SENATE COMMITTEE SUBSTITUTE FOR
SENATE, No. 1063
STATE OF NEW JERSEY
ADOPTED JANUARY 14, 1997
Sponsored by Senators EWING, PALAIA, Martin, Lipman, Codey, Bryant, McGreevey, Lynch, Kenny, O'Connor, Lesniak and Adler
An Act establishing the Educational Facilities and Technology Loan and Grant Program, supplementing Title 18A of the New Jersey Statutes and amending N.J.S.18A:72A-1 and N.J.S.18A:72A-5.
BE IT ENACTED by the Senate and General Assembly of the State of New Jersey:
1. (New section) This act shall be known and may be cited as the "Educational Facilities and Technology Loan and Grant Program Act of 1997."
2. (New section) The Legislature finds and declares that in order to provide a thorough and efficient system of education to the school age residents of the State of New Jersey, it is necessary to construct and maintain adequate capital facilities and to make educational technology available to all students; that it is necessary to provide for the renovation, repair, conversion, alteration and construction of school buildings in the State in order to provide safe and adequate public school buildings and other capital facilities; that the limitations on the availability of school districts to borrow the necessary amounts and to borrow at reasonable rates has impaired the ability of school districts to go forward with financing necessary to complete repairs, renovations, alterations, conversions and construction of school buildings and to acquire educational technology; that the lack of adequate buildings and educational technology has seriously impeded the ability of school districts to provide a thorough and efficient system of education to all pupils as required by the State constitution; and that the State cannot ignore its obligation to remedy conditions which jeopardize the health, safety and general welfare of our school age children.
3. (New section) As used in this act:
"Abbott District" means one of the 28 urban districts in district factor groups A and B specifically identified in the appendix to Raymond Abbott, et al. v. Fred G. Burke, et al. decided by the New Jersey Supreme Court on June 5, 1990 (119 N.J. 287, 394);
"Area cost allowance" means, commencing annually with January 1997, an average determined by multiplying the average estimated five-city historical cost index for construction in New Jersey reported by the R. S. Means Company, Inc. (Means Index ) for January of each year by $ 88 and dividing by 121.5;
"Authority" means the New Jersey Educational Facilities Authority established pursuant to N.J.S.18A:72A-1 et seq.;
"Bonds" means bonds, notes or other obligations issued by the authority pursuant to the provisions of this act;
"Commissioner" means the Commissioner of the Department of Education;
"Comprehensive school district" means a school district operating programs for children in grades K-12, a county special services school district, a county vocational school district or an all purpose regional school district.;
"Cost or costs" means the expenses incurred in connection with the construction, renovation, repair, alteration or conversion of any school building; the acquisition of reasonable furnishings and equipment for use in connection with any project; the procurement of reasonable engineering, inspection, planning, legal, financial or other professional services; the costs of issuance of bonds issued for the project; the administrative, organizational, operating or other expenses incident to the financing, completion and placing into service of projects; capitalized interest on the bonds for the project; and reimbursement to any fund of the State of moneys which may have been transferred or advanced therefrom to any fund created by this act, or of any moneys which may have been expended therefrom for or in connection with any project;
"Department" means the Department of Education;
"Project" means any work which is necessary for the construction, renovation, repair, alteration or conversion of a public school building or the acquisition of educational technology and facility modification to meet the needs for educational technology;
"Public school" means a school under collegiate grade, which is operated by a school district;
"School building" means any structure, building, or facility used to implement the requirements of core curriculum content standards as established by the State Board of Education;
"School district" means any local or regional school district established pursuant to chapter 8 or chapter 13 of Title 18A of the New Jersey Statutes and any county special services or county vocational school district established pursuant to chapter 46 or chapter 54 of Title 18A of the New Jersey Statutes;
"Treasurer" means the Treasurer of the State of New Jersey;
"Unhoused students" means the number of students who are projected to be enrolled in five years in preschool handicapped, preschool, kindergarten, grades one through twelve, and special education services pupil educational programs, located and currently being provided in a school district or which will be located and provided in a school district within five years, which are in excess of the capacity of the school district's current school facilities or the capacity of the school facilities which will be available within five years other than the school facilities for which the approved cost is determined, based upon a long range facilities plan as prescribed by the commissioner.
