Bill Text: NJ A3176 | 2012-2013 | Regular Session | Introduced
Bill Title: Clarifies local government unit obligations with regard to DEP loan awards for dam repairs.
Spectrum: Partisan Bill (Republican 3-0)
Status: (Introduced - Dead) 2012-06-28 - Introduced, Referred to Assembly Environment and Solid Waste Committee [A3176 Detail]
Download: New_Jersey-2012-A3176-Introduced.html
Sponsored by:
Assemblyman GARY R. CHIUSANO
District 24 (Morris, Sussex and Warren)
Assemblywoman ALISON LITTELL MCHOSE
District 24 (Morris, Sussex and Warren)
SYNOPSIS
Clarifies local government unit obligations with regard to DEP loan awards for dam repairs.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning local government unit obligations with regard to certain Department of Environmental Protection loan awards, supplementing Title 58 of the Revised Statutes, and amending P.L.2001, c.360 and various bond acts.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 11 of P.L.1992, c.88 is amended to read as follows:
11. Bonds of the State of New Jersey are authorized to be issued in the aggregate principal amount of $20,000,000 for the purposes of financing the dam restoration project cost and the inland waters project cost of dam restoration projects and inland waters projects in accordance with this section.
a. Of the amount authorized pursuant to this section:
(1) $5,000,000 is allocated to meet the dam restoration project cost and the inland waters project cost of State high-hazard dam restoration projects and State inland waters projects; and
(2) $15,000,000 is allocated for State loans to assist local government units, and to assist private lake associations or similar organizations or owners of private dams [as co-applicants] acting as co-borrowers with local government units, to meet the dam restoration project cost or inland waters project cost of dam restoration projects or inland waters projects undertaken by local government units or by private lake associations or similar organizations or owners of private dams, in conjunction with local government units, for purposes in the public interest.
b. Any loan authorized under this section shall include up to 100% of the dam restoration project cost or inland waters project cost.
c. Loans [made to local government units, or to private lake associations or similar organizations or owners of private dams as co‑applicants with local government units,] awarded under this section from the "1992 Dam Restoration and Clean Water Trust Fund" established pursuant to section 26 of [this act] P.L.1992, c.88 shall bear interest of not more than 2% per year, and shall be for a term of not more than 20 years.
d. Any loan authorized under this section shall be [provided] awarded under terms and conditions set forth in a written loan award agreement between the Department of Environmental Protection and the person or entity receiving the loan.
e. A loan may be awarded pursuant to this section to owners of private dams or to private lake associations or other similar organizations only if a local government unit acts as both a co-applicant and co-borrower for the loan. The agreement by a local government unit to act as a co-applicant for a loan, as signified by its authorized agent's co-signature on a loan award application, shall not obligate the local government unit to become a co-borrower on the loan. The agreement to act as a co-applicant shall indicate only that the local government unit intends to establish its eligibility for a loan award and will consider acting as a co-borrower therefor. A local government unit acting as a co-applicant for a loan under this subsection shall not be required to accept or repay any loan award, despite the department's approval of the loan application, and notwithstanding the appropriation or allocation of funds for purposes of the loan award, unless and until the local government unit has formally agreed to act as a co-borrower on the loan, as signified by its authorized agent's co-signature on the finalized loan award agreement.
f. The local government unit that acts as a co-borrower on a loan, which is awarded under this section to the owner of a private dam or to a private lake association or similar organization, shall assess the cost of payment of the principal and interest on [any loan made to a private lake association or similar organization or owner of a private dam, as a co‑applicant with a local government unit, shall be assessed] the loan against the real estate benefited thereby , in proportion to and not in excess of the benefits conferred [, and such] . Such assessments shall bear interest and penalties from the same time and at the same rate as assessments for local improvements in the municipality where they are imposed, and from the date of confirmation shall be a first and paramount lien upon the real estate assessed to the same extent, and be enforced and collected in the same manner, as assessments for local improvements.
[f.] g. The Department of Environmental Protection shall administer the loan program authorized pursuant to this section. The department shall notify every local government unit and private lake association or similar organization of the availability of, and the criteria for qualifying and obtaining, loans under the program.
