Approp.








P.L. 1997, CHAPTER 221, approved August 20, 1997

Senate, No. 2142

(CORRECTED COPY)

 

 

 

 

An Act appropriating moneys to the Department of Environmental Protection for the purpose of making zero interest loans to local government units to finance a portion of the cost of construction of wastewater treatment system projects.

 

    Be It Enacted by the Senate and General Assembly of the State of New Jersey:

 

    1. a. (1) There is appropriated to the Department of Environmental Protection from the "Wastewater Treatment Fund - State Revolving Fund Accounts" (hereinafter referred to as the "State Revolving Fund Accounts") contained within the "Wastewater Treatment Fund" and established pursuant to section 1 of P.L.1988, c.133 an amount equal to the Federal fiscal year 1997 capitalization grant made available to the State for wastewater treatment system projects pursuant to the "Water Quality Act of 1987" (33 U.S.C.§1251 et seq.) and any amendatory and supplementary acts thereto (hereinafter referred to as the "Federal Act").

    (2) There is appropriated to the Department of Environmental Protection any fees and penalties received pursuant to the "Marine Protection, Research, and Sanctuaries Act of 1972," (33 U.S.C.§1401 et seq.), and any amendatory and supplementary acts thereto, as may be deposited in the State Revolving Fund Accounts.

    (3) There is appropriated to the Department of Environmental Protection the unappropriated balances from the "Wastewater Treatment Fund" established pursuant to section 15 of the "Wastewater Treatment Bond Act of 1985," (P.L.1985, c.329).

    (4) There is appropriated to the Department of Environmental Protection the sum of $10,000,000 from the "1992 Wastewater Treatment Fund" established pursuant to section 27 of the "Green Acres, Clean Water, Farmland and Historic Preservation Bond Act of 1992," (P.L.1992, c.88).

    Any such amounts shall be for the purpose of making zero interest loans, to the extent sufficient funds are available, to local government units to finance a portion of the cost of construction of wastewater treatment system projects listed in sections 2 and 3 of this act, and for the purpose of implementing and administering the provisions of this act, to the extent permitted by the "Water Quality Act of 1987" (33 U.S.C.§1251 et seq.), the "Marine Protection, Research, and Sanctuaries Act of 1972," and any amendatory and supplementary acts thereto, the "Green Acres, Clean Water, Farmland and Historic Preservation Bond Act of 1992," and State law.

    b. The department is authorized to make zero interest loans to the local government units for the wastewater treatment system projects listed in sections 2 and 3 of this act up to the individual amounts indicated and in the priority stated, except as any such amount may be reduced by the Commissioner of Environmental Protection pursuant to section 6 of this act, or if a project fails to meet the requirements of section 4 of this act.

    c. The department is also authorized to make zero interest loans to the local government units for the wastewater treatment system projects listed in sections 2 and 3 of this act under the same terms, conditions and requirements as set forth in this section from any unexpended balances of the amounts appropriated pursuant to section 1 of P.L.1987, c.200, section 2 of P.L.1988, c.133, section 1 of P.L.1989, c.189, section 1 of P.L.1990, c.99, section 1 of P.L.1991, c.325, section 1 of P.L.1992, c.38, section 1 of P.L.1993, c.193, section 1 of P.L.1994, c.106, section 1 of P.L.1995, c.219 or section 1 of P.L.1996, c.85, including amounts resulting from the low bid building cost or final building cost reductions authorized pursuant to section 6 of P.L.1987, c.200, section 7 of P.L.1988, c.133, section 6 of P.L.1989, c.189, section 6 of P.L.1990, c.99, section 6 of P.L.1991, c.325, section 6 of P.L.1992, c.38, section 6 of P.L.1993, c.193, section 6 of P.L.1994, c.106, section 6 of P.L.1995, c.219 and section 6 of P.L.1996, c.85, and from any repayments of loans from the "Wastewater Treatment Fund" or amounts deposited therein during State fiscal year 1997 pursuant to the provisions of section 16 of P.L.1985, c.329, including any State Revolving Fund Accounts contained within the "Wastewater Treatment Fund."

