N.J. Stat. tit. 40, ch. 3

in effect

N.J. Stat. § 40:3-1 Definitions

For the purposes of this chapter, bonds which are payable in installments in successive years during at least three-quarters of the period covered by the term of the whole issue, shall be known as "serial bonds" . All other bonds shall be known as "term bonds" . The term "governing body" as used in this chapter means the board or body having charge and control of the finances of the municipality, county or school district.

N.J. Stat. § 40:3-2 Contracts as to bonds, notes not impaired

Nothing in this chapter shall be construed to require any sinking fund commission to do any act in violation of the contractual obligations of the municipality, county or school district, as the case may be, in respect to any bonds, notes or other evidences of indebtedness of such municipality, county or school district for the payment of which a sinking fund shall have been or may hereafter be created.

N.J. Stat. § 40:3-3 When sinking fund commission to determine requirements

In the event of the failure of the Director of the Division of Local Government in the State Department of Taxation and Finance to certify the requirements or other matters required by this chapter to be certified by him the sinking fund commission shall itself determine such requirements and other matters. Amended by L.1947, c. 117, p. 570, s. 1, eff. July 1, 1947.

N.J. Stat. § 40:3-4 Sinking fund commissions; appointment, duties and powers.

40:3-4. The sinking fund commissions of the several municipalities, counties and school districts, created and established in accordance with the provisions of the act entitled "An act concerning sinking funds and sinking fund commissions," approved March twenty-ninth, one thousand nine hundred and seventeen (L.1917, c.212, p.749), are continued. The membership of such commissions shall be as follows: a. The executive officer of the municipality or county, or the mayor of municipalities governed by a commission, or the president of the board of education, ex officio; but if such executive officer, mayor or president does not desire to serve, he may appoint in his place a member of the governing body, or an official of the municipality, county or school district, as the case may be. The term for such appointee in the sinking fund commission shall be coexistent with the term of such executive officer, mayor or president or the term of the appointee as a member of the governing body or as an official, except that it shall terminate upon his ceasing to be a member of the governing body or to hold such office; and b. The comptroller, or in municipalities which have no comptroller, the treasurer, or in municipalities governed by a commission, the director of the department of revenue and finance, or in counties, the county treasurer, or in school districts, the secretary or treasurer of school moneys, as appropriate, ex officio; and c. In addition three citizens of the municipality, county or school district, as the case may be, resident taxpayers on real estate, to be chosen with reference to their qualifications for the conduct and management of financial affairs who shall not hold any other office in such municipality, county or school district, as the case may be, during their term as members of such commission, who shall be appointed by the mayor, executive officer, or president of the municipality, county or school district by and with the consent of the governing body, or by the commission of a municipality governed by a commission, as the case may be, for a term of three years to begin on January first. When a vacancy shall occur in the citizen membership of the commission, it shall be filled for the unexpired term in the same manner as the original appointment was made. In municipalities, counties or school districts whose sinking fund amounts to less than fifty thousand dollars, it shall not be necessary for the sinking fund commission to be composed of more than three members, as the governing body thereof shall decide, but if the sinking fund commission shall in any case be limited to three members, then the same shall be composed of: the comptroller, or in municipalities which have no comptroller, the treasurer, or in municipalities governed by a commission, the director of the department of revenue and finance, or in counties the county treasurer, or in school districts, the secretary or treasurer of school moneys, as appropriate, ex officio; and two citizens of the municipality, county or school district, as the case may be, resident taxpayers on real estate, to be chosen with reference to their qualifications for the conduct and management of financial affairs, who shall not hold any other office in such municipality, county or school district, as the case may be, during their term as members of such commission, who shall be appointed by the mayor, executive officer, or president of the municipality, county or school district, by and with the consent of the governing body, or by the commission of a municipality governed by a commission, one for a term of one year and one for a term of two years, and thereafter each citizen member of such commission shall be appointed for a term of two years to begin January first. When a vacancy shall occur in the citizen membership of the commission, it shall be filled for the unexpired term in the same manner as the original appointment was made. If at any time by reason of the increase of the amount of the sinking fund to fifty thousand dollars or more, or if the governing body shall decide to increase the number of the members of the sinking fund commission to five members, then the commission shall be constituted as hereinbefore provided, and in either case the additional citizen member shall be appointed for such term as will make the term of one citizen member of the sinking fund commission expire each year, the appointments thereafter to be for three years. amended 2010, c.39, s.34.

