AN ACT CONCERNING THE CREATION OF CONNECTICUT BROWNFIELD LAND BANKS, REVISIONS TO THE BROWNFIELD REMEDIATION AND REVITALIZATION PROGRAM AND AUTHORIZING BONDS OF THE STATE FOR BROWNFIELD REMEDIATION AND DEVELOPMENT PROGRAMS.

This bill establishes a framework for organizing and operating local nonprofit land banks to acquire and remediate brownfields and sell the remediated property for redevelopment. As part of that framework, these Connecticut Brownfield Land Banks (CBLBs) may access the same brownfield remediation tools and incentives available to municipalities. To do so, a CBLB must first (1) be certified as meeting the bill's requirements by the Department of Economic and Community Development (DECD) and (2) enter into a land banking agreement with one or more municipalities.

The bill makes it easier to access the benefits of DECD's Brownfield Remediation and Revitalization Program and makes several other administrative and conforming changes. It allows developers to remediate a brownfield a section at a time and be protected from liability to the state and third parties with respect to that section instead of having to remediate the entire brownfield before receiving any liability protection. The bill also protects lenders from liability when they hold a mortgage or other security interest in a brownfield that is being remediated under the program.

The bill establishes a process for certifying nonprofit organizations as CBLBs. An organization seeking CBLB certification must apply to DECD, and once certified, may:

1. acquire, retain, and remediate brownfields and sell the remediated property for a municipality's benefit;

2. educate government officials, community leaders, economic development agencies, and nonprofit organizations on brownfield redevelopment best practices; and

3. engage in other activities the act authorizes.

A nonprofit organization applying for CBLB certification must do so on DECD-prescribed forms and provide:

1. its certificate of incorporation and bylaws,

2. a list of its current officers and a copy of its bylaws,

3. the proposed land banking agreement with one or more municipalities,

4. proof that it has the financial and technical capacity to fulfill the purposes of a CBLB,

5. its proposed business plan, and

6. any other information the commissioner requires.

In deciding whether to approve or reject a complete application, the commissioner must consider:

1. whether the applicant has the financial and technical wherewithal to fulfill the purposes of a CBLB,

2. the relative economic conditions of the municipalities the organization proposes to serve,

3. the degree to which these municipalities support the organization's certification,

4. the quality of the CBLB's business plan, and

5. any other criteria the commissioner establishes.

If the commissioner approves the application, she must issue a certificate granting the organization all the rights, privileges, and immunities the bill grants certified CBLBs.

Certified CBLBs must submit a report to the commissioner annually, by January 31, that describes their activities for the previous year, including:

1. the CBLB's updated business plan and a list of current officers and directors,

2. the CBLB's complete operating and financial statements,

3. copies of any land banking agreements the CBLB entered into during the preceding year, and

4. any other information the commissioner requests.

The commissioner must review the report to determine if it includes the required information. If it does not, she must notify the CBLB's officers by mail that she will decertify the organization 120 days after the mailing date unless the CBLB submits a revised report that she determines provides the required information. The commissioner may extend the 120-day deadline by an additional 60 days.

If the commissioner decertifies the CBLB, it cannot enter into any new land banking agreements, but continues to (1) enjoy its rights and (2) remains bound by its obligations, with respect to any property it acquired under a land banking agreement it executed before it was decertified. A decertified CBLB may reapply for certification.

CBLBs must exercise their powers through their boards of directors, which must consist of between five and 11 members, each with knowledge and expertise in the land bank's purposes and activities. The board must elect from its members the board's chairperson and any other officers it deems necessary. It may establish committees and subcommittees and adopt bylaws and procedures needed to perform its functions.

Members serve without compensation, but are entitled to reimbursement for the actual and necessary expenses they incur while performing their official duties. The members are not personally liable for CBLB's loans, other financial obligations, or environmental liabilities, nor are they subject to creditors' rights, which apply only against the CBLB.

Elected and appointed state and local officers may serve on CBLB boards, and their appointment neither terminates nor impairs their public duties. State and municipal employees also may serve on a board.

Board members may organize and reorganize a CBLB's executive, administrative, clerical, and other departments, and can specify the duties, powers, and compensation of the CBLB's employees, agents, and consultants.

