OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

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

sHB-5685

AN ACT CONCERNING BROWNFIELDS.

As Amended by House "A" (LCO 5285)

House Calendar No. : 159

Senate Calendar No. : 508

OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 07 $

FY 08 $

Department of Economic & Community Development

GF – Cost/Revenue

See Below

See Below

Department of Environmental Protection

GF - Cost

Minimal

Minimal

CT. Development Auth. (quasi-public)

Cost

Minimal

Minimal

Note: GF=General Fund

Municipal Impact:

Municipalities

Effect

FY 07 $

FY 08 $

Various Municipalities

Revenue Impact

Potential

Potential

Explanation

The bill creates an Office of Brownfield Remediation and Development (Office) within the Department of Economic and Community Development (DECD) for administrative purposes only. The DECD currently has a Community Development Specialist and a Civil Engineer that work on brownfield projects. The bill increases responsibilities for the DECD which are outlined in the bill and requires the agency to establish and operate pilot programs in four Connecticut municipalities, and provide grants to produce an economic development benefit for the municipalities that are designated. It is anticipated that the Office will require a Supervising Environmental Analyst and an Environmental Analyst 1 at a cost of $100,000 in FY 07 plus fringe benefits1 and associated other expenses estimated at $8,000 to implement the legislation. The bill requires that the additional work be handled within available appropriations and any funds allocated under Urban Action bonds, the Urban Industrial Site Tax credit program, and the Special Contaminated Property Remediation and Insurance Fund. It is unclear what this means since the bill does not specifically authorize the use of the funds or allocate funds for the pilot program and one of the mentioned programs is a tax credit. Since no additional funds are provided the agencies will either not undertake the duties, or have to divert resources from another program(s), or require a deficiency appropriation. The bill also establishes a separate non lapsing general fund account to contain any monies required to be deposited into the account including 80% of the proceeds of any sale of property. The future revenue gain from this provision is unknown at this time. The future revenue gain to municipalities from the 20% of the proceeds is also unknown.

The bill expands the use of the Urban and industrial site reinvestment tax credit program to include any municipality that the DECD Commissioner determines is connected with the relocation of an out-of-state operation or the expansion of an existing facility that will result in a capital investment by a company of not less than 50 million dollars. The tax credits are capped at $100 million for a single project and total available credits of $500 million for all projects. The value of the credits are not to exceed the total amount of state revenue the projects expects to generate.

No net fiscal impact is anticipated due to an exemption from the Transfer Act of conveyances of establishments through a tax warrant sale.

The bill establishes a task force to study the long term solutions for brownfields. To the extent that legislators are appointed to the task force, Legislative Management may incur minimal costs for legislator mileage reimbursement (currently 44. 5 cents per mile). There is no fiscal impact as these costs are budgeted as part of the normal resources of the agency.

Any increase in the workloads of the Department of Environmental Protection or the Connecticut Development Authority to act as liaisons with the new Office is anticipated to be minimal and handled within existing resources. Acceleration of these projects could divert resources from one project to another.

In addition, to the extent that the changes made in this legislation would expand the ability of a municipality to recover costs for remediation from a responsible party, a cost savings/revenue gain could be incurred.

House 'A' eliminates the $15 million dollar appropriation and provides that the costs associated be done within resources or specified programs, adds the non lapsing account and the provisions concerning the deposit of the proceeds of the sale of property, eliminates a provision allowing additional reimbursement and adds incentives for clean up of property, establishes a task force and expands the Urban and Industrial Sites Reinvestment Program resulting in the impact stated above.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation.

The preceding Fiscal Impact statement is prepared for the benefit of the members of the General Assembly, solely for the purposes of information, summarization and explanation and does not represent the intent of the General Assembly or either House thereof for any purpose.

1 The fringe benefit costs for state employees are budgeted centrally in the Miscellaneous Accounts administered by the Comptroller. The estimated first year fringe benefit rate as a percentage of payroll is 23. 6%, effective July 1, 2005. The first year fringe benefit costs for new positions do not include pension costs. The state's pension contribution is based upon the prior year's certification by the actuary for the State Employees Retirement System (SERS). The SERS 2005-06 fringe benefit rate is 34. 7%, which when combined with the non pension fringe benefit rate would total 58. 3%.