Governor Signs New Legislation Authorizing Bond Financing for All New Automotive Vehicles and Other Changes to Local Bond Law
On January 16, 2024, Governor Murphy signed into law Assembly Bill A-5567 that, among other things, amends the New Jersey Local Bond Law (N.J.S.A. 40A:2-1 et seq.) ("Local Bond Law") to authorize municipalities and counties (each a "local unit") in the State of New Jersey ("State") to issue bonds or bond anticipation notes to finance the costs of acquisition of ALL new automotive vehicles, all as summarized below.
The various legislative amendments to the Local Bond Law (as described in more detail below) are a welcome, and long-overdue, change and provide greater flexibility in capital planning for local units throughout the State.
The amendments to the Local Bond Law now specifically permit local units to finance any "automotive vehicles, including original apparatus and equipment, when purchased new", and assign a useful life designation of 5 years for such vehicles, except where such vehicles have a "gross vehicle weight rating" ("GVWR") of over 15,000 pounds, in which case such vehicles are assigned a useful life designation of 10 years. In other words, these changes formally remove the restrictions that previously disallowed the financing of new "passenger cars and station wagons" with the proceeds of bonds or notes (which effectively limited financing options to fire engines, four-wheel drive vehicles and certain alternative fuel vehicles only).
In addition to the expansion of permitted qualifying automotive vehicles, the Local Bond Law amendments also: (i) extend the useful life designation for new fire engines, apparatus and equipment from 10 to 20 years; (ii) remove the restriction of passenger cars and station wagons from those "public safety vehicles" that are permitted to be reconditioned, overhauled or subject to "major repairs", the costs of which are paid for or financed with bond or note proceeds; and (iii) include public works vehicles with a GVWR in excess of 15,000 pounds and heavy construction equipment with a weight in excess of 10,000 pounds as part of those vehicles that are permitted to be reconditioned, overhauled or subject to "major repairs", the costs of which are paid for or financed with bond or note proceeds.