New Jersey borrowing approved for $300M capitol project

New Jersey received final approval to bond for a large-scale renovation of its State House.

The New Jersey Economic Development Authority approved up to $300 million in lease revenue bonds Wednesday to finance the overhaul of the 18^th century building announced by Gov. Chris Christie last November. The Republican governor, whose term ends on Dec. 31, has said the facelift will take four years to complete and include upgrades to the HVAC system, fire codes and wheelchair accessibility.

Emile Wamsteker/Bloomberg

The building is home to both houses of the legislature as well as executive offices for the governor.

“The $300 million financing of the long-overdue restoration of the dilapidated and decaying State House will ensure that New Jersey’s Capitol is saved for future generations while having minimal annual impact on the general fund,” New Jersey Treasury spokesman Willem Rijksen said in a statement.

A memo released by the NJEDA said RBC Capital Markets bonds will sell the bonds as lead underwriter. The final maturity of the bonds, which are backed by future rent payments, will not exceed 30 years. The bonds will first be offered in a variable interest rate model and can be changed at any time to fixed rate.

New Jersey has the second oldest continuously-operated state house in the U.S. and experienced 17 different building projects from 1792 to 1958. More than $3 million was spent on “Band-Aid” projects to maintain the structure last year, according to Christie. The project will not impact the state’s Assembly and Senate chambers.

Law firm Chiesa Shahinan & Giantomasi PC was selected as bond counsel for the State House transaction following a competitive bidding process, according to the NJEDA memo. Jeffrey Chiesa, a principal at the firm, is also overseeing a state takeover of Atlantic City. The West Orange, N.J.-based firm was formerly called Wolff & Samson before rebranding in April 2015 when partner David Sampson was under investigation for misusing his position as chairman of the Port Authority of New York and New Jersey to pressure United Airlines to start flights from Newark to South Carolina.

New Jersey has experienced 11 rating downgrades since Gov. Chris Christie first entered the state house in 2010 stemming largely from structurally unbalanced budgets and rising unfunded pension liabilities. The Garden State’s general obligation bonds are rated A3 by Moody's Investors Service, A-minus by S&P Global Ratings and A by Fitch Ratings and Kroll Bond Rating Agency. Only Illinois bonds are rated lower of the 50 U.S. states.