 

    2. a. The department is authorized to expend funds for the purpose of making a supplemental zero interest loan to the local government unit listed below for the following wastewater treatment system projects:


Project No.


Local Government Unit

Estimated Allowable Project Cost

881-01-1

Hawthorne Borough

$300,000


 

TOTAL

$300,000

    b. The loan authorized in this section shall be made for the difference between the allowable loan amount required by this project based upon low bid building costs or final building costs pursuant to section 6 of this act and the loan amount certified by the commissioner in State fiscal year 1995 and for increased allowable costs as defined and determined in accordance with the rules and regulations adopted by the department pursuant to section 4 of P.L.1985, c.329. The loan authorized in this section shall be made to the local government unit listed, up to the individual amount indicated and in the priority stated, to the extent sufficient funds are available, except as the project fails to meet the requirements of section 4 of this act.

    c. The zero interest loan for the project authorized in this section shall have priority over projects listed in section 3 of this act.

 

    3. The following wastewater treatment system projects shall be known and may be cited as the "State Fiscal Year 1998 Project Priority List":

 

Project Number

Project Name

Estimated Allowable Project Cost

437-07

New Brunswick City

$ 1,450,000

958-02

Gloucester City

$ 1,400,000

927-02

Hammonton Town

$ 2,150,000

809-06

Atlantic County UA

$ 1,500,000

518-03

Buena Borough MUA

$ 950,000

818-04

Burlington County BCF

$ 5,200,000

700-07

Northwest Bergen County UA

$ 3,450,000

437-09

New Brunswick City

$ 1,000,000

336-01

Camden City

$ 800,000

640-05

Camden County MUA

$ 2,700,000

667-01

Ventnor City

$ 350,000

663-02

North Wildwood City

$ 1,100,000

361-01

Roseland Borough

$ 100,000

367-01

Merchantville Borough

$ 650,000

437-10

New Brunswick City

$ 2,750,000

433-09

Woodbridge Township

$ 650,000

703-04

Florham Park SA

$ 500,000

923-01

Hackensack City

$ 1,400,000

706-03

Washington Borough

$ 6,600,000

526-05

Harrison Township

$ 300,000

498-01

Mine Hill Township

$ 850,000

700-08

Northwest Bergen County UA

$ 1,900,000

945-06

Old Bridge Township MUA

$ 1,450,000

834-01

Nutley Township/Clifton City

$ 3,950,000

921-03

Millville City

$ 2,650,000

378-01

Bergenfield Borough

$ 950,000

809-07

Atlantic County UA

$ 3,750,000

706-04

Washington Borough

$ 1,050,000

362-02

Harrison Township

$ 1,250,000

665-01

Longport Borough

$ 850,000

536-04

East Windsor Township

$ 500,000

374-01

Cresskill Borough

$ 250,000

901-03

Highlands Borough

$ 650,000

504-03

Stanhope Borough

$ 150,000

 

TOTAL

$55,200,000

 

    4. Any loan made by the Department of Environmental Protection pursuant to this act shall be subject to the following requirements:

    a. The commissioner has certified that the project is in compliance with the provisions of P.L.1985, c.329 or P.L.1992, c.88 and any rules and regulations adopted pursuant thereto;

    b. The loan amount shall not exceed 50% of the allowable project cost of the wastewater treatment system;

    c. The loan shall be repaid within a period not to exceed 23 years of the making of the loan;

    d. The loan shall be conditioned upon approval of a loan from the New Jersey Wastewater Treatment Trust pursuant to P.L.1997, c. (pending in the Legislature as Assembly Bill No.3020 of 1997 and Senate Bill No. 2144 of 1997); except that this requirement shall not apply to Project No. S340927-02 (Town of Hammonton), for which a loan has been made by the trust pursuant to P.L.1992, c.37 for both phases of this local government unit's wastewater treatment system project;

    e. The loan shall be subject to any other terms and conditions as may be established by the commissioner and approved by the State Treasurer, which may include, notwithstanding any other provision of law to the contrary, subordination of a loan authorized in this act to loans made by the trust pursuant to P.L.1997, c. (pending in the Legislature as Assembly Bill No. 3020 of 1997 and Senate Bill No. 2144 of 1997) or to administrative fees payable to the trust pursuant to subsection o. of section 5 of P.L.1985, c.334 (C.58:11B-5).

