(TRENTON) – Legislation sponsored by Assembly Democrats Nancy Pinkin, John McKeon, Verlina Reynolds-Jackson and Carol Murphy to help make the cost of financing infrastructure improvement projects more manageable for municipalities has been signed into law.
The law (A-4173) makes certain changes to the New Jersey Infrastructure Bank’s (NJIB) enabling legislation. Specifically, the law provides that each bond, note, or other obligation issued by the NJIB for a combined sewer overflow project will mature not later than 45 years from the effective date thereof, as opposed to the typical 30 years for other environmental infrastructure projects. This change will allow municipalities to obtain less expensive financing for those projects.
“The changes that will be implemented under this law will help ease the financial burden of undertaking costly infrastructure projects,” said Pinkin (D-Middlesex), who chairs the Assembly Environment and Solid Waste Committee. “The easier we make it for municipalities to finance these projects, the better the service they will be able to provide to residents.”
“Some of the existing rules governing these loans clash with the very nature of these projects,” said McKeon (D-Essex/Morris). “These changes take into account the fiscal realities faced by many municipalities and the length of time it takes for these projects to be completed.”
“The existing provisions are restrictive and make it harder for municipalities to take advantage of this financing,” said Reynolds-Jackson (D-Mercer/Hunterdon). “This will give municipalities more time to pay back these loans, and allow them to finance projects that were previously not eligible.”
“Infrastructure projects are often cost prohibitive,” said Murphy (D-Burlington). “This gives our municipalities more options to take care of needed improvements without breaking the bank.”
The law also provides that a line of credit loan for an environmental infrastructure project or transportation infrastructure project will mature no later than: (1) the last day of the fifth succeeding fiscal year following the closing date of the line of credit loan; or (2) the last day of the third succeeding fiscal year following the date of construction certification following the closing date of the line of credit loan, whichever is sooner.
The existing three-year short-term loan often is not long enough for projects that seek to finance both planning and design activities and construction. Construction, by itself, often takes three years. This change will increase the term of the short-term loans for up-to an additional two years for projects that seek to finance both construction and planning and design activities.
The law also provides that the Commissioner of Environmental Protection may include on the drinking water project priority list required pursuant to section 24 of P.L.1997, c.224 (C.58:11B-20.1) any project that is eligible for funding under the “Water Supply Bond Act of 1981,” P.L.1981, c.261.
Currently, certain projects, such as lead line replacement in private residences and reservoir repair, cannot be included on the project priority list because they may not meet federal eligibility requirements. The change proposed in this law will allow the commissioner to include those projects on the project priority list and finance them, in part, with 1981 bond act proceeds.
Finally, the law clarifies in existing law that the long-term loan repayment schedule for each transportation infrastructure project requires a final maturity date of not more than 31 years following completion of the project.
The bill was signed into law by Gov. Murphy on Aug. 10.