February 3, 2004
HISTORY OF LOCAL CAPITAL IMPROVEMENT PROGRAM (LOCIP)
By: Kevin McCarthy, Principal Analyst
You asked for a history of the Local Capital Improvement Program (LoCIP) (CGS § 535 et seq.).
The program, established by PA 87-584, provides grants to municipalities for capital improvements such as roads, bridges, sewage treatment plants, sewers, and public buildings. The program has been amended periodically, most commonly to expand the types of projects that are eligible for funding. 1991 legislation eliminated funding for road and bridge projects under LoCIP and instead created a new special fund for these and other related activities. But, another act passed that year repealed these changes. Legislation adopted in 2000 increased from five to seven years the amount of time that a municipality has to spend its grant. The original bond authorization for the program was $20 million, which has been increased over the years to $470 million.
An Office of Policy and Management (OPM) Website, http://www.opm.state.ct.us/igp/grants/LOCIP.HTM, provides additional information about the program.
PA 87-584 created LoCIP and authorized $20 million in bonds for the program. The bond proceeds went into a special fund, which reimburses municipalities for their costs for eligible capital improvement projects. Eligible capital projects, under the act, included roads and bridges, sewage treatment plants, sewers, public buildings, and many other public improvements. In addition, the program could be used to pay for repairs connected with the reconstruction and renovation of capital facilities, but not ordinary repairs and maintenance.
The act specified the formula for allocating funds among municipalities, which considers the number of miles of roads in the municipality and its population, population density, and property wealth. The act also specified (1) the process that OPM must follow in approving and paying grants and (2) the procedures municipalities must follow in spending them.
DEFINITION OF ELIGIBLE PROJECTS
The law has been amended periodically to expand the types of projects that are eligible for LoCIP funding. The expansions included (1) improvements to emergency communication systems (PA 93-1), (2) sidewalk and pavement improvements (PA 94-53), (3) public housing projects (PA 95-2), (4) construction of or renovations to veterans' memorial monuments (PA 97-1, June 5 Special Session), (5) improvements to information technology systems, including those needed to achieve Y2K compliance (PA 99-66), (6) flood control projects, thermal imaging systems, and bulky waste and landfill projects (PA 00-167), (7) preparation of municipal plans of conservation and development (PA 01-197), and (7) purchase of automatic external defibrillators (PA 02-5).
On the other hand, PA 92-7 May Special Session, eliminated (1) local pavement management programs as eligible projects and (2) the use of LoCIP grants to pay current debt service on municipal bonds and notes.
PA 91-3, June Special Session, eliminated funding for road and bridge projects under LoCIP and instead created a new $30.5 million Local Transportation Infrastructure Project Fund to finance these and other related activities. The act made several other changes to LoCIP. First, it allowed municipalities to use LoCIP to fund sidewalks (except those on school property), flood control facilities, and park construction (as distinct from park improvements, which were already eligible) It also imposed planning requirements and eliminated the requirement that investment income generated by the fund be returned to it. But, PA 91-13, June Special Session repealed these changes.
PA 92-7, May Special Session eliminated the requirement that investment earnings credited to LoCIP Fund assets become part of the fund and added a requirement that local capital improvements be capital expenditures. It also limited municipal requests for grants to those cases in which (1) expenditures have been incurred but not yet paid, (2) expenditures have been incurred and paid within two months prior to application for payment, or (3) expenditures have been incurred and paid on projects which have not been placed in service or which were placed in service not more than two months prior to application for payment. The act permitted the OPM secretary to waive, for good cause, the requirement that the expenditure have been incurred and paid within two months prior to application for payment. If a municipality had not yet paid its expenditures, the act required the municipality to use the grant promptly to pay the cost of local capital improvements but eliminated grant payments to pay principal and interest on short-term bonds or notes issued to finance the project.
PA 00-167 gave municipalities up to seven years after a grant is authorized, instead of five, to use their LoCIP funds. It required the OPM secretary to notify the municipality twice in writing of the elapsed time and of the date when the grant authorization expires. The first notice must be given within five years of when the grant is authorized and the second within six years of the authorization date.