 

    5. The priority list and authorization for the making of loans pursuant to sections 2 and 3 of this act shall expire on July 1, 1998, and any local government unit which has not executed and delivered a loan agreement with the department for a loan authorized in this act shall no longer be entitled to that loan.

 

    6. The Commissioner of Environmental Protection is authorized to reduce or increase the individual amount of loan funds made available to local government units pursuant to sections 2 and 3 of this act based upon low bid building costs or final building costs defined in and determined in accordance with rules and regulations adopted by the commissioner pursuant to section 4 of P.L.1985, c.329, provided that the total loan amount does not exceed the original loan amount.

 

    7. The expenditure of the funds appropriated by this act is subject to the provisions and conditions of P.L.1985, c.329 or P.L.1992, c.88 and any rules and regulations adopted by the commissioner pursuant thereto.

 

    8. The Department of Environmental Protection shall provide general technical assistance to any local government unit requesting assistance regarding wastewater treatment system project development or applications for funds for a project.

 

    9. a. Prior to repayment to the "Wastewater Treatment Fund" pursuant to the provisions of section 16 of P.L.1985, c.329, and prior to repayment to the "1992 Wastewater Treatment Fund" pursuant to the provisions of section 28 of P.L.1992, c.88, repayments of loans made pursuant to this act may be utilized by the New Jersey Wastewater Treatment Trust established pursuant to P.L.1985, c.334 (C.58:11B-1 et seq.) under terms and conditions established by the commissioner and trust, and approved by the State Treasurer, and consistent with the provisions of P.L.1985, c.334 (C.58:11B-1 et seq.) and federal tax law, to the extent necessary to secure repayment of trust bonds issued to finance loans approved pursuant to P.L.1997, c. (pending in the Legislature as Assembly Bill No. 3020 of 1997 and Senate Bill No. 2144 of 1997), and to secure the administrative fees payable to the trust pursuant to subsection o. of section 5 of P.L.1985, c.334 (C.58:11B-5) by the local government units receiving trust loans.

    b. Prior to repayment to the "Wastewater Treatment Fund" pursuant to the provisions of section 16 of P.L.1985, c.329 and prior to repayment to the "1992 Wastewater Treatment Fund" pursuant to the provisions of section 28 of P.L.1992, c.88, the trust is further authorized to utilize repayments of loans made pursuant to P.L.1989, c.189, P.L.1990, c.99, P.L.1991, c.325, P.L.1992, c.38, P.L.1993, c.193, P.L.1994, c.106, P.L.1995, c.219 or P.L.1996, c.85, and P.L.1997, c. (pending in the Legislature as Assembly Bill No. 3021 of 1997 and Senate Bill No. 2142 of 1997) to secure repayment of trust bonds issued to finance loans approved pursuant to P.L.1995, c.218, P.L.1996, c.87 or P.L.1997, c. (pending in the Legislature as Assembly Bill No. 3020 of 1997 and Senate Bill No. 2144 of 1997), and to secure the administrative fees payable to the trust under these loans pursuant to subsection o. of section 5 of P.L.1985, c.334 (C.58:11B-5).

    c. To the extent that any loan repayment sums are used to satisfy trust bond repayment or administrative fee payment deficiencies, the trust shall repay such sums to the department for deposit into the "Wastewater Treatment Fund" or the "1992 Wastewater Treatment Fund," as appropriate, from amounts received by or on behalf of the trust from local government units causing any such deficiency.

 

    10. The Commissioner of Environmental Protection is authorized to enter into a capitalization grant agreement as may be required pursuant to the Federal Act.

