FOR IMMEDIATE RELEASE: Thursday, April 05, 2018


Bonds Sell Rapidly and at a Low Interest Cost for the City

Trenton, NJ – The New Jersey Department of Community Affairs (DCA) today announced the sale of bonds to finance pension and healthcare contributions to city employees that Atlantic City deferred in 2015 in the midst of its budget crisis. The $49.2 million in federally taxable, deferred contribution refunding bonds sold rapidly yesterday and at an attractive true interest cost of 4.2 percent, demonstrating 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. Governor Sheila Y. Oliver, DCA Commissioner. “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 within its budget and have confidence in its future.” 

The bonds sold under the State of New Jersey’s Municipal Qualified Bond Act. Pursuant to the Act, the State Treasurer withholds a portion of the city’s state aid in amounts sufficient to pay the principal and interest on the bonds. Also, in the case of Atlantic City, the State Treasurer will direct a portion of the Investment Alternative Taxes (IATs) paid by licensed casinos to go to the city for funding the debt service on the bonds.  

“This strategy, which culminated in yesterday’s bond sale, demonstrates the state’s willingness and ability to find creative solutions to Atlantic City’s difficult financial problems,” said Timothy J. Cunningham, Director of DCA’s Division of Local Government Services and Chairman of the Local Finance Board. “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. We developed an alternative that spares city taxpayers from picking up this expense and immediately ends the accrual of interest.” 

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

The bonds sold yesterday are expected to close on April 12, 2018.   



Tammori Petty
Lisa Ryan
(609) 292-6055