New Jersey-2018-S169-Introduced

An Act concerning the issuance of general obligation bonds by local governments and amending various parts of the statutory law.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. N.J.S.40A:2-12 is amended to read as follows:

40A:2-12. A bond ordinance shall contain in substance the following:

a. (1) an authorization for the issuance of obligations, stating in brief and general terms sufficient for reasonable identification the purpose or purposes for which the obligations are to be issued, a statement of the estimated maximum amount of bonds or notes to be issued, and the estimated cost of such purpose or purposes, but related improvements or properties may be treated as one improvement or property; or

(2) an authorization for the assumption by the local unit of the obligations of the authority sought to be dissolved pursuant to section 20 of P.L.1983, c.313 (C.40A:5A-20) for which the local unit is not a guarantor;

b. a determination of the period of usefulness of the purpose within the limitations of this chapter or, if issued for several purposes, a determination of the average period of usefulness, taking into consideration the respective amounts of obligations authorized for the said several purposes;

c. a determination that (1) the supplemental debt statement has been filed in the office of the clerk, (2) such statement shows that the gross debt as defined in this chapter is increased by authorization of such obligations by $ or is not increased, and (3) the obligations authorized by the bond ordinance will be within debt limitations prescribed by this chapter, or the issuance thereof is permitted by an exception to said limitations naming the particular section, paragraph or law providing such exception;

d. a statement of the aggregate amount for items of expense permitted under 40A:2-20;

e. a statement of the ways and means, exclusive of loans, by which the local unit shall pay the interest on the bonds as it falls due, and pay and discharge the principal amount of the bonds.

(cf: P.L.2001, c.29, s.2)

2. N.J.S.40A:2-17 is amended to read as follows:

40A:2-17. a. Introduction.

A bond ordinance shall be introduced in writing at a meeting of the governing body and shall be passed upon first reading, which may be by title.

b. Publication, hearing and adoption.

The bond ordinance, or a summary thereof, in a form prescribed by the Local Finance Board, shall be published after first reading, together with notice of the introduction thereof and of the date, which shall be at least 10 days after introduction and first reading, and the time and place of further consideration for final passage, which may be at an adjournment of such meeting or another meeting. If a summary is published, the summary shall contain a clear and concise statement prepared by the clerk of the governing body setting forth the purpose of the ordinance, the amount of indebtedness being authorized and the time and place when and where a copy of the ordinance can be obtained, without cost, by any member of the general public residing in the local unit.

Such publication shall be at least one week prior to the date for further consideration. At the time and place so advertised, or at any time and place to which such meeting or further consideration shall from time to time be adjourned, such bond ordinance may be read by its title, if,

(1) at least one week prior to such date or further consideration, there shall have been posted, on the bulletin board or other place upon which public notices are customarily posted in the principal municipal building of the municipality,

(a) a copy of such bond ordinance or summary, and

(b) a notice that copies of such bond ordinance will be made available during such week and up to and including the date of such meeting or further consideration to the members of the general public of the municipality who shall request such copies, naming the place at which such copies will be so made available, and

(2) such copies of said bond ordinance shall have been made available accordingly, but otherwise such bond ordinance shall be read in full. All persons interested shall then be given an opportunity to be heard.

After the duplicate of the supplemental debt statement has been filed in the office of the director, and after such hearing, the governing body may proceed to amend the bond ordinance and thereupon finally adopt or reject it, with or without amendments.

If any amendment is adopted substantially altering matters required by this chapter to be contained in the bond ordinance, such amended bond ordinance shall not be finally adopted until at least one week thereafter and until the bond ordinance or a summary of it shall have been published once at least two days prior to the date for further consideration, together with notice of the date, time and place at which it will be further considered for final adoption. At the time and place so advertised, or at any time and place to which such meeting or further consideration shall from time to time be adjourned, such amended bond ordinance may be read by its title, if,

(a) a copy of such bond ordinance or summary, and

(2) such copies of said bond ordinance shall have been made available accordingly, but otherwise such bond ordinance shall be read in full. All persons interested shall again be given an opportunity to be heard. After such hearing, the governing body may proceed to reject, finally adopt or further amend such bond ordinance.

A bond ordinance shall be finally adopted by the recorded affirmative votes of at least 2/3 of the full membership of the governing body. In a local unit in which the approval of any officer is required to make an ordinance or resolution effective, such bond ordinance shall be so approved, or passed over veto before it shall be published after final adoption.

c. Final publication with statement.

Every bond ordinance shall be published either in full or in summary form after final adoption, together with a statement in substantially the following form:

STATEMENT

The bond ordinance published herewith has been finally adopted and the 20-day period of limitation within which a suit, action or proceeding questioning the validity of such ordinance can be commenced, as provided in the Local Bond Law has begun to run from the date of the first publication of this statement. The bond ordinance contains a statement of the ways and means, exclusive of loans, by which (name of county or municipality, as appropriate) shall pay the interest on the bonds as it falls due, and pay and discharge the principal amount of the bonds. This bond ordinance will not take effect unless approved by a majority of the voters at the general election occurring at least 70 days next following the date of final adoption by the governing body.