 

    11. a. The Director of the Division of Budget and Accounting in the Department of the Treasury is directed to transfer to the "Wastewater Treatment Fund" the entire sum of money, if any, appropriated to the Department of Environmental Protection for "Public Wastewater Facilities" in the "State Aid" section of P.L.1997, c. (the fiscal year 1998 appropriations act now before the Legislature as Senate Bill No. of 1997). The sum transferred to the "Wastewater Treatment Fund" pursuant to this section is appropriated to the New Jersey Wastewater Treatment Trust established pursuant to P.L.1985, c.334 (C.58:11B-1 et seq.). The trust shall deposit all or a portion of this sum as it may deem necessary and appropriate into one or more reserve funds established pursuant to section 11 of P.L.1985, c.334 (C.58:11B-11). These reserve funds shall include reserve funds constituted collectively as a water pollution control revolving fund for the purposes of the Federal Act and shall be known as the Trust Reserve Fund - State Revolving Fund Accounts; except that the trust shall not establish the Trust Reserve Fund - State Revolving Fund Accounts prior to the execution of a capitalization grant agreement entered into by the Commissioner of Environmental Protection pursuant to section 10 of this act.

    b. Any portion of the sum appropriated to the trust pursuant to subsection a. of this section or subsection a. of section 11 of P.L.1989, c.189, subsection a. of section 11 of P.L.1990, c.99, subsection a. of section 11 of P.L.1991, c.325, subsection a. of section 11 of P.L.1992, c.38, subsection a. of section 11 of P.L.1993, c.193, subsection a. of section 11 of P.L.1994, c.106, subsection a. of P.L.1995, c.219 or subsection a. of section 11 of P.L.1996, c.85, plus any net earnings received from the investment or deposit of such moneys by the trust not required by the trust to establish reserve funds as provided in this section, shall be returned to the "Wastewater Treatment Fund" and placed in any account therein as determined by the commissioner to be used by the department for making zero interest loans to local government units to finance a portion of the cost of the wastewater treatment system projects listed in sections 2 and 3 of this act up to the individual amounts indicated and in the priority stated, except as any such amount may be reduced by the commissioner pursuant to section 6 of this act or if a project fails to meet the requirements of section 4 of this act; and except that the commissioner shall certify to the chairman of the trust that such funds are needed for zero interest loans before any transfer is made. In the event that the commissioner fails to make this certification, the unexpended balance not devoted to establishing reserve funds shall remain with the trust but shall not be expended by the trust until such expenditure is authorized pursuant to P.L.1985, c.334 (C.58:11B-1 et seq.).

 

    12. There is appropriated to the New Jersey Wastewater Treatment Trust established pursuant to P.L.1985, c.334 (C.58:11B-1 et seq.) from repayments of loans deposited in any account, including the State Revolving Fund Accounts contained within the "Wastewater Treatment Fund" or the "1992 Wastewater Treatment Fund," and from any net earnings received from the investment and reinvestment of such deposits, such sums as the chairman of the trust shall certify to the Commissioner of Environmental Protection to be necessary and appropriate for deposit into one or more reserve funds established by the trust pursuant to section 11 of P.L.1985, c.334 (C.58:11B-11); except that the certification shall not be made with respect to the State Revolving Fund Accounts prior to the execution of a capitalization grant agreement entered into by the commissioner pursuant to section 10 of this act.

 

    13. This act shall take effect immediately.

 

 

STATEMENT

 

    This bill would appropriate certain federal and State moneys to the Department of Environmental Protection (DEP) for the purpose of implementing the 1997 New Jersey Wastewater Treatment Financing Program, which is expected to finance approximately $111 million in wastewater treatment system projects for State Fiscal Year 1998.

