N.J.S.A. 40:62-132 — Commission cannot incur debts for municipality; appropriations for expenses

40:62-132. Commission cannot incur debts for municipality; appropriations for expenses The commission shall have no power to incur any liability on behalf of the municipalities and none of its debts, expenses or liabilities shall bind the municipalities except with their consent expressed by resolution of their respective governing bodies. The municipalities may from time to time make appropriations for the commission upon such terms and conditions as may be determined. 40:62-133. Acquisition of additional property, water rights and waterworks; bonds; proceeds The commission created pursuant to section 40:62-129 of this title to maintain, operate and extend the waterworks, may in addition to its other powers, acquire by condemnation, purchase, lease or agreement any property, or any interest therein, or any right to divert water therefrom, or any additional source of water supply, necessary or convenient for the operation, maintenance or enlargement of the waterworks purchased pursuant to sections 40:62-108 to 40:62-132 of this title, or to prevent or settle litigation growing out of diversion of water by such commission, and utilize the same in connection with such waterworks. The commission may acquire by agreement with any municipality represented by it, or any other municipality, the ownership of or the right to use any water supply, or part thereof or interest therein, or any distribution system of water mains and connections, or any part thereof, which any such municipality may own or control, and utilize the same in connection with the waterworks condemned under said sections 40:62-108 to 40:62-132. The agreement may contain such provisions as to payment for the property acquired as may be agreed upon between the commission and the municipality for which the property is acquired. If any such agreement contains or shall contain provisions as to payment by the commission to the municipality of sums of money not exceeding the principal of and interest accrued on amounts theretofore raised by taxation in the municipality and applied to the payment either of the cost of acquiring or constructing the property acquired or of the principal of or interest on bonds, notes, or other debt incurred to finance such cost, such municipality may incur indebtedness, borrow money, and issue its negotiable bonds in amount sufficient to realize an amount equal to any unpaid portion of such sums of money. Said bonds shall be deemed to be issued and shall recite that they are issued for the purpose of financing the acquisition or construction by the municipality of the property acquired, and shall be authorized and issued in the method or mode of procedure prescribed by article 1 of chapter 1 of this title (s.40:1-1 et seq.). Said bonds shall not be sold except with the consent of the commission and with its approval of the maturities of and rate of interest payable on said bonds. Such consent and approval may be given by resolution and shall be and constitute a formal assumption by the commission of said bonds, and the interest thereon. The amount realized from the sale of said bonds, up to an amount not exceeding the unpaid portion of such sums of money, shall be retained by the municipality in satisfaction and payment of a like amount of such unpaid portion, and shall be applied only to such purpose or purposes as may be financed under any other law by the issuance of bonds, other than funding or refunding bonds, or shall be paid into the sinking fund. The balance thereof, if any, after deducting therefrom the cost of issuance of such bonds shall be paid over to the commission. For all the purposes of sections 40:62-126 and 40:62-127 of this title, said bonds so issued shall be deemed to be and shall constitute debt incurred by a municipality represented by said commission, or its successors, and formally assumed by said commission, or its successors, as part of an agreement with such municipality relative to the acquisition by the said commission or its successors, of the ownership of, or the management and control of, or the right to use any water supply, or part thereof, or interest therein, or any distribution system of water mains and connections, or any part thereof, which such municipality may own or control. L.1931, c. 304, s.1; amended by L.1935, c. 153, s.1. 40:62-133.1. Findings, declarations The Legislature finds and declares that there is a need to authorize and empower commissions appointed pursuant to R.S.40:62-109 to issue bonds and other obligations to finance water projects as an alternative to the existing method of financing these projects, whereby municipalities that created these commissions issue their own general obligation bonds and provide the proceeds thereof to the commissions. L.1991,c.162,s.1. 