NEW ISSUE — BOOK-ENTRY ONLY Fitch: A+ Moody’s: A1 Standard & Poor’s: AA-See “RATINGS” herein
$152,925,000
NEW JERSEY HEALTH CARE FACILITIES FINANCING AUTHORITY
STATE CONTRACT BONDS (Hospital Asset Transformation Program)
Series 2009A
Dated: Date of Delivery Due: October 1, as shown on the inside cover
This Official Statement has been prepared by the New Jersey Health Care Facilities Financing Authority (the “Authority”) to provide information relating to its State Contract Bonds (Hospital Asset Transformation Program) Series 2009A (the “Series 2009A Bonds”).
Tax Exemption: In the opinion of McManimon & Scotland, L.L.C., Bond Counsel to the Authority, under existing law and assuming compliance by the Authority and the Borrower with the requirements of the Internal Revenue Code of 1986, as amended, and the regulations thereunder, interest on the Series 2009A Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. Bond Counsel is also of the opinion that interest on the Series 2009A Bonds held by corporate taxpayers is not included in “adjusted current earnings” in calculating alternative minimum taxable income for purposes of the federal alternative minimum tax imposed on corporations. No opinion is expressed regarding other federal tax consequences arising with respect to the Series 2009A Bonds. Bond Counsel is also of the opinion that, under existing law, interest on the Series 2009A Bonds is not includable in gross income under the New Jersey Gross Income Tax Act. See “TAX EXEMPTION” herein.
Redemption: The Series 2009A Bonds are subject to redemption prior to maturity as described herein. See “THE SERIES 2009A BONDS — Redemption Prior to Maturity” herein.
Security: The Series 2009A Bonds are special obligations of the Authority, payable solely from, and secured by payments received by the Authority from the Treasurer of the State (the “State Treasurer”) pursuant to the Contract Implementing Funding Provisions of the New Jersey Health Care Facilities Financing Authority Law, dated the date of delivery of the Series 2009A Bonds (the “State Contract”), by and between the State Treasurer and the Authority, and amounts held under the Resolution (as defined herein). All amounts paid to the Authority under the State Contract are subject to and dependent upon appropriations being made from time to time by the New Jersey State Legislature (the “State Legislature”) for such purpose. The State Legislature has no legal obligation to make any such appropriations.
THE STATE OF NEW JERSEY (THE “STATE”) IS NOT OBLIGATED TO PAY, AND NEITHER THE FAITH AND CREDIT NOR TAXING POWER OF THE STATE IS PLEDGED TO THE PAYMENT OF, THE PRINCIPAL OR REDEMPTION PRICE, IF ANY, OF OR INTEREST ON THE SERIES 2009A BONDS. THE SERIES 2009A BONDS ARE A SPECIAL, LIMITED OBLIGATION OF THE AUTHORITY, PAY-ABLE SOLELY OUT OF THE REVENUES OR OTHER RECEIPTS, FUNDS OR MONEYS OF THE AUTHORITY PLEDGED UNDER THE RESOLUTION AND FROM ANY AMOUNTS OTHERWISE AVAILABLE UNDER THE RESOLUTION FOR THE PAYMENT OF THE SERIES 2009A BONDS. THE SERIES 2009A BONDS DO NOT NOW AND SHALL NEVER CONSTITUTE A CHARGE AGAINST THE GENERAL CREDIT OF THE AUTHORITY. THE AUTHORITY HAS NO TAXING POWER. THE SERIES 2009A BONDS SHALL NOT BE A DEBT OR LIABILITY OF THE STATE OR ANY AGENCY OR INSTRUMENTALITY THEREOF (OTHER THAN THE AUTHORITY TO THE LIMITED EXTENT SET FORTH IN THE RESOLUTION), EITHER LEGAL, MORAL OR OTHERWISE, AND NOTHING IN THE ACT SHALL BE CONSTRUED TO AUTHORIZE THE AUTHORITY TO INCUR ANY INDEBTEDNESS ON BEHALF OF OR IN ANY WAY OBLIGATE THE STATE OR ANY POLITICAL SUBDIVISION THEREOF.
Purpose: The Series 2009A Bonds are being issued for the purpose of (i) providing funds under the Hospital Asset Transformation Program (as defined herein) for the costs of an eligible project or projects, and (ii) paying the costs of issuing the Series 2009A Bonds. See “PURPOSE OF ISSUANCE OF SERIES 2009A BONDS” herein.
Interest: Interest will be payable semiannually on October 1 and April 1 of each year until maturity or prior redemption (each an “Interest Payment Date”), commencing on October 1, 2009.
Denominations: $5,000 or any integral multiple thereof.
Trustee: The Bank of New York Mellon, Woodland Park, New Jersey.
Issuer Contact: New Jersey Health Care Facilities Financing Authority, Trenton, New Jersey (609) 292-8585.
Book-Entry Only: The Depository Trust Company, New York, New York (“DTC”).
This cover page contains certain information for quick reference only. Investors must read the entire Official Statement, including all Appendices, to obtain information essential to making an informed investment decision.
The Series 2009A Bonds are offered when, as and if issued by the Authority, and delivered and received by the Underwriters, subject to prior sale, or withdrawal or modification of the offer without notice, and to the approval of their legality and certain other matters by McManimon & Scotland, L.L.C., Newark, New Jersey, Bond Counsel. Certain legal matters will be passed upon for the Authority and the State by the Attorney General of the State of New Jersey. Certain legal matters will be passed upon for the Underwriters by their counsel, Cozen O’Connor, Trenton and Newark, New Jersey. The Series 2009A Bonds are expected to be available for delivery through the facilities of DTC in New York, New York on or about June 18, 2009.
GOLDMAN, SACHS & CO.
