The New Jersey Assembly recently approved legislation that would require local governments and authorities to obtain a financing cost estimate from the New Jersey Environmental Infrastructure Trust (NJEIT) for certain projects. The NJEIT, which was first established in 1986, is an independent State financing authority that provides low interest-rate loans for water quality infrastructure projects.
Pursuant to Assembly Bill No. 3548, local governments and authorities seeking to finance $1,000,000 or more for an environmental infrastructure project or project component must request an estimate of financing costs from the NJEIT if the project or project component were to be funded in whole or in part by the trust. The request would be made via an online form and would require the local government unit to provide information concerning the project and the borrower, such as a detailed description of the project, a cost estimate prepared by the project engineer or other qualified person, and the amount to be financed.
Under the proposed bill, NJEIT would have 15 days upon from the submission of a completed form to provide an estimate of financing cost and possible interest rate that may be made available for the project. If a local government or authority does not use trust financing for the project, the financing cost estimate must be submitted to the Division of Local Government Services with the local government’s supplemental debt statement.
As noted on its website, the New Jersey State League of Municipalities (NJSLOM) opposes the proposed mandate. While it acknowledges that the proposal is well intended, the NJSLOM contends that it “mandates a lengthy process that will unnecessarily delay certain projects,” particularly those that are shovel ready.
The NJSLOM further notes, “The NJEIT program may save some municipalities money when financing a project but savings are not always guaranteed. With interest rates low, municipalities have been able to secure interest rates at a lower rate than the NJEIT program without the ongoing administrative fees charged by NJEIT and DEP.”
The proposed bill is now pending before the state Senate. We will continue to track its status and provide updates as they become available.
For more information about the proposed legislation or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.