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November 9, 2012

Re: I.        State can provide temporary Inspectors
II.       Waiving of Construction Inspection Fees
III.      Division of Local Government Services provides information on Protecting Access to Financial Markets for Cash Flow Stability and Rebuilding

Dear Mayor:

I.   State can provide temporary Inspectors

The Department of Community Affairs, Division of Codes and Standards is in the process of hiring temporary building, electrical and plumbing inspectors to assist municipalities with providing inspections to municipalities as it relates to the damage caused by Hurricane Sandy.  If your municipality is in need of this assistance please contact Louis Mraw at 609-984-7672.

II.   Waiving of Construction Inspection Fees

As a reminder, if a municipality chooses to waive permit fees for work made necessary by the damage of Hurricane Sandy the State permit surcharge fee is also waived.  Please provide the Division of Codes and Standards with a copy of the resolution waiving the permit fees.  If you have any questions or need additional information please contact the Office of Regulatory Affairs at 609-984-7672.

III.   Division of Local Government Services provides information on Protecting Access to Financial Markets for Cash Flow Stability and Rebuilding

The Division of Local Government Services has issued Local Finance Notice 2012-27 to provide guidance on protecting municipalities’ access to financial markets to maintain operations and rebuild in the face of challenges posed by Hurricane Sandy.  New Jersey and its municipalities have long been recognized as having a strong relationship with the financial community.  We have financial systems and safeguards that have ensured no municipality has declared bankruptcy or defaulted on a debt payment in 80 years.  The result has been that when local governments need to borrow money for cash flow purposes or capital improvements, the financial community has been comfortable making loans at rates that are some of the most advantageous.

Certain municipalities will be financially stressed in the period ahead due to a loss of ratables.  Concerns by some investors as to how we meet the challenges posed by Hurricane Sandy may restrict access to financing.  It is important that we all take actions to show the investment community we will do what we must - as we always have - to preserve their confidence.

By working together, we can ensure that: (1) municipalities needing to issue Tax Anticipation Notes (TANs) to maintain operations maintain the ability to do so; (2) municipalities that have outstanding Bond Anticipation Notes (BANs) can either renew them when they come due or convert them to long term debt; and (3) municipalities needing to borrow to rebuild storm-damaged infrastructure have access to loans at low interest rates that make rebuilding more affordable for our taxpayers.

While all of our efforts are first and foremost to protect life and property and assist those in need in the aftermath of Hurricane Sandy, below you will find some basic information about what you can do to protect our access to financial markets.

  1. ENSURE TIMELY DEBT PAYMENTS - While priorities shift during this period of challenge, keep your eye on your financial obligation to make timely debt payments.  Investors and others take confidence in the fact that there has not been a bankruptcy or default on a debt obligation in New Jersey in over 80 years.  A single failure to make timely payment by any local government will impact not only the entity that failed to make a payment, but possibly other local governments should the failure cause the financial markets to question the system’s past strengths.
  1. BE RESPECTFUL OF, AND RESPONSIVE TO, RATING AGENCIES AND INVESTORS’ CONCERNS - During this time of stress, you may receive inquiries from rating agencies or investors about the impact of Hurricane Sandy on the ability of your local government to make timely debt payments.  We recommend that you be respectful of their concerns, let them know you appreciate their concerns as much as they do, and answer their questions in as timely a manner as you can.
  1. NOTIFY THE DIVISION OF LOCAL GOVERNMENT SERVICES AND YOUR COUNTY OF CONCERNS OR PROBLEMS IMMEDIATELY - If your municipality is concerned about its ability to make a debt service payment or its ability to gain necessary financing at reasonable rates, immediately contact the Division and your county.  The Division’s financial professionals will give you guidance on how to manage your cash flow concerns and will do their best to assist you in efforts to gain access to capital from lenders.  Counties may be able to assist you by deferring certain payments or, depending on your county, pooled financing programs or assistance may be available.  It is important that you notify the Division of concerns sooner rather than later.  The sooner they know about your concerns, the sooner they can work with you to help find a solution.
  1. YOU MAY WANT TO CONSIDER ENTRY IN THE MUNICIPAL QUALIFIED BOND PROGRAM IF YOU HAVE BANS OR NEED ACCESS TO LONG TERM FINANCING - Municipalities are encouraged to enroll in the program if they have experienced a significant loss of ratables and have BANs maturing in the coming year.  This may help ensure a continued ability to issue BANs or convert BANs to permanent financing.

Very truly yours,

William G. Dressel, Jr.
Executive Director

 

 

 

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