NEW JERSEY HEALTH CARE FACILITIES FINANCING AUTHORITY STATE CONTRACT BONDS
(Hospital Asset Transformation Program) Series 2009A
AMOUNTS, MATURITIES, INTEREST RATES, PRICE OR YIELDS AND CUSIP NUMBERS $5,930,000 Series 2009A Bonds
Maturity Date Principal Amount Interest Rate Yield Price CUSIP*
October 1, 2013 $2,405,000 4.000% 3.875% 100.484 64580AAP6
October 1, 2014 $3,525,000 4.000% 4.000% 100.000 64580AAQ4
$30,540,000 5.00% Term Bond due October 1, 2019, Price 100%, Yield 5.00%, CUSIP* 64580AAR2 $40,735,000 5.25% Term Bond due October 1, 2024, Price 97.429, Yield 5.50%, CUSIP* 64580AAS0 $75,720,000 5.75% Term Bond due October 1, 2031, Price 97.779, Yield 5.93%, CUSIP* 64580AAT8
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS WHICH MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE SERIES 2009A BONDS. SUCH ACTIONS, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME WITHOUT PRIOR NOTICE.
No dealer, broker, salesman or other person has been authorized by the New Jersey Health Care Facilities Financing Authority (the “Authority”) or the State of New Jersey (the “State”) to give any information or to make representations with respect to the Series 2009A Bonds, other than those contained in this Official Statement, and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Series 2009A Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale.
Certain information contained herein has been obtained from the State and from other sources, including DTC, which are believed to be reliable, but it is not guaranteed as to accuracy or completeness, and is not to be construed as a representation of the Authority. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the parties referred to above since the date hereof.
THE SERIES 2009A BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE FEDERAL SECURITIES ACT OF 1933, AS AMENDED, NOR HAS THE RESOLUTION BEEN QUALIFIED UNDER THE FEDERAL TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS. THE REGISTRATION OR QUALIFICATION OF THE SERIES 2009A BONDS IN ACCORDANCE WITH APPLICABLE PROVISIONS OF THE SECURITIES LAWS OF THE STATES, IF ANY, IN WHICH THE SERIES 2009A BONDS HAVE BEEN REGISTERED OR QUALIFIED AND THE EXEMPTION FROM REGISTRATION OR QUALIFICATION IN CERTAIN OTHER STATES CANNOT BE REGARDED AS A RECOMMENDATION THEREOF. NEITHER THESE STATES NOR ANY OF THEIR AGENCIES HAVE PASSED UPON THE MERITS OF THE SERIES 2009A BONDS OR THE ACCURACY OR COMPLETENESS OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE.
The following Official Statement (including the Appendices attached hereto) contains a general description of the Series 2009A Bonds, the Authority, the Borrowers and the 2009 Project (each as defined herein), and sets forth summaries of certain provisions of the Act, and forms of the Resolution, the State Contract and the Continuing Disclosure Agreement (as such terms are defined herein). The descriptions and summaries herein do not purport to be complete and are not to be construed to be a representation of the Authority. Persons interested in purchasing the Series 2009A Bonds should carefully review this Official Statement (including the Appendices attached hereto) as well as copies of such documents in their entireties, which are held by the Trustee at its principal corporate trust office.
References in this Official Statement to statutes, laws, rules, regulations, resolutions, agreements, reports and documents do not purport to be comprehensive or definitive, and all such references are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made herein. This Official Statement is distributed in connection with the sale of the Series 2009A Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose.
TABLE OF CONTENTS
Page
INTRODUCTION ... 1
The Authority ... 1
The Hospital Asset Transformation Program ... 1
Use of Series 2009A Bond Proceeds ... 2
The Series 2009A Bonds ... 3
Security for the Series 2009A Bonds ... 3
Limited Obligations of Authority ... 4
Continuing Disclosure ... 4
Miscellaneous ... 5
THE AUTHORITY ... 5
Authority Membership and Organization ... 5
Powers of the Authority ... 6
Hospital Asset Transformation Program ... 7
PURPOSE OF ISSUANCE OF SERIES 2009A BONDS ... 7
ESTIMATED SOURCES AND USES OF FUNDS ... 9
ANNUAL DEBT SERVICE REQUIREMENTS ... 10
THE SERIES 2009A BONDS ... 11
Description of the Series 2009A Bonds ... 11
Redemption Prior to Maturity ... 11
Notice of Redemption ... 13
Payment of Redeemed Bonds ... 13
Book-Entry Only System ... 14
SOURCES OF PAYMENT FOR THE SERIES 2009A BONDS ... 17
General ... 17 Pledged Property ... 17 State Contract ... 17 Event of Non-Appropriation ... 18 Refunding Bonds ... 19 TAX EXEMPTION ... 19
Federal Tax Exemption ... 19
New Jersey Gross Income Tax ... 21
Future Events... 21
LEGALITY OF SERIES 2009A BONDS FOR INVESTMENT AND DEPOSIT ... 21
LEGAL MATTERS ... 22 LITIGATION ... 22 UNDERWRITING ... 22 RATINGS ... 22 CONTINUING DISCLOSURE ... 23 MISCELLANEOUS ... 23
APPENDIX I-CS1 CUMULATIVE SUPPLEMENT DATED MAY 20, 2009, TO APPENDIX I ... I-CS1 APPENDIX I – FINANCIAL AND OTHER INFORMATION RELATING TO THE
OFFICIAL STATEMENT
Relating to
$152,925,000
NEW JERSEY HEALTH CARE FACILITIES FINANCING AUTHORITY
STATE CONTRACT BONDS (Hospital Asset Transformation Program)
Series 2009A
INTRODUCTION
This Official Statement, including the cover page, inside cover page and Appendices, sets forth certain information concerning the offering by the New Jersey Health Care Facilities Financing Authority (the “Authority”) of its $152,925,000 State Contract Bonds (Hospital Asset Transformation Program), Series 2009A (the “Series 2009A Bonds”). Certain capitalized terms used in this Official Statement and not otherwise defined herein shall have the meaning given to such terms in Appendix II hereto. This Introduction is not a summary of this Official Statement. It is only a brief description of and guide to the entire Official Statement of which a full review should be made by potential investors.
The Authority
The Authority is a public body corporate and politic, a political subdivision of the State of New Jersey (the “State”) and a public instrumentality organized and existing under and by virtue of the New Jersey Health Care Facilities Financing Authority Law, P.L. 1972, c. 29, N.J.S.A. 26:2I-1, et seq. (the “Act”). See “THE AUTHORITY.”
