N.J. Admin. Code § 6A:26-10.7

Current through Register Vol. 56, No. 16, August 19, 2024

Section 6A:26-10.7 - Approval procedures for a defeasance of lease-purchase agreements

(a) A district board of education proposing to seek voter or board of school estimate approval for the defeasance of a lease-purchase agreement entered into at any time, including lease-purchase agreements in excess of five years, through the issuance of general-obligation bonds shall adopt a resolution requesting the Division's approval of the transaction.

(b) A district board of education requesting approval for the defeasance of a lease-purchase entered into at any time, including lease-purchase agreements in excess of five years, shall submit to the Commissioner an application for defeasance on a Commissioner-prescribed form and the following documents:

1. A copy of the district board of education resolution requesting the Division's approval of the defeasance of the lease-purchase agreement through the issuance of general obligation bonds and the district board of education's vote;

2. An opinion of counsel stating that the prepayment of the lease-purchase agreement is in conformance with local, State, and Federal statutes;

3. A copy of the documents in final draft form with amendments and modification to the lease-purchase, ground lease, trustee or agent, and assignment agreements, if necessary, that effect the defeasance;

4. A schedule of sources and uses of bond issue proceeds; and

5. A detailed analysis of the percentage of net present value cost savings to the school district using the effective interest cost method as the discount rate based on an analysis of the total new bond issue to include the following for each payment:

i. Date;

ii. Prior debt service;

iii. New debt service;

iv. Savings (prior debt service minus new debt service);

v. Present value factor;

vi. Present value savings (savings times present value factor);

vii. Cumulative present value savings; and

viii. Totals of items in (b)5ii through vii above.

(c) The application shall support a net present value cost savings and shall be reviewed strictly on the merits of the cost savings without consideration of any debt service aid to which the district board of education may be entitled.

(d) After the receipt of the application for defeasance and related documents, the Division shall endorse the application, if the Division determines the defeasance of the lease-purchase agreement is in the school district's best interest. Approval shall be contingent upon board of school estimate approval or voter adoption of the specific ballot question, as applicable.

N.J. Admin. Code § 6A:26-10.7

Amended by R.2007 d.81, effective 3/19/2007.
See: 38 N.J.R. 4533(a), 39 N.J.R. 899(a).
In (d), inserted "school" preceding "district".
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 procedures for a defeasance of lease purchase agreements". Rewrote (a), (b), and (d).