N.J. Stat. § 40:3-5 Commission to supersede all commissions; body corporate; disbursements; investments

The organization of the sinking fund commission, as herein provided, shall be universally applicable and shall supersede all other sinking fund commissions whatsoever. The members of the sinking fund commission shall, together, constitute and be denominated "the sinking fund commission of the " (giving corporate name of municipality, county or school district, as the case may be). The sinking fund commission shall be a body corporate by the name aforesaid, with power and liability to sue and be sued in such corporate name in any court of competent jurisdiction. The members of the sinking fund commission shall meet annually during the first week in January to organize the sinking fund commission as herein provided. They shall elect a president, a secretary and a treasurer, and they may elect a vice president and assistant treasurer. A person not a member of the commission may be elected secretary. One person, if a member of the commission, may hold the office of secretary and of treasurer, or of vice president and of assistant treasurer, but no ex-officio member of the commission shall be elected as president or vice president. All disbursements, investments, sale or transfer of securities shall be by resolution of the sinking fund commission. When funds are disbursed the same shall be by check signed by the president, or, if one be elected by the commission, a vice president, and treasurer, or, if one be elected by the commission, by the assistant treasurer, of such commission, but the same person shall not sign in two official capacities.

N.J. Stat. § 40:3-6 Certain officers to act when commission not functioning

Until the members of the sinking fund commission have been appointed and the organization of the commission has been perfected, the comptroller, or in municipalities which have no comptroller, the treasurer, or in municipalities governed by a commission, the director of the department of revenue and finance, or in counties the county treasurer, or in school districts the custodian of school moneys shall be the sinking fund commissioner of the municipality, county or school district, as the case may be, and shall have all the rights, powers and duties of the sinking fund commission provided for under this chapter.

N.J. Stat. § 40:3-7 Foreclosure of mortgages; municipal sinking fund for school district bonds

Where the funds in the custody of any sinking fund commission superseded and terminated as provided in this chapter, are invested in mortgages upon real estate, the sinking fund commission herein provided for may prosecute, in its own name, foreclosure proceedings for the foreclosure of such mortgages, and where necessary for the preservation of the fund invested, purchase at foreclosure sale the real estate foreclosed upon. All such real estate shall be sold as speedily as reasonably may be. Whenever any school district is situated wholly within a municipality, in which there is, or should be, a sinking fund commission having charge of the sinking fund of the municipality, such commission shall be the sinking fund commission of such school district and shall have the same powers and be charged with the same duties in connection with the bonded indebtedness of the school district as are conferred or imposed upon it with regard to the bonded indebtedness of the municipality in which such school district shall be situated.

N.J. Stat. § 40:3-8 Commissioners not to receive compensation; bonds; secretary and assistants

The members of the sinking fund commission shall receive no compensation, and shall give bond with corporate security to the municipality, county, or school district, as the case may be, for the faithful performance of their duties, in such sum as shall from time to time be fixed by the governing body of the municipality, county or school district. When authorized by the governing body the sinking fund commission may employ a secretary and other assistants at such salary as the governing body may fix, or may appoint one of its members as secretary, and one as treasurer, or one of its members to fill both offices, and allow such appointee or appointees such compensation as may be fixed by the governing body. All surety bond premiums, compensations and all expenses necessarily incurred by the sinking fund commission in the discharge of its duties shall be paid from general funds, and not from the sinking fund accounts.

N.J. Stat. § 40:3-9 Custodian of moneys and securities; investments; accounts

The sinking fund commissioners shall have sole custody and control of all sinking fund moneys, securities, books, papers and records appertaining thereto. They shall deposit all moneys which shall come into their hands in a depository or depositories selected by them. They shall invest, reinvest and keep invested all moneys coming into their hands in the securities or forms of investment authorized by this chapter and in none other. They may sell or convert into cash such investments or property as may be necessary from time to time to provide funds from which to pay bonds or the municipality, county or school district, upon maturity, or sell such securities or forms of investment for the purpose of protecting the sinking fund from loss or for bettering the investment. The commission shall keep accurate and detailed books of account covering all moneys coming into its custody, and the investment, return on investment, increase or loss thereof and the expenditure thereof, in accordance with the requirements of this chapter, make the reports and certificates as and when required, and permit access to and inspection of its accounts and records, at all reasonable hours, by any person duly authorized by the governing body of the municipality, county, school district or the Director of the Division of Local Government in the State Department of Taxation and Finance, or his agents or any interested citizen taxpayer. Amended by L.1947, c. 117, p. 570, s. 2, eff. July 1, 1947.