4. (New section) a. The authority shall establish and maintain the facilities loan and grant fund into which shall be deposited: (1) amounts received from the proceeds of the bonds, not to exceed $500 million; (2) any moneys that shall be received by the authority from the repayment of principal on loans made from the loan and grant fund; (3) any moneys appropriated by the State for the purposes of the loan and grant fund; (4) all interest and investment earnings on moneys in the loan and grant fund; and (5) any other moneys which the authority determines to deposit therein.
b. The authority shall use the moneys in the facilities loan and grant fund to finance the approved costs of any project in accordance with the criteria set forth in this section. The approved costs shall be based upon the area required for unhoused students and an area cost allowance.
c. Upon application by a school district for a facilities loan and grant, the application shall be forwarded to the commissioner, and the commissioner is authorized and empowered to determine whether the project is necessary to provide a thorough and efficient system of education. In determining whether to grant approval of a loan and grant application, the commissioner shall evaluate, in consultation with the Bureau of Facility Planning Services, whether the project can be completed with the amount of the funding requested. The commissioner shall also take into consideration the ability of the school district to begin and complete the project in an expeditious manner and the extent to which the approval of the project contributes to the equable distribution of monies in the loan and grant fund. If the commissioner determines that the project is necessary and the costs are approved, the commissioner shall certify that the school district is eligible for a loan and grant pursuant to this section. The commissioner shall specify the total amount which is approved and shall notify the authority of the approval and the amount.
5. (New section) a. The authority shall establish and maintain the educational technology loan and grant fund into which shall be deposited: (1) amounts received from the proceeds of the bonds, not to exceed $50 million; (2) any moneys that shall be received by the authority from the repayment of principal on loans made from the loan and grant fund; (3) any moneys appropriated by the State for the purposes of the loan and grant fund; (4) all interest and investment earnings on moneys in the loan and grant fund; and (5) any other moneys which the authority determines to deposit therein.
b. The authority shall use the moneys in the educational technology loan and grant fund to finance the approved costs of educational technology equipment and facility modification to meet the needs for educational technology.
c. Upon application by a school district for an educational technology loan and grant, the application shall be forwarded to the commissioner, and the commissioner is authorized and empowered to determine whether the project is necessary to provide a thorough and efficient system of education. If the commissioner determines that the project is necessary and the costs are approved, the commissioner shall certify that the school district is eligible for a loan and grant pursuant to this section. The commissioner shall specify the total amount which is approved and shall notify the authority of the approval and the amount.
6. (New section) a. Upon approval of a loan and grant, the commissioner shall waive the holding of a referendum or the requirement for approval by a board of school estimate pursuant to subsection (d) of N.J.S.18A:20-4.2 or N.J.S.18A:24-5 et seq., as the case may be, or the requirement for approval of the project by a capital projects control board pursuant to P.L.1991, c.139 (C.18A:7A-46.1 et seq.)
, as appropriate. The terms of the loan and the repayment schedule shall be established by the authority. The repayments in the amount of the loan to the authority by the school district shall be treated as debt service by the school district for school aid purposes. In addition to the amount of taxes determined by the legal voters of the school district at the annual school election, the secretary of the board of education shall certify the amount required for the repayment of the interest and principal of the loan in the same manner required for interest and debt redemption charges pursuant to N.J.S.18A:22-33, and the amount so certified shall be included in the taxes assessed, levied and collected in the municipality or municipalities comprising the school district for such purposes.b. Any school district shall be eligible to receive additional loans and grants even if the district has received a previous loan and grant; provided that the additional loans and grants are in conformity with the selection criteria established.
c. In determining the allocation of the loan and the grant to be provided in connection with an application by a school district, the following criteria shall apply:
(1) With respect to an Abbott district, the amount of the approved financial assistance to pay the costs of the project shall be apportioned ninety percent (90%) as a grant and ten percent (10%) as a loan;
(2) With respect to a comprehensive school district, the amount of approved financial assistance to pay the costs of the project shall be apportioned sixty percent (60%) as a grant and forty percent (40%) as a loan; and
(3) With respect to any other school district, the amount of approved financial assistance to pay the costs of the project shall be apportioned twenty-five percent (25%) as a grant and seventy-five percent (75%) as a loan.
d. Of the total amount available in the loan and grant funds, not more than fifteen percent (15%) of the funds shall be available for school districts other than Abbott districts and comprehensive school districts. In addition, not less than fifty percent (50%) of the total shall be available for Abbott school districts and not less than thirty-five percent (35%) shall be available for comprehensive school districts.
