Pursuant to Elections Code Section 9005, we have reviewed the proposed statutory initiative that would authorize $2.7 billion in general obligation bonds to address brownfields in the state (A.G. File No. 21-0034, Amendment #1).
Many Brownfields Across the State. Brownfields are properties that are underutilized due to the presence or potential presence of a hazardous substance, pollutant, or contaminant. Common examples of brownfield sites are former dry cleaners, gas stations, and chemical storage facilities. Studies estimate that there could be between 150,000 to 200,000 brownfields in the state. Cleanup costs for brownfield sites can vary considerably—which can reach hundreds of thousands of dollars or more—depending on the type and level of contamination.
State Agencies Address Brownfields. The Department of Toxic Substances Control (DTSC) and the State Water Resources Control Board (SWRCB) are the two primary state agencies charged with overseeing the investigation and cleanup of brownfields in the state. Their responsibilities include identification of potentially contaminated sites, assessment of contamination levels, and oversight or performance of cleanup activities. In some cases, brownfield sites will be found to have contamination that can be traced back to a responsible party. In these situations, the state has the legal authority to direct responsible parties to clean up contamination or recover costs for cleanup activities it undertakes.
Authorizes Bond to Fund Brownfield-Related Activities. This measure authorizes a $2.7 billion general obligation bond for various state departments to address brownfields. The measure allocates this funding for the following purposes:
Other Provisions. The measure allows up to 10 percent of bond funds to be used for program administration. In addition, the measure prohibits the state from seeking cost recovery associated with sites cleaned up with grants supported by this bond. Also, several items in this measure prioritize funding to disadvantaged communities, which have comparatively higher concentrations of certain factors, such as poverty and environmental hazards.
State Bond Costs. This measure would allow the state to borrow up to $2.7 billion by selling additional general obligation bonds to investors, who would be repaid with interest using the state’s general tax revenues. The cost to the state of repaying these bonds would depend on various factors such as the interest rates in effect at the time they are sold and the time period over which they are repaid. We assume that (1) the interest rate for bonds would average 4 percent, (2) they would be sold over the next 5 years, and (3) all bonds would be issued for a 25-year term. Based on these assumptions, the cost to repay the bonds would average about $140 million annually over the next 30 years, totaling $4.3 billion to pay off both principal ($2.7 billion) and interest ($1.6 billion).
Summary of Fiscal Effects. This measure would have the following major fiscal effect: