower is unable to satisfy the lender's standard loan underwriting criteria. Not available for residential; non-owner occupied real estate; retail or personal services, or not-for-profits

Bonds/ CDA operating funds

Environmental Assistance Revolving Loan Fund (CGS 32-23qq)

CDA

Grants, loans, and loan guarantees for remediating and developing contaminated properties

Towns and businesses with annual gross revenues under $25 million and no more than 150 employees

Program no longer used

Table 2: State Brownfield Remediation Tax Benefit Programs

Program and Statutory Cite

Agency

Description

Eligibility Criteria

Urban and Industrial Sites Reinvestment (UISR) Tax Credit

(CGS 32-9t)

DECD

Up to $100 million in corporate business tax credits over 10-year period to businesses that build, expand, or rehabilitate new facilities

An eligible industrial site investment project is one made in a property that has been subject to environmental contamination. The investment must return the property to a viable business condition that will add significant new economic activity, increase employment and generate additional tax revenue to the state and the municipality in which the property is located.

Effective July 1, 2011, sSB 1216 aligns some of the UISR rules with the ones for federal new markets tax credits for projects receiving investments eligible for both credits. It requires these projects to meet the state and federal eligibility criteria and subjects them to the federal recapture rules.

Property Tax Abatement or Forgiveness program (CGS 12-81r)

Not applicable

Towns can (1) forgive back taxes on potentially contaminated abandoned properties, (2) abate the taxes on remediated sites, and (3) fix the assessment of a property as of the last assessment date before the clean-up activities began

Need legislative body approval and compliance with its specified conditions.

Property Tax Assessment Deferral (CGS 12-65e)

Not applicable

Effective October 1, 2011, towns can defer an increased property tax assessment on a property in a designated rehabilitation area if the property is a brownfield site.

Property owner must agree to build a new common interest community or mixed-use or commercial structure on the site.

Brownfield-related provisions were added by HB 5585, effective October 1, 2011

Table 3: Brownfield Remediation Liability Protection Programs

Program

Administering Agency

Description

Eligibility Criteria

Abandoned Brownfield Cleanup (ABC) Program (CGS 32-9ll, as amended by sHB 6526, 9-11)

DECD

Exempts participants from investigating and remediating contamination that emanated from the property before they acquired it

Property qualifies if it:

Has been unused or significantly underused for at least five years before application to the program (sHB 6526 eliminated the requirement that the property had to be in this condition since 1999) and

Party that contaminated it must clean up, is unable to do so, can no longer be identified, or no longer exists

Applicants qualify if they:

Plan to acquire title to redevelop property,

Did not create or cause contamination,

Are unaffiliated with party that did, and

Are not obligated by law or regulation to remediate contamination

(sHB 6526 extended eligibility to municipalities and entities acting on their behalf)

Liability Protection Program (New) (sHB 6526, 17)

DECD

Liability protection from the state and third parties for cleaning up brownfields according to specified procedure

Limited to 32 brownfields per year

Property qualifies if:

Its redevelopment benefits economy and

Contamination levels exceed DEP standards for protecting environment, health, and public welfare

Applicant qualifies if it:

Is an “innocent landowner” (i.e., a party who acquired a property that someone else contaminated),

Is “bona fide prospective purchaser” (i.e. a party that can, among other things show that it acquired a brownfield after it was contaminated and is complying with environmental protection requirements), or

Owns property contiguous to the brownfield (i.e., “contiguous owner”)

Voluntary Remediation Program for Property Located on Contaminated Ground Water (CGS 22a-133y)

DEP

Parties voluntarily cleaning up a brownfield may use a licensed environmental professional to investigate and remediate it

Property qualifies if it is:

Located in areas where DEP determines the ground water is affected by contamination and

Not subject to DEP order, consent order, or stipulated judgment regarding a spill

Voluntary Remediation Program for Contaminated Property Regardless of Location (CGS 22a-133x)

DEP

Same as above

Party must submit DEP Environmental Condition Assessment Form and pay $3,250 application fee

