Vol. 10 No. 4 Spring 2003
A Newsletter About New Jersey's Water Quality Programs

"Smart growth" is used to well-planned and managed development that preserves open space and farmland while adding new homes and creating new jobs. It is an approach to planning that targets resources and funding in ways that enhance the quality of life of all New Jersey's residents. Smart growth minimizes land consumption and promotes mixed-use development that is compact and integrated with existing infrastructure. By applying smart growth principles to planning and permitting efforts, particularly by focusing on redevelopment, growth can be managed in a way that will accomplish environmental goals for current and future generations.

On October 24, 2002, Governor McGreevey signed Executive Order 38, which specifies a number of actions to be implemented by several Departments to advance smart growth. The Order states that:

"75/25" Financing for Smart Growth Projects

Among the actions called for in the Executive Order is one specifying that "the Environmental Infrastructure Trust, under the direction of the Commissioner, shall establish and implement a program to reduce infrastructure finance costs in designated smart growth areas in coordination with the Office of Smart Growth." To accomplish this, the DEP and the Trust plan to proceed with a 'Smart Growth Financing Package' under this year's Environmental Infrastructure Financing Program. The 'Smart Growth Financing Package' will involve a change from the traditional "50/50" financing package and provide a "75/25" split of the DEP/Trust shares for certain project areas that promote smart growth.

Projects that will qualify for this special lower-interest rate program will include:

The Financing Program provides funding from two sources: the DEP and the New Jersey Environmental Infrastructure Trust. The DEP provides loans at 0% interest for approximately 20 years for one half of the allowable project costs. The Trust offers loans at about the market rate or less for the remaining allowable project costs, also for a 20 year term. Between these two funding sources, the rate on loans under the traditional "50/50" program is half of the market rate obtainable by a local government unit. In 2002, the Program's interest rate was 2.1%. If the proposed "75/25" Smart Growth Financing had been in place, projects that qualified would have received an interest rate of 1.1% in 2002.

Reserve Capacity Funding

The DEP currently limits loan amounts to project costs that address existing needs and needs projected through the anticipated commencement of operations; reserve capacity costs are typically funded by the Trust at market rate, with local resources paying for the debt service reserve. A rule proposal has been developed to allow the DEP to fully fund its share of project costs related to reserve capacity for projects that serve urban areas and smart growth areas as designated by the DEP on The Big Map (Blueprint for Intelligent Growth). If the rule amendments are adopted, the DEP intends to provide an increased subsidy by fully funding, with a zero-percent loan, its share of the reserve capacity associated with growth for projects that serve an approved Urban Center, an approved Urban Complex, and other smart growth areas as depicted on The Big Map. It is anticipated that the proposed amendments to N.J.A.C. 7:22 will be published in the New Jersey Register in Spring 2003.

Collectively, these preliminary initiatives will enhance the DEP and the Trust's ability to promote smart growth and will also allow the Environmental Infrastructure Financing Program to provide funds to make it a reality. Further changes can be expected as the DEP adopts additional regulatory changes to its permitting and approval processes to implement smart growth initiatives.

Priority System Amendments

To initiate the process of incorporating these changes, the DEP has developed a Proposed Addendum to the FFY2003 Priority System document and a Proposed Federal Fiscal Year 2004 Priority System document. The hearing on these documents is anticipated to be held at the DEP offices in the 6th Floor Conference Room on April 16, 2003, commencing at 10:00 a.m. and concluding at the end of testimony. The DEP offices are located at 401 East State Street in Trenton. Presentations may be made orally or in writing; if written testimony is prepared, oral presentations should be limited to a summary of the text. The period for submitting written comments on the proposal is expected to close April 22, 2003 (all comments must be postmarked by that date). All comments submitted in accordance with the deadline given above will be considered in the preparation of the final FFY2003 and FFY2004 Priority System documents.

For applicants that want to pursue funding, the schedule for the FFY2004 Financing Program is as follows:

For project-specific questions or to request a preplanning meeting, please contact the following:

NORTH (Projects in all counties north of, and including Middlesex, Somerset and Hunterdon), call: Stanley V. Cach, Jr., P.E., Chief, Bureau of Engineering North (609) 292-6894

SOUTH (Projects in all counties south of, and including Monmouth and Mercer), call: Gautam Patel, Chief, Bureau of Engineering South (609) 984-6840

OPEN SPACE LAND ACQUISITION (Statewide), call: Tracy Shevlin, Supervisor, Open Space/Land Acquisition Unit (609) 292-8961

For questions regarding rules or the Priority System, please contact Theresa Fenton, Chief, Bureau of Program Development and Technical Services, MF&CE, at (609) 292-3859.