New JerseyS4796220th Legislature (2024-2025)SenateWALLET

Amends lists of environmental infrastructure projects approved for long-term funding by DEP under FY2026 environmental infrastructure funding program.

Sponsored By: John J. Burzichelli (Democratic), Cody D. Miller (Democratic), Troy Singleton (Democratic)

Signed by Governor

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Bill Overview

Analyzed Economic Effects

16 provisions identified: 12 benefits, 1 costs, 3 mixed.

Loans support listed New Jersey water projects

Effective December 23, 2025, the law authorizes financing for listed New Jersey water projects, including zero-interest and loan-forgiveness financing. The 142-project clean-water list shows about $1.456 billion in estimated state loans and $1.942 billion in estimated total loans. Another 76-project list authorizes about $542.07 million in state loans toward $722.75 million in allowable loans. Listed drinking-water projects also qualify, including projects serving Camden, Orange, Wildwood, and other named communities. Financing depends on available money, eligible applications, and compliance with environmental and program requirements.

Affordability rules unlock water loan forgiveness

Applicants meeting state affordability standards qualify for up to $19 million in clean-water forgiveness, plus specified unused fiscal year 2025 funds. Clean-water costs receive full forgiveness up to $3 million for Tier 1 borrowers and $2 million for Tier 2. Drinking-water projects not addressing lead or emerging contaminants have up to $41 million in federal funds. That includes $20 million for full forgiveness on top-ranked qualifying loans up to $10 million, and $21 million for Tier 1 and Tier 2 forgiveness capped at $3 million and $2 million. Clean-water costs above tier limits, and eligible projects in either program receiving no forgiveness because funds run out, use 25% of the Infrastructure Bank's market rate.

Disadvantaged communities get water project help

Disadvantaged communities participating in the state's water technical assistance program qualify for planning, design, and construction help. The law authorizes up to $60 million in planning and design grants, capped at $2 million per applicant. It also authorizes up to $60 million in construction loan forgiveness, capped at $2 million per applicant. Both authorizations draw on specified fiscal year 2026 funds and designated fiscal year 2021–2023 funds. Separately, the state can transfer up to $5 million from fiscal year 2026 water funds for technical assistance.

Water systems get lead replacement relief

The law provides up to $68 million for lead-line replacement loan forgiveness, plus specified unused fiscal year 2025 funds. Water systems must meet state affordability standards and participate in the state's lead service line replacement program. Tier 1 forgiveness reaches 80%, capped at $16 million per system; Tier 2 reaches 50%, capped at $10 million. For costs up to $20 million, remaining debt carries interest at half the Infrastructure Bank's market rate; higher costs use 25%. Eligible projects receiving no forgiveness because money runs out receive loans at 20% of that market rate.

Water sponsors face loan agreement deadline

The clean-water and drinking-water eligibility lists and their loan authority expire July 1, 2026. Sponsors must sign and deliver their loan agreements to the environmental department before that date. Sponsors missing the deadline lose entitlement to loans authorized through these lists.

Sandy projects get aid with loan conditions

Listed clean-water projects can receive zero-interest or forgivable Sandy financing, capped at $300 million overall. Projects must serve Sandy-affected communities or reduce flood risk and vulnerability to changing water conditions or natural disasters. The environmental commissioner must certify compliance with federal disaster law and state environmental requirements. With State Treasurer approval, the commissioner can add administrative fees or give Infrastructure Bank loans repayment priority over state loans. Individual loan amounts can be reduced when projects fail program requirements.

Water borrowers get terms and safeguards

Certain state-supervised municipalities and authorities, federal disaster-recovery grant recipients, and sewerage authorities qualifying for overflow or stormwater grants qualify for 100% state loans. Credit-policy exceptions require state financial oversight; authorities using this route must secure repayment with their participating municipality's full faith and credit. Repayment limits are generally 30 years, 35 years for federal Water Infrastructure Finance and Innovation Act loans, and 45 years for combined sewer overflow abatement. Projects need environmental compliance certification and usually Infrastructure Bank loan approval, except specified 100% state loans. The commissioner can add loan terms with State Treasurer approval.

Communities get cleaner, more resilient water

Forgiveness pools provide up to $8 million for water quality restoration, $10 million for efficiency, and $8 million for stormwater resilience. Restoration and efficiency pools also include specified unused fiscal year 2025 funds; efficiency projects must meet federal Green Project Reserve standards. Each program forgives half of costs up to $4 million, with forgiveness capped at $2 million per borrower whenever practicable. Remaining debt within that cost range uses half the Infrastructure Bank's market rate. Costs above $4 million, and eligible projects receiving no forgiveness because funds run out, use 25% of that rate.