Municipal Brownfield Program, Innocent Third Party Status (CGS 32-9ee)

DECD

Protects program participants from liability to DEP for clean-up costs

Applicants qualify if they:

Investigated and remediated a brownfield with Municipal Brownfield Program funds;

Did not cause, contribute to, or exacerbated contamination; and

Complied with DEP requirements

Municipal development agencies must also show that they did not contaminate the property

Table 4: Brownfield Remediation Liability Protection Policies

Program

Administering Agency

Description

Eligibility Criteria

Protection from Liability when Acquiring Municipally Remediated Property (CGS 32-9dd)

DEP

Protects parties acquiring municipally remediated brownfields from liability to DEP

Party did not contaminate the property or was not related to the one that did

DEP approved the clean-up

Third Party Liability Protection (CGS 22a-133ee)

DEP

Protects developers from liability to third parties (but not government) for contamination that existed the developers acquired the property

Developer is protected if it:

Did not pollute state waters or create any other pollution or pollution source, per DEP, and

Is not affiliated with party that contaminated the property

DEP approved developer's investigation and remediation reports

Table 5: Brownfield Remediation Regulatory Relief Policies

Policy

Administering Agency

Description

Fee Exemptions (New) (CGS 22a-6, as amended by sHB 6526, 8)

DEP

State, municipal, and private organizations exempted from paying DEP fees for permits needed to remediate brownfields

Certifying Party's Responsibility Under Transfer Act (sHB 6526, 4, codified at CGS 22a-134a)

DEP

Certifying party exempted from investigating and remediating contamination that occurs after it cleaned up a brownfield

Transfer Act Exemptions for Private Entities (CGS 22a-134, as amended by sHB 6526, 10)

DEP

The law sets conditions exempting specified parties acquiring brownfields from complying with the Transfer Act's reporting requirements

sHB 6526 added these exemptions:

Title transfers from a municipality or bankruptcy court to nonprofit organizations,

Property participating in Liability Protection Program, and

Property remediated under DECD's Municipal Brownfield Program

Licensed Environmental Professionals (CGS 22a-133v)

DEP

DEP program licensing environmental professionals to investigate and remediate contaminated property according to DEP standards

Interim Verification under the Transfer Act (CGS 22a-134)

DEP

When brownfield contamination affects groundwater, licensed environmental professionals (LEPs) may certify to DEP that:

the soil has been remediated according to its standards,

the ground water is being remediated under a long-term remedy, and

there is no pathway allowing polluted ground water to escape

Environmental Use Restriction (EUR) Waivers (CGS 22a-133o, as amended by sHB 6526, 12)

DEP

Easements recorded in land records prohibiting specific uses or activities harmful to human health and environment

sHB 6526:

Requires DEP commissioner to permit an EUR to be recorded without the agreement of other parties with an interest in the property if EUR has little or no effect that interest

Allows DEP commissioner to temporarily suspend EUR restrictions without requiring full remediation for temporary releases

Regulated Activities in Aquifer Protection Areas (CGS 22a-354h)

DEP

Regulated activities allowed in aquifer protection areas if they:

are being conducted on municipally-owned site undergoing remediation and

did not substantially begin, or actively operate for five years before area's designation

Also, anyone conducting the activity for 10 years register it on DEP form

Covenants Not to Sue (CGS 22a-133aa to 22a-133bb)

DEP

Agreement exempting parties from further remediation if they initially remediated the property according to DEP standards and subsequently discovered more contamination

Party qualifies if it:

Did not contaminate property or was not involved with the party that did and

Agrees to clean up and redevelop property

Redeveloping Mills in Floodplains (CGS 25-68d)

DEP

Makes it easier for agencies to use or allow others to use mills on contaminated floodplain sites by exempting the agencies from certifying that project meets specified criteria

Use or activity must:

Meet DEP standards

Be limited to site of mill's historic use

Comply with National Flood Insurance Program

Also, residential structures must be above 500-year flood elevation