The New Jersey Garden State Preservation Trust is expected on Wednesday to sell $285 million of open-space and farmland preservation bonds to refund its Series 2003A and 2005A bonds.
A retail order period is scheduled for the same day, a spokesperson said.
Wells Fargo Securities is lead underwriter. Bond counsel is McManimon & Scotland LLC.
According to Standard & Poor’s, which assigns its AAA rating and a stable outlook to the debt, savings from the refunding in fiscal 2012 and 2013 are estimated at $7.9 million and $13.8 million, respectively. The state estimates net present-value savings to be $22.8 million.
Moody’s Investors Service rates the bonds Aa3 and Fitch Ratings assigns an equivalent AA-minus, both with stable outlooks.
The bonds will have maturities out to 2023 and are special, limited obligations of the trust, payable solely from the pledged property, which consists primarily of a portion of state sales tax revenues subject to annual legislative appropriation.
In its report, Standard & Poor’s notes the constitutional dedication of up to $98 million annually of state sales tax revenues, “which effectively eliminates the appropriation risk.”
Moody’s and Fitch also list the dedication of state sales tax as basis for their ratings. Fitch said the sales tax is “relatively broad and levied statewide.”
The bonds are issued under the Garden State Preservation Trust Act which established the trust to fund preservation projects, including land acquisition and development.
Also on Wednesday, the New Jersey Environmental Infrastructure Trust, a state instrumentality that provides low-cost financing for environmental infrastructure projects, is expected to offer a competitive $95 million sale of environmental infrastructure bonds in three series.
The state will use proceeds from the bonds to make loans to about 63 borrowers that would finance environmental infrastructure projects, including wastewater treatment.
The deal includes $68.6 million of Series A bonds, $21.8 million of Series B bonds, with interest subject to alternative minimum tax, and $4.8 million of Series C bonds, which will be federally taxable.
Among the borrowers to receive loans from the Series A bonds, the Camden County Municipal Utilities Authority will receive $15 million to finance the construction of a sewage pipeline, said the trust’s executive director, David Zimmer.
“We’re cleaning up the environment more efficiently and at a lower cost,” he said.
Tax treatment of Series B and C bonds reflects their financing of private-use projects.
Zimmer said New Jersey American Water will receive a loan of $18 million that will go toward its Canoe Brook Water Treatment Plant, a drinking water facility serving around 21 municipalities.
The Series C bonds are not eligible for tax-exemption because they will finance a loan to Newark — acting as a conduit for a private company — for liquid-waste remediation instead of solid-waste remediation.
The Environmental Infrastructure Trust bonds have triple-A ratings with stable outlooks from Moody’s, Fitch and S&P. All three agencies cite the trust’s large and diverse pool of borrowers and significant over-collateralization from loan repayments.
Moody’s analysts said the loan pool can withstand a high default tolerance of over 50% without impairing debt service coverage.
McCarter & English LLP is bond counsel and Public Financial Management Inc. is financial advisor.
