Tim Cunningham

The state’s Local Government Services Director Timothy Cunningham speaks to Atlantic City Council on Jan. 17.

More than $49 million in bonds were sold by the state Department of Community Affairs on Wednesday to finance pension and healthcare contributions to Atlantic City employees that were deferred in 2015 in the midst of its budget crisis.

According to a statement from the department, the $49.2 million in federally taxable, deferred contribution refunding bonds sold at a true interest cost of 4.2 percent. The department said the sale of the bonds demonstrated that “investors are confident in Atlantic City’s ability to pay its debt and in the State of New Jersey’s oversight of the city’s finances.”

“DCA is proud of the team of city and state professionals who worked very hard to develop a unique solution to pay the city’s deferred contributions without having to resort to tax increases on city residents,” said Lt. Gov. and DCA Commissioner Sheila Oliver. “These deferred contributions from 2015 were the last major debt hurdle facing Atlantic City. With yesterday’s successful bond sale, the city is now positioned to responsibly finance this debt wihtin its budget and have confidence in its future.”

The bonds sold under the state’s Municipal Qualified Bond Act, which stipulates that the state treasurer withhold a portion of the city’s state aid in amounts sufficient to pay the principal and interest on the bonds. The state treasurer will direct a portion of the Investment Alternative Taxes paid by licensed casinos to go to the city for funding the debt service on the bonds.

Without the bond sale, the city would have had to raise property taxes this year on residents by more than $700 on the average assessed home of $140,000, the release stated. In 2017, city residents received their first municipal property tax decrease in a decade.

Timothy Cunningham, director of DCA’s Division of Local Government Services and chairman of the Local Finance Board, said an alternative was developed to “spare city taxpayers from picking up this expense” and “immediately ends the accrual of interest.”

“This strategy, which culminated in (wednesday’s) bond sale, demonstrates the state’s willingness and ability to find creative solutions to Atlantic City’s difficult financial problems,” Cunningham said. “Conventional thinking would have been to take the deferred contributions the city owes and incorporate them as part of the city’s budget over the next five years. But that would have resulted in significant tax increases for residents and it wouldn’t have stopped interest from accruing on the deferred contributions.”{div align=”justify”}The bonds are expected to close on April 12.{/div} {div align=”justify”} {/div}

Staff Writer

I cover Atlantic City government and the casino industry since joining The Press in early 2018. I formerly worked as a politics & government reporter for NJ Herald and received the First Amendment: Art Weissman Memorial NJPA Award two years in a row.

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