The Hospital Asset Transformation Program
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costs specifically related to the closure or transition of inpatient acute care services as identified in the contract with the Treasurer. To secure such bonds, the State Treasurer and the Authority are permitted to enter into one or more contracts providing for the payment by the State Treasurer to the Authority in each State fiscal year, from the State’s General Fund, of an amount equivalent to the amount due to be paid in that fiscal year for the debt service on such bonds and any additional costs as authorized pursuant to such contract, subject to and dependent upon appropriations being made by the State Legislature for such purpose.
The Series 2009A Bonds are the third issuance of bonds under the Hospital Asset Transformation Act. The Authority may issue additional bonds under the Hospital Asset Transformation Act. Such bonds would be secured by a separate contract with the State Treasurer.
Use of Series 2009A Bond Proceeds
The proceeds of the Series 2009A Bonds will be loaned by the Authority to The Community Hospital Group, Inc., t/a JFK Medical Center, a New Jersey nonprofit corporation, Hartwyck at Oak Tree, Inc., a New Jersey nonprofit corporation and Muhlenberg Regional Medical Center, a New Jersey nonprofit corporation (each a “Borrower” and, collectively, the “Borrowers”), pursuant to a Loan Agreement dated as of June 1, 2009, (the “Loan Agreement”) by and between the Authority and the Borrowers. The Loan Agreement does not secure the Series 2009A Bonds, and the Series 2009A
Bonds are not payable from payments made by the Borrowers under the Loan Agreement. Such
loan will be used to provide funds in an amount sufficient, together with other available moneys, if any, to fund a project consisting of: (i)(a) various capital improvements to the JFK Medical Center Facilities, including, but not limited to, expansion of inpatient bed capacity and unit renovations, emergency room expansion, operating room renovations and expansion, and other necessary expansions, renovations and improvements, (b) the payment of capitalized interest on a portion of the Series 2009A Bonds, and (c) the refinancing of various series of bonds issued on behalf of, and other indebtedness of, JFK Medical Center, Hartwyck at Oak Tree and Muhlenberg Regional Medical Center, all in connection with the termination of the provision of hospital acute care services at the Muhlenberg Regional Medical Center Hospital Facilities and pursuant to the State’s Hospital Asset Transformation Program (collectively, the “2009 Project”) and (ii) paying the costs of issuing the Series 2009A State Contract Bonds. See “PURPOSE OF THE ISSUANCE OF THE SERIES 2009A BONDS” herein.
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The Series 2009A Bonds
The Series 2009A Bonds will be dated their date of delivery, and will bear interest from such date, payable semiannually on October 1 and April 1 in each year until maturity, commencing on October 1, 2009. The Series 2009A Bonds will bear interest and mature on the dates and in the amounts set forth on the inside front cover page hereof.
The Series 2009A Bonds are issuable as fully registered bonds in denominations of $5,000 each or any integral multiple thereof, and, when issued, will be registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York (“DTC”). See “THE SERIES 2009A BONDS − Book-Entry Only System” herein.
The Series 2009A Bonds are authorized by and issued under, and in accordance with the provisions of, the Act and the Hospital Asset Transformation Program State Contract Bond Resolution (JFK Medical Center Obligated Group Issue), adopted by Authority on October 23, 2008 (the “Bond Resolution”), as supplemented by a Series Certificate dated as of the date of sale of the Series 2009A Bonds (the “Series Certificate” and, together with the Bond Resolution, the “Resolution”). Pursuant to the Resolution, the Authority may, with the approval of the State Treasurer, issue Refunding Bonds, in accordance with the requirements of the Resolution, to refund the Series 2009A Bonds in whole or in part (any bonds issued pursuant to the Resolution, the “Bonds”). The Bank of New York Mellon, Woodland Park, New Jersey, is serving as the trustee, paying agent and bond registrar under the Resolution for the Series 2009A Bonds (the “Trustee”, “Paying Agent” and “Bond Registrar”). See “THE SERIES 2009A BONDS” herein.
Security for the Series 2009A Bonds
The Series 2009A Bonds are special, limited obligations of the Authority payable solely from payments received by the Authority from the State Treasurer pursuant to the Contract Implementing Funding Provisions of the New Jersey Health Care Facilities Financing Authority Law, dated the date of delivery of the Series 2009A Bonds (the “State Contract”), by and between the State Treasurer and the Authority, and amounts held under the Resolution. THE PAYMENT OF THE PRINCIPAL OR REDEMPTION PRICE OF AND INTEREST ON THE SERIES 2009A BONDS IS TO BE DERIVED FROM PAYMENTS MADE BY THE STATE TREASURER TO THE AUTHORITY UNDER THE STATE CONTRACT AND CERTAIN AMOUNTS HELD UNDER THE RESOLUTION. THE OBLIGATION OF THE STATE TREASURER TO MAKE SUCH PAYMENTS UNDER THE STATE CONTRACT IS SUBJECT TO AND DEPENDENT UPON APPROPRIATIONS BEING MADE FROM TIME TO TIME BY THE NEW JERSEY STATE LEGISLATURE (THE “STATE LEGISLATURE”) FOR SUCH PURPOSE. THE STATE LEGISLATURE HAS NO LEGAL OBLIGATION TO MAKE ANY SUCH APPROPRIATIONS. See APPENDIX I - “FINANCIAL AND OTHER INFORMATION RELATING TO THE STATE OF NEW JERSEY” and the Cumulative Supplement thereto.
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THE LOAN AGREEMENT DOES NOT SECURE THE SERIES 2009A BONDS AND THE SERIES 2009A BONDS ARE NOT PAYABLE FROM THE BORROWERS’ PAYMENTS UNDER THE LOAN AGREEMENT.
There are no remedies available to the Bondholders in the event that the State Legislature does not appropriate sufficient funds or any funds to make payments when due under the State Contract nor is there any other source of monies from which payment on the Series 2009A Bonds could be made. While the State Legislature has the legal authority to make appropriations, it has no obligation to do so. Neither the failure of the State Legislature to make such appropriation nor non-payment of the Series 2009A Bonds as a result of such failure to appropriate, is an Event of Default under the Resolution or the Series 2009A Bonds and will not give rise to any rights or remedies against the State or the Authority. See “SOURCES OF PAYMENT FOR THE SERIES 2009A BONDS – Event of Non-Appropriation.”