40:62-133.2. Commission empowered to issue bonds For the purpose of raising funds to pay the cost of any part of its waterworks, including the cost of enlarging, extending or improving the same, or for the purpose of funding or refunding any bonds including bonds or other obligations issued by any municipality represented by the commission in connection with the acquisition of waterworks, and any extensions thereto and enlargements thereof, a commission shall have power to authorize or provide for the issuance of bonds pursuant to this amendatory and supplementary act. In order to approve an action concerning bonds, the commission shall, by five members voting in the affirmative, adopt a resolution, sometimes referred to in this amendatory and supplementary act as a "bond resolution;" provided, however, that all of the municipalities which constitute the commission shall be represented among the members voting in the affirmative. The bond resolution shall: a. Describe in brief and general terms sufficient for reasonable identification the waterworks or part thereof, sometimes referred to in this amendatory and supplementary act as a "project," to be constructed, acquired, enlarged, extended, or improved or describe the bonds which are to be funded or refunded, if any; b. State the cost or estimated cost of the project, if any; and c. Provide for the issuance of the bonds in accordance with section 4 of this amendatory and supplementary act. L.1991,c.162,s.3. 40:62-133.3. Issuance of bonds by the commission Upon adoption of a bond resolution, the commission shall have power to incur indebtedness, borrow money and issue its bonds and bond anticipation notes, collectively referred to in this amendatory and supplementary act as "bonds," for the purpose of financing the project or of funding or refunding the bonds described therein. The bonds shall be authorized by the bond resolution and may be issued in one or more series and shall bear such date or dates, mature at such time or times not exceeding 40 years from the date thereof, bear interest at a rate or rates within such maximum rate established therein, be in such denomination or denominations, be in such form, either coupon or registered, carry such conversion or registration privileges, have such rank or priority, be executed in such manner, be payable from such sources in such medium of payment at such place or places within or without the State, and be subject to such terms of redemption with or without premium, as the bond resolution may provide. L.1991,c.162,s.4. 40:62-133.4. Sale of bonds, price Bonds of the commission may be sold by the commission at public or private sale at such price or prices as the commission shall determine. L.1991,c.162,s.5. 40:62-133.5. Bond resolution, publication The commission may cause a copy of any bond resolution adopted by it to be filed for public inspection in its office and in the office of clerk of the governing body of the municipalities represented in the commission and may thereupon cause to be published in a newspaper published or circulating in the municipalities represented in the commission a notice stating the fact and date of this adoption and the places where the bond resolution has been filed for public inspection and also the date of the first publication of the notice and also that any action or proceeding of any kind or nature in any court questioning the validity or proper authorization of bonds provided for by the bond resolution, or the validity of any covenants, agreements or contract provided for by the bond resolution shall be commenced within 20 days after the first publication of the notice. If no action or proceeding questioning the validity of the creation and establishment of the commission, or the validity or proper authorization of bonds provided for by the bond resolution referred to in the notice, or the validity of any covenants, agreements or contracts provided for by the bond resolution is commenced or instituted within 20 days after the first publication of the notice, all residents and taxpayers and owners of property in the municipalities and users of the waterworks system and all other persons whatsoever shall be forever barred and foreclosed from instituting or commencing any action or proceeding in any court, or from pleading any defense to any action or proceedings, questioning the validity of the creation and establishment of the commission, or the validity or proper authorization of the bonds, or the validity of the covenants, agreements or contracts, and the commission conclusively is deemed to be validly created and established and is authorized to transact business and exercise powers as a commission under this amendatory and supplementary act, and the bonds, covenants, agreements and contracts conclusively are deemed to be valid and binding obligations in accordance with their terms and tenor. L.1991,c.162,s.6. 40:62-133.6. Negotiability of bonds Any provision of law, rule or regulation to the contrary notwithstanding, any bond or other obligation issued pursuant to this amendatory and supplementary act shall be fully negotiable within the meaning and for all purposes of the State laws concerning negotiable instruments, and each holder or owner of the bond or other obligation, or of any coupon appurtenant thereto, by accepting the bond or coupon, conclusively is deemed to have agreed that the bond, obligation or coupon is fully negotiable within the meaning and for all purposes of the State laws concerning negotiable instruments. L.1991,c.162,s.7. 