Gibbons Assists Essex County and City of Newark in Financing Lead Service Line Replacement and Clean Water Delivery
September 17, 2019
The New Jersey Local Finance Board, which oversees the fiscal operations of the state’s municipalities and counties, approved on September 11 the Essex County Improvement Authority’s (ECIA) issuance of up to $120 million in bonds or notes to be loaned to the City of Newark (the City) for the replacement of all the lead service lines in the City within two years. Gibbons P.C., led by John D. Draikiwicz, Chair of the firm’s Public Finance practice, served as bond counsel to the ECIA and developed the transaction’s innovative legal structure, which will give the City a functioning water system that will deliver to its residents water that meets all applicable clean water standards – eight years sooner than the City’s original plan would have allowed.
The bonds or notes will be guaranteed by Essex County, which earned a Aaa bond rating from Moody’s in 2018 after years of strong financial stewardship by County Executive Joseph N. DiVincenzo Jr., who spearheaded the fast-track lead pipe replacement financing initiative together with Newark Mayor Ras J. Baraka. Working with the ECIA, Essex County, City officials, and attorneys from DeCotiis, FitzPatrick & Cole, LLP, who represented the City as bond counsel, Mr. Draikiwicz and the Gibbons team structured the financing transaction in a way that will deliver funds to the City as quickly as possible and accelerate the City’s efforts to alleviate its emergency water crisis. The ECIA expects to issue the debt in late October or early November. With the County guaranteeing the bonds, savings are estimated to be in the $15 million – $20 million range.
Originally announced at a press conference on August 26 that attracted local, state, and national media, the financing will allow the City to expedite the removal and replacement of all of its 18,000 lead service lines. Newark has committed to removing and replacing these lines at no cost to City homeowners or landlords.