WHEREAS, pursuant to the Tax Reform Act of 1986 (the “1986 Act”), there was an annual limitation placed on the amount of tax-exempt “private activity bonds” as defined under the Internal Revenue Code of 1986 (the “Code”) issued after August 15, 1986; and
WHEREAS, the Legislature adopted P.L. 1987, c.393 (the “Volume Cap Law”) to provide for the allocation of such annual limitation which act provided for the Governor to allocate the State volume cap limitation among the issuers in the State; and
WHEREAS, pursuant to Executive Order No. 147 issued October 20, 1986, Governor Kean provided for the procedure for the annual allocation; and
WHEREAS, pursuant to Executive Order No. 185 issued February 4, 1988, Governor Kean allocated the entire State volume cap for 1988 and for each year thereafter to the Department of the Treasury to be held by the State Treasurer and authorized the State Treasurer to allocate all or any portion of the State volume cap among State entities or local government units authorized to issue tax-exempt private activity bonds; and
WHEREAS, the federal American Recovery and Reinvestment Act of 2009, Pub. L. No. 111-5 (“ARRA”) amended the Code to provide for the issuance of certain tax-exempt, tax-credit and tax subsidy types of bonds, intended to finance programs to facilitate the economic recovery of the nation and which provisions contain limitations on the amount of such bonds which can be issued throughout the State; and
WHEREAS, as a result of ARRA, it is now necessary to provide for a process of allocating the State share of the volume cap provided to the State under the Code as amended by these provisions of ARRA; and
WHEREAS, to address such issue, the Legislature adopted P.L. 2009, c. 76 which amends the Original Cap Law (the “Cap Law Amendments”) to provide for the allocation of the State’s annual bond volume limits on certain bonds in accordance with ARRA and amending the title and body of P.L. 1987, c. 393; and
WHEREAS, the Cap Law Amendments provide that the Governor is authorized to establish a procedure for the allocation of State volume cap for tax credit bonds and tax subsidy bonds received under ARRA; and
WHEREAS, the procedures established by Executive Orders No. 145 and 187 have served the State well in assuring an efficient allocation of the private activity volume cap; and
WHEREAS, under ARRA, some of the allocations of the annual bond volume limits on certain bonds will be made directly to local issuers, including municipalities and counties, to assist these local issuers to deal with this economic downturn and stimulate economic development; and
WHEREAS, ARRA contains time limitations within which the local government units may use their allocations of the volume cap or waive their allocations and assign their allocations to the State; and
WHEREAS, to ensure the maximum use of the volume caps allocated under ARRA it is desirable to monitor the uses by local government units of their allocations under ARRA;
NOW, THEREFORE, I, JON S. CORZINE, Governor of the State of New Jersey, by virtue of the authority vested in me by the Constitution and by the Statutes of this State, do hereby ORDER and DIRECT:
For the purpose of this Executive Order, the following terms shall have the meanings set forth below:
- “ARRA Tax-Credit Bond” is a bond the interest on which is included in gross income for federal income tax purposes, but in respect of which the holder receives a tax credit which tax credit is predicated on the Bond qualifying for such amounts under applicable provisions of ARRA as may be amended from time to time or any similar type of legislation. Examples of such an ARRA Tax-Credit Bond are the Qualified Energy Conservation Bond established under section 54D of the Code, the Qualified Zone Academy Bond established under section 54E of the Code, and the Qualified School Construction Bond established under section 54F of the Code.
- “ARRA Tax Subsidy Bond” is a Bond the interest on which is included in gross income for federal income tax purposes, but in respect of which the Issuer receives interest subsidy payments, which interest subsidy payments are predicated on the Bond qualifying for such amounts under applicable provisions of the ARRA. An example of such an ARRA Tax Subsidy Bond is the Recovery Zone Economic Development Bond established under section 1400U-2 of the Code.
- “ARRA Tax-Exempt Private Activity Bond” means a Bond or portion thereof, other than a governmental bond, the interest on which is not includible in federal gross income pursuant to Section 103 of the Code and the issuance of which is subject to an allocation of volume limitation as prescribed under the Code. An example of such an ARRA Tax-Exempt Private Activity Bond is the Recovery Zone Facility Bond established under section 1400U-3 of the Code.
- "ARRA Volume Cap" means the annual dollar limitation on the issuance of ARRA Tax-Credit Bonds or ARRA Tax Subsidy Bonds under the Code.
