New Jersey has launched its first transportation loan program for local capital projects.
The New Jersey Transportation Infrastructure Bank, which was approved by state lawmakers in April, is offering low interest loans to counties and municipalities to tackle crucial roadway, bridge and transit repairs.
The newly formed I-Bank is partnering with the New Jersey Department of Transportation on the program with an initial start of $22.6 million generated from a 23-cent-per-gallon gas tax increase implemented as part of the Transportation Trust Fund’s $16 billion renewal in 2016.
“The Transportation I-Bank is a unique partnership that will significantly reduce the total cost of local transportation infrastructure by reducing the cost of financing and will enable our communities to increase the number of projects funded,” NJDOT Commissioner Diane Gutierrez-Scaccetti said in a statement. “The program will provide opportunities for the design and construction of more expensive local projects that cannot be significantly funded with Local Aid grants.”
Gutierrez-Scaccetti said the program is modeled after the 33-year-old New Jersey Water Bank, formerly the New Jersey Environmental Infrastructure Financing Program, which provides low-cost financing for water infrastructure projects. Interest rates for the transportation infrastructure bank program in the 2019 fiscal year are anticipated at between 1.5% and 1.75% for terms of up to 31 years.
Regina Egea, president of the Garden State Initiative, said the New Jersey Water Bank was “well intended”, but has been used more as a grant program than a low-interest financing arm to address infrastructure improvements. She said with plenty of funds available under the TTF, a loan program for localities is likely not the state's best focus with many other fiscal challenges looming.
“It’s unclear what the intended targets are and who doesn’t have access to the capital markets,” said Egea, who was chief of staff for former Gov. Chris Christie from 2015 to 2016. “I’d rather see them utilizing the funds that are available under the TTF.”
The New Jersey Department of Transportation did not immediately respond to a request for comment about spending levels under the TTF, which was replenished in October 2016 at $2 billion annually for eight years. The fund ran out of cash flow in the summer of 2016, which prompted then Governor Christie to order a shutdown of non-essential road and transit projects.