ASSEMBLY, No. 2471
STATE OF NEW JERSEY
INTRODUCED NOVEMBER 7, 1996
By Assemblywoman MURPHY
An Act concerning bond anticipation notes and amending N.J.S.40A:2-8.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. N.J.S.40A:2-8 is amended to read as follows:
40A:2-8. a. A local unit, in anticipation of the issuance of bonds, may borrow money and issue negotiable notes if the bond ordinance or subsequent resolution so provides. Any such note shall be designated "bond anticipation note" and shall contain a recital that it is issued in anticipation of the issuance of bonds. Such notes may be issued for a period of not exceeding one year and may be renewed from time to time for periods of not exceeding one year, but all such notes, including renewals, shall mature and be paid not later than the tenth anniversary of the date of the original notes, provided, however, that no such notes shall be renewed beyond the third anniversary date of the original notes unless an amount of such notes, at least equal to the first legally payable installment of the bonds in anticipation of which said notes are issued, is paid and retired on or before said third anniversary date and, if such notes are renewed beyond the fourth anniversary date of the original notes, a like amount is paid or retired on or before said fourth anniversary date from funds other than the proceeds of obligations, except that:
1. Such notes shall mature and be paid not later than the first day of the fifth month following the close of the tenth fiscal year next following the date of the original notes, provided that, in addition to amounts paid and retired pursuant to paragraph a. above, an amount of such notes equal to not less than the first legally payable installment of the bonds in anticipation of which such notes are issued has been paid and retired not later than the end of said [fifth] tenth fiscal year from funds other than the proceeds of obligations; and
2. Notes issued to finance local improvements and in an amount not exceeding the amount of special assessments then confirmed and unpaid and not delinquent may be renewed for periods of not exceeding one year but shall mature and be paid not later than the fifth anniversary of the date of the original notes.
b. A local unit may finance any improvement which it has power to finance by obligations issued under this chapter by the issuance of "capital notes." The aggregate amount of all such notes outstanding at any one time shall not exceed the lesser of $200,000.00 or 1/2 of 1% of the equalized valuation basis. Such notes shall be authorized in the same manner as bond anticipation notes and shall be payable from funds other than the proceeds of obligations within five years from the date of the issuance of the first of said notes and not less than 20% thereof shall be paid in each succeeding year. The local unit shall provide for the payment of the principal of, and interest on such notes falling due in each year.
c. The local finance board shall issue, in the manner prescribed by law, such rules and regulations as are necessary to the implementation and execution of this act.
(cf: P.L.1990, c.112, s.1)
2. This act shall take effect immediately and shall be retroactive to November 16, 1990.
STATEMENT
This bill would correct an oversight in P.L.1990, c.112 which was the most recent amendment to N.J.S.40A:2-8. Section 1 of P.L.1990, c.112 amended the statute to increase the length of time over which a bond anticipation note can be repaid from five years to 10 years. The phrase "said fifth fiscal year" should have been amended in the 1990 law to read "said tenth fiscal year" since it refers to a previous phrase in the sentence, "close of the tenth fiscal year." The sponsor has been requested by the Division of Local Government Services in the Department of Community Affairs to introduce this bill to correct this error. The bill would be retroactive to November 16, 1990, the enactment date of P.L.1990, c.112
Clarifies ten-year maximum repayment period for bond anticipation note issued by local units.