Connecticut Seal

Senate Bill No. 371

Public Act No. 04-200

AN ACT CONCERNING WATER COMPANY LANDS.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Subsections (d) and (e) of section 16-43 of the general statutes are repealed and the following is substituted in lieu thereof (Effective from passage):

(d) Any water company selling land that at any time has been in the water company's rate base shall use the net proceeds from the sale of such land for capital projects which improve or protect the water supply system or for the acquisition of a water supply source or land to protect a water supply source. In the case of a water company required to file a water supply plan pursuant to section 25-32d, as amended, the capital projects or acquisition shall be consistent with such plan.

(e) For the purposes of rate making, the department shall use an accounting method for allocating the economic benefits of sales of land by a water company, as defined in section 16-1, as amended, that at any time has been in the water company's rate base that equitably allocates all of the economic benefits of any such sale between the ratepayers and the shareholders of the company based on the facts of each application for sale, except as follows:

(1) For any sale of land where the property is not more than ten acres and has not been taxed under the provisions of sections 12-107c to 12-107e, inclusive, during the previous ten years, the department shall equitably allocate all of the economic benefits of any such sale between the ratepayers and the shareholders of the company. Any such allocation shall be based on the facts of each application for sale and the department may [, except as otherwise provided in this subsection,] allocate all of the economic benefits of any such sale to either the ratepayers or the shareholders. [The department shall allocate the economic benefits of any such sale of water company land which promotes a perpetual public interest in the use of land for open space or recreational purposes, as defined in section 16-43b, substantially in favor of a water company's shareholders if not less than twenty-five per cent of the area of such land in the sale is to be used for open space or recreational purposes and shall allocate up to one hundred per cent of the benefits to the shareholders if one hundred per cent of the land in the sale is to be used for open space or recreational purposes. The department shall determine how much more than a majority of such benefits shall be allocated to the shareholders based on the extent to which part of the land is for open space or recreational purposes. Any such land designated for open space or recreation shall not be required to be part of or contiguous to the class III land which is subject to the sale in order to be considered in the determination of the allocation of benefits provided such noncontiguous land is (1) consistent with the state or local plan for open space and recreation in the municipality in which it is located, or (2) is adjacent to existing protected open space, or (3) creates a linkage between two or more parcels of protected open space and further provided only half of the acreage within such noncontiguous land designated for open space or recreational purposes shall be counted toward the percentage used in determining whether the twenty-five per cent minimum requirement in this section is met. Substitution of noncontiguous land to meet this requirement shall not be permitted if such land to be sold together with any contiguous class III land from which the water company has divided or subdivided it for sale is more than one hundred fifty acres and is contiguous to land protected as open space, forest land or farmland designated under sections 12-107c to 12-107e, inclusive, or classified as water company land, any of which, in combination with the land to be sold, is more than five hundred acres. The deed for any noncontiguous land used in any such determination shall clearly indicate that the land is held for the public interest in perpetuity. ]

(2) For a sale of class I or class II land to another water company for water supply purposes or to the state, a municipality, or a land conservation organization, which land has a permanent conservation easement in accordance with section 25-32, as amended, the department shall equitably allocate, in a contested case proceeding, all of the economic benefits of any such sale between the ratepayers and the shareholders of the company.

(3) For the sale of land for an educational use, as defined in section 16-43b, as amended by this act, the department shall allocate the economic benefits of any such sale in accordance with past practices for nonopen space transactions pursuant to subsection (a) of this section.

(4) For the sale of class III land where the property is more than ten acres and promotes a perpetual public interest in the use of land for open space or recreation purposes, as defined in section 16-43b, the department shall allocate the benefits in accordance with the following:

(A) If twenty-five per cent of the land or less is to be used for open space or recreational purposes, the department shall allocate one hundred per cent of the benefits to the ratepayers;

(B) If more than twenty-five per cent but less than eighty per cent of the land is to be used for open space or recreational purposes, the department shall calculate the benefit allocated to a water company's shareholder by multiplying by a factor of eighty per cent of the portion of class III land in the transaction that is reserved for open space;

(C) If eighty per cent or more but less than ninety per cent of the area of such land is to be used for open space or recreational purposes, the department shall allocate the benefits of such sale in favor of a water company's shareholders in an amount that is proportionate to the percentage of class III land in such sale that is to be used for open space or recreational purposes;

(D) If not less than ninety per cent of the area of such land is to be used for open space or recreational purposes, the department shall allocate one hundred per cent of the benefits to the shareholders.

