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December 11, 2006
Mayor's letter to the editor of The Record in response to recent article about EnCap financing
Dear Editor:
I wish to comment on the Sunday Record's article on Encap. While the project is located within the three municipalities of Rutherford, Lyndhurst, and North Arlington, each town negotiated and entered into their own separate agreements with Encap.
For Rutherford's part all of the items now deemed by the Local Finance Board to be necessary were already included in our agreement such as requiring that repayment of the bonds would be solely the responsibility of the developer and at no time ever would the Borough or its citizens be put at risk. It appears that the Local Finance Board is trying to extend the same protections to the boroughs of Lyndhurst and North Arlington that Rutherford has already negotiated and secured in its agreement. Even if the Encap project does not go forward PILOTs already negotiated and received by Rutherford would not have to be returned. Nor would the landfill clean-up and closure costs paid for and completed by the developer have to be returned. Rutherford has begun no capital projects nor anticipate any that rely on En cap for their completion.
The Borough, in its negotiations and Agreement with EnCap, has ensured that the bonds are non-recourse bonds, meaning there is no recourse whatsoever to the Borough for default of any kind. The bonds are Encap's obligation, not Rutherford's. The Borough will continue to exercise due diligence and its fiduciary obligation to the citizens of Rutherford in all matters.
Bernadette P. McPherson
Mayor of Rutherford, NJ
Chairwoman, Bergen County Board of Chosen Freeholders
December 8, 2006
Borough's response to Record reporter's recent questions about EnCap Financing:
The Borough of Rutherford, in its negotiations with EnCap, has consistently and continuously sought for and ensured that there is full and complete protection of the Borough and its taxpayers. The Borough and its citizens have no exposure or liability whatsoever should there be an EnCap default on its bond obligations.
The Borough, in its negotiations and Agreement with EnCap, has ensured that the bonds are non-recourse bonds, meaning there is no recourse whatsoever to the Borough for default of any kind.
All of the LFB’s questions and concerns are already positively addressed in every aspect in the Borough of Rutherford’s Agreement with EnCap. It appears that the LFB is seeking to extend the same protections that Rutherford has already negotiated in its signed agreement, to the Boroughs of North Arlington and Lyndhurst. Rutherford’s agreement fully protects its citizens, and the terms that Rutherford negotiated may be different than what exists with the other municipalities.
The PILOT securitization and bond sale is fully legal and allowed under State Law. The Borough has been fully represented and advised by its professionals in all aspects of the transaction.
The bond sale is a useful way to enable the remediation of the landfills while eliminating the Borough’s own significant potential liability for clean-up. It is useful to enable the construction of a project that will increase the tax revenues and the taxable base for the Borough in a substantial way.
The Borough will continue to exercise due diligence and its fiduciary obligation to the citizens of Rutherford in all matters.
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