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Clerk

d. Referendum before taking effect.

The bond ordinance shall not take effect until it has been submitted to the voters of the local unit, at the general election occurring at least 70 days next following its final adoption by the governing body. Approval shall be by a majority of the legally qualified voters of the local unit voting thereon.

(cf: P.L.2000, c.126, s.14)

3. (New section) The bond referendum question submitted to the voters pursuant to the requirements of N.J.S.40A:2-17 shall be submitted in the following form:

"Shall the bond ordinance, approved by the governing body, which authorizes the governing body to issue bonds in the amount of $ to provide moneys for (insert purpose of bonds), and providing the ways and means to pay the interest on the debt and also to pay and discharge the principal of the bonds, which ways and means shall be (insert funding sources to be used to pay principal and interest on bonds), be approved?"

4. N.J.S.40A:2-18 is amended to read as follows:

40A:2-18. A bond ordinance shall [take effect 20 days after the first publication of the ordinance or of a summary thereof after final adoption. A bond ordinance which authorizes obligations to fund, refund, renew, extend or retire obligations issued or authorized pursuant to this chapter, or notes or bonds issued or authorized pursuant to any act of which this chapter is a revision shall not be subject to referendum] be submitted to the voters of the local unit at the general election next following by at least 70 days the final adoption of the ordinance by the governing body. A bond ordinance shall take effect upon its approval by a majority of the legally qualified voters of the local unit voting thereon.

(cf: P.L.2000, c.126, s.15)

5. N.J.S.40A:2-49 is amended to read as follows:

40A:2-49. After 20 days after publication after final passage of a bond ordinance, but subject to the referendum requirement of subsection d. of N.J.S.40A:2-17, and N.J.S.40A:2-18, the following shall be conclusively presumed:

a. the accuracy, correctness and sufficiency of any annual or supplemental debt statement filed in connection therewith;

b. any recitals or statements of fact contained in such ordinance or preamble or recital thereof;

c. determinations in said ordinance as to purposes for which said obligations are authorized, the period or average period of usefulness, the maturities of any obligations, and the validity of the purpose or purposes for which authorized;

d. the due and regular introduction, publication and final passage and adoption of such ordinance;

e. the compliance with the provisions of this chapter and every other law of such ordinance and all matters in connection therewith, and the issuance of obligations authorized thereby or pursuant thereto by the local unit.

The local unit and all other persons interested shall forever be stopped from denying that such ordinance or its final adoption or issuance of obligations thereunder do not comply with the provisions of this and every other law, or from questioning in any manner the validity of such ordinance or any obligations issued thereunder in any action or proceeding commenced after 20 days shall have elapsed from publication of such ordinance after final passage.

(cf: N.J.S.40A:2-49)

6. N.J.S.40A:2-51 is amended to read as follows:

40A:2-51. Any local unit may incur indebtedness, borrow money, authorize and issue refunding bonds, notwithstanding any provision or limitation contained in this chapter or in any other law, and in any amount determined to be necessary by the governing body of the local unit and approved by the Local Finance Board, except as provided in subsection c. of this section, to effect the refunding for the purpose of:

a. Paying, funding or refunding outstanding bonds of the local unit, including emergency appropriations, temporary emergency appropriations, advance funding of pension obligations as part of an early retirement program offered by the State, and amounts owing to others for taxes levied in the local unit, or any renewals or extensions thereof, or any bonds issued to fund or refund the same and whether or not prior to the maturity or earliest redemption date of the bonds to be refunded.

b. Paying the cost of the issuance of such refunding bonds, including printing, advertising, accounting and financial and legal expenses.

c. Issuance of refunding bonds to realize debt service savings on outstanding obligations without the approval of the local finance board when authorized by conditions set forth in rules and regulations of the local finance board and upon a resolution adopted by 2/3 vote of the full membership of the governing body.

d. The sale and award of bonds by a finance officer who has been delegated that responsibility by resolution of the governing body in accordance with the advertised terms of public sale. The finance officer making any such sale shall report in writing to the governing body at the next meeting thereof as to the principal amount, interest rate and maturities of the bonds sold, along with the price obtained and the name of the purchaser.

e. Bonds issued by a local unit pursuant to this section shall not
be subject to the referendum requirements of subsection d. of

N.J.S.40A:2-17 and N.J.S.40A:2-18.

(cf: P.L.2003, c.15, s.9)

7. N.J.S.40A:2-52 is amended to read as follows:

40A:2-52. Refunding bonds shall be authorized by a refunding bond ordinance which shall be adopted in the manner prescribed for adoption of a bond ordinance, except that no down payment or voter referendum shall be required. Bonds to be paid, funded or refunded with respect to which a refunding bond ordinance has been adopted pursuant to the provisions of this chapter and not otherwise deductible shall be deducted from the gross debt of the local unit. To the extent such refunding bonds are authorized for purposes other than the refunding of outstanding bonds, such refunding bonds shall be deductible from gross debt.

