One Legal Challenge Filed Against $300M State House Renovation Remains

John Reitmeyer | November 1, 2017 | Politics
Assemblyman Wisniewski asks state’s Superior Court to overturn lower-court ruling that gave the go-ahead to the controversial undertaking

statehouse renovation outside
Work on a $300 million renovation of the New Jersey State House has been moving along in recent months, with cranes and hardhats now regularly seen at 125 West State Street in Trenton. But a legal challenge of the controversial project’s financing still remains alive.

The latest legal brief in the case was just filed by Assemblyman John Wisniewski (D-Middlesex), who is now asking the state Superior Court’s Appellate Division to overturn a lower court ruling issued in June that allowed the renovation project to move ahead.

The Christie administration has until the middle of this month to respond to Wisniewski’s brief, according to the appeals court’s latest scheduling order, and oral arguments are currently set for early next year. A spokesman for the state attorney general’s office, which has been defending the state in the case, did not respond to a request for comment yesterday.

Bridgegate strategy

Wisniewski — who several years ago led the legislative inquiry into the Bridgegate scandal — is using a similar argument in the appellate case that ultimately proved unsuccessful in the lower court. He claims the $300 million in borrowed funds that’s paying for the State House repairs violated limits on the issuance of debt that are written into the state Constitution. It’s not certain Wisniewski’s appeal will prevail, and similar legal challenges mounted by other lawmakers, including state Sen. Ray Lesniak (D-Union), have already been dropped.

But the current schedule for Wisniewski’s case also presents an interesting issue, since Christie, a second-term Republican who has championed the renovation project, must leave office in January 2018 under term limits that are in the state Constitution. That could ultimately leave it up to his successor to continue the defense of the bond sale, and both leading gubernatorial candidates oppose the project, and have pledged to try and stop it.

Christie first announced the four-year renovation project in November 2016, saying it would be the first in decades for a section of the building that houses the signature gold-leaf dome, its rotunda, and several executive-branch offices, including the governor’s. This original part of the State House was built in 1792, and Christie said its deteriorating condition had become “an embarrassment to the people of the state.” His administration has also said it was costing $8 million to $10 million annually just to maintain the building in its current condition.

But instead of putting the rehab project directly before lawmakers or voters for approval, it was shifted earlier this year to the little-watched State Capitol Joint Management Commission, a panel made up of both legislative and executive branch appointees that’s empowered by state law with “exclusive jurisdiction” of the State House’s “management and operation, including maintenance, repair, renovation.” The JMC commission voted in April to approve the project and its finance plan, which involves a leaseback arrangement with the Economic Development Authority that will effectively make the authority the landlord of the State House while the bonds are being paid off using rent money from the JMC.

About a month after the JMC’s approval, the focus shifted to the EDA, which voted to approve bond financing for the project, and then within hours moved ahead with a “private placement” transaction with RBC Capital.

Filing legal challenge

Wisniewski and several lawmakers initially filed a legal challenge in Superior Court to contest the expedited bond sale, but Judge Mary Jacobson issued a ruling in June that declared the case moot since the bonds had already been sold. She also held up as precedent a 1997 state Supreme Court case that involved a legal challenge filed by the then-mayor of Edison against the administration of then-Gov. Christine Todd Whitman over the sale of nearly $3 billion in pension bonds — debt that is still on the state’s books.

statehouse renovation interior
Jacobson’s decision allowed the project to move forward, and the progress on the renovation effort was reviewed during a recent JMC meeting, with officials saying all occupants of the executive portion of the building have been relocated. All “furnishings and fixtures” have also been removed, according to the JMC’s meeting minutes. Demolition is also underway, along with removal of the building’s heating and air-conditioning system, the minutes said. A fence and covered walkway have also been installed along the front of the building on West State Street.

Christie himself has also moved to a new executive office, which is located at nearby 225 West State Street.

But even as the renovation work was moving forward, Wisniewski pressed on with an appeal of the project’s financing in July, and the appellate division granted his motion on August 9. In his latest legal brief, Wisniewski argues that the 1997 case accepted as precedent by the lower-court judge is not entirely applicable to this case. Administration officials in 1997 waited for a court ruling before issuing the pension bonds, but the Christie administration held its bond sale before the courts were given an opportunity to weigh in, the brief said.

Language in the State House renovation bond documents and the EDA’s own bond resolution also dictate that there is a process in place for the bonds that were sold in May to be redeemed, the brief said. And other documents issued by the state also warned investors of the potential for litigation since Wisniewski and the others were already signaling they would likely sue to block the sale.

“Any potential fee, expense or inconvenience of said redemption would be dwarfed by the harm to the taxpayers and voters of the State of New Jersey by allowing these unconstitutional actions to continue,” the brief said.

Wisniewski, who opted not to seek re-election this year in favor of a bid to win the Democratic gubernatorial nomination that was unsuccessful, said in an interview that he’s still continuing to fight the financing scheme in court to make sure “this can’t happen again.”

“I have enormous respect for Judge Jacobson, but I do think she really missed the salient issue in this case,” he said.

Oral arguments are currently scheduled for January 9, 2018, but Wisniewski noted that the court schedule is often changed, meaning the case could drag out even further into the new year.

“It’s clearly going to be argued in 2018,” Wisniewki said.