Moody's Investors Service said the settlement arrived at between the New Jersey Meadowlands Commission and Lyndhurst regarding unpaid township property taxes is a credit positive.

Under the settlement, the Meadowlands Commission, a state agency, must pony up $5 million to the township to settle all back taxes and liens, as well as make a payment-in-lieu-of-tax of $175,000 annually until the properties are sold or become taxable.

The property in dispute was formerly owned by Encap Golf Holdings LLC and was planned to be used for a large golf course and luxury residential properties.

The redevelopment project failed after EnCap defaulted on state loans and filed for bankruptcy.

The Meadowlands Commission took ownership of the property, but did not pay taxes, claiming it was exempt since it was a state agency.

EnCap had been Lyndhurst's top taxpayer, with anticipated annual property tax payments of $2.4 million.

"The recent settlement is credit positive because it resolves uncertainty from the sizeable uncollected property tax payments," Moody's analysts said in a report.

However, the $5 million settlement is shy of the accumulated $7.1 million anticipated by Lyndhurst, the report said.

Moody's rates Lyndhurst Baa1 with a negative outlook.

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