7. (New section) Any additional moneys requested by a school district for a project may be provided by a loan to the school district from the authority. The loan shall be subject to the terms and conditions as the authority shall determine to be consistent with the purpose thereof. Each loan by the authority shall be evidenced by notes, bonds or other obligations of the school board issued to the authority. The notes, bonds or other obligations shall be issued by the school board and notwithstanding any other law to the contrary, may be sold at private sale to the authority at any price, whether or not less than par value, and shall be subject to redemption prior to maturity at any times and at any prices as the authority and the school board may agree. Each loan to a school district and the notes, bonds or other obligations thereby issued shall bear interest at a rate or rates as the authority and the school board shall agree.
8. (New section) The authority shall establish and maintain the trust fund in which shall be deposited the amounts appropriated by the Legislature from revenue dedicated by the State Constitution for the purpose of financing public school facilities that are necessary to maintain and support a thorough and efficient system of free public schools or the amounts required by the authority to pay the principal of and interest on the bonds issued pursuant to section 9 of this act.
9. (New section) a. Except as may be otherwise expressly provided in this act, the authority may from time to time issue its bonds in any principal amounts as in the judgment of the authority shall be necessary to provide sufficient funds to pay the costs of the projects, including the payment, funding or refunding of the principal of, or interest or redemption premiums on, any bonds, notes or other obligations issued by it, whether the bonds or the interest or redemption premiums thereon to be funded or refunded have or have not become due, the establishment or increase of reserves or other funds to secure or to pay the bonds or interest thereon and all other costs or expenses of the authority incident to and necessary to carry out its purposes and powers under this act.
b. Whether or not the bonds of the authority are of a form and character as to be negotiable instruments under the terms of Title 12A of the New Jersey Statutes, the bonds are made negotiable instruments with the meaning of and for the purposes of Title 12A, subject only to the provisions of the bonds for registration.
c. Bonds of the authority shall be authorized by a resolution or resolutions of the authority and may be issued in one or more series and shall bear any date or dates, mature at any time or times, bear interest at any rate or rates of interest per annum, be in any denomination or denominations, be in any form, either coupon, registered or book entry, carry any conversion or registration privileges, have any rank or priority, be executed in any manner, be payable in any coin or currency of the United States which at the time of payment is legal tender for the payment of public and private debts, at any place or places within or without the State, and be subject to any terms of redemption by the authority or the holders thereof, with or without premium, as the resolution or resolutions may provide. A resolution of the authority authorizing the issuance of bonds may provide that the bonds be secured by a trust indenture between the authority and a trustee, vesting in the trustee any property, rights, powers and duties in trust consistent with the provisions of this act as the authority may determine. All bonds of the authority shall be sold at such price or prices and in such manner at the public or private sale as the authority shall determine.
d. Bonds of the authority may be issued under the provisions of this act without obtaining the consent of any department, division, board, bureau or agency of the State, and without any other proceedings or the happening of any other conditions or things, other than those consents, proceedings, conditions or things which are specifically required by this act.
e. Bonds of the authority issued under the provisions of this act shall not be debt or liability of the State or of any political subdivision thereof other than the authority and shall not create or constitute any indebtedness, liability or obligation of the State or any political subdivision, but all the bonds, unless funded or refunded by bonds, shall be payable solely from revenues or funds pledged or available for their payment as authorized in this act. Each bond shall contain on its face a statement to the effect that the authority is obligated to pay the principal thereof or the interest thereon only from its revenues, receipts or funds pledged or available for their payment as authorized in this act and that neither the State, nor any political subdivision thereof, is obligated to pay the principal or interest and that neither the faith and credit nor the taxing power of the State, or any political subdivision thereof, is pledged to the payment of the principal of or the interest on the bonds.
f. The aggregate principal amount of bonds shall not exceed $550 million. In computing the foregoing limitations, there shall be excluded all the bonds for which there shall be deposited in an escrow fund (1) the entire amount necessary to pay at maturity or upon redemption the principal, premium, if any, and interest due or to become due or to such date of maturity or redemption date for such bonds or (2) an amount, the principal of and interest on which, when invested, shall be sufficient to pay at maturity or upon redemption the principal, premium, if any, and interest due or to become due or to such date of maturity or redemption date for such bonds.
