Title
Dept/ Agency: Finance
Action: ( ) Ratifying (X) Authorizing ( ) Amending
Purpose: Application to Local Finance Board for approval of bond ordinance
Name of Project(s): Mulberry Commons Pedestrian Bridge
Amount to be Financed: $110,000,000.00
Funding Source: Revenue Bonds
Local Finance Board meeting date(s): October 20, 2021
Project Information:
(Description/ Project No./ Amount Appropriated/Ordinance No.)
RESOLUTION OF THE CITY OF NEWARK, IN THE COUNTY OF ESSEX, NEW JERSEY, APPROVING THE SUBMISSION OF AN APPLICATION TO THE LOCAL FINANCE BOARD PURSUANT TO N.J.S.A. 40A:12A-29(a)(3) PERTAINING TO THE ISSUANCE OF UP TO $110,000,000.00 PRINCIPAL AMOUNT OF MASS TRANSIT ACCESS TAX REVENUE BONDS AND PROJECT NOTES (MULBERRY PEDESTRIAN BRIDGE REDEVELOPMENT PROJECT) (CITY SECURED) AT ANY ONE TIME OUTSTANDING OF THE CITY, ACTING AS REDEVELOPMENT ENTITY AND THE ADOPTION OF A SUBSIDY ORDINANCE BY THE CITY RELATING THERETO.
Additional Information:
The 3.5% Mass Transit Tax will be pledged to pay the debt service for these bonds.
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WHEREAS, the P.L. 2019, c. 289, specifically N.J.S.A. 40:48C-1.7, et seq. (the “Mass Transit Access Parking Tax Law”), authorized certain municipalities to impose a 3.5% tax within such municipality and to use the proceeds therefrom for the exclusive purposes of financing and funding capital improvements for pedestrian access to mass transit stations, specifically N.J.S.A. 40:48C-1.7(b) (the “Eligible Project”); and
WHEREAS, pursuant to Ordinance 6PSF-e, adopted by Municipal Council on March 24, 2020 (the “Tax Ordinance”), the City of Newark (the “City”) has heretofore authorized the imposition of a 3.5% Mass Transit Access Tax on fees generated from the parking, garaging and storing of motor vehicles, subject to certain exemptions and exceptions (the “Mass Transit Access Tax”); and
WHEREAS, pursuant to and in accordance with the provisions of the Mass Transit Access Parking Tax Law, specifically N.J.S.A. 40:48C-1.7(b), the City may finance capital improvements for pedestrian access and acting as Redevelopment Entity pursuant to N.J.S.A. 40A:12A-30, and issue bonds or bond anticipation notes for the purpose of financing the Eligible Project, which bonds and bond and anticipation notes shall be payable from and secured by revenues generated by the Mass Transit Access Tax; and
WHEREAS, the City is desirous of constructing the Mulberry Pedestrian Bridge Redevelopment Project, which is an Eligible Project pursuant to the Mass Transit Access Parking Tax Law located in all or a portion of redevelopment areas within the City, including the Downtown Core Redevelopment Plan, as amended and the Living Downtown Redevelopment Plan, as amended, as applicable, to provide commuter and pedestrian access from Penn Station to various neighborhoods within the City; and
WHEREAS, to fund the costs of constructing the Eligible Project, the City as Redevelopment Entity intends to issue its Mass Transit Access Tax Revenue Bonds (Mulberry Pedestrian Bridge Redevelopment Project)(City Secured) (the “Bonds”) and Project Notes in anticipation of the issuance of such Bonds (“Project Notes”) to fund, as applicable, the costs of demolition, construction, and preliminary architectural, planning and design and soft costs (the “Project Costs”) in one or more series, under the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1 et seq. (the “Redevelopment Law”) and sell the Bonds and Project Notes at private sale to one or more purchasers to be designated by a resolution of Municipal Council, pursuant to N.J.S.A. 40:A12A-29(a)(3); and
WHEREAS, the City, as Redevelopment Entity, has determined to issue an initial series of Bonds and Project Notes in the principal amount not to exceed One Hundred Ten Million Dollars and Zero Cents ($110,000,000.00) at any one time outstanding, to fund the Project Costs of the Eligible Project, such Bonds and Project Notes to be sold at private sale; and
WHEREAS, the City as Redevelopment Entity intends to adopt, inter alia, a bond resolution approving the terms for the issuance and sale of the Bonds and Project Notes and the forms of various documents, including, inter alia, a Trust Indenture and Pledge and Assignment Agreement; and