(cf: P.L.1992, c.88, s.11)
2. Section 26 of P.L.1992, c.88 is amended to read as follows:
26. The State Treasurer shall establish a revolving, nonlapsing fund to be known as the "1992 Dam Restoration and Clean Water Trust Fund," and the moneys therein are to be held in those depositories as the State Treasurer may select. The State Treasurer shall deposit into the fund all proceeds from the sale of the bonds issued by the State under [this act] P.L.1992, c.88 for the purposes of financing dam restoration projects and inland waters projects as set forth in section 11 of [this act] P.L.1992, c.88. The moneys in the fund are specifically dedicated and shall be applied to the dam restoration project cost and the inland waters project cost of [the purposes] dam restoration projects and inland waters projects, as set forth in section 11 of [this act] P.L.1992, c.88. Moneys derived from the payment of interest and principal on the loans to local government units, and to private lake associations or similar organizations or owners of private dams acting as [co‑applicants] co-borrowers with local government units, as authorized in section 11 of [this act] P.L.1992, c.88 , and such grants, contributions, donations, and reimbursements from federal aid programs as may lawfully be used for the purposes of making grants and loans to local government units, or to private lake associations or similar organizations or owners of private dams acting as [co‑applicants] co-borrowers with local government units, for the purposes set forth in section 11 of [this act] P.L.1992, c.88 , shall also be held in the "1992 Dam Restoration and Clean Water Trust Fund." Moneys in the fund shall not be expended except in accordance with appropriations from the fund made by law, but bonds may be issued as herein provided, notwithstanding that the Legislature has not adopted an act making a specific appropriation of any of the moneys. Any act appropriating moneys from the "1992 Dam Restoration and Clean Water Trust Fund" shall identify the particular dam restoration or inland waters project or projects to be funded with such moneys.
(cf: P.L.1992, c.88, s.26)
3. Section 9 of P.L.1996, c.70 is amended to read as follows:
9. Bonds of the State of New Jersey are authorized to be issued in the aggregate principal amount of $5,000,000 for the purposes of financing the cost of lake restoration projects.
a. The sum authorized pursuant to this section shall be used to: (1) provide grants to local government units to meet the cost, in whole or in part, of lake restoration projects for lakes owned, leased, or managed by local government units; (2) provide loans to private lake associations or similar organizations or owners of private lakes, acting as [co-applicants] co-borrowers with local government units, to meet the cost, in whole or in part, of lake restoration projects undertaken by private lake associations or similar organizations or owners of private lakes, in conjunction with local government units; or (3) meet the cost, in whole or in part, of lake restoration projects undertaken by the State for lakes owned, leased, or managed by the State.
b. Loans [made to private lake associations or similar organizations or owners of private lakes as co-applicants with local government units] awarded under subsection a. of this section from the "1996 Lake Restoration Fund" established pursuant to section 21 of [this act] P.L.1996, c.70 shall bear interest of not more than 2% per year, and shall be for a term of not more than 20 years.
c. Any loan authorized under this section shall be [provided] awarded under terms and conditions set forth in a written loan award agreement between the Department of Environmental Protection and the entity or person receiving the loan.
d. A loan may be awarded pursuant to this section to owners of private lakes or to private lake associations or similar organizations only if a local government unit acts as both a co-applicant and co-borrower for the loan. The agreement by a local government unit to act as a co-applicant for a loan award, as signified by its authorized agent's co-signature on the loan award application, shall not obligate the local government unit to become a co-borrower on the loan. The agreement to act as a co-applicant shall indicate only that the local government unit intends to establish its eligibility for a loan award and will consider acting as a co-borrower therefor. A local government unit acting as a co-applicant for a loan under this subsection shall not be required to accept or repay any loan award, despite the department's approval of the loan application, and notwithstanding the appropriation or allocation of funds for purposes of the loan award, unless and until the local government unit has formally agreed to act as a co-borrower on the loan, as signified by its authorized agent's co-signature on the finalized loan award agreement.
e. The local government unit that [is a co-applicant for] acts as a co-borrower on a loan [made] , which is awarded under this section to an owner of a private lake or to a private lake association or similar organization [or owner of a private lake] , shall assess the cost of payment of the principal and interest [for any loan made pursuant to this section upon] on the loan against the real estate benefited thereby , in proportion to and not in excess of the benefits conferred. [Upon failure to pay an assessment imposed pursuant to this section, the property owner shall pay] Such assessments shall bear interest and penalties from the same time and at the same rate as [for failure to pay] assessments for local improvements in the municipality where imposed, and from the date of confirmation [the unpaid assessment] shall be a first and paramount lien upon the real estate assessed to the same extent, and be enforced and collected in the same manner, as assessments for local improvements.