(f) For the sale of class III land by a water company that at any time has been in the water company's rate base and that is to be used for open space or recreational purposes, the water company shall file with the department a certified copy of a conservation easement that is recorded on the land records for the portion of class III land preserved as open space. Such conservation easement shall state that the land subject to such easement shall be permanently dedicated for land uses such as public parks or forests or natural areas, including, but not limited to, reservoirs and water company land. Such land shall be preserved predominantly in its natural scenic and open space condition that may allow for camping, hiking, forestry, fishing, wildlife or natural resource conservation, which easement shall prohibit all other building or development except as may be required for source protection and to meet water quality standards, if used as a public water supply.

Sec. 2. Section 12-217dd of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) For purposes of this section, "donation of open space land" means the value of any land or interest in land conveyed without financial consideration, or the value of any discount of the sale price in any sale of land or interest in land, to the state, a political subdivision of the state, a water company, as defined in section 25-32a, or to any nonprofit land conservation organization where such land is to be permanently preserved as protected open space or used as a public water supply source.

(b) There shall be allowed a credit for all taxpayers against the tax imposed under section 12-217, in an amount equal to fifty per cent of any donation of open space land or as a public water supply source. For purposes of calculating the credit under this section, the amount of donation shall be based on the use value of the donated open space land and the amount received for such land. For purposes of this subsection, "use value" means the fair market value of land at its highest and best use, as determined by a certified real estate appraiser.

(c) A credit that is allowed under this section, with respect to any taxable year commencing on or after January 1, 2000, but is not used by a taxpayer may be carried forward to each of the successive income years until such credit is fully taken. In no case shall a credit that is not used be carried forward for a period of more than [ten] fifteen years.

Sec. 3. Section 16-43b of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

For purposes of subsection (e) of section 16-43, as amended by this act, "open space or recreational purposes" means public parks or forests or natural areas, including, but not limited to, reservoirs and water company land, which are preserved predominantly in their natural scenic and open condition which may allow for camping, hiking, forestry, fishing, wildlife or natural resource conservation and "educational use" means the use by any town, city or borough, whether consolidated or unconsolidated, and any school district or regional school district for the purposes of schools and related facilities.

Sec. 4. (NEW) (Effective from passage) (a) For purposes of this section, "donation of land for educational use" means the value of any land or interest in land conveyed without financial consideration, or the value of any discount of the sale price in any sale of land or interest in land, to any municipality or political subdivision of the state for educational use, as defined in section 16-43b of the general statutes, as amended by this act.

(b) There shall be allowed a credit for all taxpayers against the tax imposed under section 12-217 of the general statutes, in an amount equal to fifty per cent of any donation of land for educational use. For purposes of calculating the credit under this section the amount of donation shall be based on the difference between the use value of the donated land and the amount received for such land. For the purposes of this subsection, "use value" means a fair market value of land at its highest and best use, as determined by a certified real estate appraiser.

(c) A credit that is allowed under this section, with respect to any taxable year commencing on or after January 1, 2004, but is not used by a taxpayer may be carried forward to each of the successive income years until such credit is fully taken. In no case shall a credit that is not used be carried forward for a period of more than fifteen years.

Sec. 5. Subsection (f) of section 16-50d of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(f) When more than one person gives notice of a desire to acquire a water company source or land, the right to acquire such land shall be in the following order: (1) A water company, as defined in section 25-32a, for water supply purposes; (2) a municipality in which the land is located for water supply, open space, [or] recreational purposes; (3) the state for open space or recreational purposes; (4) a private, nonprofit land-holding organization for open space or recreational purposes; (5) a municipality for any public purpose, including, but not limited to, an educational use; and (6) the state for any public purpose. Any land acquired for open space or recreational purposes shall have such restriction placed in the instrument intended as a conveyance recorded in the land records in the town where the land is situated. No land acquired pursuant to this section for open space or recreational purposes may be used for any other purpose unless the land has been reoffered for open space or recreational purposes pursuant to the provisions of this section and no notice of a desire to acquire such land has been given. The department shall approve any such reoffering provided there is compliance with this section. In any decision pursuant to this subsection, the department shall act in concurrence with the Commissioner of Environmental Protection. Notwithstanding the provisions of subdivision (5) of this subsection, not more than fifteen per cent of the land acquired pursuant to this section may be used by a municipality for a use other than open space or recreational purposes without a reoffering. Any such other use shall be subject to the provisions of section 7-131n. As used in this subsection, "open space or recreational purposes" means use of lands for agriculture, parks, natural areas, forests, camping, fishing, wetlands preservation, wildlife habitat, reservoirs, hunting, golfing, boating, swimming and hiking and "educational use" means the use by any town, city or borough, whether consolidated or unconsolidated, and any school district or regional school district, for the purposes of schools and related facilities.

Approved June 3, 2004