    Specifically, the bill would appropriate to the DEP moneys from (1) the "Wastewater Treatment Fund - State Revolving Fund Accounts" established pursuant to section 1 of P.L.1988, c.133 an amount equal to the Federal Fiscal Year 1997 capitalization grant made available to the State pursuant to the federal "Water Quality Act of 1987" for wastewater treatment system projects; (2) any fees and penalties received pursuant to the federal "Marine Protection, Research, and Sanctuaries Act of 1972," as may be deposited in the State Revolving Fund Accounts; (3) the unappropriated balances from the "Wastewater Treatment Fund" established pursuant to section 15 of the "Wastewater Treatment Bond Act of 1985," (P.L.1985, c.329); and (4) the sum of $10,000,000 from the "1992 Wastewater Treatment Fund" established pursuant to section 27 of the "Green Acres, Clean Water, Farmland and Historic Preservation Bond Act of 1992," (P.L.1992, c.88).

    The DEP would use the funds appropriated under this bill to make zero interest loans to local governments for up to 50% of eligible project costs for wastewater treatment system projects included in the "State Fiscal Year 1998 Project Priority List" and to provide a supplemental zero interest loan to a local government that received a loan in past years. The supplemental loan constitutes the difference between the allowable loan amounts required by the project and the loan amounts certified by the Commissioner of DEP in State FY 1995 under the New Jersey Wastewater Treatment Financing Program.

    A companion bill, Assembly Bill No.3020 of 1997 and Senate Bill No. 2144 of 1997, would authorize the New Jersey Wastewater Treatment Trust to provide approximately $300,000 in a supplemental loan for an existing project and approximately $53 million for loans to local governments identified on the priority list for the remaining allowable project costs.

    New wastewater treatment system projects that are eligible for financing in calendar year 1997 have allowable costs totaling approximately $110.4 million, while previously financed projects that are eligible to receive supplemental loans under the State Fiscal Year 1998 Program total approximately $.6 million.

    The New Jersey Wastewater Treatment Financing Program is the primary source available for either federal or State funding to assist eligible local governments to finance necessary wastewater treatment (sewer) system upgrades. In 1985, the Legislature established the New Jersey Wastewater Treatment Trust, a State financing authority established pursuant to P.L.1985, c.334 (C.58:11B-1 et seq.), as the keystone of a financing mechanism for funding the rehabilitation and construction of wastewater treatment facilities.

    The New Jersey Wastewater Treatment Financing Program comprises two complementary elements: the proceeds of State general obligation bonds and federal capitalization grants administered by the DEP, and the revenue bonds issued by the Trust. The federal grant moneys are made available from the federal Environmental Protection Agency (EPA) under the State Revolving Loan Fund Program established pursuant to the federal "Water Quality Act of 1987" (33 U.S.C.§1251 et seq.). Additional federal moneys are available from any fees and penalties received pursuant to the federal "Marine Protection, Research, and Sanctuaries Act of 1972," (33 U.S.C.§1401 et seq.).

    To qualify for receipt of federal moneys under the "Water Quality Act of 1987," a state must establish a revolving loan fund and provide an annual 20 percent State-match to those moneys. All federal moneys received by the State for wastewater treatment system project financing are deposited in the "Wastewater Treatment Fund," a revolving loan fund established pursuant to the $190 million "Wastewater Treatment Bond Act of 1985," P.L.1985, c.329 and administered by the DEP. In past years, the State has met the match requirement entirely through conventional General Fund appropriations or from a combination of a General Fund appropriation and by pledging loan repayment moneys from previous project loans made from the "Wastewater Treatment Bond Act of 1985." The 20% match for State Fiscal Year 1998 is expected to be provided entirely from loan repayments of older wastewater treatment system projects funded from the "Wastewater Treatment Bond Act of 1985" during the late 1980's.

    Section 6 a. of the 1985 bond act allocated $150 million to the DEP for zero interest loans to local governments for wastewater treatment system projects. Section 6 b. allocated $40 million to the Trust to establish a reserve account for loans made by the Trust, and a guarantee account to secure debt issued by local governments in connection with the financing of a project. In 1987, the Legislature enacted P.L.1987, c.198, which appropriated the $40 million to the Trust for these purposes.

