ASSEMBLY STATE AND LOCAL GOVERNMENT COMMITTEE

STATEMENT TO

ASSEMBLY, No. 4533

STATE OF NEW JERSEY

DATED:  JUNE 24, 2024

      The Assembly State and Local Government Committee reports favorably Assembly Bill No. 4533.

      This bill modifies certain sections of law concerning financing mechanisms for school facilities projects that are constructed by districts other than SDA districts.  These districts are often referred to as “regular operating districts.”

      Pursuant to current State law, a regular operating district may enter into an agreement with a county improvement authority to construct a school facilities project and to issue bonds to finance the project.  In this case, the county improvement authority is required to lease the school facilities project to the county, which then leases it for nominal consideration to the school district for as long as the county improvement authority bonds are outstanding.  The law stipulates that a county is not authorized to require a district to bear any portion of the cost of the bonds issued by a county improvement authority to fund the school facilities project.  County lease payments made to the county improvement authority are not subject to any cap on appropriations or on spending or to any tax levy cap.  This bill would modify this section of law to:

· permit, rather than require, a county improvement authority to lease the school facilities project to the county;

· remove the requirement that the lease of a school facilities project from a county to a district be for nominal consideration;

· remove language that prohibits a county from requiring a district to bear any portion of the debt service costs for bonds issued by a county improvement authority to fund a school facilities project;

· require that district lease payments pursuant to the bill be sufficient to pay all debt service on county improvement authority bonds that remain after the application of State debt service aid; and

· provide that school district lease payments to a county for a school facilities project are not subject to any cap on appropriations or on spending or to any tax levy cap. 

      Current State law also permits a regular operating district to raise bonds for a school facilities project without the approval of the voters of the district if: 1) the school district enters into a contract with one or more municipalities under which the municipality remits a portion of the payments in lieu of taxes received from one or more designated properties; and 2) the amounts remitted from the municipality to the school district are used for the full repayment of the bonds raised for the school facilities project.  This bill modifies the law to provide that municipal remittances to school districts are to be sufficient to cover only the portion of bond proceeds that are not supported by debt service aid provided by the State.  The bill further clarifies that bonds, which are supported by municipal remittances of payments in lieu of taxes to a school district for a school facilities project, are eligible for State debt service aid.