New Jersey will take on $157.4 million of moral obligation debt this week as the South Jersey Port Corp. will issue the marine terminal revenue bonds with the expectation that state allocations to meet the corporation's debt service costs will continue.
Raymond James & Associates will price the new-money bonds on Tuesday after today's retail-order period. The transaction consists of $128.7 million of taxable Build America Bonds, $23.7 million of tax-exempt private activity debt, and $4.9 million of taxable bonds.
Bond proceeds will help finance a new 190-acre Paulsboro Marine Terminal cargo port in southwestern New Jersey, across the Delaware River from the Philadelphia International Airport. SJPC officials estimate the development will create 500 construction jobs and 2,500 indirect jobs once the port begins operations in 2012.
In addition, the port is anticipated to generate $10 million to $15 million per year within five years and bring in $20 million annually by 2019, according to the SJPC.
Since 1972, the state has replenished the corporation's debt service reserve fund each year as its revenues have been insufficient to cover principal and interest payments. New Jersey paid $7.45 million to SJPC in fiscal 2009 for debt service costs, and the corporation anticipates the state will pay $8.47 million by June 30 to replenish SJPC's debt service fund, according to the preliminary official statement.
The corporation's $143.7 million of outstanding debt and the Series 2009P bonds are not state appropriations bonds or state contract bonds and New Jersey is not legally obligated to repay the debt.
"Purchasers of the Series 2009P bonds should assume that the net revenues of the corporation after paying operating expenses well be insufficient to make debt service payments on the Series 2009P bonds, and that all or a portion of the required debt service payments on the Series 2009P bonds will be made with funds appropriated to the corporation by the state, from time to time, for such purpose; provided, however that the state legislature has no legal obligation to make any such appropriations."
Incoming Gov.-elect Chris Christie has pledged to scale back on borrowing once he takes office on Jan. 19 in light of the state's $33.8 billion of outstanding general obligation, state appropriation, and moral obligation debt. Maria Comella, spokeswoman for Christie, declined to comment on the $157.4 million sale or the state's moral obligation to repay the debt.
The state's Treasury Department also did not return requests for a comment.
In other news, New Jersey's gross income tax receipts in November were $76.1 million above budgeted projections, a 10.6% increase. Total November revenue came in $625,000 above earlier calculations, at $1.92 billion. Sales tax receipts, business tax collections, and other revenue were below budgeted estimates.
"The stronger-than-expected growth in the gross income tax is an encouraging sign for New
Jersey's economy and the state's budget," Treasurer David Rousseau said in a prepared statement.