See APPENDIX I - “FINANCIAL AND OTHER INFORMATION RELATING TO THE STATE OF NEW JERSEY” and the Cumulative Supplement thereto attached hereto for certain financial and other information concerning the State. See “SOURCES OF PAYMENT FOR THE SERIES 2009A BONDS” herein for a complete description of the security for the Series 2009A Bonds.
Limited Obligations of Authority
THE STATE IS NOT OBLIGATED TO PAY, AND NEITHER THE FAITH AND CREDIT NOR TAXING POWER OF THE STATE IS PLEDGED TO THE PAYMENT OF, THE PRINCIPAL OR REDEMPTION PRICE, IF ANY, OF OR INTEREST ON THE SERIES 2009A BONDS. THE SERIES 2009A BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY OUT OF THE REVENUES OR OTHER RECEIPTS, FUNDS OR MONEYS OF THE AUTHORITY PLEDGED UNDER THE RESOLUTION AND FROM ANY AMOUNTS OTHERWISE AVAILABLE UNDER THE RESOLUTION FOR THE PAYMENT OF THE SERIES 2009A BONDS. THE SERIES 2009A BONDS DO NOT NOW AND SHALL NEVER CONSTITUTE A CHARGE AGAINST THE GENERAL CREDIT OF THE AUTHORITY. THE AUTHORITY HAS NO TAXING POWER. THE SERIES 2009A BONDS SHALL NOT BE A DEBT OR LIABILITY OF THE STATE OR ANY POLITICAL SUBDIVISION THEREOF (OTHER THAN THE AUTHORITY TO THE LIMITED EXTENT SET FORTH IN THE RESOLUTION), EITHER LEGAL, MORAL OR OTHERWISE, AND NOTHING IN THE ACT SHALL BE CONSTRUED TO AUTHORIZE THE AUTHORITY TO INCUR ANY INDEBTEDNESS ON BEHALF OF OR IN ANY WAY OBLIGATE THE STATE OR ANY POLITICAL SUBDIVISION THEREOF.
Continuing Disclosure
5
Miscellaneous
Certain provisions of the Act, the Resolution, the State Contract and certain provisions of law are summarized, quoted or described in this Official Statement. Such summaries, quotations and descriptions do not purport to be comprehensive or definitive and reference is made to the full text of such documents for a full and complete statement of their respective provisions. Copies of the Resolution, the State Contract and the Continuing Disclosure Agreement are available for inspection at the principal corporate trust office of the Trustee. All inquiries should be directed to the Corporate Trust Department in Woodland Park, New Jersey.
THE AUTHORITY
The Authority is a public body corporate and politic, a political subdivision of the State and a public instrumentality organized and existing under and by virtue of the Act. The purpose of the Act is to ensure that all health care organizations have access to financial resources to improve the health and welfare of the citizens of the State.
Authority Membership and Organization
The Act provides that the Authority shall consist of seven (7) members: the State Commissioner of Health and Senior Services, who shall be Chairman; the State Commissioner of Banking and Insurance; the State Commissioner of Human Services; and four public members who are citizens of the State appointed for terms of four years by the Governor with the advice and consent of the State Senate. Each member holds office for the term of his or her appointment and until his or her successor is appointed and qualified. All Authority members serve without compensation but may be reimbursed for their necessary expenses incurred in their official duties. On or about May 30 of each year, the Authority shall elect from its members a Vice Chairman and may appoint other officers. The members of the Authority are as follows:
HEATHER HOWARD, J.D., Chairman (serves during her tenure as Commissioner of Health
and Senior Services).
JENNIFER VELEZ, ESQ., Member (serves during her tenure as Commissioner of the
Department of Human Services).
STEVEN M. GOLDMAN, Member (serves during his tenure as Commissioner of the
Department of Banking and Insurance).
GUSTAV E. ESCHER, III, Vice Chairman (term of office expires April 30, 2010).
ULYSSES LEE (term of office expired April 30, 2008; continues to serve until a successor is
appointed and qualified).
The Authority currently has two public member vacancies.
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Powers of the Authority
Under the terms of the Act, as amended, the powers of the Authority are vested in its members. The Authority has, among others, the following powers: to issue bonds as provided in the Act for the several purposes therein specified, including refunding bonds of the Authority already outstanding; to acquire, lease as lessee or lessor, hold and dispose of real and personal property or any interest therein in the exercise of its powers and the performance of its duties under the Act; by contracts with and for health care organizations (organizations located in the State authorized or permitted by law, whether directly or indirectly through a holding company, partnership or other entity, to provide health care related services or entities affiliated with health care organizations or a group of legally affiliated health care organizations), and pursuant to public bidding requirements of the Act as applicable, to construct, acquire, reconstruct, rehabilitate and improve, and furnish and equip health care organization projects; to enter into contracts for the management and operation of projects in the event of default as described in the Act using, however, its best efforts to conclude its position as an operator as soon as practicable; generally to fix and revise from time to time and to charge and collect rates, rents, fees and other charges for the use of and for the services furnished or to be furnished by a project or any portion thereof and to contract with holders of its bonds and with any other person, partnership, association, corporation or other body, public or private, with respect thereto; to make loans to health care organizations for the construction or acquisition of projects in accordance with loan agreements (such loans may not exceed the total cost of the project); to make loans to health care organizations to refund existing bonds, mortgages or advances given or made by the health care organization for the construction of projects to the extent that this will enable the health care organization to offer greater security for loans for new project construction; to enter into agreements, credit agreements or contracts, execute any and all instruments, and do and perform any and all acts or other things necessary, convenient or desirable for the purposes of the Authority or to carry out any power expressly given to the Authority in the Act; and to invest any moneys held in reserve or sinking funds, or any moneys not required for immediate use for disbursement, at the discretion of the Authority, in such obligations as are authorized by Bond Resolution of the Authority.
