N.J. Admin. Code § 6A:26-10.3

Current through Register Vol. 56, No. 17, September 3, 2024

Section 6A:26-10.3 - Approval of lease-purchase agreements for improvements or additions to school facilities

(a) School districts shall submit to the Division for approval pursuant to this section all lease-purchase agreements to fund the local share or a portion of the total costs of a school facilities project for improvements or additions to a school facility that has no excess costs. No lease-purchase agreement that will fund excess costs of a school facilities project for improvements or additions to a school facility or the local funding of an other capital project shall be submitted to the Division for approval. If the Division does not approve a lease-purchase agreement, the school district shall frame a separate question to authorize the lease-purchase agreement and obtain voter or board of school estimate approval to enter into the agreement. No lease-purchase agreement for a capital project shall be executed by a school district unless it has received written approval of the Division, voters, or board of school estimate, as appropriate.

(b) School districts shall file with the Division a copy of all lease-purchase agreements approved by voters or the board of school estimate.

(c) A school district shall not enter into a lease-purchase agreement until the Division has notified the school district of the final eligible costs of a school facilities project or the consistency of an other capital project with the school district's approved LRFP and other applicable standards, as set forth in 6A:26-3.1 1.

(d) The Division shall approve a lease purchase-agreement for local share or total costs of a school facilities project receiving State debt service aid payments that does not include excess costs only upon a demonstration by the school district that the payments for a lease-purchase agreement and any operating expenses related to the agreement can be included within the school district's net budget spending growth limitations and will not result in the need for approval by voters or the board of school estimate, as appropriate, of additional spending proposals to maintain existing instructional programs or extracurricular activities.

(e) All requests for approval of lease-purchase agreements for capital projects that are required to be filed with, and approved by, the Division shall include the following:

1. A copy of the Department's approval letter for the school facilities project and calculation of final eligible costs;

2. The lease agreement in accordance with 6A:26-10.4;

3. If applicable, an intercept agreement among the school district, the lessor and the State, executed by the school district and the lessor, providing that the State shall have the right to withhold the portion of State support owed to the school district necessary to make timely payments under the lease-purchase agreement and the agent agreement if the school district should fail to make timely payment of amounts owed under the lease-purchase and agent agreements, and apply the withheld State support to pay the school district's obligation, subject to available State appropriation;

4. The ground lease in accordance with 6A:26-10.5, except for the lease-purchase of equipment only;

5. Evidence of clear title to the proposed building site(s) and any land stated in the ground lease except for the lease-purchase of equipment only;

6. A resolution of the district board of education approving the application and authorizing submission to the Division of an application on a form prescribed by the Commissioner;

7. A copy of the newspaper advertisement for the public hearing;

8. A copy of the newspaper advertisement for request for proposals;

9. A copy of detailed board minutes for the public hearing resolution and vote on the approval of the lease-purchase concept, approval of the projected maximum funding level, assurance that annual lease payments can be included within the school district's base budget spending growth limitation, and authorization for the chief school administrator or board secretary to advertise for proposals for the selection of underwriter/lessor; and

10. Any additional information that a school district deems relevant for the Division's review of the lease purchase agreement.

(f) Upon receipt of an application for approval of a lease-purchase agreement for a capital project, the Division shall review the application and inform the school district in writing whether the application is complete. If the application is determined incomplete, the Division shall request additional information from the school district.

(g) After reviewing and assessing a complete application, the Division shall notify the school district in writing whether the lease purchase is approved and, if the lease purchase is not approved, the reason(s) for not approving it.

(h) For lease-purchase agreements that must be submitted to the Division, a district board of education shall conduct a minimum of one public hearing prior to adoption of a resolution endorsing the lease-purchase concept and approving the submission of an application to the Division. All provisions of the Open Public Meetings Act (10:4-6 through 21) shall be followed for the public hearing. In addition, notice of the public hearing shall be published not less than seven days prior to the date fixed for each public hearing in at least one newspaper published in the school district or circulating in the school district if no newspaper is published therein. The notice shall fix a date, place, and time for holding the public hearing and shall include a description of the proposed capital project, the estimated cost and the proposed method of project financing.

1. The public hearing shall provide taxpayers and other interested persons an opportunity to present to the district board of education questions or other commentary with respect to the proposed capital project, the estimated cost thereof and the proposed financing method.

2. After the public hearing, a district board of education shall adopt by affirmative vote of at least two-thirds of the full board membership a resolution that includes the following provisions:

i. Approval of the lease purchase concept;

ii. Approval of the projected maximum funding level;

iii. An assurance that annual lease payments and any operating expenses related to the agreement can be included within the school district's net budget spending growth limitations and will not result in the need for approval by the voters or board of school estimate, as appropriate, of additional spending proposals to maintain existing instructional programs or extracurricular activities; and

iv. Authorization for the chief school administrator and board secretary to advertise and solicit proposals for the selection of a lessor and underwriter in connection with a lease-purchase agreement and to request Departmental approval of a lease-purchase agreement not including excess costs.

(i) A district board of education having entered into a lease-purchase agreement for a capital project shall not terminate, materially change, or alter the approved lease-purchase agreement and accompanying legal documents without first obtaining the Division's written approval.

(j) Upon completion of the transaction, the school district shall file with the Division an opinion from the school district's legal counsel stating the following:

1. The transaction is in conformance with local, State and Federal law; and

2. The parties hereto are properly organized; are in good standing; have the requisite power; and have been properly authorized to enter into the transaction.

(k) Upon completion of a lease-purchase agreement, a district board of education shall file with the Division the Official Statement (Prospectus) of the transaction.

N.J. Admin. Code § 6A:26-10.3

Amended by R.2004 d.214, effective 6/7/2004.
See: 36 N.J.R. 243(a), 36 N.J.R. 2733(b).
In (e), rewrote 4 and 5.
Amended by R.2007 d.81, effective 3/19/2007.
See: 38 N.J.R. 4533(a), 39 N.J.R. 899(a).
Inserted "school" preceding "district" throughout; in (a) and (b), substituted "School districts" for "Districts"; and in (c), (d), (h)2iii and the introductory paragraph of (j), inserted "school" preceding "district's".
Amended by R.2013 d.145, effective 12/16/2013.
See: 45 N.J.R. 1026(a), 45 N.J.R. 2557(a).
Section was "Approval of lease purchase agreements for improvements or additions to school facilities". Rewrote the section.