N.J. Admin. Code § 7:26-14A.8

Current through Register Vol. 56, No. 19, October 7, 2024

Section 7:26-14A.8 - Loan terms and administration of disbursements

(a) The following requirements apply to the amount of, interest rate on and maturity period of the loan:

1. Loan amounts shall be established and appropriated by the Legislature of the State of New Jersey.

2. Loan proceeds may be used to pay any project costs authorized in the loan agreement, which agreement shall be consistent with the provisions of the 1985 Act and this subchapter.

i. Loan proceeds may be used for project costs associated with the construction and/or the operation of resource recovery facilities and/or environmentally sound sanitary landfill facilities and/or other approved solid waste facilities to service the needs of local government units.

ii. Loan proceeds may be used directly by the local government unit to undertake project costs associated with the development of a resource recovery and/or environmentally sound sanitary landfill facility and/or other approved solid waste facility.

iii. Loan proceeds may be used by the local government unit to defray project costs associated with an agreement it has entered into with a vendor.

iv. Loan proceeds may be used to pay any operation and maintenance costs after project completion as well as the costs of any debt service associated with the development, construction or operation of the project.

3. The interest rate on the loans shall be dependent upon legislation and/or the financial condition of the Fund. The loan interest rate shall be established annually by the State Treasurer.

4. The loan maturity period shall be for a period of not more than 23 years from the date the funds are delivered to the escrow agent by the Department. Repayment shall begin no later than the fourth year of the loan maturity period or one year following the initiation of full scale operation of the facility, whichever comes first. Equal semi-annual loan repayments shall be made starting on or before the first of February and August for every year that repayments are due. The Department may, at its discretion, negotiate an individual repayment schedule. Principal and accrued interest, if applicable, may be prepaid without penalty prior to the end of the loan maturity period. Partial repayment shall be applied on a pro rata basis to reduce all subsequent payments.

5. There shall be due and owing by the local government unit to the Fund a late fee of five percent of any payment when such payment is 15 calendar days or more past due, 10 percent of any payment when such payment is 30 calendar days or more past due. Failure of the local government unit to make any repayment within 45 calendar days of the scheduled repayment date shall constitute default of the loan agreement and all outstanding principal, interest and penalty amounts shall become immediately due and owing to the State.

(b) The following terms of the loan shall be incorporated into the loan agreement to be executed by the Department and the borrower:

1. Execution of the loan agreement constitutes an irrevocable agreement to repay the loan on the part of the borrower;

2. Counties and municipalities shall place general obligation bonds with the State in order to receive the loan proceeds. Other local government units lacking general taxing powers shall secure their loans with service/deficiency agreements with a local government unit having the ability to levy taxes, a surety bond, or other security acceptable to the Department;

3. A list of the required contents of the county or municipal bond resolution, which list shall be subject to Department approval;

4. Loans may be released by the Department on a single or multiple sum basis at the discretion of the Department. Release of the loan funds may be based upon adherence to the project schedule which shall be included in the loan agreement;

5. Release of the loan funds may only be made to an escrow agent selected by the borrower and approved by the Department. In the case of comparatively small loans or where the local government unit, after using its best efforts, cannot retain an escrow agent which will act in accordance with this subchapter, the Department shall act as the escrow agent. The borrower shall enter into an agreement with the escrow agent specifying the escrow agent's duties and responsibilities, which agreement shall be consistent with the terms and conditions of the loan agreement and the requirements of this subchapter. Any escrow agent shall only disburse loan funds in accordance with the executed loan agreement, the escrow agreement and this subchapter;

6. Where there is an escrow agent other than the State, the escrow agent shall submit a monthly financial activity report to the Department which includes a disbursement report for the previous month, an expenditure report which identifies the specific uses of loan funds and, where applicable, a certified statement by the licensed project engineer for the local unit or the vendor in accordance with N.J.A.C. 7:26-14A.24, confirming the percentage of project construction which is completed, and an estimate of expenditures for the upcoming fiscal year.

7. Interest earned on the funds in the borrower's loan escrow account shall accrue to the benefit of the project and may only be used for project costs as defined in 7:26-14A.4; and

8. The borrower shall be responsible for paying for the services of the escrow agent.

(c) The borrower shall promptly notify the Department loan project officer in writing (certified mail, return receipt requested) of events or proposed changes which may require a loan modification. Changes in the use of loan funds which shall require such notification shall include but are not limited to:

1. Rebudgeting;

2. Changes in approved technical plans or specifications for the project;

3. Changes which may affect the approved scope or objective of a project;

4. Significant changed conditions at the project site;

5. Deceleration in time for the performance of the project, construction schedule, or any major phase thereof; and

6. Changes which may increase or substantially decrease the total cost of the project. There shall be no loan modification increasing the funding amount;

7. Unforeseen expenses; and

8. Less than anticipated revenues;

(d) If, on the basis of information submitted pursuant to (c) above, the Department determines that a formal loan amendment is necessary, it shall notify the borrower and a written amendment to the loan agreement will be prepared in accordance with this subchapter.

(e) Administrative changes by the Department, such as a change in the designation of key Department personnel or of the office to which a report is to be transmitted by the borrower, constitute changes to the loan agreement (but not necessarily to the project work) and do not affect the substantive rights of the Department or the borrower. The Department may issue such change unilaterally. Such changes shall be in writing and shall be effected by a letter (certified mail, return receipt requested) to the borrower.

N.J. Admin. Code § 7:26-14A.8

Recodified from 7:26-14A.11 and amended by R.1996 d.578, effective 12/16/1996.
See: 28 New Jersey Register 2114(a), 28 New Jersey Register 5248(a).
Inserted (a)1; (a)2i and (a)2ii amended to include operation of specified facilities, added (a)2iv; in (a)3, deleted reference to proposed loans; in (a)4, amended loan maturity date and repayment start date, and added partial payment provision; in (b)6, amended reporting period and added expenditure report requirement; and added (c)7 and (c)8. Former section was recodified to N.J.A.C. 7:26-14A.7.