NJEDA Fashions Second Tax-exempt Municipal Pooled Bond Issue: Five New Jersey Municipalities to...

Business Editors

TRENTON, N.J.--(BUSINESS WIRE)--Oct. 11, 2001

Revisiting a successful program launched last year to help New Jersey municipalities obtain favorable interest rates on borrowing for local projects, the New Jersey Economic Development Authority (NJEDA) has sold

The tax-exempt bond issue under the NJEDA's Governmental Loan Pool Program is earmarked for projects in the City of Bayonne in Hudson County, Independence Township in Warren County, Medford Lakes Borough in Burlington County, Township of Phillipsburg in Warren County, and Rutherford Borough in Bergen County.

"The Governmental Loan Pool Program responds to a request received last year by the NJEDA from the New Jersey Conference of Mayors to structure a lending program to help towns and cities in New Jersey borrow money on a long-term basis on more favorable terms by giving them access to NJEDA bonding capabilities," said Anthony R. Coscia, chairman of the Authority. "The pool structure allows these small communities to get the advantage of a triple A credit rating and gain access to public markets they could not normally afford to tap on their own."

Caren S. Franzini, executive director of the NJEDA, noted, "the program worked so well last fall when we issued nearly $21 million in bonds on behalf of six municipalities that we decided to pursue a second issue. We have now sold $31 million in bonds that will provide municipalities with funds at fixed interest rates ranging from 2.5% to 5%. The maximum repayment term of the bond was 20 years."

The bonds are backed by Ambac Assurance Corporation, which assures bond holders of repayment and helps reduce the interest cost. Participating municipalities further benefit by sharing the costs of issuance. Franzini noted that each municipality backs its own share of the pooled financing, resulting in no financial exposure to the Authority.

The Program assists municipalities that do not have access to county-sponsored pooled financing programs for such capital needs as equipment acquisition, municipal building improvements or debt refinancing, according to Frank T. Mancini, Jr., managing director of the NJEDA's Investment Banking Division.

A municipality must first go through its local approval process for incurring debt and may also need approval from the state's Local Finance Board, which evaluates whether the locality can manage the additional debt. Once these approvals are received, the municipality can apply to the NJEDA for assistance.

Although each project is funded through the issue, each municipality has its own loan repayment schedule and is responsible for its portion of the debt only. Each community stands on its own credit and is unaffected by the credit of other municipalities in the pooled issue.

The five municipalities in the bond pool and their financings are:

- Bayonne City, $17,771,000 to refinance bond anticipation notes

issued to purchase equipment and machinery for several city

departments including a fire truck, buses, police equipment

and office furniture and equipment. The financing will also

make possible renovation of several municipal facilities

including Veterans Stadium, the Bayonne municipal building, a

firehouse, and upgrades to the Public Works Department

building, traffic signal improvements, and sirens for civil

defense.

- Independence Township, $1,995,000 for the construction of a new municipal
building, including architectural and engineering costs, and to refinance prior
debt issued for construction of the water supply system serving the township's
Asbury Road area.

- Medford Lakes Borough, $2,816,000 to complete capital improvements and
renovation of the Oaks Hall Municipal Building and public works building, and
to refinance bond anticipation notes issued to finance a new garbage truck.

- Township of Phillipsburg, $6,408,000 to refinance bond anticipation notes for
the purchase of new equipment and vehicles and renovation of municipal
buildings including the Borough Hall, as well as infrastructure improvements
for sewers, roads, parks and playgrounds.

- Rutherford Borough, $2,025,000 to purchase new equipment and vehicles for its
municipal and public works departments, renovate the exterior of Borough Hall
and make electrical upgrades, make road improvements and upgrade infrastructure
including sewers, parks and playgrounds. The senior manager for the issue is
Commerce Capital Markets, Inc. and Tucker Anthony is the co-manager.

Municipalities interested in learning more about this program should contact the Conference of Mayors at (609) 989-9216 or (609) 989-9226. The Conference will assist a municipality in preparing the application and then forward it to the NJEDA for processing.

The NJEDA was established in 1974 to encourage business expansion and create jobs in New Jersey. It has arranged nearly $15 billion in financing since its inception. For more information on NJEDA programs, call (609)292-1800, or visit its website at www.njeda.com.