A costly plan from Gov. Chris Christie to renovate the state house in Trenton cleared an important hurdle on Thursday, with the state Economic Development Authority voting to authorize $300 million in bonds to finance the project.
The EDA board members asked a couple of questions before voting unanimously to approve the project, a wholesale renovation of the executive wing of the capitol, which houses the governor’s office and the state Treasury Department.
New Jersey’s state house dates to 1792 and is the second oldest continuously operating capitol in the United States. Christie slightly hyperbolically describes it as a death trap where crumbling pieces of architecture could bludgeon visiting school children. But the plan, at a time of deep budget troubles and high taxes, has drawn withering criticism from lawmakers and the front-runner for the Republican nomination for governor, Lt. Gov. Kim Guadagno.
“We don’t need a Palace of Versailles in Trenton,” she says.
The EDA board also met in private to discuss “potential litigation” on Thursday. State Sen. Ray Lesniak (D-Union), a candidate for the Democratic nomination for governor, wants to block the renovation through the courts and said at a debate Tuesday that he will be announcing a new development in his effort next week.
The $300 million in bonds over a period of up to 30 years will be underwritten by RBC Capital Markets, according to an EDA memorandum. The initial interest rate cannot exceed 5 percent a year under the terms of the EDA authorization, and thereafter may not exceed 12 percent annually.
The authority also approved $75 million in bonds to buy out a lease currently held on the state house by the New Jersey Building Authority, a separate state entity.
The bond counsel for the deal will be one of Christie’s top advisers, former state attorney general Jeff Chiesa of the firm Chiesa, Shahinian and Giantomasi. Chiesa’s firm — formerly known as Wolff and Samson — won a competitive bidding process to handle the renovation deal. A former U.S. senator appointed to fill a temporary vacancy by Christie after Frank Lautenberg’s death in 2013, Chiesa is also the state monitor overseeing a takeover of Atlantic City’s finances.
It’s unclear what would happen with the financing if a court challenge succeeds. Staff have already been relocated to other buildings, and workers have been hauling out portraits and paintings this week.
“The approval of $300 million in new debt to finance a badly-needed rehabilitation to the 225 year-old state house was made without clarity about the nature and specifics of the work to be conducted — or the legality of the action taken,” said Gordon MacInnes, president of the liberal think tank New Jersey Policy Perspective, which closely monitors EDA activity. Taxpayers could be hosed down the line, he said, and the state’s finances could fall deeper in distress.
The renovation project, at $300 million, is the EDA’s third largest obligation and has no dedicated source of revenue, MacInnes added.
In addition to the $300 million price tag, state Treasurer Ford Scudder testified before a legislative committee last week that the state could face $20 million to $25 million in yearly borrowing costs over the lifespan of the bonds. That was only a rough calculation, according to the Treasury Department.
But after reports surfaced adding up the borrowing costs to the principal, Christie spokesman Brian Murray said “the cost to repair, renovate and make safe New Jersey’s aging and decaying state house is estimated to be about $300 million dollars. Period.”
Demolition is expected to begin in the summer, and the renovation work will be bid out competitively, according to the Treasury.