10. (New section) a. To secure the payments of the bonds, the authority may require that if a school district fails or is unable to pay to the authority in full when due any obligations of the school district to repay principal of and interest on the loan to the authority, an amount sufficient to satisfy the deficiency shall be paid by the treasurer to the authority from any State aid payable to the school district.
b. If the authority requires, and there has been a failure or inability by a school district to pay its obligations to the authority remaining uncured for a period of 30 days, the chairman of the authority shall certify to the treasurer, with written notice to the fiscal officer of the school district and to the Legislature, the amount remaining unpaid, and the treasurer shall pay that amount to the authority, or if the right to receive those payments has been pledged or assigned to a trustee for benefit of the holders of bonds, to that trustee, out of the State aid payable to the school district, until the amount so certified is paid.
c. The amount paid over to the authority shall be deducted from the corresponding appropriation or apportionment of State aid payable to the school district and shall not obligate the State or make, nor entitle the school district to receive, any additional appropriation or apportionment.
11. (New section) The commissioner or Director of the Division of Local Government Services in the Department of Community Affairs, as appropriate, is authorized, for those school districts issuing bonds pursuant to this act, to waive the requirement imposed pursuant to N.J.S.18A:24-46 or N.J.S.40A:2-29, as the case may be, that school districts issue bonds at not less than par value.
12. (New section) The authority, in consultation with the commissioner, shall establish the rules and regulations governing the making of loans and grants and their use including, but not limited to, procedures for the submission of loan and grant requests, standards for the evaluation of application requests, provisions implementing priority systems for projects, reporting requirements of the recipient of any loans or grant concerning the progress and the expenditure of funds, and limitations, restrictions or requirements concerning the use of loan or grant funds as the authority shall prescribe; provided that the rules and regulations shall be in compliance with the terms and provisions of this act relating to the making of or eligibility for loans or grants for projects generally or for any particular type or class of projects. Any rules or regulations so adopted shall not be subject to the provisions or requirements of the "Administrative Procedure Act," P.L.1968, c.410(C.52:14B-1 et seq.), except that any rules and regulations so adopted shall be filed with the Secretary of State and shall provide for the prompt publication of the rules and regulations after the filing of same.
13. N.J.S.18A:72A-1 is amended to read as follows:
18A:72A-1. It is hereby declared that a serious public emergency exists affecting and threatening the welfare, comfort, health, safety and prosperity of the people of the state and resulting from the fact that financial resources are lacking with which to construct required dormitory and other educational facilities at public and private institutions of higher education and to provide for public school facility projects; that it is essential that this and future generations of youth be given the fullest opportunity to learn and to develop their intellectual and mental capacities; that it is essential that institutions for higher education and school districts within the state be provided with appropriate additional means to assist such youth in achieving the required levels of learning and development of their intellectual and mental capacities; that it is essential that all resources of the state be employed in order to meet the tremendous demand for higher educational opportunities and public school facilities; that all institutions of higher education in the state, both public and private, and all public school facilities are an integral part of the total educational effort in the state for providing prekindergarten through higher educational opportunities, and that it is the purpose of this chapter to provide a measure of assistance and an alternative method to enable institutions of higher education and school districts in the state to provide the facilities which are sorely needed to accomplish the purposes of this chapter, all to the public benefit and good, to the extent and manner provided herein.