N.J. Stat. § 40:3-10 Sinking fund moneys; investment of

Investment of sinking fund moneys shall be restricted to unlimited obligations issued by the United States of America, or bonds of the State of New Jersey, or bonds of any county, school district or municipality of this State, or the negotiable notes of any county, municipality or school district of this State, but except as herein otherwise provided the date of maturity of such investments shall be such that with subsequent accretions to the fund there shall be moneys on hand to pay the several issues of bonds as they fall due. If in the judgment of the majority of the sinking fund commissioners it is inexpedient and not to the best interests of the sinking fund to sell such securities held in the fund, the commission may borrow funds to meet maturing bonds, using as collateral for such loans any of the securities held in the fund. Amended by L.1943, c. 48, p. 91, s. 1, eff. March 27, 1943.

N.J. Stat. § 40:3-11 Annual report; publication

The sinking fund commission shall report annually, on or before January fifteenth, to the governing body of the municipality, county or school district fully and in detail with reference to the amount, investment and sufficiency of the sinking funds in their hands, as of December thirty-first of the previous year. Such report shall be published for distribution by the sinking fund commission during the month of January of each year. In addition, the commission shall make such other and further reports as shall be required by the governing body of the municipality, county or school district or by any state authority pursuant to law.

N.J. Stat. § 40:3-12 Accounts; how kept; classification of bonds; accretions; interest; losses

The sinking fund commission shall cause to be kept a separate account for each issue of term bonds and under at least the following classifications: namely, school bonds, water bonds, and general bonds. It may invest all funds under one account and shall distribute and credit to each account the proper proportion of the annual sinking fund appropriation, and also make among such accounts a proportionate distribution of all accretions and interest earned by the sinking fund investment and a like distribution of losses, which distribution shall be made as of December thirty-first of each year.

N.J. Stat. § 40:3-13 When commission may sell bonds of county, school district or municipality

When any sinking fund commission shall purchase any bonds of the municipality, county or school district for which it is constituted, as the result of its bid for such bonds or in exercise of the preferential right of purchase, as granted by law, the bonds so purchased shall not be sold within ten months after the time of purchase. No sinking fund commission shall sell any of the bonds of the municipality, county or school district for which it is constituted, which it may own, except for the purpose of raising funds with which to pay maturing bonds of the municipality, county or school district which are a proper charge against the sinking fund. If the sinking funds for the several issues of term bonds of any municipality, county or school district are equal to or in excess of the requirements as set forth in this chapter for the uncanceled bonds of such issues, then the sinking fund commission of the municipality, county or school district may cancel the bonds of any issue for which the sinking fund is in excess of such requirements to an amount not greater than such excess, and the sinking fund for that issue shall be reduced by the par value of the bonds as canceled. When the sinking fund for any issue of term bonds shall be equal to the principal of the uncanceled bonds of that issue, the sinking fund commission may cancel any or all of such bonds and the sinking fund for that issue shall be reduced by the par value of the bonds so canceled.

N.J. Stat. § 40:3-14 Bonds falling due; funds transmitted for payment

At least three days previous to the time when any bonds shall fall due, for which there are funds to the credit of such bonds in the custody of the sinking fund commission, the commission shall transmit to the chief financial officer of the municipality, county or school district, as the case may be, the funds on hand to the credit of such bond issue, providing such funds are not in excess of the amount of bonds falling due, in which case only an amount sufficient to retire such bonds shall be transmitted. Should there be a surplus in any account, after the payment of all the bonds of such issue, then such surplus shall be placed in the special sinking fund account, if such shall exist in accordance with the provisions of this chapter, and if there be no special sinking fund account, such surplus shall be distributed among the other bond accounts in the sinking fund, and credited to the principal thereof.

