N.J.S.A. 40A:10-38 — Powers, authority.

40A:10-38 Powers, authority. 3. a. The commissioners of a joint insurance fund shall have the powers and authority granted to commissioners of individual local insurance funds under the provisions of subsections a., b., c., and e. of N.J.S.40A:10-10. b. The commissioners may invest and reinvest the funds, including workers' compensation funds, as authorized under the provisions of subsection b. of N.J.S.40A:10-10. The commissioners may, subject to the cash management plan of the joint insurance fund adopted pursuant to N.J.S.40A:5-14, delegate any of the functions, powers and duties relating to the investment and reinvestment of these funds, including the purchase, sale or exchange of any investments, securities or funds to an investment or asset manager. Any transfer of investment power and duties made pursuant to this subsection shall be detailed in a written contract for services between the joint insurance fund and an investment or asset manager. The contract shall be filed with the Commissioner of Banking and Insurance and the Commissioner of Community Affairs. Compensation under such an arrangement shall not be based upon commissions related to the purchase, sale or exchange of any investments, securities or funds. In addition to the types of securities in which the joint insurance fund may invest pursuant to section 8 of P.L.1977, c.396 (C.40A:5-15.1), a joint insurance fund may invest moneys held in the fund in bonds, notes, and other obligations issued by an agency or corporation of the federal government or a governmental entity established under the laws of this State, provided that the agency, corporation, or governmental entity responsible for the issuance of the bonds, notes, or other obligations is not in default as to the payment of principal or interest upon any of its outstanding obligations, and provided further that the bonds, notes, or other obligations are purchased at fair market value, guaranteed as to interest and principal, and have a credit rating of A3 or higher by Moody's Investor Services, Inc., A- or higher by Standard & Poor's Corporation, and A- or higher by Fitch Ratings, except that two of the three ratings is sufficient and further provided that the Commissioner of the Department of Community Affairs, in consultation with the Commissioner of the Department of Banking and Insurance, shall promulgate rules and regulations to limit the duration of the long-term investments and to cap these investments at an appropriate percentage of a joint insurance fund's overall investment portfolio. If a rating for the bonds, notes, or other obligations has not been obtained from two of the credit rating agencies, the bonds, notes, or other obligations may be purchased if the agency, corporation, or governmental entity responsible for the issuance meets the minimum rating criteria specified by the previous sentence and if the bond offering has the unconditional guarantee of the agency, corporation, or governmental entity responsible for the issuance. c. The commissioners may transfer moneys held in the fund to the Director of the Division of Investment in the Department of the Treasury for investment on behalf of the fund, pursuant to the written directions of the commissioners, signed by an authorized officer of the joint insurance fund, or any investment or asset manager designated by them. The commissioners shall provide a written notice to the director detailing the extent of the authority delegated to the investment or asset manager so designated to act on behalf of the joint insurance fund. Moneys transferred to the director for investment shall be invested subject to section 8 of P.L.1977, c.396 (C.40A:5-15.1), and in accordance with the standards governing the investment of other funds which are managed under the rules and regulations of the State Investment Council. In addition to the types of securities in which the joint insurance fund may invest pursuant to section 8 of P.L.1977, c.396 (C.40A:5-15.1), a joint insurance fund may invest in debt obligations of federal agencies or government corporations with maturities not to exceed 10 years from the date of purchase, excluding mortgage backed or derivative obligations, provided that the investments are purchased through the Division of Investment and are invested consistent with the rules and regulations of the State Investment Council. d. Moneys transferred to the director for investment may not thereafter be withdrawn except: (1) pursuant to the written directions of the commissioners signed by an authorized officer of the joint insurance fund, or any investment or asset manager designated by them; (2) upon withdrawal or expulsion of a member local unit from the fund; (3) termination of the fund; or (4) in specific amounts in payment of specific claims, administrative expenses or member dividends upon affidavit of the director or other chief executive officer of the joint insurance fund. e. The commissioners or the executive board, as the case may be, of any joint insurance fund established pursuant to the provisions of this act shall be subject to and operate in compliance with the provisions of the "Local Fiscal Affairs Law" (N.J.S.40A:5-1 et seq.), the "Local Public Contracts Law," P.L.1971, c.198 (C.40A:11-1 et seq.) and such other rules and regulations as govern the custody, investment and expenditure of public funds by local units. L.1983, c.372, s.3; amended 1992, c.53, s.2; 1995, c.374, s.1 2018, c.40, s.1. 