OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http: //www. cga. ct. gov/ofa

sHB-5342

AN ACT CONCERNING REVISIONS TO THE STATE'S BROWNFIELD REMEDIATION AND DEVELOPMENT STATUTES.

OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 13 $

FY 14 $

Treasurer, Debt Serv.

GF - Cost

See Below

See Below

Department of Economic & Community Development

GF - Potential Cost

Indeterminate

Indeterminate

Department of Energy and Environmental Protection

GF -Potential Revenue Loss

See Below

See Below

Various State Agencies

GF - Potential Cost

Less than $1,000

Less than $1,000

Note: GF=General Fund

Municipal Impact:

Municipalities

Effect

FY 13 $

FY 14 $

Various Municipalities

Potential Revenue Impact

See Below

See Below

Explanation

Sections 1, 2, 6 and 7 expand the purposes for which General Obligation (GO) bond funds authorized for the Regional Brownfield Redevelopment Loan Fund can be used to include: (1) grants to municipalities, (2) loans for affordable housing projects, and (3) staffing and marketing costs associated with the Department of Economic and Community Development's (DECD) Brownfields Remediation Program. To the degree that bond funds are expended more rapidly than they otherwise would have been, this will accelerate General Fund expenditures for debt service costs. It could also result in the need for the authorization of additional GO bonds for this program in future years.

There is currently a $10 million unallocated GO bond balance for the Regional Brownfield Redevelopment Loan Fund and an additional $25 million will be made available in FY 13.

Section 2 also results in a potential cost by permitting the Commissioner of Economic and Community Development to forgive loans provided to municipalities and economic development agencies. The actual cost is uncertain as the commissioner has discretion over forgiving any particular loan that would otherwise be repaid.

Section 3 has no fiscal impact by specifying that DECD may use up to four percent of available funding for brownfield financing programs for certain administrative expenses related to those programs and the administration of the Office of Brownfield Remediation and Development (OBRD). There is no fiscal impact because the provision redirects funding to this specific purpose without providing additional funds.

Section 4 has no fiscal impact by redirecting any funds recovered by the Attorney General from parties that polluted brownfield sites to the Brownfield Remediation and Development account.

Section 5 results in a decrease in revenue by reducing and eliminating certain fees collected under the Liability Protection Program.

Section 5 gives applicants more time to pay the program's various application fees, which they must pay in two installments to the Department of Energy and Environmental Protection (DEEP). This is anticipated to result in delayed receipt of revenue to the state, as applicants are likely to take longer in submitting fees. This provision also allows municipal applicants to delay the remittance of fees to the state.

This section also reduces fees submitted to DEEP under certain conditions and eliminates the second installment payment. Currently, the first installment must be reduced by 10% if the applicant finishes investigating and remediating the property within 180 days of being notified that the DECD commissioner accepted the brownfield into the program. This requirement would result in a revenue loss to the state, and is anticipated to result in cost avoidance to municipalities, to the extent that they are applicants of brownfields.

The bill allows municipalities to ask the DEEP commissioner to waive the fee on any brownfield located within their respective jurisdictions that has been accepted into the program. Currently, municipalities are permitted to request fee waivers only for brownfields within their respective jurisdictions that others own. This is expected to result in a revenue loss to DEEP and a revenue gain to municipalities.

The bill eliminates the requirement that a party receiving a brownfield transfer from an applicant pay a $10,000 fee upon the transfer. 1 It instead requires the party to pay any outstanding application fee balance. It is uncertain what this provision would have on the state and municipalities, since the balance of application fees varies. The balance may, or may not, exceed the $10,000 application fee. Currently however no payments have been made in this program as the first applications were received in FY 11.

Section 5 also redirects application fees from the Special Contaminated Property Remediation and Insurance Fund (SCPRIF) to the Brownfield Remediation and Development account. This transfer from one account to another has no fiscal impact to the state.

Section 8 requires DECD to identify abandoned and underutilized mills, which will require at least one employee at an annual cost of $86,071 ($66,608 in salary plus $19,463 in fringe) in the OBRD to administer. It is anticipated that the administrative funding support provided to OBRD in Section 3 of the bill may accommodate this expense.

Currently, there are three full-time employees at the ORBD that manage DECD's brownfield programs and initiatives.

Section 9 may result in a cost of less than $1,000 to agencies participating in the working group to reimburse legislators and agency staff for mileage expenses.

The Out Years

The annualized ongoing fiscal impact identified above for General Fund debt service would continue into the future subject to inflation. The impact of Section 5 would continue into the future subject to fee changes and the extent to which municipalities apply to certain state brownfield programs.

All other annualized ongoing fiscal impacts would also continue into the future subject to inflation.

1 Under current law, an applicant may transfer a brownfield to another party before completing its investigation and remediation. The brownfield may remain in the program if the transferee meets the program's eligibility criteria and pays a $10,000 fee, which it must pay again when it finishes remediating the property and submits documents necessary to receive the program's protections.