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Hospital Asset Transformation Program
The Hospital Asset Transformation Act (P.L. 2000, c. 98, as amended) amended the Act and established a Hospital Asset Transformation Program within the Authority for the purpose of providing financial assistance by the Authority to nonprofit hospitals in the State, in connection with the termination of the provision of hospital acute care services at a specific location that may no longer be necessary or useful for the provision of such care. The New Jersey Advisory Commission on Hospitals (the “Advisory Commission”), convened in 1999, had recommended that the closure of entire hospitals (as opposed to across-the-board downsizing) was the most effective way to deal with the oversupply of hospital beds – a root cause of the weak financial condition of the New Jersey hospital industry. The recommendation of the Advisory Commission was a consideration in the creation of the Hospital Asset Transformation Program. Under the Hospital Asset Transformation Act, the Authority, subject to the prior written approval of the State Treasurer, may issue bonds in order to provide, in connection with the Hospital Asset Transformation Program, any nonprofit health care organization in the State with the funds to satisfy the outstanding bonded indebtedness or any other outstanding indebtedness of any hospital in the State; pay the costs of transitioning a general hospital to a nonprofit, non-acute care health care-related facility, including, but not limited to, construction, renovation, equipment, information technology and working capital; pay the costs related to transitioning acute care and related services from the hospital at which inpatient acute care services are to be terminated to an existing nonprofit general hospital, including, but not limited to, construction, renovation, equipment, information technology and working capital; pay the costs associated with the closure of a general hospital; pay the costs of the acquisition of a general hospital in the State for the purpose of either (i) moving an existing general hospital’s services into the acquired hospital and closing the acquirer’s inpatient acute care services, or (ii) closing its inpatient acute care services; pay capitalized interest; fund a debt service reserve fund; pay the costs associated with the issuance of any bonds for any of the aforementioned purposes; or pay other costs specifically related to the closure or transition of inpatient acute care services as identified in the contract with the Treasurer. To secure such bonds, the State Treasurer and the Authority are permitted to enter into one or more contracts providing for the payment by the State Treasurer to the Authority in each State fiscal year, from the State’s General Fund, of an amount equivalent to the amount due to be paid in that fiscal year for the debt service on such bonds and any additional costs as authorized pursuant to such contract, subject to and dependent upon appropriation being made by the State Legislature for such purpose. See “SOURCES OF PAYMENT FOR THE SERIES 2009A BONDS – State Contract” herein for a complete description of the obligations of the State with respect to the Series 2009A Bonds.
PURPOSE OF ISSUANCE OF SERIES 2009A BONDS
8
Program, and (ii) paying the costs of issuing the Series 2009A Bonds. (all such uses of proceeds are collectively referred to herein as the “2009 Project”).
Upon issuance and delivery of the Series 2009A Bonds, a portion of the purchase price of the Series 2009A Bonds, together with approximately $10,188,560 on deposit in the following funds: (a) the Debt Service Fund and the Debt Service Reserve Fund established in connection with the 1993 Bonds (as hereinafter defined), (b) the Debt Service Fund and the Debt Service Reserve Fund established in connection with the 1995 Bonds (as hereinafter defined), (c) the Debt Service Fund established in connection with the 1998 Bonds (as hereinafter defined), (d) the Debt Service Fund established in connection with the 2000 Bonds (as hereinafter defined) and (e) the Bond Fund in connection with the 2003 Bonds (as hereinafter defined) will be applied to defease the following bonds: (i) the Authority’s Revenue Bonds, JFK Health Systems Obligated Group Issue, Series 1993, originally issued on March 18, 1993 in the aggregate principal amount of $22,200,000 and currently Outstanding in the aggregate principal amount of $11,720,000 (the “1993 Bonds”); (ii) the Authority’s Revenue Bonds, JFK Health Systems Obligated Group Issue, Series 1995, originally issued on June 14, 1995 in the aggregate principal amount of $30,100,000 and currently Outstanding in the aggregate principal amount of $20,615,000 (the “1995 Bonds”); (iii) the Authority’s Revenue and Refunding Bonds, JFK Medical Center/Hartwyck at Oak Tree Obligated Group Issue, Series 1998 originally issued on August 6, 1998 in the aggregate principal amount of $53,205,000 and currently Outstanding in the aggregate principal amount of $41,565,000 (the “1998 Bonds); (iv) the Authority’s Revenue and Refunding Bonds, Muhlenberg Regional Medical Center Issue, Series 2000, originally issued on October 12, 2000, in the aggregate principal amount of $25,990,000 and currently Outstanding in the aggregate principal amount of $17,275,000 (the “2000 Bonds”) (v) the Authority’s Revenue Bond, Variable Rate Composite Program-The Community Hospital Group, Inc. Project, Series 2003 A-1, originally issued on June 20, 2003 in the aggregate principal amount of $20,000,000 and currently Outstanding in the aggregate principal amount of $15,200,000 (the “2003 Bonds”); and (vi) the Authority’s Revenue Bond, Variable Rate Composite Program-JFK Medical Center Project, Series 2005 A-3, originally issued on December 20, 2005 in the aggregate principal amount of $18,000,000 and currently Outstanding in the aggregate principal amount of $17,935,000 (the “2005 Bonds”, and together with the 1993 Bonds, the 1995 Bonds, the 1998 Bonds, the 2000 Bonds and the 2003 Bonds, the “Outstanding Bonded Indebtedness”). In addition, approximately $6.57 million of the proceeds of the Series 2009A Bonds are being used to pay the Borrowers’ outstanding line of credit with Wachovia Bank, N.A., the proceeds of which were applied to fund various capital expenditures at the JFK Medical Center Facilities. See “ESTIMATED SOURCES AND USES OF FUNDS” herein.
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ESTIMATED SOURCES AND USES OF FUNDS
The proceeds of the Series 2009A Bonds are expected to be used as follows:
Sources of Funds:
Par Amount of Series 2009A Bonds $152,925,000
Less Original Issue Discount ... (2,717,398) Transfer of Existing Funds ... 10,188,561
Total Sources of Funds $160,396,163
Uses of Funds:
Deposit to Escrow Funds to pay Outstanding Bonded
Indebtedness ... $127,695,722 Repayment of Wachovia Line of Credit ... 6,571,000 Funding of Capital Projects at JFK Medical Center ... 23,029,514 Deposit to Debt Service Fund to pay Capitalized Interest ... 1,761,145 Costs of Issuance (1) ... 470,462 Underwriters’ Discount ... 868,320
Total Uses of Funds $160,396,163
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ANNUAL DEBT SERVICE REQUIREMENTS
The following table sets forth the annual debt service requirements on the Series 2009A Bonds.