WHEREAS, pursuant to the provisions of the Redevelopment Law, specifically N.J.S.A. 40A-12A-29(a)(3), the sale and issuance of the Bonds and Project Notes at private sale is subject to the approval of the Local Finance Board, in the Division of Local Government Services, Department of Community Affairs, State of New Jersey (the “Local Finance Board” or “Board”); and
WHEREAS, the City intends to adopt a subsidy ordinance (the “Subsidy Ordinance”) and to execute an agreement which will provide for: (i) the payment of any shortfalls in the Debt Service Reserve Fund for the Bonds and the replenishment thereof resulting from a deficiency in Mass Transit Access Tax revenues; and (ii) the payment of the principal of and interest on the Project Notes when due and owing to the extent payment is not otherwise provided for; and
WHEREAS, the City desires to make application to the Local Finance Board for: (i) its approval of the private sale of the Bonds/Project Notes to one or more purchaser(s) thereof as may be designated by the City pursuant to N.J.S.A. 40A:12A-29(a)(3); (ii) any approvals that may be required for the adoption of the Subsidy Ordinance pursuant to N.J.S.A. 40A:12A-37, 41 and the Local Bond Law, N.J.S.A. 40A:2-1 et. seq.,; and (iv) such other approvals and/or findings as may be required by the Local Finance Board in connection therewith; and
WHEREAS, the Bonds/Project Notes will be nonrecourse to the City as Redevelopment Entity, and except with respect to the City Subsidy, the City’s full faith and credit will not be pledged to the payment of principal and interest on such Bonds/Project Notes, but rather will be payable from and secured solely by a pledge of 100% of Mass Transit Access Tax revenues; and
WHEREAS, the Subsidy Ordinance for the Bonds and Project Notes will pledge the full faith and credit of the City to the payment of deficiencies in the debt service reserve fund for the Bonds and the payment of principal and interest due and owing on the Project Notes to the extent payment is not otherwise provided for; and
WHEREAS, the Municipal Council believes that:
(a) it is in the public interest to accomplish such purposes;
(b) said purpose or improvements are for the health, welfare, convenience or betterment of the inhabitants of the City;
(c) the amounts to be expended for such purpose or improvements are not unreasonable or exorbitant; and
(d) the proposal is an efficient and feasible means of providing services for the needs of the inhabitants of the City and will not create an undue financial burden to be placed upon the City.
NOW, THEREFORE, BE IT RESOLVED by the Municipal Council of the City of Newark, New Jersey, THAT:
1. The application to the Local Finance Board is hereby authorized and approved, and the City's Business Administrator, Director of the Department of Finance, Deputy Mayor/Director of the Department of Economic and Housing Development, the City’s Bond Counsel, Municipal Advisor and Auditor, along with other representatives of the City, are each hereby authorized and directed to prepare such application, to file such application with the Local Finance Board in connection with the above transaction and to represent the City in matters pertaining thereto.
2. The City Clerk is hereby directed to prepare and file a copy of the within resolution as adopted and the proposed Subsidy Ordinance as introduced with the Local Finance Board as part of such Application.
3. The Local Finance Board is hereby respectfully requested to consider such application and to record its findings, recommendations and/or approvals as provided by the applicable New Jersey Statute, including causing its consent to be endorsed upon certified copies of the Subsidy Ordinance (as applicable).
STATEMENT
This Resolution approves the submission of an application to the Local Finance Board relating to the proposed issuance of up to $110,000,000.00 Mass Transit Access Tax Revenue Bonds (Mulberry Pedestrian Bridge Redevelopment Project) (City Secured) of the City, the proceeds of which will be used to pay Project Costs of the Pedestrian Bridge Project, and pay preliminary expenses and soft costs. Except with respect to the Subsidy Ordinance, the Bonds and Project Notes will be nonrecourse to the City, but rather will be payable from and secured by the City's Mass Transit Access Tax revenues. The Subsidy Ordinance will pledge the full faith and credit and taxing power of the City to fulfill its obligations thereunder, to the extent payment is not otherwise provided for.