Garden State Preservation Trust to consider $350M bond refinancing

TRENTON – For more than a decade, the Garden State Preservation Trust Fund has helped save hundreds of thousands of acres from being developed in this densely populated state.

The state recently has tried to address the issue of how much of the money goes toward actual land acquisition and how much has to go toward debt service. And on Wednesday the  Trust Fund will consider a resolution to refinance about $350 million of bonds.

While millions of dollars of taxpayer funds have been used to preserve land, steps were taken recently – a bond refunding – to try and ensure that savings could be on the horizon.

The Garden State Preservation Trust Fund was created through a 1998 referendum. The deal was that the state would allocate $98 million toward the trust fund every year until 2029.

Overall, one-third of the state, or about 1.5 million acres, has been preserved, of which 360,709 acres were acquired with GSPT funds.  Those acres are spread among 347 municipalities throughout the state’s 21 counties.

In the first 10 years, the money was largely used to buy and preserve land. Of the $980 million allocated between 1999 and 2008, about $200 million went toward debt service payments.

But since 2009, all of the annual $98 million allocations are to be used to pay debt service on old bonds that were issued for land purchases.

That doesn’t mean the days of preserving land to prevent sprawl are over, though. Voters approved subsequent referendums in 2007 and 2009 for $200 million and $400 million, respectively. While the 2007 funds have all been spent, there is still $196 million remaining from the 2009 referendum, Garden State Preservation Trust Executive Director Ralph Siegel said.

Siegel said he wouldn’t rule out a third referendum, but that is not his call.

“It’s up to the Legislature.”

There are other ways to find money. The Joint Budget Advisory Commission approved a resolution to refund $350 million worth of bonds last week. That same resolution will be taken up by the trustees of the Garden State Preservation Trust at its Wednesday morning hearing. It will take place in Room 16 of the Statehouse Annex.  

The purpose of refunding bonds is to take advantage of lower interest rates, which could result in less debt service. For fiscal year 2013, the bond refunding will cut debt service by $20 million, Siegel said.

Siegel says he reviews the requests made by each group. Among the groups that come to it seeking funds for preservation projects are Green Acres, the Farmland Preservation Trust Fund and Historic Preservation Trust Fund.

Siegel explained that the state doesn’t actually buy the land itself: it buys the development rights.

“We strip them of the right of the development,” he said. “(The farmer) can still use it for agriculture.”

Sometimes land purchases fall through, and the money that was originally earmarked for it remains intact. That money could theoretically be used for another purchase.

“Sometimes the projects get cancelled,” he said. “They are not set in stone.”

Siegel estimates that each year some $30 million to $40 million in reallocations take place.

But not everyone is celebrating the lowered debt service that’s expected.

Jeff Tittel, executive director of the New Jersey Sierra Club, said the money voters approved earlier should be spent now to save land and flood-prone properties.

“The money from the 2009  Bond Act was supposed to be spent by now yet (Gov. Chris Christie) is not releasing the funding this year, significantly reducing the amount of money available for open space preservation even further,” he said. “The money from the refinance will end up in the general fund, not open space, since GSPT-dedicated funds can only go for debt service, not open space acquisition under the 1998 constitutional dedication.”

Garden State Preservation Trust to consider $350M bond refinancing