Fiscal Year Ending
June 30 Principal Interest Total
11
THE SERIES 2009A BONDS
Description of the Series 2009A Bonds
The Series 2009A Bonds are being issued by the Authority under the Act and pursuant to the Resolution, will be dated their date of delivery and will bear interest from such date, payable semiannually on October 1 and April 1 in each year until maturity (each an “Interest Payment Date”), commencing on October 1, 2009. The Series 2009A Bonds will bear interest and mature on the dates and in the amounts set forth on the inside front cover page hereof, and will be subject to the redemption provisions set forth below.
The Series 2009A Bonds are issuable as fully registered bonds in the denomination of $5,000 each or any integral multiple thereof and, when issued, will be registered in the name of Cede & Co., as nominee for DTC. DTC will act as a securities depository for the Series 2009A Bonds. Purchases of the Series 2009A Bonds will be made in book-entry form, in the denomination of $5,000 or any integral multiple thereof. See “THE SERIES 2009A BONDS − Book−Entry Only System” herein.
As long as DTC or its nominee, Cede & Co., is the registered owner of the Series 2009A Bonds, payments of principal, redemption price and interest on the Series 2009A Bonds will be made directly to Cede & Co. Interest on the Series 2009A Bonds which is payable and is punctually paid or provided for on any Interest Payment Date will be paid to the registered owner at the close of business on the 15th day (whether or not a Business Day) of the calendar month next preceding each Interest Payment Date (a “Record Date”). Interest on each Interest Payment Date is payable by check mailed by the Trustee in its capacity as Paying Agent for the Series 2009A Bonds to the registered holder thereof at its registered address.
Any interest on or principal of any Series 2009A Bonds that is payable, but is not punctually paid or provided for, on any Interest Payment Date shall forthwith cease to be payable to the registered owner on the relevant Record Date. Such interest and/or principal shall be paid to the owner in whose name the Series 2009A Bond is registered at the close of business on a special record date to be fixed by the Trustee, such date to be not less than fifteen (15) days prior to the date of proposed payment (a “Special Record Date”). The Trustee shall, at the expense of the Authority, cause notice of the proposed payment of such interest and/or principal and Special Record Date therefor to be mailed, first class postage prepaid, to each registered owner at the address as it appears in the Bond Register not less than fifteen (15) days prior to such Special Record Date.
For every transfer and exchange of the Series 2009A Bonds, the Beneficial Owner may be charged a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto.
Redemption Prior to Maturity
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such order as the Authority shall direct, and within a maturity by lot or in any other manner of selection as determined by the Trustee.
Mandatory Sinking Fund Redemption. The Series 2009A Bonds maturing on October 1, 2019 shall be subject to redemption prior to maturity by operation of the Debt Service Fund, at a Redemption Price of 100% of the principal amount to be redeemed, plus accrued interest thereon to the date of redemption, on October 1 of the years and in the amounts set forth below. The Series 2009A Bonds or portions thereof to be redeemed shall be selected by the Trustee in direct order of maturity, and if less than all of the Series 2009A Bonds of like maturity shall be called for prior redemption, the particular Series 2009A Bonds or portions of Series 2009A Bonds to be redeemed shall be selected pro rata by the Trustee. Year Amount 2015 $4,715,000 2016 5,980,000 2017 6,285,000 2018 6,610,000 2019† 6,950,000 __________________________ †Final maturity.
The Series 2009A Bonds maturing on October 1, 2024 shall be subject to redemption prior to maturity by operation of the Debt Service Fund, at a Redemption Price of 100% of the principal amount to be redeemed, plus accrued interest thereon to the date of redemption, on October 1 of the years and in the amounts set forth below. The Series 2009A Bonds or portions thereof to be redeemed shall be selected by the Trustee in direct order of maturity, and if less than all of the Series 2009A Bonds of like maturity shall be called for prior redemption, the particular Series 2009A Bonds or portions of Series 2009A Bonds to be redeemed shall be selected pro rata by the Trustee.
Year Amount 2020 $7,315,000 2021 7,710,000 2022 8,125,000 2023 8,560,000 2024† 9,025,000 __________________________ †Final maturity.
13 Year Amount 2025 $9,535,000 2026 10,100,000 2027 10,700,000 2028 11,330,000 2029 12,000,000 2030 12,710,000 2031† 9,345,000 __________________________ †Final maturity.
Notice of Redemption
So long as DTC or its nominee is the registered owner of the Series 2009A Bonds, the Trustee, the Bond Registrar and the Paying Agent will recognize DTC or its nominee as the Bondholder for all purposes, including notices and voting. Conveyance of notices and other communications by DTC to DTC Participants, by DTC Participants to Indirect Participants, and by DTC Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory and regulatory requirements as may be in effect from time to time.
The Trustee shall give notice of redemption to the Bondholders by mail, postage prepaid, mailed not less than thirty (30) days nor more than sixty (60) days prior to the date fixed for redemption. If at the time of mailing of any notice of optional redemption the Authority has not deposited with the Trustee moneys sufficient to redeem all Series 2009A Bonds then to be called for redemption, such notice must state that it is conditional and is subject to the deposit with the Trustee of moneys sufficient to effect such redemption. Such notice of redemption will be of no effect unless the moneys described in the preceding sentence are so deposited.
So long as DTC or its nominee is the Bondholder, any failure on the part of DTC or failure on the part of a nominee of a Beneficial Owner (having received notice from a DTC Participant or otherwise) to notify the Beneficial Owner so affected, shall not affect the validity of the redemption.
So long as DTC or its nominee is the Bondholder, if less than all of the Series 2009A Bonds of any one maturity shall be called for redemption, the particular Series 2009A Bonds or portions of Series 2009A Bonds of such maturity to be redeemed shall be selected by lot by DTC and the DTC Participants in such manner as DTC and the DTC Participants may determine.
