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AN ORDINANCE OF THE COUNTY OF PASSAIC, NEW JERSEY AUTHORIZING THE GUARANTY OF THE PAYMENT OF THE PRINCIPAL OF AND INTEREST ON NOT TO EXCEED $44,898,000 AGGREGATE PRINCIPAL AMOUNT OF COUNTY GUARANTEED LEASE REVENUE BONDS (LITTLE FALLS BOARD OF EDUCATION PROJECT), SERIES 2025 ISSUED BY THE PASSAIC COUNTY IMPROVEMENT AUTHORITY
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WHEREAS, the Passaic County Improvement Authority (the “Authority”) has been duly created by resolution duly adopted by the Board of County Commissioners (the “Board of County Commissioners”) of the County of Passaic, New Jersey (the “County”) as a public body corporate and politic of the State of New Jersey (the “State”) pursuant to and in accordance with the county improvement authorities law, constituting Chapter 183 of the Pamphlet Laws of 1960 of the State, and the acts amendatory thereof and supplemental thereto (the “Act”), and other applicable law; and
WHEREAS, as a result of increasing needs to support the significant enrollment growth and modernization of aging infrastructures, The Board of Education of the Township of Little Falls, in the County of Passaic, New Jersey (the “School District”) has determined to expand its existing school facilities and undertake infrastructure renovations which include (i) the addition of a multi-purpose room and two (2) general classrooms, and several structural upgrades, replacements and tech renovations to School No. 1, including but not limited to sitework for parking lot, sidewalk and drainage upgrades, roofing replacements, toilet room upgrades, cafeteria and multipurpose room wall graphics, fire alarm, mechanical, electric, lighting and plumbing upgrades; (ii) the addition of eight (8) Pre-K classrooms and an art room, and several structural upgrades, replacement and renovations to School No. 2, including but not limited to sitework for parking lot, sidewalk and drainage upgrades, roofing replacements, masonry repointing at parapet walls, cafeteria and multipurpose room wall graphics, renovations to stair towers/treads and walls, mechanical, electric, lighting and plumbing upgrades; and (iii) the addition of three (3) classrooms, an auxiliary cafeteria and performing arts room and ELA classroom, and several structural upgrades, replacements and renovations to School No. 3, including but not limited to sitework for parking lot, sidewalk and drainage upgrades, roofing replacements, cafeteria and multipurpose room wall graphics, renovate egress stair to create corridor to addition, mechanical, electric, lighting and plumbing upgrades (collectively, the “Facilities Project”); and
WHEREAS, the total cost of the Facilities Project is estimated to be $44,897,195, of which, the State has committed to the School District debt service aid for 19.32% of the Facilities Project totaling approximately $8,674,199 of the Facilities Project costs, which the State is expected to make payments annually equal to 19.32% of the debt service payment (the “State Commitment”); and
WHEREAS, subsequent to the adoption of certain legislative changes to the Educational Facilities Construction Financing Act, constituting Chapter 183 of the Laws of 1960 of the State, as amended and supplemented (N.J.S.A. 18A:7G-1 et seq.)(the “EFCFA”), the School District requested assistance from the Authority to finance the costs of the Facilities Project not otherwise funded by the State Commitment; and
WHEREAS, the Authority is authorized, pursuant to the Act, to provide financing for the provision of “public facilities” (as defined in the Act), which includes the Facilities Project, for use by the State, the County or any beneficiary county, or any municipality in any such county, or any two (2) or more or any subdivisions, departments, agencies or instrumentalities of any of the foregoing, including the County and the School District, for their respective governmental purposes; and
WHEREAS, pursuant to N.J.S.A. 40:37A-55, the Authority is authorized to extend credit or make loans to any governmental unit or person, including the County and the School District, for the planning, design, acquisition, construction, equipping and furnishing of a “public facility”, upon the terms and conditions that the loans be secured by loan and security agreements, mortgages, leases and other instruments, the payments on which shall be sufficient to pay the principal of and interest on any bonds issued for the purpose by the authority, and upon such other terms and conditions as the authority shall deem reasonable; and
WHEREAS, pursuant to N.J.S.A. 40:37A-45(p), the Facilities Project to be acquired, owned or constructed by the Authority constitutes a “public facility” within the meaning of the Act and, as such, the Authority is authorized to provide financial assistance to the County and the School District for the purpose of financing the costs of the same; and