Grants cover eligible sewer project costs

The law makes federal Sewer Overflow and Stormwater Reuse grant receipts available for eligible clean-water projects. The federal money must be available by June 30, 2026; no fixed grant total is stated. Qualifying sewer overflow and stormwater projects also have up to $2 million in forgiveness, plus specified unused fiscal year 2025 funds. A fully forgiven loan can cover up to 20% of project costs, with a state environmental department grant covering the rest.

Pinelands communities gain water financing options

Four listed Pinelands water projects receive loan authority totaling an estimated $15.34 million. The law also allows drinking-water projects to use the Pinelands Infrastructure Trust Fund. Until drinking-water financing rules are adopted, those projects use the fund's wastewater project rules.

Sewer overflow projects get loan relief

Construction projects reducing combined sewer overflows have two forgiveness pools of up to $18 million each, plus specified unused fiscal year 2025 funds. The general pool limits forgiveness to $5 million per borrower whenever practicable. For general-pool costs above $5 million through $10 million, half is forgiven; remaining debt uses half the Infrastructure Bank's market rate. The affordability-based pool fully forgives costs up to $8 million for Tier 1 borrowers and $7 million for Tier 2. Costs above each program's upper threshold, and eligible projects receiving no forgiveness because funds run out, use 25% of that market rate.

Small water systems get debt relief

Systems serving 10,000 people or fewer have up to $5 million in loans, plus specified unused fiscal year 2025 funds. Their forgiveness pool totals $1 million; each sponsor is limited to 50% of its loan and $2 million. A separate $5 million forgiveness pool serves systems with fewer than 1,000 people. These systems receive full forgiveness through the Community Engineering Corp or Engineering Contract with the New Jersey Water Association. Nonparticipants can receive full forgiveness up to $2 million; costs above $2 million in either small-system program use 25% of the Infrastructure Bank's market rate.

Three communities get added water financing

Brick Township Municipal Utilities Authority and East Orange receive supplemental drinking-water loan authority for qualifying cost increases. Their estimated state loans total $4.3125 million, toward $5.75 million in estimated total loans. Ship Bottom's clean-water project receives supplemental zero-interest loan authority of $750,000, toward $1 million in estimated total loans. These loans cover final construction-cost differences from fiscal year 2020 certified amounts and qualifying added costs. Funding depends on sufficient money and compliance with the program's project requirements.

Water projects get emerging contaminant relief

Projects mainly addressing emerging contaminants qualify for dedicated loan forgiveness. Clean-water projects have a $27 million pool, with full forgiveness on costs up to $10 million whenever practicable. Drinking-water projects have an $18 million pool, with up to full loan forgiveness capped at $3 million per applicant. Costs above these limits carry interest at 25% of the Infrastructure Bank's market rate. Eligible projects receiving no forgiveness because money runs out also receive that reduced rate.

State can redirect water financing funds

The state can transfer up to $25 million in specified drinking-water funds to the New Jersey Infrastructure Bank. Eligible sources include fiscal year 2025 appropriations and designated fiscal year 2021–2024 funds. The bank can invest the money, back project debt, or pay interest for project sponsors. The environmental department can also move money between clean-water and drinking-water revolving funds within federal limits. Clean-water funds can address drinking-water needs, including public-health threats, with uses and interest charges limited by federal law.

State can resize water project loans

The environmental department can set its share of an authorized project's allowable loan anywhere from zero to 100%. A 100% state loan uses the certification-year program terms when interim financing was issued; otherwise, fiscal year 2026 terms apply. Individual loan amounts can rise or fall with final construction costs or low bids, within authorized limits. Additional adjustments of up to 10% can address asset management, emergency response, flood protection, or backup-power guidance. Program-wide loan limits can also include interest accrued on qualifying short-term or temporary interim loans.

Sponsors & Cosponsors

Cosponsors

David Bailey Jr.
Democratic • House
John F. McKeon
Democratic • Senate
Shirley K. Turner
Democratic • Senate
Benjie E. Wimberly
Democratic • Senate

Roll Call Votes

All Roll Calls

Yes: 109 • No: 0

House vote • 12/22/2025

3RDG FINAL PASSAGE

Yes: 72 • No: 0 • Other: 1

Senate vote • 12/22/2025