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F I S C A L I M P A C T R E P O R T

SPONSOR Gutierrez

ORIGINAL DATE

LAST UPDATED

1-31-06

HB 494

SHORT TITLE

VOLUNTARY REMEDIATION ACT

AMENDMENTS

SB

ANALYST Hadwiger

REVENUE (dollars in thousands)

Estimated Revenue

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

FY08

$1,000.0

Non-Rec

Brownfields

Cleanup Revolving

Loan Fund*

(Parenthesis ( ) Indicate Expenditure Decreases)

* Grant from The Federal Environmental Protection Agency (EPA)

SOURCES OF INFORMATION

LFC Files

Responses Received From

New Mexico Department of Environment (NMED)

Department of Finance and Administration (DFA)

Office of the State Engineer (OSE)

SUMMARY

Synopsis of Bill

House Bill 494 creates a new Brownfields Cleanup Revolving Loan Fund, comprised of money

from a grant from the Environmental Protection Agency (EPA), repayments of loans and interest

and income accruing on the balance of the fund. The Department of Environment (NMED)

would be authorized to make secured and unsecured loans or grants from the fund for remedial

actions and other approved activities at abandoned or underused industrial, commercial or agri-

cultural sites or residential property. Eligible loan recipients include municipalities, tribes, non-

profit organizations and private entities. Unexpended balances would not revert to the general

fund. NMED would review and approve qualified loan applications; cleanup activities would be

performed pursuant to this act.

House Bill 494 – Page

2

FISCAL IMPLICATIONS

NMED reports that they received a $1 million grant award from the EPA to establish a Brown-

fields Clean up Revolving Loan Fund. According to NMED, it is necessary to create this fund in

order to accept and implement this grant. No state match is required. The department does not

anticipate additional costs from administering the revolving fund.

SIGNIFICANT ISSUES

NMED indicated the State of New Mexico does not have funds for the cleanup of unused or

abandoned sites that have been contaminated due to past practices. These types of contaminated

properties are often a hindrance to redevelopment and can result in economically blighted areas

of concern to local governments. Once cleaned up, these sites can be either reused for public

benefit or returned to the tax rolls as economically viable properties. The EPA has an estab-

lished program to award grant money for the clean up of such sites called the Brownfields Pro-

gram.

NMED received $1 million in federal grant money for the Brownfield Cleanup Program and con-

tracted the Program to an outside financial administrator. NMED has since learned that EPA re-

quires NMED to administer the grant directly. NMED is obligated to expend this grant award

according to the grant administration requirements specified by EPA. NMED has been working

on a loan application for the town of Silver City for the clean up of the former Hillcrest Hospital

and is currently ready to make its first loan. Without the authority for fiscal management of a

Brownfields Clean up Revolving Loan Fund, the federal grant award will revert back to EPA,

according to NMED.

HB494 creates an account in the State Treasury to facilitate management of these federal grant

dollars. NMED can then make loans and grants from the fund for eligible applicants and eligible

activities. Revolving loan funds are to be loaned on a first come, first served basis. NMED de-

termines whether a site is an eligible brownfields, based upon established EPA criteria. If the

site qualifies as a brownfields site, then NMED's contractor, the New Mexico Community De-

velopment Loan Fund, reviews the applicant's credit worthiness and determines the applicant's

ability to repay the loan.

PERFORMANCE IMPLICATIONS

This fund and the EPA grant would increase the number of brownfield sites that NMED can get

cleaned up.

ADMINISTRATIVE IMPLICATIONS

NMED indicates the new fund would be managed by NMED staff who are already funded by

other EPA Voluntary Remediation grants. No additional FTEs are required to manage the fund.

OTHER SUBSTANTIVE ISSUES

By means of background, the EPA defines a brownfield site as “real property, the expansion, re-

development, or reuse of which may be complicated by the presence or potential presence of a

hazardous substance, pollutant, or contaminant.” Federal and state programs target the cleanup

House Bill 494 – Page

3

of brownfield sites, as well as redevelopment of abandoned, idled and underused industrial and

commercial facilities where expansion and redevelopment is burdened by environmental con-

tamination.

DH/nt