Riverton’s $180 Million Question: What Does It Mean And Who Pays?

A closer look at the numbers behind one of Sayreville’s largest redevelopment projects.

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SAYREVILLE, NJ — The Sayreville Economic Redevelopment Agency is preparing to complete its first round of bond financing for the Riverton development following a process that officials said has taken two years.

The financing involves several large numbers and terms that are not commonly used outside government meetings. During SERA’s Sept. 10 meeting, officials explained how much money is being borrowed now, what the broader $180 million authorization means and where the money to repay the bonds is expected to come from.

First, What Is A Bond?

In simple terms, a bond allows an organization to borrow money now and repay it over time.

For the Riverton development, SERA is using what are known as Redevelopment Area Bonds, or RABs. The bonds are intended to help finance costs connected to the project as different portions of Riverton are developed.

Agency Attorney Michael Baker said the first bond closing was moved to the following week so attorneys and the bank trustee could complete the remaining paperwork.

“The attorneys working on it and the bank trustee need to dot some more I’s and cross some T’s,” Baker said.

Why Officials Say Residents Will Not Pay The Bonds

Baker said the financing was designed so that money generated by the Riverton project would repay the bonds.

“It’s an extensive amount of work,” Baker said. “It’s two years in the making, and it’ll set the foundation for the next 10 years of financing for the project, all of which to be paid for by the project, not by the residents of Sayreville.”

Put simply, SERA officials say the repayment money will come from revenue connected to Riverton rather than from Sayreville residents.

The first bonds will be tied to the Bass Pro Shops property. Future bond issues are expected to be connected to other portions of Riverton as those properties are developed and begin producing revenue.

Does SERA Plan To Borrow $180 Million Now?

No. The $180 million figure is the maximum amount the New Jersey Local Finance Board authorized for the broader Riverton financing program.

It is not the amount SERA plans to borrow in the first bond issue.

Executive Director Himanshu Shah said SERA expects to issue the bonds in smaller portions over approximately 10 to 15 years. Each issue would be connected to particular properties within Riverton.

“They decided that they want to tie each issue with certain properties,” Shah said.

That means the financing would be added gradually as the development moves forward, rather than issuing the entire authorized amount at the beginning.

How Much Is The First Bond Issue?

The first bond issue is expected to total between $1 million and $1.3 million.

SERA had initially considered issuing approximately $4 million. Shah said the amount was reduced after further financial analysis and a decision to connect each bond issue to a specific part of the development.

The initial bonds will be tied to Bass Pro Shops.

“Right now this is going to be tied to the Bass Pro property,” Shah said.

Shah described the bonds as revenue-based. SERA must show that revenue associated with the Bass Pro Shops property will be available to make the required payments to bondholders.

What Happens When More Of Riverton Is Built?

Additional bonds could be issued as other portions of Riverton move forward.

Shah said future rounds of financing could be connected to surrounding commercial properties and later residential phases. Under the structure presented at the meeting, the revenue from each part of the development would support the bonds associated with that portion of the project.

The full $180 million authorization gives SERA the ability to issue additional bonds over time. It does not require the agency to issue that entire amount.

What Is The Difference Between RABs And PILOTs?

Commissioners also discussed how information about the financing should be presented to residents.

Baker explained that SERA oversees the Redevelopment Area Bonds. The Borough Council controls Payments in Lieu of Taxes, commonly known as PILOT agreements.

“We control RABs. Council controls PILOTs,” Baker said.

A RAB is a form of borrowing that must be repaid. A PILOT is an agreement governing payments made by a developer or property owner instead of conventional property taxes.

Although the two may both be connected to a redevelopment project, they are different financial tools and are overseen by different borough entities.

Where Will Residents Find The Financial Information?

Commissioner Donna Roberts called for SERA to provide a clear and consistent way for the public to review the bond information.

“The RAB is for us, and we’re just getting started on that,” Roberts said. “You should have a very clear, consistent reporting mechanism to be able to share.”

Shah said the complete bond package will be posted online after it is finished. He also agreed to provide a separate amortization schedule.

An amortization schedule shows how much is expected to be paid over time, including the timing of the payments.

“Our RAB bonds’ complete package, once it’s done, will be online under the documents,” Shah said. “But we’ll do a separate amortization posting.”

The Bottom Line

Here is the Riverton financing plan in its simplest terms:

• The state authorized SERA to issue up to $180 million in bonds over the life of the financing program.
• SERA is not issuing the entire $180 million now.
• The first bond issue is expected to total between $1 million and $1.3 million.
• The first bonds will be tied to revenue associated with the Bass Pro Shops property.
• Future bonds may be issued as other commercial and residential portions of Riverton are developed.
• SERA officials say the project, not Sayreville residents, will repay the bonds.
• The completed bond documents and payment schedule are expected to be posted online.

The first closing was expected after attorneys and the bank trustee completed their final review of the documents.

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