SENATE, No. 2144

STATE OF NEW JERSEY

INTRODUCED MAY 22, 1997

By Senators McNAMARA and BARK

An Act authorizing the expenditure of funds by the New Jersey Wastewater Treatment Trust for the purpose of making loans to local government units to finance a portion of the cost of construction of wastewater treatment system projects, and supplementing P.L.1985, c.334 (C.58:11B-1 et seq.).

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

    1. a. The New Jersey Wastewater Treatment Trust, established pursuant to P.L.1985, c.334 (C.58:11B-1 et seq.), is authorized to expend the aggregate sum of up to $50,000,000, and any unexpended balance of the aggregate expenditures authorized pursuant to section 1 of P.L.1994, c.105, section 1 of P.L.1995, c.218 and section 1 of P.L.1996, c.87 for the purpose of making 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, 3 and 4 of this act.

    b. The trust is authorized to increase the aggregate sums specified in subsection a. of this section by:

    (1) the amounts of capitalized interest and the bond issuance expenses as provided in subsection b. of section 7 of this act; and

    (2) the amounts of reserve capacity expenses and the associated debt service reserve fund requirements for such reserve capacity expenses as provided in subsection c. of section 7 of this act.

    c. For the purposes of this act:

    (1) "capitalized interest" means the amount equal to interest paid on trust bonds which is funded with trust bond proceeds;

    (2) "issuance expenses" means and includes, but need not be limited to, the costs of financial document printing, municipal bond insurance premiums, underwriters' discount, verification of financial calculations, the services of bond rating agencies and trustees, employment of accountants, attorneys, financial advisors, loan servicing agents, registrars, and paying agents and any other costs related to the issuance of trust bonds; and

    (3) "reserve capacity expenses" means those project costs for reserve capacity not eligible for loans under rules and regulations governing zero interest loans adopted by the Commissioner of Environmental Protection pursuant to section 4 of P.L.1985, c.329 but which are eligible for loans from the trust in accordance with the rules and regulations adopted by the trust pursuant to section 27 of P.L.1985, c.334 (C.58:11B-27).

    d. The trust is also authorized to increase the loan amount in the future to compensate for a refunding of the issue, provided adequate savings are achieved, for the loans issued pursuant to P.L.1991, c.324, P.L.1992, c.37, P.L.1993, c.192, P.L.1994, c.105, P.L.1995, c.218, P.L.1996, c.87 and P.L.1997, c. (pending in the Legislature as Senate Bill No. 2144 of 1997 and Assembly Bill No. 3020 of 1997).

    2. a. The New Jersey Wastewater Treatment Trust is authorized to expend funds for the purpose of making a supplemental loan to the local government unit listed below for the following wastewater treatment system project:

    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 subsection a. of section 7 of this act and the loan amount certified by the chairman of the trust in State fiscal year 1995 and for increased allowable costs as defined and determined in accordance with the rules and regulations adopted by the trust pursuant to section 27 of P.L.1985, c.334 (C.58:11B-27). 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 6 of this act.

    c. The loan authorized in this section shall have priority over the wastewater treatment system projects listed in section 4 of this act.

    3. The New Jersey Wastewater Treatment Trust is authorized to make loans to the local government units for the wastewater treatment system projects listed in section 4 of this act up to the individual amounts indicated and in the priority stated, except as any such amount may be reduced by the trust pursuant to subsection a. of section 7 of this act, or if a project fails to meet the requirements of section 6 of this act.

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

    5. In accordance with and subject to the provisions of sections 5, 6 and 23 of P.L.1985, c.334 (C.58:11B-5, 58:11B-6, and 58:11B-23) and as set forth in the financial plan required pursuant to section 21 of P.L.1985, c.334 (C.58:11B-21), any proceeds from bonds issued by the trust to make loans for priority wastewater treatment system projects listed in sections 2, 3 and 4 of this act which are not expended for that purpose may be applied for the payment of all or any part of the principal of and interest and premium on the trust bonds whether due at stated maturity or earlier upon redemption. A portion of the proceeds from bonds issued by the trust to make loans for priority wastewater treatment system projects pursuant to this act may be applied for the payment of capitalized interest and for the payment of any issuance expenses; for the payment of reserve capacity expenses and the associated debt service reserve fund requirements; and for the payment of increased costs as defined and determined in accordance with the rules and regulations adopted by the trust pursuant to section 27 of P.L.1985, c.334 (C.58:11B-27).

    6. Any loan made by the New Jersey Wastewater Treatment Trust pursuant to this act shall be subject to the following requirements:

    a. The chairman of the trust has certified that the project is in compliance with the provisions of P.L.1985, c.334 or P.L.1992, c.88 and any rules and regulations adopted pursuant thereto;

    b. The loan shall be conditioned upon approval of a zero interest loan from the Department of Environmental Protection from the "Wastewater Treatment Fund" established pursuant to the "Wastewater Treatment Bond Act of 1985," P.L.1985, c.329 or 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;

    c. The loan shall be repaid within a period not to exceed 20 years of the making of the loan;

    d. The loan shall not exceed the allowable project cost of the wastewater treatment system, exclusive of capitalized interest and issuance expenses as provided in subsection b. of section 7 of this act, reserve capacity expenses and the associated debt service reserve fund requirements as provided in subsection c. of section 7 of this act, and increased costs as defined and determined in accordance with the rules and regulations adopted by the trust pursuant to section 27 of P.L.1985, c.334 (C.58:11B-27);

    e. The loan shall bear interest, exclusive of any 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, at or below the interest rate paid by the trust on the bonds issued to make the loans authorized by this act, adjusted for underwriting discount, in accordance with the terms and conditions set forth in the financial plan required pursuant to section 21 of P.L.1985, c.334 (C.58:11B-21); and

    f. The loan shall be subject to all other terms and conditions as the trust shall determine to be consistent with the provisions of P.L.1985, c.334 (C.58:11B-1 et seq.) and any rules and regulations adopted pursuant thereto, and with the financial plan required by section 21 of P.L.1985, c.334 (C.58:11B-21).