N.J. Stat. § 40:3-15 Commissioners may enforce payment to sinking fund of sums due

The sinking fund commission shall have power and authority to demand and enforce by appropriate legal proceedings the appropriation, collection and payment to the sinking fund of the proper amounts due thereto, as provided by this chapter or any other law.

N.J. Stat. § 40:3-16 Annual sinking fund requirements; amortization basis

The annual sinking fund requirements for the uncanceled bonds of any issue of term bonds issued by any municipality, county or school district, shall not be less than an amount, which, figured at the time of the issuance of such bonds, would if thereafter annually contributed to such fund, with the fund and with the accumulations thereon, and the contributions thereto, computed at the rate of three and one-half per cent per annum, produce at the date of maturity an amount equal to the amount of the bonds, which shall be known as the "amortization basis" . Any part of the sinking fund for an issue of bonds, which arises from other sources than the tax levy, shall be deducted from the sinking fund requirements to be placed in the tax levy and the balance only raised by taxation. Moneys accruing to the sinking fund from the payment of assessments, or the receipts from utilities dedicated to bond payments, shall be credited as principal and not as earnings.

N.J. Stat. § 40:3-17 Sinking fund requirements for year; how calculated

The sinking fund commission of a municipality, county or school district (where a sinking fund commission exists only for such school district) shall calculate the annual requirements of the sinking fund for all term bonds for the ensuing fiscal year, in accordance with the provisions of section 40:3-16 of this Title, and on or before November first next before the final date fixed for the adoption of the budget for the fiscal year of the municipality or county, and on or before December first next before the annual school meeting for school districts as to bonds issued by such districts, shall submit such calculation of the sinking fund requirements for the fiscal year for which the budget shall apply, to the governing body of the municipality or county or the board of education of the school district, as the case may be, and to the Director of the Division of Local Government in the State Department of Taxation and Finance. The said director shall correct and audit such calculations, and on or before December first next before the date fixed for the adoption of the budget as to requirements for municipal or county bonds, and on or before February first next before the meeting at which school appropriations are voted for such school districts as to requirements for bonds of school districts, shall issue a certificate of the sinking fund requirements for such year to the sinking fund commission, and shall transmit a copy of such certificate to the governing body of the municipality, county or the board of education of the school district, as the case may be, and the amount as certified by the said director shall be the official determination of the sinking fund requirements for such fiscal year, which shall be included in the annual budget and tax ordinance of the municipality, or the annual budget or tax resolution of the county, and the appropriations of school districts, and shall be assessed, levied and collected as required by law. The required amount as certified shall be turned over to the sinking fund commission for the municipality, county or school district, as the case may be, on or before December thirty-first of the year for which such budget shall apply. The sinking fund commission shall, on or before January fifth following, transmit to the said director a certificate as to the receipt or nonreceipt by it of the sinking fund requirements previously certified, but the failure on the part of any sinking fund commission or the said director to issue a certificate of the amount of sinking fund requirements for any year shall in no wise relieve the governing body of any municipality or county, or the board of education of any school district, of their obligation to make provisions for the proper sinking fund requirements for the year in their appropriations for municipal, county or school purposes, as the case may be. Should such appropriations not be included in the budget, as adopted, they shall, nevertheless, be included in the tax ordinance or resolution, as the case may be, but in no case shall the district clerk and the county board of taxation be relieved from their duty to determine that such requirements have been provided for in the case of bonds issued by school districts. Amended by L.1947, c. 117, p. 571, s. 3; L.1948, c. 129, p. 850, s. 1, eff. June 12, 1948.

N.J. Stat. § 40:3-18 When contributions to cease

When the sinking fund of any issue of term bonds shall equal the amount of the uncanceled bonds of such issue, no further contributions shall be required to be made thereto, except to make good any losses which may occur, and the earnings of such sinking fund may be used to reduce the total annual sinking fund requirements, as provided in section 40:3-16 of this title.