WHEREAS, the Authority is also authorized by law, including the Act and the EFCFA, to plan, design, acquire, construct, equip and furnish public facilities, including the Facilities Project, on behalf of certain governmental units, including the County and the School District, and to lease, sell or otherwise convey said the Facilities Project to such governmental units; and
WHEREAS, in recognition of the importance of the Facilities Project for the School District, in accordance with the Act and the EFCFA, the Authority will (i) provide financing to the School District for purposes of paying or financing: (a) a portion of the costs of the development, construction and equipping of the Facilities Project not otherwise funded by the State Commitment or other available monies of the School District, and (b) the costs of issuance with respect to the proposed financing, all as further set forth in the information submitted to the Authority in connection therewith (collectively, the “2025 Project”); (ii) utilize the proceeds of the Series 2025 Bonds (as defined herein) to complete the 2025 Project; and (iii) lease the Facilities Project to the County pursuant to the terms and conditions of a Lease Agreement (as hereinafter defined) and in the Indenture of Trust, dated as of December 1, 2025, by and between the Authority and the trustee named therein (“Indenture”); and
WHEREAS, in furtherance thereof, the Authority has determined to issue and sell up to $44,898,000 aggregate principal amount of its Guaranteed Lease Revenue Bonds (Little Falls Board of Education Project), Series 2025 (the “Series 2025 Bonds”) to finance the costs of the 2025 Project, provided the County guarantees the payment of the Series 2025 Bonds; and
WHEREAS, pursuant to the EFCFA, in order to develop, construct and finance the Facilities Project, the School District will lease the lands or facilities upon which the Facilities Project will be situated to the Authority; and
WHEREAS, thereafter, in accordance with the EFCFA: (i) the Authority shall lease the Facilities Project to the County pursuant to a lease between the Authority, as lessor, and the County, as lessee (“Lease Agreement”), the County will make certain payments thereunder, so long as the Series 2025 Bonds are outstanding, in an amount equal to the debt service payment (the “Lease Payments”); and (ii) simultaneously therewith, the County shall sublease the Facilities Project to the School District for so long as the Series 2025 Bonds (or any refunding bonds issued to refinance the Series 2025 Bonds) are outstanding in accordance with a sublease between the County, as sublessor, and the School District, as sublessee (“Sublease Agreement” and, together with the Lease Agreement, the “Lease Agreements”); and
WHEREAS, pursuant to the EFCFA (N.J.S.A. 18A:7G-5b(e) in particular), when the Series 2025 Bonds (or any refunding bonds issued to refinance the Series 2025 Bonds) are no longer outstanding, the Facilities Project shall be solely vested in the School District, and the County Guaranty (as defined below) shall be discharged; and
WHEREAS, to provide an inducement to the prospective purchasers of the Series 2025 Bonds to purchase the same and to provide additional security to the holders thereof, pursuant to Section 37 (“Section 37”) of the Act (N.J.S.A. 40:37A-80) and other applicable law, the Board of County Commissioners of the County is adopting this guaranty ordinance (the “Guaranty Ordinance”) in support of the 2025 Project; and
WHEREAS, the County and the Authority have determined that it in their best interests to, among other things: (i) cause the Authority to issue its Series 2025 Bonds for the purpose of financing the costs of the 2025 Project, (ii) cause the County to adopt this Guaranty Ordinance, execute the hereinafter-defined Guaranty Agreement and execute a certificate of guaranty on the face of each Series 2025 Bond (collectively, the “County Guaranty”), authorizing the guaranty of the principal of and interest on the Series 2025 Bonds, and (iii) cause the County and the Authority to take any and all other actions deemed necessary, desirable and convenient in connection with matters detailed herein; and
WHEREAS, the Series 2025 Bonds shall be offered and sold through a public sale thereof with an investment banking firm or investment bank to be selected by the Chairman, Vice Chairman, or Executive Director of the Authority in accordance with the Authority’s, procurement procedures (the “Underwriter”), the term of which sale shall be set forth in that certain Bond Purchase Agreement (as defined herein); and
WHEREAS, the Series 2025 Bonds shall be issued pursuant to the terms of the Sale Documents (as defined below), as each may be amended and supplemented from time to time in accordance with its terms, certificates, the Act and other applicable law; and