Payment of Redeemed Bonds
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Series 2009A Bonds so called for redemption shall cease to bear interest and such Series 2009A Bonds shall no longer be considered to be Outstanding under the Resolution. If said moneys shall not be so available on the redemption date, the principal of such Series 2009A Bonds or portions thereof shall continue to bear interest until paid at the same rate as they would have borne had they not been called for redemption.
Book-Entry Only System
The following description of The Depository Trust Company (“DTC”) New York, New York, and the procedures and record keeping with respect to beneficial ownership interests in the Series 2009A Bonds, payment of principal, interest and other payments on the Series 2009A Bonds to Direct Participants, Indirect Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interests in such Series 2009A Bonds and other related transactions by and between DTC, the Direct Participants, the Indirect Participants and the Beneficial Owners is based solely on information provided by DTC, and the Authority and the State assume no responsibility therefor. Accordingly, no representations can be made concerning these matters and neither the Direct Participants, the Indirect Participants nor the Beneficial Owners should rely on the following information with respect to such matters but should instead confirm the same with DTC or the Direct Participants or the Indirect Participants, as the case may be. Information concerning DTC and the Book-Entry-Only System has been obtained from DTC and is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation of the Authority or the State.
General. The Depository Trust Company (“DTC”), New York, New York will act as securities depository for the Series 2009A Bonds. The Series 2009A Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Series 2009A Bond certificate will be issued for each maturity of the Series 2009A Bonds of each Series each in the aggregate principal amount of such maturity, and will be deposited with DTC.
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Purchases of Series 2009A Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2009A Bonds on DTC’s records. The ownership interest of each actual purchaser of each 2009 Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2009A Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Series 2009A Bonds, except in the event that use of the book-entry system for the Series 2009A Bonds is discontinued.
To facilitate subsequent transfers, all Series 2009A Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of the Series 2009A Bonds with DTC and their registration in the name of Cede & Co. do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2009A Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Series 2009A Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.
Redemption notices shall be sent to DTC. If less than all of the Series 2009A Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to any matter related to the Series 2009A Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Authority as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Series 2009A Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
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to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of the Direct and Indirect Participants.
DTC may discontinue providing its services as securities depository with respect to the Series 2009A Bonds at any time by giving reasonable notice to the Authority or its Paying Agent, if any. Under such circumstances, in the event that a successor securities depository is not obtained, Series 2009A Bond certificates are required to be printed and delivered. The Authority may decide to discontinue use of the, system of book-entry-only transfers through DTC (or a successor securities depository). In such event, Series 2009A Bond certificates will be printed and delivered to DTC.
The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the Authority believes to be reliable, but neither the Authority nor State take any responsibility for the accuracy thereof.
THE AUTHORITY, THE STATE, THE PAYING AGENT AND THE TRUSTEE CANNOT AND DO NOT GIVE ANY ASSURANCES THAT DTC WILL DISTRIBUTE TO THE DIRECT PARTICIPANTS OR THAT THE DIRECT PARTICIPANTS OR THE INDIRECT PARTICIPANTS WILL DISTRIBUTE TO THE BENEFICIAL OWNERS OF THE SERIES 2009A BONDS (I) PAYMENTS OF PRINCIPAL OF, REDEMPTION PRICE OR PURCHASE PRICE OR INTEREST, IF ANY, ON THE SERIES 2009A BONDS, (II) CERTIFICATES REPRESENTING AN OWNERSHIP INTEREST OR OTHER CONFIRMATION OF BENEFICIAL OWNERSHIP INTEREST IN SERIES 2009A BONDS OR (III) REDEMPTION OR OTHER NOTICES SENT TO DTC OR CEDE & CO., ITS NOMINEE, AS THE HOLDER OF THE SERIES 2009A BONDS, OR THAT THEY WILL DO SO ON A TIMELY BASIS OR THAT DTC, DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS WILL SERVE AND ACT ON THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT.
NEITHER THE AUTHORITY, THE STATE, NOR THE TRUSTEE WILL HAVE ANY RESPONSIBILITY OR OBLIGATIONS TO ANY DIRECT PARTICIPANTS, ANY PERSON CLAIMING A BENEFICIAL OWNERSHIP INTEREST IN THE SERIES 2009A BONDS UNDER OR THROUGH DTC OR ANY DIRECT PARTICIPANT, OR ANY OTHER PERSON WHICH IS NOT SHOWN ON THE REGISTRATION BOOKS OF THE BOND REGISTRAR AS BEING A BONDHOLDER. THE AUTHORITY, THE STATE AND THE TRUSTEE SHALL HAVE NO RESPONSIBILITY WITH RESPECT TO (I) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC, CEDE & CO., ANY DTC PARTICIPANT, OR ANY INDIRECT PARTICIPANT; (II) ANY NOTICE THAT IS PERMITTED OR REQUIRED TO BE GIVEN TO THE OWNERS OF THE SERIES 2009A BONDS UNDER THE RESOLUTION; (III) THE SELECTION BY DTC OR ANY DTC PARTICIPANT OF ANY PERSON TO RECEIVE PAYMENT IN THE EVENT OF A PARTIAL REDEMPTION OF THE SERIES 2009A BONDS; (IV) THE PAYMENT BY DTC OR ANY DTC PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT WITH RESPECT TO THE PRINCIPAL OR REDEMPTION PREMIUM, IF ANY, OR INTEREST DUE WITH RESPECT TO THE SERIES 2009A BONDS; (V) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS THE OWNER OF SERIES 2009A BONDS; OR (VI) ANY OTHER MATTER.
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Termination or Failure of Book-Entry-Only System. The Trustee may issue registered certificates for the Series 2009A Bonds in the event that (i) the Authority determines to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository) or (ii) DTC determines to discontinue providing its services with respect to the Series 2009A Bonds and the Authority fails to identify a qualified securities depository as successor to DTC.
