In 1960 New Jersey legislature adopted the County Improvement Authorities Law. The idea was to have a county-wide authority that could undertake a variety of public projects primarily dealing with public transportation and provision for governmental buildings for use by the State or local governmental units. The powers were very broadly stated, but the overall scope of the activities of an improvement authority was perceived to be relatively limited.
Since that time, a variety of amendments to the purposes of the authority have been adopted by the State which in effect have made county improvement authorities the single most comprehensive regional authority in the State. Each county is authorized to create such an authority. Unlike other authorities that once established become essentially independent, an improvement authority is required by N.J.S.A. 40:37A-56 to obtain the approval of the governing body of the county prior to the acquisition or construction of any public facility by the authority. This in enables the county to reap the advantage of the flexibility established under the Improvement Authorities Law both with regard to the types of projects that it can undertake as well as the financing options afforded in that Act for financing the various projects it chooses to be involved in, while at the same time maintaining a degree of control over the types of activities that such an authority embarks on.
One of the significant benefits to the local governmental units that use an improvement authority as a financing vehicle is that there is a much more flexible means of financing available that would otherwise not be available under either the Local Bond Law or Title 18A, Education, or similar laws that would form the basis of debt obligations of the local governmental units. Capital appreciation bonds, zero coupon bonds, term bonds in combination with serial bonds, county guarantied or local guarantied revenue bonds and a variety of other financing options become feasible under financings undertaken by an improvement authority since bonds issued by improvement authorities can be negotiated with investment banking firms. Bond issues are able to be timed in such a way that the authority can take advantage of changes in the marketplace to enter into purchase contracts in a more flexible way than the advertising requirements of the Local Bond Law, Title 18A and related statutes. Assuming sophisticated financial advice by financial advisors to monitor the contracts entered into with investment bankers, this can provide significant advantages particularly on transactions that involve large capital expenditures and which affect more than one municipality.
There tends to be a fear that an improvement authority becomes an enterprise unto itself, and that it becomes difficult to control as it becomes successful. The counties that have utilized improvement authorities to the maximum extent provided in the law have found that they can become much more creative and much more responsive to the developing needs of their county as Federal dollars shrink and local initiatives become more difficult. The degree of control that is exercised by the county is simply a matter of policy. In some cases, that control is manifested by a simple delegation of broad power to undertake the particular projects that are brought to the governing body for consideration. In others, there have been specific strings attached to the approvals that are given by the governing body. In some instances, the approval is given before any action is undertaken, and in others, much more significant discussions are held before any submission is made to the governing body for its consideration. The process is as broad as it is long. The ultimate bottom line is that nothing can be done by the improvement authority without the blessing of the county governing body. The degree of cooperation between the county itself and the improvement authority will determine to what extent the improvement authority is successful as a tool to make county and local government more responsive, more creative and more effective.