[e.] f. The Department of Environmental Protection shall administer the grant and loan program authorized pursuant to this section. The department shall make available to every local government unit and private lake association or similar organization information concerning the availability of, and the criteria for qualifying and obtaining, grants and loans under the program.
(cf: P.L.1996, c.70, s.9)
4. Section 1 of P.L.1999, c.347 is amended to read as follows:
1. a. There shall be appropriated to the Department of Environmental Protection from the General Fund the sum of $6,000,000 for the purpose of financing the costs of rehabilitating dams defined and designated as "high hazard" by the Department of Environmental Protection. This sum shall be appropriated pursuant to the provisions of subsection e. of this section. It shall include administrative costs and shall be allocated to those projects included on a Dam Safety Priority List, as developed and maintained by the Department of Environmental Protection and approved by the Commissioner of Environmental Protection.
b. The sum appropriated under subsection a. of this section shall be made available to finance the cost of rehabilitating eligible dams owned by the State, local government units, and private parties. Funds shall be awarded to eligible local government units in the form of nonmatching grants and to eligible private dam owners, acting as [co-applicants] co-borrowers with local government units, in the form of loans.
c. Any loan authorized under this section shall be awarded under terms and conditions set forth in a written loan award agreement between the Department of Environmental Protection and the entity or person receiving the loan.
d. Loans awarded under subsection b. of this section shall bear an annual rate of interest of 2% and shall be for a term of not more than 20 years. Repayments shall be used for new dam rehabilitation projects or for the maintenance costs of previously funded projects. Grant and loan amounts for each project shall be determined by the Department of Environmental Protection.
e. A loan may be awarded pursuant to this section to private dam owners only if a local government unit acts as both a co-applicant and co-borrower for the loan. The agreement by a local government unit to act as a co-applicant for a loan award, as signified by its authorized agent's co-signature on the loan award application, shall not obligate the local government unit to become a co-borrower on the loan. The agreement to act as a co-applicant shall indicate only that the local government unit intends to establish its eligibility for a loan award and will consider acting as a co-borrower therefor. A local government unit acting as a co-applicant for a loan under this subsection shall not be required to accept or repay any loan award, despite the department's approval of the loan application, and notwithstanding the appropriation or allocation of funds for purposes of the loan award, unless and until the local government unit has formally agreed to act as a co-borrower on the loan, as signified by its authorized agent's co-signature on the finalized loan award agreement.
[d.] f. Except as otherwise provided pursuant to subsection [c.] d. of this section, loans under subsection b. of this section shall be awarded and administered by the Department of Environmental Protection pursuant to the rules and regulations governing the existing revolving loan program for dam restoration projects created and funded under the "Green Acres, Clean Water, Farmland and Historic Preservation Bond Act of 1992," P.L.1992, c.88.
[e.] g. For the purposes of this section there is appropriated from the General Fund to the Department of Environmental
Protection $6,000,000 in Fiscal Year 2000.
(cf: P.L.1999, c.347, s.1)
5. Section 2 of P.L.1999, c.347 is amended to read as follows:
2. a. There shall be appropriated to the Department of Environmental Protection from the General Fund the sum of $3,500,000 for the purpose of financing the costs of rehabilitating dams designated by the Department of Environmental Protection as affected by flood waters caused by Hurricane Floyd. Such rehabilitation may include dredging that is intended to ameliorate the effects of the flood waters on an eligible dam. This sum shall be appropriated pursuant to the provisions of subsection [e.] f. of this section. This sum shall include administrative costs and 10% of the total program amount shall be available for emergency repairs as shall be determined by the department.
