OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

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

EMERGENCY CERTIFICATION

SB-1242

AN ACT AUTHORIZING BONDS OF THE STATE FOR CAPITAL IMPROVEMENTS AUTHORIZING SPECIAL TAX OBLIGATION BONDS OF THE STATE FOR TRANSPORTATION PURPOSES AND AUTHORIZING STATE GRANT COMMITMENTS FOR SCHOOL BUILDING PROJECTS.

OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 12 and beyond

Treasurer, Debt Serv.

GF - Cost

See Below

Treasurer, Debt Serv.

TF - Cost

See Below

Education, Dept.

GOBonds - Cost

See Below

Note: GF=General Fund; TF=Transportation Fund; GOBonds=General Obligation Bonds

Municipal Impact:

Municipalities

Effect

FY 12 and beyond

Various Municipalities

Revenue Gain

See Below

Explanation

Bonding Provisions

The bill authorizes new General Obligation (GO) bonds in FY 11, FY 12 and FY 13 and cancels $2. 8 million in GO bonds in FY 12. The authorization amounts and the associated General Fund debt service costs1 are shown in the table below.

New GO Bond Authorizations and Estimated Debt Service Cost

($-millions)

Fiscal Year

Authorization

Amount

Total Debt Service Cost*

Interest

Principal

FY 11

9. 0

13. 7

4. 7

9. 0

FY 12

1,202. 4

1,833. 7

631. 3

1,202. 4

FY 13

1,365. 1

2,081. 8

716. 7

1,365. 1

*Figures assume that bonds are issued at 5. 0% over 20 year term

It authorizes Special Tax Obligation bonds in FY 12 and FY 13. The authorization amounts and associated Special Transportation Fund debt service costs1 are shown in the table below.

New STO Bond Authorizations and Estimated Debt Service Cost

($-millions)

Fiscal Year

Authorization

Amount

Total Debt Service Cost**

Interest

Principal

FY 12

578. 6

968. 4

389. 8

578. 6

FY 13

515. 2

862. 3

347. 1

515. 2

**Figures assume that bonds are issued at 5. 5% over 20 year term

It authorizes Clean Water Fund (CWF) revenue bonds in FY 12 and FY 13. The authorization amounts and the associated debt service costs are shown in the table below.

New CWF Bond Authorizations and Estimated Debt Service Cost

($-millions)

Fiscal Year

Authorization

Amount

Total Debt Service Cost***

Interest

Principal

FY 12

233. 4

355. 9

122. 5

233. 4

FY 13

238. 4

363. 5

125. 1

238. 4

*** Figures assume that bonds are issued at 5. 0% over 20 year term

It should be noted that the debt service cost for CWF revenue bonds is paid primarily2 with revenue from: (1) investment earnings on the reserves and assets held in the reserve fund required by statute, and (2) loan payments from towns who receive CWF low-interest loans. Based on current projected CWF expenditures for the biennium, it is expected that no General Fund subsidy will be needed for the revenue bonds authorized in the bill.

Municipal Impact of Bonding and Validating Provisions

The bond authorizations for: (a) the Small Town Economic Assistance Program (STEAP), (b) the Local Capital Improvement Program (LoCIP), (c) Inter-town Capital Equipment Purchase Incentive Program, (d) school construction grants-in-aid, (e) the Clean Water Fund Program and (f) grants-in-aid for acquisition of open space for conservation or recreation purposes, will result in a municipal revenue gain for various municipalities.

Section 46 validates a referendum vote on May 2, 2011 in the City of Groton. This will result in potential cost avoidance because it may preclude a court challenge to the referendum.

Section 47 validates an ordinance approved by the Norwich City Council on October 19, 2009, which allows the city to proceed with the issuance of the bonds. The provision has no direct fiscal impact.

Section 48 extends the term of bonds issued by the town of Canaan from 20 to 40 years. This will reduce the size of the annual debt service payments that Canaan must make on the bonds but will also increase the total debt service cost due over the life of the bonds.

School Construction Provisions

Section 93 approves state grant commitments for school construction projects on the education commissioner's project priority list. This authorizes $284. 9 million in state grant commitments for 22 new school construction projects of various types. It also reauthorizes a total of five previously authorized projects. These projects have changed substantially (more than 10%) in cost or scope. The reauthorizations increase state grant commitments by a net $1. 85 million from the amounts previously authorized for these projects. The total cost of the state's share of the priority list is anticipated to be approximately $437. 25 million; this includes $286. 75 million in principal payments, and $150. 5 million in interest payments. The state cost of $286. 75 million represents a revenue gain to various municipalities whose projects are included on the priority list.

Sections 94-99 & 101-115 exempt specified school construction projects from various statutory and regulatory requirements to allow them to qualify for state grants. These exemptions are referred to as “notwithstanding” provisions. See the table below for a summary of each exemption and any applicable conditions. The cost estimates shown are provided by the Office of Fiscal Analysis.

Notwithstanding Provisions

District

Project (s)

Exemption, Waiver, or Other Change

State Cost $

94

Bridgeport

Projects authorized between July 1, 2011 and June 30, 2016

Exemption for limit on cost of site acquisition and remediation of a brownfield if that cost is less than the cost of a reasonable alternative site, as determined by the DCS commissioner, in consultation with the education commissioner and the Office of Brownfield Remediation and Development

DCS, in consultation with the commissioner and the office, must report to the Education and Finance committees by June 30, 2017 on the efficacy and cost-effectiveness of the exemption.

0

95

Bristol

Bristol Central High and

Bristol Eastern High: Alterations

Change to a renovation project

5,421,146

96

CREC

7 new interdistrict magnet schools

State must pay the initial cost of CREC's local shares for these projects.