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

    7. a. The New Jersey Wastewater Treatment Trust is authorized to reduce the individual amount of loan funds made available to local government units pursuant to sections 2, 3 and 4 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 trust pursuant to section 27 of P.L.1985, c.334 (C.58:11B-27). The trust is authorized to use any such reduction in the loan amount made available to a local government unit to cover that local government unit's increased costs due to differing site conditions as defined and determined in accordance with the rules and regulations adopted by the trust pursuant to section 27 of P.L.1985, c.334 (C.58:11B-27).

    b. The trust is authorized to increase each loan amount authorized in sections 2, 3 and 4 of this act by the amount of capitalized interest and issuance expenses allocable to each loan made by the trust pursuant to this act; provided that the increase for issuance expenses, excluding underwriters' discount, municipal bond insurance premiums and bond rating agency fees, shall not exceed 0.4% of the principal amount of trust bonds issued to make loans authorized by this act.

    c. The trust is authorized to increase each loan amount authorized in sections 2, 3 and 4 of this act by the amount of reserve capacity expense, including the debt service reserve fund requirement associated with such reserve capacity expense, as may be allowed the project by the trust in accordance with rules and regulations adopted by the trust pursuant to section 27 of P.L.1985, c.334 (C.58:11B-27).

    8. The New Jersey Wastewater Treatment Trust is authorized to increase the individual amount of loan funds made available to local government units by the trust pursuant to P.L.1989, c.190, P.L.1990, c.97, P.L.1991, c.324, P.L.1992, c.37, P.L.1993, c.192, P.L.1994, c.105, 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), provided that adequate savings are achieved, to compensate for a refunding of trust bonds issued to make loans authorized by the aforementioned acts.

    9. The expenditure of funds authorized pursuant to this act is subject to the provisions of P.L.1985, c.329, P.L.1992, c.88 and P.L.1985, c.334 (C.58:11B-1 et seq.) and any rules and regulations adopted pursuant thereto.

    10. This act shall take effect immediately.

STATEMENT

    This bill would authorize the New Jersey Wastewater Treatment Trust to expend up to $50,000,000, and any unexpended balances from the authorizations made by P.L.1994, c.105, P.L.1995, c.218, and P.L.1996, c.87 to provide loans with an interest rate at or below the prevailing market rate to local government units for the costs of eligible wastewater treatment system projects. The eligible projects are those included in the "State Fiscal Year 1998 Project Priority List" and one project that received loans in the past and which now requires a supplemental loan in order to meet actual costs.

    The New Jersey Wastewater Treatment Trust, established pursuant to P.L.1985, c.334 (C.58:11B-1 et seq.), is a State financing authority which can issue bonds, notes and other debt obligations. In the initial year of funding, the provisions of P.L.1987, c.199 authorized the Trust to expend $150,000,000 for loans to local government units for up to 50% of the costs of eligible wastewater treatment system projects. Subsequently, the provisions of P.L.1988, c.132 authorized the expenditure of $75,000,000, the provisions of P.L.1989, c.190 authorized $85,000,000, the provisions of P.L.1990, c.97 authorized $100,000,000, the provisions of P.L.1991, c.324 authorized $90,000,000, the provisions of P.L.1992, c.37 authorized $75,000,000, the provisions of P.L.1993, c.192 authorized $75,000,000, the provisions of P.L.1994, c.105 authorized $60,000,000, the provisions of P.L.1995, c.218 authorized $50,000,000, and the provisions of P.L.1996, c.87 authorized $75,000,000.

    This bill permits the Trust to expend up to $50 million for loans to local government units for eligible wastewater treatment system projects, and authorizes the use of any remaining moneys from prior authorizations, any loan repayments received to date, and the amounts for capitalized interest and issuance expenses, to fund the State FY 1998 financing program.

    A companion bill (Assembly Bill No. 3021 of 1997 and Senate Bill No. 2142 of 1997) would appropriate certain federal and State moneys to the Department of Environmental Protection 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 FY 1998. The department would use the funds appropriated under that bill to make zero interest loans to local governments for up to 50% of eligible project costs for new wastewater treatment system projects included in the "State Fiscal Year 1998 Project Priority List" and to provide a supplemental loan to a local government for the supplemental costs of a previously funded project.

    Thus, this bill and Assembly Bill No. 3021 of 1997 and Senate Bill No. 2142 of 1997 together provide loan financing for 100% of the eligible cost of a wastewater treatment system project: approximately one-half of the loan amount from the Trust with interest at or below the prevailing market rate and one-half from a zero interest loan from the Department.

Authorizes New Jersey Wastewater Treatment Trust to make up to $50 million in loans for wastewater treatment system projects.