40:62-133.7. Provisions permitted in bond resolution Any bond resolution of the commission providing for or authorizing the issuance of any bonds may contain provisions, and the commission, in order to secure the payment of these bonds and in addition to its other powers, shall have the power, by provision in the bond resolution, to covenant and agree with the several holders of these bonds, as to: a. The custody, security, use, expenditure or application of the proceeds of the bonds; b. The construction and completion, acquisition, enlargement, extension or improvement of all or any part of the waterworks; c. The use, regulation, operation, maintenance, insurance or disposition of all or any part of the waterworks, or restrictions on the exercise of the powers of the commission to dispose, or to limit or regulate the use, of all or any part of the waterworks; d. Payment of the principal of or interest on the bonds, or any other obligations, and the sources and methods thereof, the rank or priority of the bonds or obligations as to any lien or security, or the acceleration of the maturity of the bonds or obligations; e. The use and disposition of any moneys of the commission, including revenues, sometimes referred to in this amendatory and supplementary act as "water revenues," derived or to be derived from the operation of all or any part of the waterworks, including any parts thereof previously constructed or acquired and any parts, enlargements, extensions, replacements or improvements thereof subsequently constructed or acquired; f. Pledging, setting aside, depositing or trusteeing all or any part of the water revenues or other moneys of the commission to secure the payment of the principal of or interest on the bonds or any other obligations or the payment of expenses of operation or maintenance of the waterworks, and the powers and duties of any trustee with regard thereto; g. The setting aside out of the water revenues or other moneys of the commission of reserves and sinking funds, and the source, custody, security, regulation, application and disposition thereof; h. Determination or definition of the water revenues or of the expenses of operation and maintenance of the waterworks; i. The rents, rates or the use, products or services of the waterworks, including any parts thereof previously constructed or acquired and any parts, enlargements, extensions, replacements or improvements thereof subsequently constructed or acquired, and the fixing, establishment, collection and enforcement of the same, the amount or amounts of water revenues to be produced thereby, and the disposition and application of the amounts charged or collected; j. The assumption or payment or discharge of any indebtedness, liens or other claims relating to any part of the waterworks, or any obligations having or which may have a lien on any part of the water revenues; k. Limitations on the issuance of additional bonds or any other obligations or on the incurrence of indebtedness of the commission; l. Vesting in a trustee or trustees within or without the State the property, rights, powers and duties in trust as the commission may determine which may include any or all rights, powers and duties of the trustee appointed by the holders of bonds pursuant to section 9 of this amendatory and supplementary act, and limiting or abrogating the right of the holders to appoint a trustee pursuant to section 9 of this amendatory and supplementary act or limiting the rights, duties and powers of the trustee; m. Payment of costs or expenses incident to the enforcement of the bonds or of the provisions of the bond resolution or of any covenant or contract with the holders of the bonds; n. The procedure, if any, by which the terms of any covenant or contract with, or duty to, the holders of bonds may be amended or abrogated, the amount of bonds the holders of which shall consent thereto, and the manner in which the consent may be given or evidenced; or o. Any other matter or course of conduct which, by recital in the bond resolution, is declared to further secure the payment of the principal of or interest on the bonds. The provisions of the bond resolution and the covenants and agreements constitute valid and legally binding contracts between the commission and the several holders of the bonds, regardless of the time of issuance of the bonds, and are enforceable by the holder or holders of the bonds by appropriate action, suit or proceeding in any court of competent jurisdiction, or by proceeding in lieu of prerogative writ. L.1991,c.162,s.8. 