Legislation is advancing through the New Jersey Senate that aims to facilitate private financing of water conservation, storm shelter construction, and flood and hurricane resistance projects through the use of voluntary special assessments. The State Assembly has passed the bill; it has since been reviewed and reported out by the Senate Budget Committee.
Under existing law, New Jersey municipalities are authorized to fund the purchase and installation of renewable energy systems and energy efficiency improvements made by property owners upon receiving approval from the Director of the Division of Local Government Services (DLGS) in the Department of Community Affairs. By ordinance, the municipality may provide for a “clean energy special assessment” to be imposed on those properties when the property owner has requested the assessment in exchange for receiving assistance with the initial financing.
The proposed municipal financing legislation (A-2579 and S-1510) expands the “clean energy special assessment” available under existing law to include water conservation projects, flood resistant construction projects, hurricane resistant construction projects, storm shelter projects, and safe room projects. The new name for the program would be PACE (property assessed clean energy) special assessment.
The proposed legislation also makes it easier for municipalities to finance such projects by eliminating the need for DLGS approval in most cases and allowing certain exceptions to the “Local Bond Law,” such as the down payment requirement, and provisions addressing periods of usefulness, bond maturity, public sale, and local finance board review.
In addition to issuing bonds or borrowing funds from a county improvement authority or other public entity, the bill also expressly authorizes municipalities to use private funds to finance eligible projects. The loans would be secured by the payment of a special assessment on the improved property. Special assessments would be paid quarterly and assigned to the agency that issued the bonds or provided the financing for the renewable energy improvements.
We will be closely tracking the status of the proposed legislation and will 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.