b. The sum appropriated under subsection a. of this section shall be made available to finance the cost of rehabilitating eligible dams owned by the State, local government units, and private parties. Funds shall be awarded to eligible local government units in the form of nonmatching grants and to eligible private dam owners, acting as [co-applicants] co-borrowers with local government units, in the form of loans.
c. Any loan authorized under subsection b. of this section shall be awarded under terms and conditions set forth in a written loan award agreement between the Department of Environmental Protection and the person or entity receiving the loan.
d. Loans awarded under subsection b. of this section shall bear an annual rate of interest of 2% and shall be for a term of not more than 20 years. Repayments shall be used for new dam rehabilitation projects or for the maintenance costs of previously funded projects under either section 1 of P.L.1999, c.347 or this section. Grant and loan amounts for each project shall be determined by the Department of Environmental Protection.
[d.] e. A loan may be awarded pursuant to this section to private dam owners only if a local government unit acts as both a co-applicant and co-borrower for the loan. The agreement by a local government unit to act as a co-applicant for a loan award, as signified by its authorized agent's co-signature on the loan award application, shall not obligate the local government unit to become a co-borrower on the loan. The agreement to act as a co-applicant shall indicate only that the local government unit intends to establish its eligibility for a loan award and will consider acting as a co-borrower therefor. A local government unit acting as a co-applicant for a loan under this subsection shall not be required to accept or repay any loan award, despite the department's approval of the loan application, and notwithstanding the appropriation or allocation of funds for purposes of the loan award, unless and until the local government unit has formally agreed to act as a co-borrower on the loan, as signified by its authorized agent's co-signature on the finalized loan award agreement.
f. Except as otherwise provided pursuant to subsection [c.] d. of this section, loans authorized under subsection b. of this section shall be awarded and administered by the Department of Environmental Protection pursuant to the rules and regulations governing the existing revolving loan program for dam restoration projects created and funded under the "Green Acres, Clean Water, Farmland and Historic Preservation Bond Act of 1992," P.L.1992, c.88.
[e.] g. For the purposes of this section there is appropriated from the General Fund to the Department of Environmental Protection $3,500,000 in Fiscal Year 2000.
(cf: P.L.1999, c.347, s.2)
6. Section 2 of P.L.2001, c.360 (C.58:4-12) is amended to read as follows:
2. a. There is established in the Department of Environmental Protection a dedicated, nonlapsing fund, designated the "Dam, Lake and Stream Project Fund." Moneys in the fund shall be used for the purpose of supplementing the department's capital construction programs that provide funding for dam restoration and repair, lake dredging and restoration, and stream cleaning and desnagging, and to fund the cost of dam inspection as prescribed under subsection [f.] g. of this section. There is appropriated from the "Surplus Revenue Fund," established pursuant to P.L.1990, c.44 (C.52:9H-14 et seq.), to the Dam, Lake and Stream Project Fund the sum of $6,730,000.
b. Moneys in the Dam, Lake and Stream Project Fund are appropriated for State, local or privately-owned projects and may be combined with other State or non-State funding sources.
c. Moneys appropriated from the Dam, Lake and Stream Project Fund may be used by the department to provide loans bearing an interest rate of not more than 2% or other forms of assistance, other than full or matching grants, to owners of private dams, lakes or streams, in accordance with criteria for existing programs established under previous State bond acts, legislative initiatives, or federal aid guidelines.
d. Any loan authorized under this section shall be awarded under terms and conditions set forth in a written loan award agreement between the Department of Environmental Protection and the entity or person receiving the loan.
e. (1) [Loans] A loan may be awarded [under] pursuant to this section to owners of private dams or lake associations [shall require local government units to act as co-applicants] only if a local government unit acts as a co-applicant and co-borrower therefor. The agreement by a local government unit to act as a co-applicant for a loan award, as signified by its authorized agent's co-signature on the loan award application, shall not obligate the local government unit to become a co-borrower on the loan. The agreement to act as a co-applicant shall indicate only that the local government unit intends to establish its eligibility for a loan award and will consider acting as a co-borrower therefor. A local government unit acting as a co-applicant for a loan under this paragraph shall not be required to accept or repay any loan award, despite the department's approval of the loan application, and notwithstanding any appropriation or allocation of funds for purposes of the loan award, unless and until the local government unit has formally agreed to act as a co-borrower on the loan, as signified by its authorized agent's co-signature on the finalized loan award agreement .