The bill gives CBLBs broad contractual, financial, and development powers, except the power to take property by eminent domain. A CBLB may:

1. enter into land banking agreements with municipalities to acquire, retain, remediate, and sell land and buildings in those municipalities;

2. enter into contracts and agreements with municipalities to receive or provide staff support;

3. obtain grants or borrow money from private lenders, municipalities, and state and federal agencies to fund its operations;

4. secure the payment of some or all of its debt by procuring insurance or state and federal guarantees and making the necessary premium payments;

5. acquire property by purchase contracts, lease purchase agreements, installment sales contracts, land contracts, and foreclosure of municipal tax liens; and

6. do all things necessary to fulfill its purposes and comply with applicable laws.

The bill complements the CBLB's property acquisition powers by allowing municipalities to transfer or convey land and buildings and interests in them to a CBLB. A municipality may do this regardless of any conflicting statute, special act, charter, or home rule ordinance. The CBLB may accept property from the municipality according to the terms and conditions specified in their land banking agreement. The CBLB may also convey the property as its procedures allow.

CBLBs must exercise their powers to benefit state residents, specifically to increase their commerce, wealth, and prosperity. Consequently, the act deems the exercise of these powers an essential public function and exempts CBLBs from paying state and local taxes and assessments on (1) the revenue or property they receive, acquire, transfer, or use and (2) any income derived from these sources.

A CBLB may acquire only brownfields and adjacent or nearby property identified in the land banking agreement between it and the municipality where the property is located. It must hold this property in its own name regardless of the entity that transferred it. The CBLB must also maintain an inventory of all the real property it acquires and allow the public to review and inspect it.

The CBLB must adopt policies and procedures specifying the terms and conditions for acquiring real property or property interests. Those terms and conditions may allow for different types of compensation, including: (1) monetary payments; (2) secured financial obligations, covenants, or conditions related to the property's current or future use; (3) contractual commitments imposed on the party transferring the property; and (4) other forms the CBLB's directors determine are in the CBLB's best interest.

The CBLB may also dispose of property it acquires as its land banking agreements allow. It can convey, exchange, sell, transfer, lease as lessee, grant, release, demise, and pledge as collateral any and all interests in, on, or to the property as long as the municipality where the property is located approves the transaction, as specified in the land banking agreement.

§§ 7-13 — CBLBs' Access to Brownfield Remediation Tools and Incentives

The bill allows CBLBs to access the same brownfield remediation tools and incentives available to municipalities.

Local Option Property Tax Abatement (CGS § 12-81r). The bill allows municipalities to forgive all or a portion of the principal and interest due on delinquent property taxes for a property the CBLB acquires or plans to acquire in the municipality. Current law allows them to:

1. forgive the delinquent taxes on a property for a party that intends to acquire, investigate, and remediate it according to state standards;

2. abate the property taxes for up to seven years on a property whose owner agrees to remediate it according to state standards; and

3. tax a remediated property for up to seven years based on its pre-remediation fair market value.

Conducting Environmental Site Assessments (CGS § 22a-133dd). The law sets conditions under which a municipality, or a licensed environmental professional (LEP) it employs, may enter a property, without liability, to assess or investigate it. The bill sets similar conditions under which a CBLB or an LEP it employs may enter a property it controls for the same purposes.

The CBLB or its LEP may enter the property subject to a land banking agreement between the CBLB and the municipality if:

1. the land banking agreement requires it to be investigated and assessed and the municipality is authorized to enter the property or

2. the property's owner and the municipality or CBLB enter into a voluntary agreement allowing the property's environmental condition to be investigated or assessed.

As with municipalities, the CBLB or its LEP is not protected from liability for gross negligence or intentional misconduct. The CBLB or the LEP must, like municipalities, give the property owner 45-days notice before entering the property.

Department of Energy and Environmental Protection (DEEP) Liability Relief Program (CGS § 22a-133ii). The bill makes CBLBs eligible to participate in DEEP's liability relief program, which, under current law, is open only to municipalities, economic development agencies, municipally-formed nonprofit economic development corporations, and nonstock or limited liability companies municipalities or these corporations form and control. The program protects these entities from liability for contamination that occurred before they acquired the property.

Transfer Act Exemptions (CGS § 22a-134). Under the bill, properties municipalities convey to CBLBs are exempt from the transfer act, which requires parties to a real estate transaction involving contaminated property to notify DEEP about the contamination and identify the party that will investigate and remediate it. The law already exempts property that municipalities foreclosed on and subsequently conveyed, remediated under DECD's municipal brownfield grant program (CGS § 32-376), or acquired by eminent domain.

