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EDA to Issue $400M in State Debt for Controversial Government Buildings

Christie administration uses obscure committees and commissions to push through contentious construction plan, keeping Assembly and Senate out of the loop

Construction workers

Gov. Chris Christie’s administration is preparing to issue more than $400 million in new state debt in the remaining weeks before he gives way to Gov.-elect Phil Murphy, with the money earmarked to pay for the construction of several new government buildings, including proposed state offices in Trenton that have been panned by many residents and business owners.

The proposed new bond-financing won approval yesterday from the New Jersey Economic Development Authority, which has the power to issue state debt for these types of building initiatives without first getting authorization from voters or the full Legislature.

Under the Christie administration’s latest plans, the proposed new borrowing would finance the construction of two new government office buildings in Trenton, and three Juvenile Justice Commission facilities in Ewing, Winslow, and Woodbridge. The building projects have received little public attention amid the ongoing lame-duck legislative session, going through obscure committees and commissions rather than being put up for votes in the Assembly and Senate.

Despite yesterday’s advancement by the EDA, final approval of the building projects and a leasing arrangement between the state and the EDA is still required from the seldom-watched Joint State Leasing and Space Utilization Committee in Trenton. The current legislative schedule does not indicate when that panel will hold its next meeting, or if it will occur before Christie — a Republican who took a hard line on state debt issues during his own transition period eight years ago — is due to leave office in mid-January.

Also unclear is where Democratic Gov.-elect Phil Murphy stands on the building projects, which would have to be completed by his incoming administration if the bonds are issued prior to the changeover.

Trenton residents, business owners unhappy

trenton aerial

Although planning for the new government office buildings in Trenton started in 2014, Christie first announced the project in September 2016. Under the latest plans reviewed yesterday, the project will involve the construction of two new office buildings in downtown Trenton to house the Department of Health and the Department of Treasury’s Division of Taxation. The plans also call for the existing building that’s currently used by Health employees to be demolished and turned into parking space once the new construction is complete. The existing Taxation building will be put out to bid as a redevelopment opportunity for the private sector, officials said yesterday, though it could eventually be demolished as well.

Christie touted the building plan as a way to reduce the overall state footprint in Trenton, and has predicted it will generate more economic development and private-sector investment in the city, which has struggled in the wake of the Great Recession. Trenton officials have praised the Christie administration for its decision to make a significant investment in the city.

But several Trenton residents and local business owners, including members of a group called Stakeholders Allied for the Core of Trenton, have faulted the state for not locating the new buildings in the city’s core downtown district, and for not including a mixed-use element that would encourage more downtown foot traffic. The Christie administration has also been criticized for not taking advantage of public-private partnership opportunities that would increase the city’s ratable base, and for advancing the project without first having a completed impact statement from the Capital City Redevelopment Corporation.

Trenton resident Iana Dikidjieva spoke out against the project during yesterday’s EDA meeting, calling the building designs “ill-conceived.” She also said the new buildings could ultimately “damage our downtown, rather than fostering the kind of mixed-use development the city needs.”

The plan to build three Juvenile Justice Commission facilities was first outlined in detail during a meeting of the State House Commission in Trenton late last week. Attorney General Christopher Porrino told that panel — made up of lawmakers and Christie administration appointees — that the new buildings would replace an existing facility in Monroe Township that is outdated, costly to maintain, and has been criticized by social-justice advocates. The new facilities will be in Ewing, Winslow, and Woodbridge. They will have better access to mass transit and will be more evenly distributed throughout the state, according to documents reviewed by the EDA yesterday.

Little discussion as EDA approves bonds

Under the agenda items approved with little discussion among members of the EDA board yesterday, the state would issue as many as three series of bonds to finance the new buildings, including $215 million in tax-exempt bonds for the government offices in Trenton, and $175 million in tax-exempt bonds for the three Juvenile Justice Commission facilities. A remaining $25 million in taxable bonds would also be issued to cover costs related to both initiatives.

Tim Lizura, the agency’s president and chief operating officer, said the bond issues would likely go to market before the end of the year, once final approval from the Joint State Leasing and Space Utilization Committee is secured.

By going through the EDA to authorize the financing, the Christie administration can avoid tight legal restrictions on the issuance of new state debt that are written into the state constitution, much in the way the agency was used earlier this year to finance a controversial, $300 million renovation of the New Jersey State House. Lawmakers who were upset about not having a say in that project’s financing sued the Christie administration to try and block it, but a state Superior Court judge ultimately ruled against them. That issue is now the subject of a case before the court’s Appellate Division.

Christie once had different view of state borrowing

Christie’s apparent eagerness to issue the new debt during his final weeks in office marks an abrupt turnaround from the position he took on state borrowing when he was the incoming governor-elect eight years ago. At the time, a new report on state indebtedness indicated New Jersey’s total bonded obligations had risen to an estimated $33.9 billion.

“Any projections of future borrowing that is scheduled to happen after Jan. 19, if you're the investment bank on that, don't spend the fees yet," Christie said in December 2009 as he was preparing to take office the following month.

“We're going to reevaluate everything and make sure that we have folks look at it and tell me whether or not this is something that is absolutely necessary in light of that burgeoning debt problem,” Christie said at the time.

The latest official state debt report, released by the Christie administration earlier this year, indicated total bonded debt measured nearly $43 billion as of the end of the 2016 fiscal year.

For his part, as a candidate for governor this year Murphy regularly criticized Christie’s handling of the financing of the State House renovation project, but a spokesman did not respond to a request for comment yesterday on the proposed borrowing for the new building projects.

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