(cf: N.J.S.18A:72A-1)
14. N.J.S.18A:72A-5 is amended to read as follows:
18A:72A-5. The authority shall have power:
(a) To adopt bylaws for the regulation of its affairs and the conduct of its business;
(b) To adopt and have an official common seal and alter the same at pleasure;
(c) To maintain an office at such place or places within the State as it may designate;
(d) To sue and be sued in its own name, and plead and be impleaded;
(e) To borrow money and to issue bonds and notes and other obligations of the authority and to provide for the rights of the holders thereof as provided in this chapter;
(f) To acquire, lease as lessee, hold and dispose of real and personal property or any interest therein, in the exercise of its powers and the performance of its duties under this chapter;
(g) To acquire in the name of the authority by purchase or otherwise, on such terms and conditions and in such manner as it may deem proper, or by the exercise of the power of eminent domain, any land or interest therein and other property which it may determine is reasonably necessary for any project, including any lands held by any county, municipality or other governmental subdivision of the State; and to hold and use the same and to sell, convey, lease or otherwise dispose of property so acquired, no longer necessary for the authority's purposes;
(h) To receive and accept, from any federal or other public agency or governmental entity, grants or loans for or in aid of the acquisition or construction of any project, and to receive and accept aid or contributions from any other source, of either money, property, labor or other things of value, to be held, used and applied only for the purposes for which such grants, loans and contributions may be made;
(i) To prepare or cause to be prepared plans, specifications, designs and estimates of costs for the construction and equipment of projects for participating colleges under the provisions of this chapter, and from time to time to modify such plans, specifications, designs or estimates;
(j) By contract or contracts or by its own employees to construct, acquire, reconstruct, rehabilitate and improve, and furnish and equip, projects for participating colleges; however, in any contract or contracts undertaken by the authority for the construction, reconstruction, rehabilitation or improvement of any public college project where the cost of such work will exceed $25,000, the contracting agent shall advertise for and receive in the manner provided by law:
(1) separate bids for the following categories of work;
(a) the plumbing and gas fitting work;
(b) the heating and ventilating systems and equipment;
(c) the electrical work, including any electrical power plants;
(d) the structural steel and ornamental iron work;
(e) all other work and materials required for the completion of the project, or
(2) bids for all work and materials required to complete the entire project if awarded as a single contract; or
(3) both (1) and (2) above.
All bids submitted shall set forth the names and license numbers of, and evidence of performance security from, all subcontractors to whom the bidder will subcontract the work described in the foregoing categories (1)(a) through (1)(e).
Contracts shall be awarded to the lowest responsible bidder whose bid, conforming to the invitation for bids, will be the most advantageous to the authority;
(k) To determine the location and character of any project to be undertaken pursuant to the provisions of this chapter, and to construct, reconstruct, maintain, repair, operate, lease, as lessee or lessor, and regulate the same; to enter into contracts for any or all such purposes; to enter into contracts for the management and operation of a project, and to designate a participating college as its agent to determine the location and character of a project undertaken by such participating college under the provisions of this chapter and, as the agent of the authority, to construct, reconstruct, maintain, repair, operate, lease, as lessee or lessor, and regulate the same, and, as agent of the authority, to enter into contracts for any and all such purposes including contracts for the management and operation of such project;
(l) To establish rules and regulations for the use of a project or any portion thereof and to designate a participating college as its agent to establish rules and regulations for the use of a project undertaken by such participating college;
(m) Generally to fix and revise from time to time and to charge and collect rates, rents, fees and other charges for the use of and for the services furnished or to be furnished by a project or any portion thereof and to contract with holders of its bonds and with any other person, party, association, corporation or other body, public or private, in respect thereof;
(n) To enter into any and all agreements or contracts, execute any and all instruments, and do and perform any and all acts or things necessary, convenient or desirable for the purposes of the authority or to carry out any power expressly given in this chapter;
(o) To invest any moneys held in reserve or sinking funds, or any moneys not required for immediate use or disbursement, at the discretion of the authority, in such obligations as are authorized by law for the investment of trust funds in the custody of the State Treasurer; (p) To enter into any lease relating to higher education equipment with a public or private institution of higher education pursuant to the provisions of P.L.1993, c.136 (C.18A:72A-40 et al.);
(q) To establish and maintain a loan and grant fund and a trust fund in order to provide loans and grants to public school districts pursuant to the provisions of P.L. , c. (C. )(now pending before the Legislature as this bill).
(cf: P.L.1993, c.136, s.4)
15. This act shall take effect immediately.
Establishes the Educational Facilities and Technology Loan and Grant Program.