The bill also sets conditions that exempt from the transfer act a property that a CBLB remediates and subsequently transfers. The transfer is exempt if the property was remediated under a DEEP or DECD liability relief program, is still compliant with that program when the transfer occurs, and was not used to generate hazardous waste after entering the program.

Remedial Action and Redevelopment Municipal Grant Program (CGS § 32-763). The bill makes CBLBs eligible for DECD remedial action and redevelopment grants, which are currently available only to municipalities and local economic development agencies. The grants are for investigating, assessing, and cleaning up contaminated properties.

Abandoned Brownfield Cleanup Program (CGS § 32-768). The bill allows CBLBs to request the DECD commissioner to determine if a property is eligible for the program's benefits regardless of the property's current owner. As such, CBLBs can recommend property regardless of whether they own it. It also exempts them from having to meet the program's responsible party criteria (i.e., the party that contaminated the property cannot be determined, no longer exists, or is unable to remediate it).

The program exempts participants from investigating and remediating contamination that emanated from the property before they acquired it and limits their liability to the state or third parties for the contamination as long as they did not cause or contribute to the contamination or negligently or recklessly exacerbate it.

Liability Protection for Remediated Portions of a Property (CGS § 32-769(j)(3))

The bill makes it easier for developers to remediate and develop a brownfield in sections. It does so by allowing them to remediate a section of the brownfield and receive the program's liability protection for that section instead of waiting until they remediate the entire brownfield, as current law requires.

To receive liability protection for a remediated section, a developer must submit to the DECD and Department of Energy and Environmental Protection (DEEP) commissioners the required documents verifying a brownfield's remediation. That is, the developer must submit a report indicating that the section was (1) investigated and remediated according to state standards (i.e., verification) or (2) investigated and remediated according to those standards except for contaminated groundwater, which is being remediated under a long-term remedy (i.e., interim verification). The bill specifies that, in both cases, the remediation must address hazardous substances that extend out from the section to the brownfield's boundaries.

Besides submitting the required verification or interim verification report, the developer must have complied with the law's requirements for preparing, submitting, and implementing the statutorily required investigation plan and remediation schedule. Specifically, the developer must have notified the DEEP commissioner that the following tasks were completed on time:

1. the entire property was investigated according to the prevailing standards and guidelines for conducting such investigations within two years after the developer paid the first installment of the program's application fee,

2. the remediation plan for the entire brownfield had been submitted to the commissioner, and

3. the remediation work began within three years after paying the first installment.

Lastly, the developer must demonstrate to the commissioners' satisfaction that the entire property will be remediated on time.

The bill extends the program's liability protections to lenders that hold or held a security interest in a property a developer remediated under the program. A lender receives these protections if it:

1. was not cited for polluting the state's waters;

2. did not contaminate the property or create the source that did; and

3. is not affiliated with any person that contaminated the property or contamination source through any direct or indirect familial relationship or any contractual, corporate, or financial relationship other than holding the security interest.

The bill specifies that developers remediating brownfields under the program do not have to investigate and remediate any hazardous substance, including plumes, beyond the boundaries of the brownfield. Current law exempts them from investigating and remediating only plumes, which are volumes of contaminated groundwater that extend downward and outward from a specific source.

The bill changes the fees that must be paid before the program's liability protections can be extended to a party that acquires a property (i.e., transferee) while it is being remediated under the program. Under current law, the transferee must pay the same fee as the property's initial owner. The bill instead requires the transferee to pay a $10,000 fee or the balance of any unpaid fee, whichever is greater.

The bill requires the LEP a developer retains to supervise the brownfield's remediation to state in the remedial action report that he or she supervised the remediation and prepared the verification or interim verification report in compliance with the professional ethics and code of conduct for LEPs, as specified in DEEP regulations (CGS § 22a-133v(c)).

The bill adjusts the deadline for the DEEP commissioner to audit a verification or interim verification report. If the commissioner decides to audit the verification, the law gives him up to 180 days to complete it. But the 180-day period stops if the commissioner requests additional information and the developer fails to provide it within 14 days of the commissioner's request. The commissioner may restart the audit within 60 days of his request if the developer fails to provide the requested information. In these cases, the bill extends the 180-day deadline by the number of days during which the audit was suspended.

Yea

Nay

(03/21/2017)