Qualified Local Government Units and eligible Water Purveyors should consider borrowing funds from the NJ Water Bank Financing Program to undertake the construction of water-related infrastructure projects because the Financing Program saves Borrowers money – a lot of it – mostly in the form of interest cost savings; and provides pre-construction technical assistance and post-funding local and financial assistance. Funds lent from the State at a 0% interest rate, combined with funds lent from the I-Bank at its AAA-rated interest rate create a blended-interest rate for participants that, in recent years and at current rates, have saved Borrowers typically between 25% to 40% of their loan amount versus the project being financed in similar fashion, independently by the borrowers. Since its inception, the Financing Program has saved borrowers at least $2.77 billion through lower interest costs, and created an estimated 149,000 direct construction jobs, adding vital economic activity to the State in the process.

For a comparison between financing a project through the Water Bank program versus independent financing, visit the NJEIT's Wise Calculator.


Earnings Credits
Earnings on investments in all bond funds, including the Project fund, Revenue fund and Borrower-funded Debt Service Reserve funds, are distributed to Borrowers as credits toward their debt service payments.

No Bond Insurance Required
The security provided by the I-Bank's financial structure saves Borrowers the expense of purchasing costly bond insurance.

No Debt Service Reserve Fund
Almost all Borrowers are relieved of their obligation to commit funds to a debt service reserve fund due to the Program's Master Program Trust structure.

Minimized Financing Costs
Program underwriting costs are allocated to each Borrower's pro-rated share of a bond series. This results in the cost of bond issuance being shared among Borrowers proportionately based on each Borrower's project loan amount, dramatically minimizing each Borrower's cost when compared to self-financed bond deals.

No Front-loading Requirement
Local Government Units issuing their own general obligation debt are required to “front load” their repayment schedule. This ensures that debt service payments are larger in the early years of the loan, and grow smaller over time. Financing Program provides for level debt service throughout the life of the loan smoothing Borrowers' cash flows.

Net Funding
According to a projects draw schedule, all undrawn funds are invested by the I-Bank and accrue earnings that are credited to the Borrower.

The I-Bank continually monitors market conditions to assess when interest rates meet the I-Bank's savings threshold for refunding prior bonds. All net savings realized from prior bond refundings, totaling over $200 million to date, are passed on to Borrowers.

Debt Service Reserve Fund
Many borrowers are relieved of their obligation to commit a portion of loan funds to debt service reserve fund due to the Program's Master Program Trust structure.


Capitalized Interest Loans may be structured to include all or part of construction period interest costs allowing borrowers to defer interest cost repayments for up to 36 months.
Deferred Principal Repayment To better align a project's cash flow dynamics, borrowers are allowed to defer principal repayment for up to 36 months from the time of bond closure.
Generous Allowable Costs Associated project costs, including planning and design, engineering, local financing and curb-to-curb right-of-way restoration may be financed through the program. An eligible project's reserve capacity costs such as excess project capacity may be financed through an I-Bank only loan.
Flexible Term Shorter term financing is available for Borrowers who prefer not to have a 20-year obligation or for assets with useful average lives of less than 20 years.


No Arbitrage Worries
The I-Bank manages federal IRS arbitrage rebate requirements, relieving Borrowers of the cost and administration of this obligation.

No Secondary Disclosure Requirements
Due to the size of the Financing Program, no single borrower is a material obligated entity. As a result, Financing Program borrowers are not required to fulfill SEC secondary disclosure or reporting requirements.

Timely Decisions
The DEP prioritizes Financing Program project reviews.

Program reports required of each borrower by the SEC, IRS, EPA and others are handled or managed by the I-Bank, thereby minimizing the need and expense of additional administrative staff by the Borrowers.