By Gary B. O’Connor, Pullman & Comley, LLC

On June 7th, the General Assembly passed House Bill No. 7229 (File No. 461), 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 legislation creates a valuable new tool for municipalities seeking to remediate and redevelop brownfield sites.

Despite the great strides made by the State in developing brownfield programs that have reduced the barriers to brownfield remediation, a large number of municipalities have remained reluctant to acquire and redevelop brownfield sites. Many communities simply do not have the expertise to take on this task. Others have been discouraged by internal challenges such as compliance with procurement and sale ordinances, the uncertain cost of remediation, public safety concerns during the holding period and political considerations. And despite the great work of the Malloy Administration and the General Assembly, there is still liability exposure at the federal level.

The new land bank legislation creates a viable remediation alternative for municipalities and adds another important tool to the State’s brownfield redevelopment tool box. It provides a certification process for qualified non-stock corporations to acquire, manage, cleanup and reposition brownfield sites for redevelopment on behalf of municipalities. In many ways, this legislation is unique and will place Connecticut at the forefront of the brownfield land bank movement throughout the country. Although a number of states have already established land banks to manage and dispose of vacant or blighted properties, the promotion of brownfield redevelopment by a certified land bank takes the land bank concept to the next level. In most other states, land banks are captive organizations controlled by a single county for operation solely in that county. In Connecticut, such a concept would be unworkable in view of the fact that our state does not have viable county governments. Likewise, creating quasi-municipal organizations in 169 communities would be impracticable, because it would not allow for economies of scale and expert staffing.

The certification of Connecticut brownfield land banks creates more flexibility by allowing land banks to serve a number of municipalities, but insures that only qualified entities which possess the necessary resources and expertise will be able to enter into land banking agreements with  those municipalities to redevelop their abandoned and contaminated properties. At the same time, the land banking agreement will give each municipality the ability to control the remediation, transfer and redevelopment of any property transferred by such municipality to the land bank, without that municipality incurring the liability, costs and other challenges associated with owning and managing a brownfield site. Due to the fact that the Connecticut brownfield land banks will be private non-stock corporations and not quasi-public entities, it is expected that some or all of them will apply for non-profit status under the Internal Revenue Code, which, in turn, will make them attractive to foundations and other philanthropists, who are looking to donate money to help improve the environment and/or the quality of life in distressed communities. These private sources of funding will become increasingly valuable as the demand for limited public sector funding escalates.

The land bank legislation was drafted and proposed by the State Brownfield Working Group in collaboration with the Department of Economic and Community Development, the Department of Energy and Environmental Protection, the Office of Policy Management and the Commerce Committee of the General Assembly. It is expected that Governor Malloy, a major proponent of brownfield redevelopment, will sign the bill into law within the next two months.

 

Gary B. O’Connor is co-chair of the Connecticut Brownfield’s Working Group.  He is chair of Pullman & Comley’s Real Estate Law practice and can be reached at goconnor@pullcom.com.