40A:10-38.1. Commissioners; additional powers, environmental insurance 1. In addition to the powers and authority granted to commissioners pursuant to section 3 of P.L.1983, c.372 (C.40A:10-38), the commissioners of a joint insurance fund established pursuant to subsection b. of section 1 of P.L.1983, c.372 (C.40A:10-36) shall have the power: a. to adopt and use a corporate seal; b. to sue and be sued; and c. to bond or to borrow funds and incur indebtedness by other means, including letters of credit, for the purpose of providing environmental impairment liability insurance, and to provide for and secure the payment of bonds and indebtedness, except that the total aggregate amount of any such bonds, borrowings and letters of credit outstanding at any one time shall not exceed $10,000,000. Bonds shall be sold by a joint insurance fund pursuant to the "Local Bond Law," N.J.S.40A:2-1 et seq., but shall not be subject to the debt limitation set forth in N.J.S.40A:2-6. L.1993,c.269,s.1. 40A:10-38.2. Definitions 2. As used in this act: a. "Bond" means bonds and other obligations, such as letters of credit, authorized and issued by a joint insurance fund. b. "Bond resolution" means a resolution adopted by a joint insurance fund describing the bonds to be authorized and issued and the bonds or indebtedness to be funded or refunded. c. "Joint insurance fund" or "fund" means a joint insurance fund created pursuant to subsection b. of section 1 of P.L.1983, c.372 (C.40A:10-36). L.1993,c.269,s.2. 40A:10-38.3. Bylaws, plan of risk management; filing proof of approval 3. A copy of the proof of approval of the bylaws and plan of risk management issued by the Commissioner of Insurance pursuant to section 6 of P.L.1983, c.372 (C.40A:10-41) shall be filed in the Office of the Secretary of State, the Director of the Division of Local Government Services, and the Commissioner of Insurance. Upon proof of such filing, the joint insurance fund therein referred to shall, in any suit, action or proceeding involving the validity or enforcement of, or relating to, any contract or obligation or act of the joint insurance fund, be conclusively deemed to have been lawfully and properly created, organized and established and authorized to transact business and exercise its powers under this act. Copies of the filing, duly certified by the Secretary of State, shall be admissible in evidence in any suit, action or proceeding and shall be conclusive evidence of due and proper filing thereof. L.1993,c.269,s.3. 40A:10-38.4. Issuance of bonds; adoption of bond resolution 4. a. For the purpose of raising funds to establish an environmental impairment liability insurance pool or for the purpose of funding or refunding a bond or other indebtedness, including a letter of credit in connection with environmental impairment liability insurance, a joint insurance fund shall have the power to authorize and issue or provide for the issuance of bonds pursuant to this act. No funds so raised shall be used for administrative expenses of the joint insurance fund. For such purpose, a joint insurance fund shall adopt a bond resolution which shall (1) describe the bonds to be authorized and issued and the bonds or indebtedness to be funded or refunded, if any; (2) state the cost or estimated cost of the project, if any; and (3) provide for the issuance of the bonds in accordance with section 5 of this act. b. No bond resolution shall be adopted by a joint insurance fund pursuant to subsection a. of this section unless member local units representing at least two-thirds of the joint insurance fund's current annual assessments have approved the proposed bond resolution by resolution or ordinance of each approving member local unit, which resolution or ordinance has been duly certified by the appropriate officer of the local unit and filed with the secretary of the joint insurance fund. c. Any debt incurred by a joint insurance fund pursuant to P.L.1993, c.269 (C.40A:10-38.1 et al.) shall be subject to the oversight provisions of sections 6, 7 and 8 of P.L.1983, c.313 (C.40A:5A-6 through 40A:5A-8). L.1993,c.269,s.4. 40A:10-38.5. Bonds 5. Upon adoption of a bond resolution, a joint insurance fund shall have the power to incur indebtedness, borrow money and issue its bonds for the purpose of raising funds to establish an environmental impairment liability insurance pool or funding or refunding any bonds or other indebtedness, including a letter of credit. A bond shall be authorized by the bond resolution and may be issued in one or more series. A bond shall bear the date provided in the resolution and shall mature on a date not exceeding 20 years from the date on the bond. A bond shall bear interest at a rate within the maximum rate, be in the denomination and the form, carry the 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.1993,c.269,s.5. 40A:10-38.6. Sale of bonds 6. Bonds of a joint insurance fund may be sold by the fund at public or private sale at a price determined by the commissioners of the fund. L.1993,c.269,s.6. 