$500 Million Clean Water Fund subsidizes new development
ENCAP DEBACLE LOOMS OVER LATEST NEW JERSEY WATER FUND PLAN — Impending Legislative Approval Fails to Address Root Causes of Smoldering Scandal
NJ has a $16 Billion Unmet Clean Water Infrastructure Need – So Why are Clean Water loans subsidizing new development?
Trenton — Yesterday, a key committee of the New Jersey legislature approved financing for a new round of water projects, but this year’s $500 million spending plan does not remedy the flaws that led to the Encap fiasco, according to testimony delivered by Public Employees for Environmental Responsibility (PEER).
At a meeting yesterday, the Senate Environment Committee signed off on a four bill package which implements the Infrastructure Trust financing program, clearing the way for a half-billion dollars of new state clean water loans to be issued this fall. This endorsement for extending unchanged current policies occurs just months after an Inspector General’s report laid out causative factors behind the Encap scandal in which the state Department of Environmental Protection provided a $212 million, largely unsecured loan to a project that went belly-up, leaving taxpayers to pay a multi-million tab.
Despite the bath taxpayers took when Encap declared bankruptcy, the Corzine administration is actually increasing reliance on the very techniques that led to the fiscal follies of Encap. For example, it has adopted rules allowing clean water funds to be used for “conduit financings,” “transit villages,” and “transfer of development rights” projects and other high-finance, high-risk projects. Here’s the DEP’s list of “non-traditional” eligible project categories that receive priority points:
Smart growth projects
Transfer of Development Rights (TDR) Receiving Areas
NJDOT Designated Transit Villages –
State Plan Urban Centers and Urban Complexes
Designated Brownfields Development Areas –
Conduit Borrowers (like ENCAP)
Sustainable Community Planning
$25 million Set aside Landfill Closures and Site Remediation
In testimony before the committee today, New Jersey PEER Director Bill Wolfe argued that fundamental features enabling Encap remain. Under the new plan –
1) Clean water funds could be used to subsidize private “brownfields” projects (for example, multi-million dollar loans to big corporations, such as Hartz Mountain ($31 million) and Michelin Tire ($6.6 million) are on the funding list). In addition, tax-secured loans could still go to new development including projects only tangentially related to clean water purposes – as opposed to upgrading existing deficient infrastructure, despite state Department of Environmental Protection (DEP) estimates of a $16 billion infrastructure backlog;
2) The proposed Trust renewal legislation fails to remedy insider and lobbyist abuses identified by the Inspector General as facilitating the Encap debacle; and
3) The legislation does not address the lax financial oversight of loans found by the Inspector General, such as DEP waiver of loan collateral and security and approval of payments for ineligible uses. Without remedying weak DEP financial controls and insufficient staff to oversee loans, the Legislature leaves the program vulnerable to more financial manipulation and abuse.
“We need to close the cookie jar by prohibiting private use or benefit from Infrastructure Trust loans,” Wolfe commented, “We need to focus state support on priority clean water projects instead of no-collateral development schemes sponsored by Governor Corzine.”
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Look at development projects subsidized
Download file
Read the 2007 PEER letter to EPA asking for oversight
http://www.peer.org/docs/nj/07_30_1_epa_oversight_req.pdf
See the 2008 U.S. EPA disclaimer
http://www.state.nj.us/dep/dwq/pdf/cwf_epa_disclaimer.pdf
Look at the Inspector General report
http://www.state.nj.us/oig/pdf/Meadowlands%20Remediation%20and%20Redevelopment%20Project.pdf
http://www.state.nj.us/dep/dwq/pdf/cwf_2008prop_toc.pdfView the Wastewater Infrastructure Trust Intended Use Plan
Examine diversion of water infrastructure funds to development schemes
http://www.peer.org/news/news_id.php?row_id=813
Review $16 billion backlog of water infrastructure needs
http://www.peer.org/news/news_id.php?row_id=813
New Jersey PEER is a state chapter of a national alliance of state and federal agency resource professionals working to ensure environmental ethics and government accountability
Thanks for putting the whole sordid picture together. I could add other things going on at DEP that add to the giveaways to developers or business: Pressure is easily placed by various “stakeholders” to have Hazardous Discharge Site Remediation Funds (HDSRF) money awarded to various projects by local and state politicians (often one and the same, such as with Bayonne or Jersey City). Then the grant recipient (the municipality or Redevelopment Board) is given the right to select the contracted engineering firm or consultant to do the investigation. Then the invoices for the work being paid by state funds must be approved by the DEP. And when staffers at DEP ask too many questions about line items on the invoices or wonder why the investigation and/or remediation costs so much, political pressure is again placed and they are told to just approve it or be reassigned to the basement (you get the idea). It happens all the time.
Another bright idea (not) is the EPA’s “Triad” approach. Under this retread of an idea (EPA gives out promotions to those who reinvent the wheel), so-called fast-track investigation is performed at contaminated sites. The DEP staff and “stakeholders” such as Redevelopment Boards and their consultants , local politicians and their consultants, and the developer and their consultants (!) meet often to iron out the details without the “hassle” of writing work plans or reports or other requirements of state regulations. However, in the interest of speeding up a project in order to get those condos built, much is often overlooked.
I foresee the time when we have Licensed Site Professionals running DEP (with whistleblower protection) while a skeleton crew of DEP staff try to oversee hundreds of projects each and with no whistleblower protection. As the Sierra Club said in their article the other day, soon NJ will be run totally by developers. And the taxpayers and residents don’t even see it coming. They are being duped by the idea that DEP is the reason the economy is in the dumper! Yea, DEP is so powerful that it managed to cause the loan and credit crisis, the rise in unemployment and the rise in the cost of gasoline! If twe have that kind of power, why can’t we get Corzine to lift his hiring and promotional freeze? I guess we probably caused the savings & loan scandal in the 1990s too. Wait a minute……….was there even a DEP then? I do remember this……….there was a Republican in the White House then just as there is now! Coincidence? I think not.