WHEREAS, the payment of the principal (including mandatory sinking fund installments, if any) of, and interest (at interest rates not to exceed the maximum rates set forth in the Local Finance Board Application) on the Series 2025 Bonds, but not any redemption premium, shall be fully, unconditionally and irrevocably guaranteed in accordance with (i) the terms of this Guaranty Ordinance, (ii) by a guaranty certificate to be executed by an authorized officer of the County within each Series 2025 Bond and (iii) a Guaranty Agreement to be dated the date of issuance of the Series 2025 Bonds (as the same may be amended and supplemented from time to time in accordance with its terms, the “Guaranty Agreement”) by and between the County and the Authority, setting forth, among other things, the County’s obligation to make any such guaranty payments in accordance with and within the parameters set forth in this Guaranty Ordinance and the Indenture, all pursuant to Section 37 and other applicable law, which payments are included as part of the hereinafter-defined Pledged Property applicable to the Series 2025 Bonds pledged by the Authority to the trustee under the Indenture; and
WHEREAS, payment of the principal of (including mandatory sinking fund installments, if any) and interest on the Series 2025 Bonds, shall be secured by the Pledged Property (as defined in the Indenture), including the Lease Payments and payments by the County under the County Guaranty (the “Guaranty Payments”); and
WHEREAS, pursuant to the terms of the Indenture, as a “materially obligated person” within the meaning and for the purposes set forth in Rule 15c2-12, the County will be required to enter into that certain County Continuing Disclosure Agreement dated the first day of the month of issuance of the Series 2025 Bonds (as the same may be amended and supplemented from time to time in accordance with its terms, the “County Continuing Disclosure Agreement”) with the Dissemination Agent in order to satisfy the secondary market disclosure requirements of Rule 15c2-12; and
WHEREAS, pursuant to the terms of the Indenture and/or the County Continuing Disclosure Agreement, the Authority shall (i) not be considered a “materially obligated person” within the meaning and for the purposes set forth in Rule 15c2-12, and (ii) be required to provide certain material events notices in accordance with Rule 15c2-12, and accordingly, the Authority shall be required to provide such material events notices under the terms of the County Continuing Disclosure Agreement, all in order to satisfy the secondary market disclosure requirements of Rule 15c2-12; and
WHEREAS, in accordance with the Act and N.J.S.A. 40A:5A-6, 7 and 8 of the Local Authorities Fiscal Control Law, the Authority will make an application (the “Local Finance Board Application”) seeking findings from the Local Finance Board on October 8, 2025 (the “Local Finance Board”) in the Department of Local Government Services of the State Department of Community Affairs, and has heretofore obtained and reviewed such findings; and
WHEREAS, it is expected that the Local Finance Board issue positive findings in respect of the Local Finance Board Application; and
WHEREAS, in order to market and sell the Series 2025 Bonds the Authority shall have authorized (a) the distribution of a preliminary official statement “deemed final” within the meaning and for the purposes of Rule 15c2-12 describing the terms of the Series 2025 Bonds (the “Preliminary Official Statement”); (b) the execution and delivery of a bond purchase agreement (the “Bond Purchase Agreement”) with the Underwriter and (c) the execution and delivery of a final Official Statement incorporating the terms of the sale of the Series 2025 Bonds and certain other information into the Preliminary Official Statement (the “Official Statement”, and together with the Preliminary Official Statement, and the Bond Purchase Agreement, and any of the same or other offering or sale documents that may be required, the “Sale Documents”); and
WHEREAS, in accordance with Section 13 (“Section 13”) of the Act (N.J.S.A. 40:37A-56), the Authority has heretofore made a detailed report regarding the 2025 Project to the Board of County Commissioners, which report shall include, without limitation, descriptions of the Series 2025 Bonds, the Indenture, the County Continuing Disclosure Agreement, the Guaranty Agreement, the Leases and, to the extent available, the Sale Documents (collectively, the “Transaction Documents”), and which report shall be accepted by the County by resolution adopted, or to be adopted, by the Board of County Commissioners pursuant to Section 13.
NOW, THEREFORE, BE IT ORDAINED BY THE BOARD OF COUNTY COMMISSIONERS OF THE COUNTY OF PASSAIC, NEW JERSEY, as follows:
Section 1. The recitals are fully incorporated herein by reference.