After audit of completed projects, DCS must calculate the local share of each and determine a 20-year repayment schedule, including a fixed interest rate as determined by the state treasurer over the repayment period.

SDE must withhold annual repayments from the interdistrict magnet school grants payable to CREC for operating the schools.

SDE must transfer withheld amounts annually to the School Building Construction Fund.

15,313,217

97

Two Rivers Magnet Academy governance committee

Two Rivers Magnet Middle School: new magnet school

Forgives repayment of $1,568,672 in grant funds received for reimbursement of ineligible costs.

Governance committee members repay $268,600 on a pro rata basis.

1,568,672

98

Goodwin College

Connecticut River Academy: New magnet school

Reduces authorized project cost by $1. 2 million

0

99

Cromwell

Woodside Intermediate School: New school

Waives repayment of any portion of grant already paid prior to the bill's passage based on enrollment figure of 494.

SDE not responsible for making any more grant payments based on that figure.

1,303,617

101

Hartford

Capital Preparatory Magnet School: New magnet school

Allow district to change the project to accommodate change from a grade 6-12 to Pre-k to 12 school, provided:

there is no increase in total project costs currently authorized,

the education commission reviews and approves all construction plans and specifications for the pre-k-12 school, and

the education commissioner approves Hartford's modified enrollment projections for the pre-k-12 school

0

102

Ledyard

Juliet W. Long Elementary School: Asbestos removal

Waives requirements for Bureau of School Facilities plan approval before bid, provided Bureau approves plans and specifications

169,650

103

Ledyard

Ledyard High School: Asbestos removal

Waives requirements for Bureau of School Facilities plan approval before bid, provided Bureau approves plans and specifications.

50,895

104

New London

Interdistrict magnet school district

Extends, from June 30, 2012 to June 30, 2015, the deadline for New London's out-of-district student enrollment to equal at least 15% of its total districtwide enrollment as a condition of receiving state operating grants, and

Requires the districtwide enrollment to be measured based on the total number of students enrolled in New London public schools.

0

105(a)

West Haven

West Haven High School: Alteration and energy conservation

Waives requirements for Bureau of School Facilities plan approval before bid, provided Bureau approves plans and specifications

607,194

105 (b)

West Haven

West Haven High School: Alteration and energy conservation

Waives competitive bidding requirements for orders and contracts applicable to project

283,913

105 (c)

West Haven

West Haven High School: Alteration and energy conservation

Makes district eligible for payment for any change orders not submitted within statutory time limit.

Included above

106

Woodstock

Woodstock Elementary School: Asbestos removal

Waives requirement for Bureau of School Facilities plan approval before bid, provided Bureau approves plans and specifications.

5,714

107

Winchester

Pearson Middle School: Code violations

Waives requirement for Bureau of School Facilities plan approval before bid, provided Bureau approves plans and specifications

47,845

108

Enfield

Stowe Elementary School

Waives requirement to repay the unamortized balance of a school construction grant when redirecting a school building to other use.

Waiver continues while Enfield leases the building to CREC for temporary use as the Public Safety Magnet School.

Period for which CREC uses the facility to be credited towards time Enfield uses it for another school use.

147,622

109

Groton

Catherine Kolnaski Magnet School: New school

Exempts project from space standards for grant calculation purposes.

1,954,889

110

New Haven

Clinton Avenue School: New school

New Haven not responsible for returning any portion of grant already paid prior to the bill's passage based on enrollment figure of 680.

SDE not required to make any more grant payments based on that figure.

2,821,167

111

Hartford

M. D. Fox Elementary School: Alteration, energy conservation, code violation and renovation

Waives requirement that a renovation project cost less than a new building, provided project cost does not exceed approved cost of $54,337,500.

0

112

Danbury

Danbury Head Start Center: Extension/alteration

Changes project scope to site acquisition and new construction

0

113

Amistad Academy Charter School

Amistad Academy Charter School: Purchase and renovations

Increases authorized project cost by $2. 75 million, from $31. 5 million to $34. 25 million

2,750,000

114

Region 6

Wamogo Regional High School: vocational agriculture/extension and alteration

Waives newspaper notice requirement in competitive bidding procedure to allow alternate public bidding for costs up to $419,200.

419,197

115

Wilton

Cider Mill School: renovation/ extension

Waives repayment of any portion of grant already paid prior to the bill's passage based on sqaure footage of 145,300.

SDE not responsible for making any additional grant payments based on that figure.

40,805

TOTAL

     

32,905,543

Section 100 requires the Department of Construction Services (DCS) commissioner, in consultation with the education commissioner, to provide special school construction grants for school districts that have one or more schools with minority enrollments that exceed the district-wide average for the same grades by more than 25%. There are currently nine schools within Connecticut that have a 25% or greater racial imbalance. This could result in a significant cost to the state. The scope of the cost is indeterminate as it is unknown what the scope of the capital costs would be for the schools accepting diversity school project grants.

The education commissioner is required to conduct a programmatic audit of each diversity school within five years after it opens. If, after the one-year period, the commissioner determines there has not been significant progress, the bill requires the school district to repay the extra project reimbursement. This could result in a revenue gain to the state in the out years, as some districts would be responsible for reimbursing the state. Similarly, this provision could result in a cost to various local and regional school districts that do not make significant progress.

The Out Years

The fiscal impact identified above for the General Fund and the Transportation Fund would continue into the future for the term of issuance of the bonds.

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 chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

1 The first year that the state will experience costs associated with the bonds depends on when they are allocated through the State Bond Commission and when the funds are expended.

2 A General Fund subsidy is only needed if the revenue from these two sources is not sufficient to cover the debt service on the CWF revenue bonds.