40:62-133.8. Appointment of trustee in event of default a. If a default occurs in the payment of the principal of or interest on any bonds of the series after the bonds are due, whether at maturity or upon call for redemption, and this default continues for a period of 30 days, or if the commission fails or refuses to comply with the provisions of this amendatory and supplementary act or fails or refuses to carry out and perform the terms of any contract with the holders of the bonds, and this failure or refusal continues for a period of 30 days after written notice to the commission of its existence and nature, the holders of 25% in the aggregate principal amount of the bonds and the series then outstanding by instrument or instruments filed in the office of the Secretary of State and proved or acknowledged in the same manner as a deed to be recorded, may appoint a trustee to represent the holders of the bonds of the series for the purposes provided in this section. This section shall be applicable only if the bond resolution of the commission authorizing the issuance of a series of its bonds provides that the holders of the bonds of the series are entitled to the benefits of this section. b. The trustee may, and upon written request of the holders of 25% in aggregate principal amount of the bonds of the series then outstanding shall, in his or its own name: (1) By any action, writ, proceeding in lieu of prerogative writ, or other proceeding, enforce all rights of the holders of the bonds, including the right to require the commission to charge and collect water rents adequate to carry out any contract as to, or pledge of, water revenues, and to require the commission to carry out and perform the terms of any contract with the holders of the bonds or its duties under this amendatory and supplementary act; (2) Bring an action upon all or any part of the bonds or interest coupons or claims appurtenant thereto; (3) By action, require the commission to account as if it were the trustee of an express trust for the holders of the bonds; (4) By action, enjoin any acts or things which may be unlawful or in violation of the rights of the holders of the bonds; or (5) Declare the bonds due and payable, whether or not in advance of maturity, upon 30 days' prior notice in writing to the commission and, if all defaults are satisfied, with the consent of the holders of 25% of the principal amount of the bonds then outstanding, annul the declaration and its consequences. c. The trustee shall have and possess all of the powers necessary or appropriate for the exercise of the functions specifically set forth herein or incident to the general representation of the holders of the bonds of the series in the enforcement and protection of their rights. d. In any action or proceeding by the trustee, the fees, counsel fees and expenses of the trustee and of the receiver, if any, appointed pursuant to this amendatory and supplementary act, shall constitute taxable costs and disbursements, and all costs and disbursements, allowed by the court, shall be a first charge upon any water rents and water revenues of the commission pledged for the payment or security of bonds of the series. L.1991,c.162,s.9. 40:62-133.9. Appointment of receiver If the bond resolution of a commission authorizing for the issuance of a series of its bonds provides that the holders of the bonds of the series are entitled to the benefits of section 9 of this amendatory and supplementary act and further provides that any trustee appointed pursuant to that section, or having the powers of the trustee, has the powers provided by this section, the trustee, whether or not all of the bonds of the series are declared due and payable, is entitled as of right to the appointment of a receiver of the waterworks, and the receiver may enter upon and take possession of the waterworks and, subject to any pledge or contract with the holders of the bonds, shall take possession of all moneys and other property derived from or applicable to the acquisition, construction, operation, maintenance or reconstruction of the waterworks and proceed with the acquisition, construction, operation, maintenance or reconstruction which the commission is under any obligation to do, and operate, maintain and reconstruct the waterworks and fix, charge, collect, enforce and receive the water rents and all water revenues thereafter arising subject to any pledge thereof or contract with the holders of the bonds relating thereto and perform the public duties and carry out the contracts and obligations of the commission in the same manner as the commission itself might do and under the direction of the court. L.1991,c.162,s.10. 40:62-133.10. Commission members, State, county or local units not liable on bonds Neither the members of the commission nor any person executing the bonds issued pursuant to this amendatory and supplementary act shall be liable personally on the bonds by reason of the issuance thereof. Bonds or other obligations issued by the commission pursuant to this amendatory and supplementary act shall not be in any way a debt or liability of the State or of any local unit or of any county or municipality and shall not create or constitute any indebtedness, liability or obligation of the State or of any local unit, county or municipality, either legal, moral or otherwise, and nothing contained in this amendatory and supplementary act shall be construed to authorize the commission to incur any indebtedness on behalf of or in any way to obligate the State or any county or municipality. L.1991,c.162,s.11. 