Section 2. This Guaranty Ordinance shall be adopted by the governing body of the County in the manner provided for adoption of a bond ordinance as provided in the Local Bond Law, constituting Chapter 169 of the Pamphlet Laws of 1960 of the State, as amended (the “Local Bond Law”).
Section 3. Pursuant to and in accordance with the terms of the Act, specifically Section 37, the County is hereby authorized to and hereby shall fully, unconditionally and irrevocably guarantee the punctual payment of the principal, when due, of (including sinking fund installments, if any) and interest on the Series 2025 Bonds in an aggregate principal amount not exceeding $44,898,000, which Series 2025 Bonds are to be issued to finance the Project as described in the preambles hereof. Notwithstanding the provisions of any other Transaction Documents, upon the endorsement of the Series 2025 Bonds referred to in Section 3 below by an authorized officer of the County, the County shall be fully, unconditionally and irrevocably obligated to pay, when due, the principal of (including sinking funds installments, if any) and interest on the Series 2025 Bonds to the extent the Trustee, for any reason, has insufficient monies on any such payment dates to pay the principal of and interest on the Series 2025 Bonds in full when due on any such payment dates, in the same manner and to the same extent as in the case of bonds issued by the County, and accordingly, the County shall be fully, unconditionally and irrevocably obligated to levy ad valorem taxes upon all the taxable property within the County for the payment thereof without limitation as to rate or amount. The full faith and credit of the County are hereby pledged for the full and punctual performance of said County guaranty. This full, unconditional and irrevocable guaranty of the County effected hereby to pay the principal of (including sinking fund installments, if any) and interest on the Series 2025 Bonds when due in accordance with the terms hereof and of the Transaction Documents may not be waived, setoff or otherwise abrogated by action or inaction of the Authority, the County, the School District or for any other reason.
Section 4. The Director of the Board of County Commissioners (the “Commissioner-Director”) shall, by manual or facsimile signature, and is hereby directed to execute an endorsement on each of the Series 2025 Bonds evidencing this guaranty by the County as to the punctual payment of the principal of (including sinking fund installments, if any), when due, and interest thereon. The endorsement on each Series 2025 Bond shall be in substantially the following form, and absent the fully executed endorsement in such following form on any such Series 2025 Bond, such Series 2025 Bond shall not be entitled to the benefits of this Guaranty Ordinance:
“GUARANTY OF THE COUNTY OF PASSAIC, NEW JERSEY
The payment of the principal of (including sinking fund installments, if any) and interest on the within Series 2025 Bond shall be fully, irrevocably and unconditionally guaranteed by the County of Passaic, New Jersey (the “County”) in accordance with the provisions of N.J.S.A. 40:37A-80 and the guaranty ordinance of the County finally adopted pursuant thereto and the Guaranty Agreement executed by the County in connection therewith, and the County is fully, irrevocably and unconditionally liable for the payment, when due, of the principal of (including sinking fund installments, if any) and interest on this Series 2025 Bond, and if necessary the County shall levy ad valorem taxes upon all the taxable property within the County without limitation as to rate or amount in order to make such payments on time and in full.
IN WITNESS WHEREOF, the County has caused this County Guaranty to be executed by the manual or facsimile signature of its Commissioner-Director.
COUNTY OF PASSAIC, NEW JERSEY
By:____________________
Commissioner-Director”
The Commissioner-Director is hereby further authorized to execute or acknowledge such other certificates or agreement relating to this full, irrevocable and unconditional guaranty that may be required by the Authority to comply with the terms of the Transaction Documents, including without limitation, (i) the Guaranty Agreement in substantially in form attached hereto as Exhibit A, with such changes thereto as the Commissioner-Director, in consultation with counsel to the County and other professional advisors deem in his sole discretion to be necessary, desirable or convenient for the execution thereof and to consummate the transactions contemplated hereby, which execution thereof shall conclusively evidence the Commissioner-Director’s approval of any changes to the forms thereof, (ii) any letters of representation or similar undertakings to be executed in connection with the sale of the Series 2025 Bonds, setting forth certain representations, warranties and covenants of the County as an inducement to the purchase of the Series 2025 Bonds, (iii) any certificates deeming “final” (for the purposes of Rule 15c2-12 of the U.S. Securities and Exchange Commission) any Preliminary or final Official Statements of the Authority in connection with the Series 2025 Bonds and (iv) any lease or sublease executed in connection with the sale of the Series 2025 Bonds. Such further agreements or certificates shall not in any manner relieve the County from its obligations hereunder, and shall contain only such terms as are consistent with or within the parameters herein set forth.