- "Bond" means a revenue obligation, security, bond, note, debenture, certificate or other evidence of indebtedness of an issuer.
- "Carryforward" means that portion of the ARRA Volume Cap for any calendar year which is unused during that calendar year and which is available to be carried forward to be used in later years pursuant to the Code.
- “Code” means the Internal Revenue Code of 1986, 26 U.S.C. § 146 et seq., as amended or any successor statute thereto and any regulations promulgated thereunder.
- “District” means any area of the State which has been delineated for the purpose of providing a governmental service or services.
- "Issuer" means the State or any political subdivision of the State or any entity issuing Bonds on behalf of the State or any political subdivision of the State.
- “Local Government Unit” means any county; or municipality; or any board, commission, committee, authority or agency, which is not a State board, commission, committee, authority or agency, and which has administrative jurisdiction over any District for the purpose of providing a governmental service or governmental services.
- “Local Government Unit ARRA Volume Cap” means the portion of ARRA Volume Cap that has been given by the federal government directly to Local Government Units.
- Allocation of the ARRA Volume Cap to the Department of the Treasury.
The State receives an allocation of the ARRA Volume Cap directly from the federal government.
- To the extent permitted by law, this ARRA Volume Cap is allocated to the Department of the Treasury to be held by the State Treasurer.
- The State Treasurer may allocate all or any part of the ARRA Volume Cap among State Entities as that term is defined in Executive Order No. 147, or Local Government Units authorized to issue ARRA Tax-Credit Bonds or ARRA Tax Subsidy Bonds.
- The State Treasurer shall set forth the terms and conditions for receiving an allocation of the ARRA Volume Cap. Further, the State Treasurer may set forth the terms and conditions under which the State Entities and Local Government Units may reallocate their allocation received pursuant to the Treasurer’s order. The State Treasurer may also set forth the terms and conditions under which State Entities may carry forward their allocations, if permitted by law.
- Re-Allocation of Local Government Unit ARRA Volume Cap
- A Local Government Unit may be required to issue Bonds subject to an allocation of Local Government Unit ARRA Volume Cap within a certain period of time; the Code allows a Local Government Unit that is unable to issue Bonds subject to an allocation of the Local Government Unit ARRA Volume Cap within the requisite time period to reallocate any unused Local Government Unit ARRA Volume Cap to the State, at the option of such Local Government Unit.
- In the event that a Local Government Unit elects to re-allocate its Local Government Unit ARRA Volume Cap to the State, such Local Government Unit ARRA Volume Cap is allocated to the Department of the Treasury to be held by the State Treasurer.
- The State Treasurer may allocate all or any part of the Local Government Unit ARRA Volume Cap re-allocated to the State by a Local Government Unit pursuant to the preceding paragraph to any State Entity or any other Local Government Unit which is authorized to issue the type of Bonds which are subject to such Local Government Unit ARRA Volume Cap.
- Financial Monitoring
- The monitoring provisions of Part I of Executive Order No. 147 are hereby extended to include the ARRA Tax-Credit Bonds, the ARRA-Tax Subsidy Bonds and the ARRA Tax-Exempt Private Activity Bonds authorized under ARRA and the Bonds subject to the Local Government Unit ARRA Volume Cap which is re-allocated to the State by a Local Government Unit.
- In order to provide for the efficient use of the Local Government Unit ARRA Volume Cap, the State Treasurer is hereby authorized to develop, in consultation with the Division of Local Government Services, guidelines for monitoring the use and reporting of the Local Government Unit ARRA Volume Cap by the Local Government Units. Such guidelines shall be in addition to the provisions concerning Local Government Finance Review set forth in subpart 5 of Part I of Executive Order No. 147.
- Delegation to State Treasurer of Certifications
I hereby designate the State Treasurer as my delegate for the purpose of certifying compliance by Issuers with any volume cap requirement.
- Prior Executive Orders
The provisions of Executive Orders No. 147 and No. 185 shall remain in full force and effect and shall not be deemed to be limited by the provisions of this Executive Order.
- This Order shall take effect immediately.
GIVEN, under my hand and seal this 18th day
of January, Two Thousand and Ten, and
Independence of the United States,
Two Hundred and Thirty-Fourth.
/s/ Jon S. Corzine
/s/ William J. Castner, Jr.
Chief Counsel to the Governor