40:62-133.11. Commission property exempt from levy, sale All property of a commission shall be exempt from levy and sale by virtue of an execution and no execution or other judicial process shall issue against the same nor shall any judgment against a commission be a charge or lien upon its property; except that nothing herein contained shall apply to or limit the rights of the holder of any bonds to pursue any remedy for the enforcement of any pledge or lien given by a commission on its waterworks, water revenues or other moneys. L.1991,c.162,s.13. 40:62-133.12. Investment of sinking funds, other moneys, funds Notwithstanding any restriction contained in any other law, rule or regulation, the State and all public officers, municipalities, counties, political subdivisions and public bodies, and agencies thereof, all banks, bankers, trust companies, savings banks and institutions, building and loan associations, savings and loan associations, investment companies, and other persons carrying on a banking business, all insurance companies, insurance associations and other persons carrying on an insurance business, and all executors, administrators, guardians, trustees and other fiduciaries, may legally invest any sinking funds, moneys or other funds belonging to them or within their control in any bonds of the commission, and the bonds shall be authorized security for any and all public deposits. L.1991,c.162,s.14. 40:62-133.13. Waterworks public property, bonds exempt from taxation Every waterworks and all other property of a commission are declared to be public property of a political subdivision of the State and devoted to an essential public and governmental function and purpose and, other than lands subject to assessment and taxation pursuant to R.S.54:4-3.3, shall be exempt from all taxes and special assessments of the State or any subdivision thereof. All bonds are declared to be issued by a political subdivision of this State and for an essential public and governmental purpose and to be a public instrumentality and the bonds, and the interest thereon and the income therefrom, and all service charges, funds, revenues and other moneys pledged or available to pay or secure the payment of the bonds, or interest thereon, shall at all times be exempt from taxation except for transfer, inheritance and estate taxes and taxes on transfers by or in contemplation of death. L.1991,c.162,s.15. 40:62-133.14. State shall not alter commission's, bond holders' rights The State of New Jersey hereby pledges to and covenants and agrees with the holders of any bonds issued pursuant to a bond resolution of the commission that the State shall not limit or alter the rights vested in the commission to fix, establish, charge and collect its water rates and to fulfill the terms of any agreement made with the holders of the bonds or other obligations, and shall not in any way impair the rights or remedies of the holders, and shall not modify in any way the exemptions from taxation provided for in this amendatory and supplementary act, until the bonds, together with interest thereon, with interest on any unpaid installments of interest, and all costs and expenses in connection with any action or proceeding by or on behalf of the holders are fully met and discharged. L.1991,c.162,s.16. 40:62-133.15. Agreements between commission and bank or banking institution All banks, bankers, trust companies, savings banks, investment companies and other persons carrying on a banking business are authorized to give to any commission a good and sufficient undertaking with such sureties as shall be approved by the commission to the effect that the bank or banking institution as described herein shall faithfully keep and pay over to the order of or upon the warrant of the commission or its authorized agent all such funds as may be deposited with it by the commission and agreed interest thereon, at such times or upon these demands as may be agreed with the commission or in lieu of these sureties, deposit with the commission or its authorized agent or any trustee therefor or for the holders of any bonds, as collateral, these securities as the commission may approve. The deposits of the commission may be evidenced by a depository collateral agreement in the form and upon such terms and conditions as may be agreed upon by the commission and the bank or banking institution. L.1991,c.162,s.17. 40:62-133.16. Filing of copy of bond resolution The commission shall file a copy of each bond resolution adopted by it with the Director of the Division of Local Government Services in the Department of Community Affairs, together with a summary of the dates, amounts, maturities and interest rates of all bonds issued pursuant thereto. L.1991,c.162,s.18.

This is the verbatim text of N.J.S.A. 40:62-132, retrieved from the New Jersey Legislature's public statute corpus. Statutes are amended periodically — for the most current version, check the external source link above. Kyzer is not a law firm and this page is not legal advice.