(2) The local government unit that acts as a co-borrower on a loan, which is awarded under this section to an owner of a private dam or to a lake association, shall assess the cost of payment of the principal and interest on [these loans shall be assessed,] the loan, in the same manner as provided for the assessment of local improvements generally under chapter 56 of Title 40 of the Revised Statutes, against the real estate benefited thereby , in proportion to and not in excess of the benefits conferred [, and such] . Such assessment shall bear interest and penalties from the same time and at the same rate as assessments for local improvements in the municipality in which they are imposed, and from the date of confirmation shall be a first and paramount lien upon the real estate assessed to the same extent, and be enforced and collected in the same manner, as assessments for local improvements.
[(2)] (3) Notwithstanding the provisions of [paragraph (1) of] this subsection or of any other law to the contrary, no project for which loans to owners of private dams or lake associations are awarded under this section shall be considered a municipal capital improvement, nor shall the amount of any such loan be considered part of the municipal capital budget, and no such loan shall be subject to the review or approval of the Local Finance Board established under P.L.1974, c.35 (C.52:27D-18.1).
[e.] f. The moneys appropriated under this section shall be allocated commencing with the fiscal year of enactment in such a manner that [(a)] (1) the amount allocated to dam restoration and repair shall be $4,730,000 [(b)] (2) the amount allocated to lake dredging and restoration and to stream cleaning and desnagging shall be $2,000,000 and [(c)] (3) the amount allocated to the Department of Environmental Protection for repair of department-owned dams shall be $0.00.
[f.] g. In addition to the number of individuals employed as inspectors of dams on October 1, 2000, the Department of Environmental Protection is directed to employ nine additional individuals as inspectors of dams and to keep all of the positions, including both those in which individuals were employed as inspectors of dams on October 1, 2000 and those to which the nine additional individuals shall have been appointed thereafter, with employees having educational backgrounds or skills in engineering necessary to conduct the inspection of dams and otherwise to carry out the objectives of [this act] P.L.2001, c.360. The salary costs for the nine additional staff positions shall be charged against the moneys appropriated under subsection a. of this section and allocated under subparagraph (a) of paragraph (2) of subsection e. hereof.
(cf: P.L.2001, c.360, s.2)
7. Section 5 of P.L.2003, c.162 is amended to read as follows:
5. a. Bonds of the State of New Jersey are authorized to be issued in the aggregate principal amount of $150,000,000 for the purposes of financing the costs of dam restoration and repair projects, lake dredging and restoration projects, stream cleaning and desnagging projects, and State flood control projects, all as hereinafter provided.
b. Of the total principal amount authorized pursuant to subsection a. of this section:
(1) $15,000,000 is allocated to the department to finance the costs of State dam restoration and repair projects;
(2) $95,000,000 is allocated to the department for the purpose of providing loans or other forms of assistance other than full or matching grants to local government units, or to owners of private dams [,] acting as [co-applicants] co-borrowers with local government units, [or to local government units that own dams,] to finance the costs of dam restoration and repair projects undertaken by, or on behalf of, the owners of dams;
(3) $15,000,000 is allocated to the department for the purpose of providing loans or other forms of assistance other than full or matching grants to owners of lakes or streams [and] or private lake associations acting as co-borrowers with local government units, to finance the costs of lake dredging and restoration projects, or stream cleaning and desnagging projects, undertaken by, or on behalf of, the owners of lakes or streams or private lake associations; and
(4) $25,000,000 is allocated to the department to finance the costs of State flood control projects.
c. Any loan authorized under this section shall include up to 100% of the cost of a dam restoration and repair project, lake dredging and restoration project, or stream cleaning and desnagging project.
d. Loans [made to owners of private dams, or to local government units that own dams, or to owners of lakes or streams, or to private lake associations, with local government units as coapplicants,] awarded under subsection b. of this section from the "2003 Dam, Lake and Stream Project Revolving Loan Fund" established pursuant to section 17 of [this act] P.L.2003, c.162 shall bear interest of not more than 2 percent per year, shall be for a term of 20 years, and shall be made in accordance with criteria for existing programs established under previous State general obligation bond acts, legislative initiatives, or federal aid guidelines.