(cf: P.L.2003, c.15, s.10)

8. N.J.S.40A:4-51 is amended to read as follows:

40A:4-51. Any local unit may borrow money and issue its negotiable notes to meet an emergency appropriation. Each such note shall be authorized by resolution of the governing body, shall be designated an "emergency note" , and may be renewed from time to time. All such notes, and any renewals thereof, shall mature not later than the last day of the fiscal year next succeeding the fiscal year in which such notes were issued and the emergency appropriation authorized. The provisions of this chapter relating to tax anticipation notes shall apply to emergency notes except for limitations as to maturity and renewals.

Bonds issued by a local unit pursuant to this section shall not be subject to the referendum requirements of subsection d. of N.J.S.40A:2-17 and N.J.S.40A:2-18.

(cf: P.L.2000, c.126, s.14)

9. Section 5 of P.L.1961, c.22 (C.40A:4-55.5) is amended to read as follows:

5. No such ordinance or resolution shall be valid unless it is approved by the Local [Government] Finance Board and a copy thereof shall be filed forthwith after it is adopted with the Director of the Division of Local Government Services in the Department of [the Treasury] Community Affairs for that purpose. An ordinance or resolution so approved by the director shall not be subject to the referendum requirements of subsection d. of N.J.S.40A:2-17 and N.J.S.40A:2-18.

(cf: P.L.1961, c.22, s.5)

10. Section 1 of P.L.1965, c.87 (C.40A:4-55.8) is amended to read as follows:

1. Upon the receipt of a certification from the board of school estimate of the board of trustees of a county college, a county may by a 2/3 vote of its entire governing body, adopt a resolution authorizing a special emergency appropriation to provide for funds expected to be received as State or Federal aid for the establishment of a county college. Such resolution shall:

(a) State the amount needed to provide for said State or Federal share based upon the certification of the board of school estimate.

(b) Set forth the amount appropriated, which shall not be in excess of the amount requested by the board of trustees.

(c) Provide for the borrowing of any amount required in anticipation of the receipt of State or Federal aid which may subsequently become available, said borrowing to be by "special county college emergency notes." Emergency notes issued pursuant to this section shall not be subject to the referendum requirements of subsection d. of N.J.S.40A:2-17 and N.J.S.40A:2-18.

(cf: P.L.1965, c.87, s.1)

11. Section 4 of P.L.1968, c.194 (C.40A:4-55.16) is amended to read as follows:

4. When any such appropriation is to be financed by borrowing money, the governing body of the local unit shall, by a 2/3 vote of the full membership thereof, adopt a resolution:

a. Setting forth the amount appropriated, and

b. Making provision for the borrowing of money by the issuance of "special emergency notes" which may be renewed from time to time, but at least 1/3 of all such notes, and the renewals thereof, shall mature and be paid in each succeeding year so that all notes and renewals shall have matured and have been paid not later than the last day of the third year following the date of the special emergency resolution.

The issuance of "special emergency notes" pursuant to this section shall not be subject to the referendum requirements of subsection d. of N.J.S.40A:2-17 and N.J.S.40A:2-18.

(cf: P.L.1968, c.194, s.4)

12. Section 2 of P.L.1982, c.66 (C.40A:4-55.19) is amended to read as follows:

2. a. The governing body of a distressed municipality may by resolution approved by not less than two-thirds vote of its full membership provide for the payment of any judgment against it resulting from an order of the court by providing an appropriation therefor, and financing such from surplus funds or by borrowing through issuance of notes or other obligations in the name of the municipality.

b. Any resolution adopted under the provisions of this act shall provide that in the case of any notes issued to finance appropriations, at least one-fifth of all such notes, and any renewals thereof, shall mature and be paid each year, so that all notes and renewals shall have matured and have been paid not later than the last day of the fifth year following the date of the resolution.

The issuance of notes or other obligations issued pursuant to this section shall not be subject to the referendum requirements of subsection d. of N.J.S.40A:2-17 and N.J.S.40A:2-18.

(cf: P.L.1982, c.66, s.2)

13. This act shall take effect immediately.

STATEMENT

This bill would amend current statutory provisions of the "Local Bond Law," N.J.S.40A:2-1 et seq., and the "Local Budget Law," N.J.S.40A:4-1 et seq., to require that prior to the issuance of general obligation bonds by a county or municipality, the bond ordinance authorizing the obligation must be submitted to the voters of the county or municipality, as appropriate, at the general election next following by at least 70 days the final adoption of the ordinance by the local governing body. The bond ordinance must contain a statement of the ways and means, exclusive of loans, by which the local unit shall pay the principal and interest on the bonds, and would take effect upon its approval by a majority of the legally qualified voters voting on the ordinance. The provisions of the bill would not apply to the issuance of "special emergency notes," refunding bonds, bonds issued by a distressed municipality to pay a judgment resulting from a court order, or borrowing by a county in anticipation of State or federal aid for the establishment of a county college. The bill also contains the language for the bond referendum question to be submitted to the voters.

Under current law, local voters do not have the right to vote on the issuance of general obligation bonds, but are required to repay those bonds through their property taxes. The provisions of this bill would allow the voters of a municipality or county to vote to approve, or disapprove, the issuance of bonds, and thereby exercise some control over their local property taxes.