The Commissioner-Director, Deputy Commissioner-Director or Director of Finance is hereby further authorized to execute one or more continuing disclosure agreement(s) or other instrument(s) undertaking the secondary obligations of the County required by Rule 15c2-12 of the U.S. Securities and Exchange Commission in connection with the issuance of the Series 2025 Bonds by the Authority.
Section 5. It is hereby found, determined and declared by the governing body of the County that:
(a) This Guaranty Ordinance may be adopted notwithstanding any statutory debt or other limitations, including particularly any limitation or requirement under or pursuant to the Local Bond Law, but the aggregate principal amount of the Series 2025 Bonds which shall be entitled to the benefits of this Guaranty Ordinance, being an amount not to exceed $44,898,000, shall, after their issuance, be included in the gross debt of the County for the purpose of determining the indebtedness of the County under or pursuant to the Local Bond Law.
(b) The principal amount of Series 2025 Bonds entitled to the benefits of this Guaranty Ordinance and included in the gross debt of the County shall be deducted and is hereby declared to be and to constitute a deduction from such gross debt under and for all the purposes of the Local Bond Law (i) from and after the time of issuance of the Series 2025 Bonds until the end of the fiscal year beginning next after the completion of acquisition, construction, installation or renovation of the Series 2025 Bonds, and (ii) in any annual debt statement filed pursuant to the Local Bond Law as of the end of said fiscal year or any subsequent fiscal year if the revenues or other receipts or moneys of the Authority in such year are sufficient to pay its expenses of operation and maintenance in such year and all amounts payable in such year on account of the principal of and interest on all such guaranteed Series 2025 Bonds, all bonds of the County issued as provided in Section 36 of the Act (N.J.S.A. 40:37A-79) and all bonds of the Authority issued under the Act.
Section 6. The following matters are hereby determined, declared, recited and stated:
(a) The maximum principal amount of Series 2025 Bonds of the Authority which are hereby and hereunder fully, unconditionally and irrevocably guaranteed as to the punctual payment of the principal thereof (including sinking fund installments, if any) and interest thereon is $44,898,000; the maximum principal amount of Series 2025 Bonds of the Authority that may be outstanding at any one time is $44,898,000; and the maximum estimated cost of the Project to be financed in accordance with the transactions contemplated hereby is $44,898,000.
(b) The purpose described in this Guaranty Ordinance is not a current expense of the County and no part of the cost thereof has been or shall be assessed on property specially benefited thereby.
(c) The Series 2025 Bonds of each series shall mature within [twenty-five (25)] years from the date of issue.
(d) A supplemental debt statement of the County has been duly made and filed in the office of the Clerk of the Board, and a complete executed duplicate thereof has been filed in the office of the Director of the Division of Local Government Services in the Department of Community Affairs of the State, and such debt statement shows that while the gross debt of the County, as defined in the Local Bond Law, is increased by this Guaranty Ordinance by $44,898,000 in accordance with the provisions of the Act, the net debt of the County is not increased, and the obligation of the County authorized by or incurred pursuant to the terms of this Guaranty Ordinance is permitted by an exception to the debt limitations of the Local Bond Law which exception is contained in the Act, so long as the payment obligations of the County hereunder are not called upon.
(e) Other than the publication requirements set forth below, all other items to be contained in a bond ordinance adopted pursuant to the Local Bond Law are hereby determined to be inapplicable to the County's guaranty of the Series 2025 Bonds hereby.
Section 7. To the extent one or more series of the Series 2025 Bonds are not issued in 2025, references herein to “2025” may without any further action be changed to the year of issuance of such Series 2025 Bonds and all dates related to such year of issuance shall be automatically adjusted.
Section 8. The Clerk of the Board of County Commissioners is hereby directed to publish and post notice of this Guaranty Ordinance as required by applicable law, including the Act and Local Bond Law.
Section 9. This Guaranty Ordinance shall take effect at the time and in the manner provided by law.
EXHIBIT A
Form of County Guaranty Agreement