Municipal Pooled Financing Program

Program Summary

Municipal Pooled Financing Program

Overview and advantages of a Capital Pooling Program

The Program provides cost effective financing to build or purchase capital projects and equipment. By financing through this Program, municipalities may obtain lower insurance costs, lower interest rates and easy access to funds for construction and equipment financing.

Through this program, municipalities can purchase their capital equipment needs through a convenient lease/purchase arrangement with the Authority. The Program involves the acquisition of buildings, equipment, vehicles, furnishings and other related items. Participants have the advantage of obtaining such equipment, land and buildings more efficiently and economically, by combining the financing from numerous similar projects. By sharing the cost with other participants and capitalizing on economies of scale, each municipality will incur fewer fees. Typical purchases include computers, fire trucks, copiers, telecommunications systems, dump trucks, ambulances, snow-plows and construction of facilities.

Some of the benefits to the municipality are as follows:

Lower Issuance Costs

All fixed costs associated with the issuance of debt, such as legal, underwriting, printing and trustee fees are shared by program participants on a pro-rated percentage basis.

No Down Payment Requirement

Under State Law, the Authority has the ability to execute a lease financing without the five percent (5%) down payment required of a municipality when issuing general obligation bonds.

Exemption from Municipal Cap Law

Purchases funded through the Authority are not subject to capital statutory debt limitation requirements. Under the Improvement Authorities Law, program participants can take advantage of this flexibility by financing through the Authority.

Lower Interest Rates

The Authority has the potential to achieve lower interest rates because of its legal structure and frequent market exposure. Tax-exempt interest rates are the lowest available.

Convenient Payback Schedules

Payback schedules are determined by the useful life of the equipment being financed. At the expiration of the lease, the participants own the equipment.

Municipal Pooled Financing Fees

The Authority will offer municipalities participating in the Pooled Finance Program a reduced fee structure. Unlike the 1% fee charged (up to $20 million issue) on non-municipal financings, participants in the Pooled Financing Program shall pay ¼% of the amount of the bonds issued, payable at closing.

Requirement to Participate

To participate, the governing body of the municipality must adopt a resolution identifying specific items and expected costs of each item and authorize, by ordinance, the procurement of the capital purchase by the municipality through the Authority. This process forms the basis for issuance. The capital item is then leased to the town for a period equal to its useful life.

Summary

The Authority will:

• Negotiate and contract directly with financial professionals, as needed, for debt issuance such as financial advisors, trustees, bond counsel, rating agencies, underwriters, or bond insurance providers.
• Coordinate all financial matters related to the negotiation of the bond sale.
• Oversee required approvals from the Camden County Board of Chosen Freeholders and the New Jersey Local Finance Board.
• Attend to the publication of public notices.

The advantages of these pooled financing programs include:

• Economies of scale
• Lower interest rates
• The benefits of a negotiated sale
• No down payment
• Exemptions from municipal budget caps

For additional information please contact:
James P. Blanda
Director of Finance
856-751-2242