e. Any loan authorized under this section shall be [provided] awarded under the terms and conditions set forth in a written loan award agreement between the department and the person or entity receiving the loan.
f. (1) [Loans awarded under this section to owners of private dams, or to private lake associations, shall require local government units to act as co-applicants.] A loan may be awarded to owners of private dams pursuant to paragraph (2) of subsection b. of this section, or to private lake associations or owners of lakes or streams pursuant to paragraph (3) of subsection b. of this section, only if a local government unit acts as both a co-applicant and co-borrower for the loan. The agreement by a local government unit to act as a co-applicant for a loan award, as signified by its authorized agent's co-signature on the loan award application, shall not obligate the local government unit to become a co-borrower on the loan. The agreement to act as a co-applicant shall indicate only that the local government unit intends to establish its eligibility for a loan award and will consider acting as a co-borrower therefor. A local government unit acting as a co-applicant for a loan shall not be required to accept or repay any loan award, despite the department's approval of the loan application, and notwithstanding the appropriation or allocation of funds for purposes of the loan award, unless and until the local government unit has formally agreed to act as a co-borrower on the loan, as signified by its authorized agent's co-signature on the finalized loan award agreement.
(2) The local government unit that acts as a co-borrower on a loan, which is awarded under this section to the owner of a private dam, the owner of a lake or stream, or a private lake association, shall assess the cost of payment of the principal and interest on [any loan made to the owner of a private dam, or to a private lake association, as a co-applicant with a local government unit, shall be assessed] the loan, in the same manner as provided for the assessment of local improvements generally under chapter 56 of Title 40 of the Revised Statutes, against the real estate benefited thereby in proportion to and not in excess of the benefits conferred [, and such] . Such assessments shall bear interest and penalties from the same time and at the same rate as assessments for local improvements in the municipality where they are imposed, and from the date of confirmation shall be a first and paramount lien upon the real estate assessed to the same extent, and be enforced and collected in the same manner, as assessments for local improvements.
[(2)] (3) Notwithstanding the provisions of [paragraph (1) of] this subsection or of any other law to the contrary, no project for which loans to owners of dams, owners of lakes or streams, or lake associations are awarded under this section shall be considered a municipal capital improvement, nor shall the amount of any such loan be considered part of the municipal capital budget, and no such loan shall be subject to the review or approval of the Local Finance Board established under P.L.1974, c.35 (C.52:27D-18.1).
g. The department shall administer the program authorized pursuant to this section in accordance with criteria for existing programs established under previous State general obligation bond acts, legislative initiatives, or federal aid guidelines. The department shall notify every local government unit, dam or lake owner, and private lake association of the availability of, and the criteria for qualifying and obtaining, loans or other forms of assistance under the program.
h. Payments of principal and interest on loans made from the "2003 Dam, Lake and Stream Project Revolving Loan Fund" established under section 17 of [this act] P.L.2003, c.162 shall be returned to that fund for use for any authorized purpose to which moneys in the fund may be used.
(cf: P.L.2003, c.162, s.5)
8. (New section) Notwithstanding any law, rule, or regulation to the contrary, any moneys, which are appropriated or allocated to the Department of Environmental Protection, pursuant to any law or bond act, for the purposes of providing departmental loans for dam repair and restoration projects, lake restoration and lake dredging projects, or stream desnagging and stream cleaning projects, may be used by the department to provide loans to owners of private dams, lakes, or streams, or to private lake associations or similar organizations, only if a local government unit acts as both a co-applicant and co-borrower for the loan. The agreement by a local government unit to act as a co-applicant for a loan, as signified by its authorized agent's co-signature on the loan award application, shall not obligate the local government unit to become a co-borrower on the loan. The agreement to act as a co-applicant shall indicate only that the local government unit intends to establish its eligibility for a loan award and will consider acting as a co-borrower therefor. A local government unit acting as a co-applicant for a loan shall not be required to accept or repay any loan award, despite the department's approval of the loan application, and notwithstanding the appropriation or allocation of funds for purposes of the loan award, unless and until the local government unit has formally agreed to act as a co-borrower on the loan, as signified by its authorized agent's co-signature on the finalized loan award agreement.
