N.J. Admin. Code § 6A:26-10.1 - Use of lease-purchase agreements

(a) A school district may acquire improvements or additions to school facilities through lease-purchase agreements of five years or less provided that the lease-purchase agreement provides for the funding in full to the school district upon commencement of construction of the school facilities project. School districts shall not enter into lease purchase agreements of more than five years' duration.

(b) Subject to (a) above, a school district may utilize a lease-purchase agreement to fund the local share or total costs of a school facilities project receiving State debt service aid or to provide the local funding for an other capital project as long as:

1. There are no contingencies pursuant to which such funding could be withheld in whole or in part; and

2. In funding the local share or total costs of a Development Authority-constructed school facilities project, the school district does not encumber what has been lease purchased in favor of another party, such as the lender or trustee unless said interest is subordinated to the Development Authority.

(c) Lease-purchase agreements in excess of five years duration entered into prior to July 18, 2000, may continue in effect through the term of the agreement. However, as of July 18, 2000, no lease-purchase agreement entered into by a school district for improvements or additions to school buildings or for equipment shall exceed five years' duration.

(d) A school district may acquire equipment, as provided in N.J.A.C. 6A:26-3.2(a), through lease-purchase agreements that are not subject to the ground-lease requirements of N.J.A.C. 6A:26-10.5. Lease-purchase agreements for acquisition of equipment do not require Commissioner approval, but shall be filed with the executive county superintendent and shall include:

1. The lease-purchase agreement, which shall contain the following provision: "Payments shall be subject to the annual appropriation of funds sufficient to meet the required payments or shall contain an annual cancellation clause pursuant to N.J.S.A. 18A:20-4.2(f)";

2. A resolution of the district board of education approving the application on a Commissioner-prescribed form and authorizing submission to the executive county superintendent; and

3. Evidence acceptable to the Department that the school district has procured the equipment in accordance with N.J.S.A. 18A:18A-1 et seq.

Notes

N.J. Admin. Code § 6A:26-10.1

Amended by R.2004 d.214, effective 6/7/2004.
See: 36 N.J.R. 243(a), 36 N.J.R. 2733(b).
Rewrote the section.
Amended by R.2007 d.81, effective 3/19/2007.
See: 38 N.J.R. 4533(a), 39 N.J.R. 899(a).
Inserted "school" preceding "district" throughout; and in (a), substituted "School districts" for "Districts".
Amended by R.2013 d.145, effective 12/16/2013.
See: 45 N.J.R. 1026(a), 45 N.J.R. 2557(a).
Section was "Use of lease purchase agreements". In (a), the introductory paragraph of (b), (c), and (d), substituted "lease-purchase" for "lease purchase"; in (a), inserted "school" preceding "district", and substituted "years'" for "years"; in the introductory paragraph of (b), deleted "of five years or less"; in (b)2, substituted "a Development Authority-constructed" for "an Authority constructed"; in (c) and the introductory paragraph of (d), substituted "Lease-purchase" for "Lease purchase"; in the introductory paragraph of (d), substituted "that" for "of five years or less and which", "ground-lease" for "ground lease", and "executive county superintendent" for "county superintendent of schools"; and in (d)2, inserted "on a Commissioner-prescribed form" and "executive", and deleted "of an application form prescribed by the Commissioner" following "superintendent".
Petition for Rulemaking.
See: 52 N.J.R. 535(b), 1085(b).