40A:10-38.7. Bond resolution adoption; publication 7. A joint insurance fund shall cause a copy of a bond resolution adopted by it to be filed for public inspection in its office and in the offices of the clerks of the local units which are members of the fund and shall thereupon cause to be published in a newspaper published or circulating in the jurisdiction of the member local units a notice stating the fact and date of the adoption, the places where the bond resolution has been filed for public inspection, and the date of the first publication. The notice also shall state that any action or proceeding of any kind in any court questioning the validity or proper authorization of a bond provided for by the bond resolution, or the validity of any covenant, agreement or contract provided for by the bond resolution shall be commenced within 20 days after the first publication of the notice. If after the notice is published, no action or proceeding questioning the validity or proper authorization of a bond provided for by the bond resolution referred to in the notice, or the validity of a covenant, agreement or contract provided for by the bond resolution is commenced within 20 days after the first publication of the notice, then all member local units of the fund, their residents, and all other persons shall be forever barred from commencing an action or proceeding in a court or from pleading a defense to an action or proceeding, questioning the validity of the creation and establishment of the joint insurance fund, or the validity or proper authorization of the bonds, or the validity of a covenant, agreement or contract, and the fund shall be conclusively deemed to have been validly created and established and to be authorized to transact business and exercise powers as a joint insurance fund under this act, and the bond, covenant, agreement or contracts shall be conclusively deemed to be a valid and binding obligation in accordance with its terms and tenor. L.1993,c.269,s.7. 40A:10-38.8. Negotiability of bonds 8. Any provision of any law to the contrary notwithstanding, bonds issued pursuant to this act shall be fully negotiable within the meaning and for all purposes of the negotiable instruments law of the State, and each holder of a bond, or of any coupon appurtenant thereto, by accepting the bond or coupon shall be conclusively deemed to have agreed that the bond or coupon is and shall be fully negotiable within the meaning and for all purposes of the negotiable instruments law. L.1993,c.269,s.8. 40A:10-38.9. Payment of bonds; powers of joint insurance fund 9. A joint insurance fund, in order to secure the payment of its bonds shall have the power by provision in the bond resolution to covenant and agree with the several holders of a bond, as to: a. the custody, security, use, expenditure or application of the proceeds of a bond; b. payment of the principal of or interest on a bond and the sources and methods thereof, the rank or priority of a bond obligation as to a lien or security, or the acceleration of the maturity of a bond; c. the use and disposition of any moneys of the joint insurance fund; d. pleading, setting aside, depositing or trusteeing all or any moneys of the joint insurance fund to secure the payment of the principal of or interest on the bond or the payment of expenses of operation of the fund, and the powers and duties of a trustee with regard thereto; e. the setting aside out of the moneys of the joint insurance fund of reserves and sinking funds, and the source, custody, security, regulation, application and disposition thereof; f. determination or definition of the moneys of the joint insurance fund or of the expenses of its operation; g. the assessments or other charges imposed by the joint insurance fund and the fixing, establishment, collection and enforcement of same, the amount to be raised thereby, and the disposition and application of the amount charged or collected; h. the assumption or payment of any indebtedness, lien or other claim against the joint insurance fund or any obligation having or which may have a lien on any moneys of the fund; i. limitations on the issuance of additional bonds or on the incurrence of indebtedness of the joint insurance fund; j. vesting in a trustee or trustees within or without the State the rights, powers and duties in trust determined by the joint insurance fund, which powers and duties may include any or all of the rights, powers and duties of the trustee appointed by the holders of bonds pursuant to section 10 of this act, and limiting or abrogating the right of the holders to appoint a trustee pursuant to section 10 of this act or limiting the rights, duties and powers of the trustee; k. 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; l. the procedure, if any, by which the terms of a covenant or contract with, or duty to, the holders of bonds may be amended or abrogated, which holders of bonds are required to consent to such an amendment or abrogation before it can be enforced, and the manner in which the consent may be given or evidenced; or m. 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. All provisions of the bond resolution and all covenants and agreements shall constitute valid and legally binding contracts between the joint insurance fund and the several holders of the bonds, regardless of the time of issuance of the bonds, and shall be enforceable by any holder by appropriate action, suit or proceeding in lieu of prerogative writ. L.1993,c.269,s.9.

This is the verbatim text of N.J.S.A. 40A:10-38, 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.