Title
Dept/ Agency: Law
Action: ( X ) Ratifying ( X ) Authorizing ( ) Amending
Type of Service: Loan Agreement
Purpose: To authorize the execution of the CY 2024 Transitional Aid (TA) Loan Agreement, as amended, and to provide for additional loan support for CY 2025
Entity Name: State of New Jersey, Department of Community Affairs, Division of Local Government Services
Entity Address: 101 South Broad Street, 2nd Floor, P.O. Box 803, Trenton, New Jersey 08625-0803
Loan Amount: $22,000,000.00 (CY 2024) and $30,000,000.00 (CY 2025
Contract Period: Effective June 28, 2024 through September 30, 2031, and subject to terms of repayment as set forth in the Agreement
Contract Basis: ( ) Bid ( ) State Vendor ( ) Prof. Ser. ( ) EUS
( ) Fair & Open ( ) No Reportable Contributions ( ) RFP ( ) RFQ
( ) Private Sale ( ) Grant ( ) Sub-recipient (X) n/a
Additional Information:
This resolution reflects amendments to the CY 2024 Transitional Aid Loan Agreement extending the repayment period and establishes the terms of a new $30,000,000 Transitional Aid Loan for CY 2025.
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WHEREAS, the City of Newark is facing a serious fiscal emergency and has requested aid from the CY 2024 Transitional Aid (TA) to Localities administered by the State of New Jersey, Department of Community Affairs; and
WHEREAS, the Director of the Division of Local Government Services has determined that the City of Newark shall receive an award of Twenty-Two Million Dollars ($22,000,000.00) of Transitional Aid (TA) to Localities; and
WHEREAS, the Department of Community Affairs and the City of Newark have agreed to the terms of a Loan Agreement (the "Agreement"); and
WHEREAS, the Loan Agreement requires an amendment to address the City's structural budget and repayment timeline for CY 2024, and to provide for an additional $30,000,000.00 loan in support of the City's CY 2025 budget; and
WHEREAS, the State of New Jersey, Department of Community Affairs, requires a resolution from the Governing Body authorizing the execution of the amended Agreement, indicating its awareness of and acknowledging its contents, and agreeing to certain conditions.
NOW, THEREFORE, BE IT RESOLVED BY THE MUNICIPAL COUNCIL OF THE CITY OF NEWARK, THAT:
1. The Municipal Council of the City of Newark hereby authorizes the Mayor and/or his designee, the Business Administrator, to execute the amended Loan Agreement (the "Agreement") with the State of New Jersey, Department of Community Affairs, Division of Local Government Services.
2. The Municipal Council hereby acknowledges that it has reviewed the amended Agreement and is aware of and agrees to its terms and conditions, including the following provisions, which shall be incorporated into and deemed part of the Agreement:
a. The Division has loaned the City $22,000,000 in support of the City's CY 2024 budget. The term of this loan expires on September 30, 2031, and this loan bears no interest. The loan shall be repaid in five (5) equal installments of $4,400,000.00, payable by either check or ACH by September 30 of each year commencing in 2027.
b. Upon receipt of the signed documentation, the Division will loan the City $30,000,000 in support of the City's CY 2025 budget. The term of this loan expires within 180 days of execution of the Agreement, and this loan bears no interest. The loan shall be repaid in full by either check or ACH payment in the amount of $30,000,000.00 no later than March 3, 2026.
3. This resolution is ratified retroactive to June 28, 2024.
4. The provisions of the Agreement shall remain in full force and effect in accordance with the repayment timelines set forth above.
5. A copy of the fully executed Agreement shall be filed in the Office of the City Clerk and made available for public inspection.
STATEMENT
This Resolution authorizes the Mayor and/or his designee, the Business Administrator, on behalf of the City of Newark, to execute the amended Loan Agreement with the State of New Jersey, Department of Community Affairs, Division of Local Government Services. The Agreement provides for a $22,000,000.00 Transitional Aid Loan for CY 2024, repayable in five equal installments from 2027 through 2031, and an additional $30,000,000 Transitional Aid Loan for CY 2025, repayable in full by March 3, 2026. The City Council acknowledges the terms and conditions of the Agreement and ratifies this authorization retroactive to June 28, 2024.