9. This act shall take effect immediately.
STATEMENT
This bill would amend the loan authorization provisions of several bond acts, as well as the statutory provision that relates to the award by the Department of Environmental Protection (DEP) of loan moneys from the "Dam, Lake and Stream Project Fund," in order to clarify the obligations of local government units with regard to the acceptance of loan awards under these acts. The bill would also supplement Title 58 in order to ensure that local government units will be subject to the same obligations in this regard under all future bond acts or relevant funding statutes.
The law currently provides that DEP "[l]oans awarded . . . to owners of private dams or lake associations shall require local government units to act as co-applicants." Previous bond acts authorizing the DEP to issue loans for purposes of dam and lake restoration have each contained similar language. However, a recent situation involving Lake Neepaulin Dam in Sussex County has indicated that this language may be problematic, and, in particular, that it may have led to a misunderstanding regarding the obligations of local government units that elect to act as co-applicants for a DEP dam repair loan.
Lake Neepaulin Dam is privately-owned by the Friends of Lake Neepaulin (FOLN) - a lake association. When the FOLN was ordered by DEP to repair the dam, the FOLN applied for a DEP loan to finance the repair. As required by the law, the Township of Wantage agreed to and did co-sign the DEP loan application submitted by the FOLN, and it thereby became a co-applicant for the loan. It also enacted an ordinance that authorized the levying of a special property tax assessment to finance the loan's repayment, in accordance with the law.
Prior to the formal execution of the loan award agreement, however, and after an outcry from local residents who were opposed to paying the special tax assessment, the township indicated its intent to withdraw its support from the FOLN's loan request. The township signified this intent by passing Ordinance 2009-16, which rescinded the earlier ordinance that would have permitted the special tax assessment for loan repayment purposes. The FOLN, thereafter, sued the township, and on May 14, 2010, Judge B. Theodore Bozonelis held that Wantage Township was obligated to follow through with the loan by accepting the DEP loan award, and by imposing the special tax assessment on residents in order to finance the loan's repayment.
The decision by the court in the Lake Neepaulin case, however, is contrary to well established DEP procedures related to the award of loan moneys for dam repair and restoration projects. DEP regulations expressly provide that a loan award shall not become effective until the parties have executed and co-signed a finalized loan award agreement. The DEP, moreover, distinguishes between applicants for, and borrowers of, loan moneys, and, significantly, does not view the initial loan application as a document that binds the parties to any course of action. Consequently, according to the DEP, a local government unit should not be forced to co-sign or otherwise agree to the terms of a loan award agreement simply because it has acted as a co-applicant for the loan award. The DEP has concluded that a local government unit's agreement to act as a co-applicant for a loan indicates only that the local government unit is considering acting as a co-borrower therefor.
The court's decision in the Lake Neepaulin case essentially required Wantage Township to accept and comply with the contractual terms of the DEP's loan award agreement, despite the fact that the township had not yet expressly agreed to be bound thereby. The court's decision seriously brings into question the discretion of local government units to appropriately respond to the concerns of their citizens and to make policy decisions in their citizens' best interests.
Accordingly, in order to ensure that the discretion of local government units is protected, and in order to ensure that local government units will not be bound to fulfill the terms of loan award agreements prior to the formal execution of those agreements, this bill would amend and supplement the statutory law and amend several relevant bond acts to make it clear that, although the participation of a local government unit is required in order for a DEP loan to be awarded to owners of private dams, owners of private lakes, or lake associations, the mere co-signing of a loan application will not obligate a local government unit to accept or repay any DEP loan award. The bill would specify, in particular, that a local government unit will not be committed to follow through with a DEP loan, despite the DEP's approval of the loan application, and notwithstanding any legislative appropriation or allocation of moneys for purposes of the loan, unless and until an authorized agent of the local government unit has co-signed a finalized loan award agreement, and has thereby indicated the local government unit's agreement both to be bound by the terms of the agreement, and to act as a co-borrower - not merely as a co-applicant - for purposes of the loan.