    Moneys in the "Wastewater Treatment Fund" provide zero interest loans to local governments for up to 50% of eligible project costs for wastewater treatment system projects included on the project priority list. The Trust revenue bonds provide moneys for low interest (at or below market-rate) loans to local governments for the remaining portion of allowable project costs. By matching the loans made by the DEP, the Trust nearly doubles the amount of money available for wastewater treatment system projects. Since the combined money is provided at half the typical market interest rate, the New Jersey Wastewater Treatment Financing Program reduces the costs to a local government that must be passed on to the project's users. By funding its wastewater treatment system project through the Program, a local government should realize an average savings of 30% on the financing of the total eligible cost of the project over what it would cost that local government to secure its own financing.

    On November 3, 1992 the voters approved the $345 million "Green Acres, Clean Water, Farmland and Historic Preservation Bond Act of 1992," P.L.1992, c.88. Section 12 of the 1992 bond act allocated $50 million for the financing of wastewater treatment system projects, in order to bring such systems into full compliance with permits issued pursuant to the "Water Pollution Control Act", P.L.1977, c.74 (C.58:10A-1 et seq.), to provide adequate wastewater treatment in areas where large numbers of septic systems have malfunctioned or become obsolete, or to connect an obsolete or malfunctioning wastewater treatment system to another wastewater treatment system.

    Section 12 b. of the 1992 bond act allocated $45 million to the DEP for zero interest loans to local governments for wastewater treatment system projects. Section 12 c. allocated $5 million to the Trust to be used for reserve and guarantee funding to secure debt issued by the Trust or by local governments in connection with the financing of wastewater treatment system projects.

    A local government seeking financial assistance for a wastewater treatment system project must apply for a loan from each State agency.

    P.L.1985, c.334 requires that the DEP develop a project priority list for funding by the Trust in conformance with the applicable provisions of federal law.

    Under federal law, a Federal Priority List must be developed by the DEP and approved each year by the EPA. The list ranks projects based upon existing water quality conditions and anticipated impacts on existing and potential water uses. All local governments listed or eligible for listing on the project priority list are required to advise the DEP whether they will pursue their own funding source, or exercise their option to apply for loans from the State. Those local governments opting for State financial assistance are ranked in accordance with the priority system and placed on the State funding list. These projects are placed in the same rank order as they are found on the Federal Priority List.

    The New Jersey Wastewater Treatment Financing Program has completed ten annual financing cycles and financed more than $1.3 billion of wastewater treatment system projects throughout the State. Between 1987 and 1996 the DEP and the Trust have utilized moneys from the following sources: federal capitalization grants made available under the federal "Water Quality Act of 1987," State loans from the moneys made available under the "Wastewater Treatment Bond Act of 1985," State General Fund appropriations, loan repayments, and the unexpended balances of leftover or "de-obligated" loan moneys from project loans made in prior years. The EPA has made ten federal capitalization grants to New Jersey totaling approximately $651 million since the Program's inception.

    Under this bill, in conjunction with Assembly Bill No. 3020 of 1997 and Senate Bill No. 2144 of 1997, the New Jersey Wastewater Treatment Financing Program for 1997 would finance approximately $110 million in wastewater treatment system projects. A new component of the Program introduced in 1995 permits local governments sponsoring wastewater treatment system projects partially funded from the "Pinelands Infrastructure Trust Fund" established pursuant to the "Pinelands Infrastructure Trust Bond Act of 1985," P.L.1985, c.302, to receive a Trust loan for the balance of allowable project costs. However, there are no Pinelands area projects scheduled to be financed in State Fiscal Year 1998.

    New wastewater treatment system projects eligible for financing under this bill and Assembly Bill No. 3020 of 1997 and Senate Bill No. 2144of 1997 have total allowable costs of approximately $110 million, while a previously financed project is eligible to receive supplemental loans totaling $600,000.

 

 

                             

 

Appropriates funds to DEP for wastewater treatment system projects.