N.J. Stat. § 40:3-19 Excess accumulations, to reduce requirements of sinking fund; deficiency

When the accumulation of the sinking fund for any year shall be more than three and one-half per cent, then the amount in excess of three and one-half per cent may be applied to reduce the sinking fund requirements for the succeeding year, and if the accumulations of the sinking fund for any year are less than three and one-half per cent, then an amount sufficient to make up the deficit in accumulations for that year shall be added to the sinking fund requirements for the succeeding year.

N.J. Stat. § 40:3-20 Outstanding term bonds tabulated; adjustment of excesses and deficits; surpluses

If upon any tabulation heretofore made of outstanding term bonds and the calculation to determine whether the sinking fund for each issue is equal to the amortization basis set forth in section 40:3-16 of this Title, or upon any subsequent tabulation and calculation ordered by the Director of the Division of Local Government in the State Department of Taxation and Finance, the sinking fund for any issue of term bonds of any municipality, county or school district shall be found to be in excess of the proper amortization basis, and any other sinking fund shall be found to be deficient, such excess shall be transferred and credited to the deficient sinking funds. Where a distribution of surpluses is made, it must be first made to the sinking funds for bonds within the classification as defined in section 40:3-12 of this Title, and then to the sinking funds for other bonds in the order of their maturities. Should there be a surplus in the sinking fund after the distribution herein directed, the same may be transferred to a surplus account, and the principal thereof shall be distributed only as provided in sections 40:3-13 and 40:3-24 of this Title. Amended by L.1947, c. 117, p. 573, s. 4, eff. July 1, 1947.

N.J. Stat. § 40:3-21 Deficiency in sinking funds; how raised

In order to bring the sinking fund for each issue of term bonds up to the proper amortization basis, the deficiency as shown by the final tabulation and calculation shall be raised and paid into a fund, to be known as the special sinking fund, in annual installments at the rate of not less than one-fifth of a mill on the dollar of the last corrected valuation of taxable property in the municipality, county or school district, as the case may be, until the deficiency with interest compounded annually at three and one-half per cent from January first, one thousand nine hundred and seventeen, is accumulated.

N.J. Stat. § 40:3-22 Special sinking fund requirements additional to annual requirements

The special sinking fund requirements, as provided in section 40:3-21 of this title shall not take the place of the proper annual sinking fund requirements for any issue of term bonds, but shall be in addition thereto.

N.J. Stat. § 40:3-23 Special sinking fund; distribution of

The special sinking fund shall be held intact, as such, until it shall have accumulated an amount sufficient to create or equalize the sinking fund for each issue of term bonds in accordance with the standard as defined in section 40:3-16 of this Title. Then the special sinking fund shall be distributed to the several sinking fund accounts, and the special sinking fund shall be retired. If during the process of accumulation of the special sinking fund there shall fall due any bonds for whose payment no sinking fund has been accumulated, or the sinking fund for which is insufficient for the payment thereof, then the amount of the deficiency for the payment of such bonds shall be taken from the special sinking fund and the yearly installment shall continue to be raised and set aside until the sinking fund, with its accumulations, shall be equal to the deficiency of the sinking fund for all term bonds. The annual requirements for the distribution of, and the discontinuance of the special sinking funds shall be subject to the approval of the Director of the Division of Local Government in the State Department of Taxation and Finance. Amended by L.1947, c. 117, p. 573, s. 5, eff. July 1, 1947.

N.J. Stat. § 40:3-24 Interest on surplus; use of

The surplus in the sinking fund of any municipality, county or school district, as provided in section 40:3-20 of this Title, shall be held in the sinking fund, but the estimate of the annual earnings of such surplus figured on a three and one-half per centum (3 1/2 %) basis may be used as a credit or offset to the annual requirements for the sinking fund, but the principal of the surplus may be used to reduce the appropriation for the annual sinking fund requirements as set forth in section 40:3-16 of this Title. The fund so used in any one year shall not be in excess of fifty per centum (50%) of the requirements for the sinking fund for that year, but in no case shall such credit or offset be used unless a certificate of approval shall first have been obtained from the Director of the Division of Local Government in the State Department of Taxation and Finance. Amended by L.1947, c. 117, p. 574, s. 6, eff. July 1, 1947.

Source: Open US Law by Vaquill AI (CC BY 4.0)URL: https://www.njleg.state.nj.us/legislative-activity/statutesFetched: 10/17/2026