New Jersey Administrative Code › Title 5 - COMMUNITY AFFAIRS › Chapter 30 - LOCAL FINANCE BOARD › Subchapter 2 - LOCAL BOND LAW › Section 5:30-2.8 - Self-liquidating improvements and extensions

Current through Register Vol. 56, No. 14, July 15, 2024
(a) Obligations to
				finance an improvement or extension of a municipal public utility shall be deemed to
				be for a self-liquidating purpose in the fiscal year in which the obligations to
				finance the same have been authorized or issued and calculated pursuant to
				40A:2-8.
1. In instances that a local unit desires to
				establish a utility, and desires the Local Finance Board to determine that any debt
				would be self-liquidating and, therefore, the debt excluded from the net debt of the
				local unit, the local unit shall provide appropriate supporting documentation to
				indicate the utility shall be self-liquidating.
2. Such documentation shall include, as
				appropriate to the circumstances, the following:
i. The amount of cash on hand based on prepaid
				service revenue;
ii. Presentation of
				evidence of participation or connection supported by enforceable documents
				guaranteeing every pledge or agreement;
iii. An engineering or other study of annual
				income from casual, or ancillary use of the facility with adequate reasons for
				supporting such estimate;
iv. Statement
				of amount estimated to be derived from any concessions, other recreational
				activities, or other activities, with suitable explanation;
v. Projected budget for the first full year of
				operations, setting forth the amounts required for salaries and wages, insurance,
				detail of other operating expenses, and amounts required for annual debt
				service;
vi. Statement in the
				application that adequate liability insurance will be carried in an amount adequate
				for the protection of the public and the local unit, with a certification by some
				local municipal official that the coverage appears to be adequate, based on the best
				information obtainable;
vii. Statement
				to the effect that any determination of self-liquidation is subject to the
				provisions of 40A:4-35 which requires any annual
				deficit to be provided for the next annual municipal budget and the next debt to be
				computed according to the provisions of
				40A:2-48;
viii. A statement setting forth any covenant to be
				included in any bond issue in order to insure the purchaser that the bonds will be
				met at maturity regardless of the income from the utility.
3. All of the provisions of (a)2 above shall be in
				addition to or part of the formal application in the form required by the Local
				Finance Board for municipal extensions of credit.
4. The Board will, after receiving each
				application, set a date for public hearing thereon and will, if it is deemed
				necessary, require the presentation of any supplemental or additional detail deemed
				to be in order.
5. Any governing body,
				may, if it has adequate unencumbered borrowing power, undertake a project of this
				nature without the approval of the Local Finance Board, assuming that it is willing
				to have the prospective indebtedness included in the net debt of the municipality.
				In an instance of this kind, the municipality could, assuming that the first full
				year's operations of the project did in fact produce sufficient cash revenues to
				meet all operating expenses and debt service charges, secure a deduction in the
				annual debt statement required to be filed at the end of the year or any subsequent
				year. It would follow, of course, that if the income in any instance was inadequate
				to meet operating expenses and debt service, it would be necessary to take the
				charge against the net debt as required by
				40A:2-48.