SOURCES OF PAYMENT FOR THE SERIES 2009A BONDS
General
THE STATE IS NOT OBLIGATED TO PAY, AND NEITHER THE FAITH AND CREDIT NOR TAXING POWER OF THE STATE IS PLEDGED TO THE PAYMENT OF, THE PRINCIPAL OR REDEMPTION PRICE, IF ANY, OF OR INTEREST ON THE SERIES 2009A BONDS. THE SERIES 2009A BONDS ARE SPECIAL, LIMITED OBLIGATIONS OF THE AUTHORITY, PAYABLE SOLELY OUT OF THE REVENUES OR OTHER RECEIPTS, FUNDS OR MONEYS OF THE AUTHORITY PLEDGED UNDER THE RESOLUTION AND FROM ANY AMOUNTS OTHERWISE AVAILABLE UNDER THE RESOLUTION FOR THE PAYMENT OF THE SERIES 2009A BONDS. THE SERIES 2009A BONDS DO NOT NOW AND SHALL NEVER CONSTITUTE A CHARGE AGAINST THE GENERAL CREDIT OF THE AUTHORITY. THE AUTHORITY HAS NO TAXING POWER. THE SERIES 2009A BONDS SHALL NOT BE A DEBT OR LIABILITY OF THE STATE OR ANY POLITICAL SUBDIVISION THEREOF (OTHER THAN THE AUTHORITY TO THE LIMITED EXTENT SET FORTH IN THE RESOLUTION), EITHER LEGAL, MORAL OR OTHERWISE, AND NOTHING IN THE ACT SHALL BE CONSTRUED TO AUTHORIZE THE AUTHORITY TO INCUR ANY INDEBTEDNESS ON BEHALF OF OR IN ANY WAY OBLIGATE THE STATE OR ANY POLITICAL SUBDIVISION THEREOF.
Pledged Property
The Series 2009A Bonds are special and limited obligations of the Authority, payable from amounts on deposit in certain funds (and the investment income thereon) held by the Trustee pursuant to the Resolution, and secured by a pledge and assignment to the Trustee of, the Pledged Property. Pursuant to the Resolution, the “Pledged Property” means the State Contract, the Revenues and the amounts and Investment Securities on deposit in the Funds (other than the Project Fund and the Rebate Fund). Pursuant to the Resolution, “Revenues” means (i) all amounts appropriated and paid to the Authority pursuant to the State Contract, (ii) any other amounts appropriated and paid by the State to the Authority or received from any other source by the Authority and pledged by the Authority as security for the payment of the Series 2009A Bonds, and (iii) interest received or to be received on any moneys or securities held pursuant to the Resolution and paid or required to be paid into the Revenue Fund; provided, however, that the term “Revenues” does not include interest received or to be received on any moneys or security held in the Project Fund or the Rebate Fund. Moneys held by the Trustee under the Resolution are required to be invested as provided therein. See “COPY OF BOND RESOLUTION” in Appendix II hereto.
State Contract
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Facility Payment Obligations due and payable on such Payment Date. The State Treasurer may discharge all or a portion of the obligation to make payments relating to Bond Payment Obligations by delivering to the Trustee for cancellation on or before a Payment Date, the Bonds or a portion thereof on which Debt Service is due on such Payment Date.
The payment obligations of the State Treasurer under the State Contract, including any and all transfers and payments to be made from the General Fund of the State, are subject to and dependent upon appropriations being made from time to time by the State Legislature for the purposes set forth in the State Contract as authorized in the Hospital Asset Transformation Act. Although the State Legislature has the legal authority to make the appropriations, it has no obligation to do so. The obligation of the State or the State Treasurer to pay the amounts under the State Contract shall not constitute a debt or liability of the State within the meaning of any State constitutional or statutory provisions, or a pledge of the faith and credit of the State.
The Authority shall collect and forthwith cause to be deposited with the Trustee all amounts, if any, payable to it pursuant to the State Contract. The Authority shall enforce the provisions of the State Contract and agreements thereunder. The Authority will not consent or agree to or permit any amendment, change or modification to the State Contract that would reduce the amounts payable to the Authority or extend the times when such payments are to be made thereunder. See “FORM OF THE STATE CONTRACT” in Appendix III hereto.
THE PAYMENT OF THE PRINCIPAL OR REDEMPTION PRICE OF AND INTEREST ON THE SERIES 2009A BONDS IS TO BE DERIVED FROM PAYMENTS MADE BY THE STATE TREASURER TO THE AUTHORITY UNDER THE STATE CONTRACT AND CERTAIN AMOUNTS HELD UNDER THE RESOLUTION. THE OBLIGATION OF THE STATE TREASURER TO MAKE SUCH PAYMENTS UNDER THE STATE CONTRACT IS SUBJECT TO AND DEPENDENT UPON APPROPRIATIONS BEING MADE FROM TIME TO TIME BY THE STATE LEGISLATURE FOR SUCH PURPOSE. THE STATE LEGISLATURE HAS NO LEGAL OBLIGATION TO MAKE ANY SUCH APPROPRIATIONS.
There are no remedies available to the Bondholders in the event that the State Legislature does not appropriate sufficient funds or any funds to make payments when due under the State Contract nor is there any other source of monies from which payment on the Series 2009A Bonds could be made. While the State Legislature has the legal authority to make appropriations, it has no obligation to do so.
See APPENDIX I - “FINANCIAL AND OTHER INFORMATION RELATING TO THE STATE OF NEW JERSEY” and the Cumulative Supplement thereto attached hereto for certain financial and other information concerning the State.
Event of Non-Appropriation
An “Event of Non-Appropriation” with respect to the Series 2009A Bonds shall be deemed to have occurred under the State Contract if the State Legislature shall fail to appropriate funds for any fiscal year in an amount sufficient to pay when due the Authority’s Bond Payment Obligations and Financing Facility Payment Obligations due under the State Contract.
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Resolution or the Series 2009A Bonds resulting from the occurrence of an Event of Non-Appropriation shall not constitute an Event of Default as defined under the Resolution.
Upon the occurrence of an Event of Non-Appropriation, the Trustee, on behalf of the Holders of the applicable Series of Series 2009A Bonds, has no remedies. The Trustee may not seek to accelerate the Series 2009A Bonds. The Authority has no obligation to pay any Bond Payment Obligations with respect to which an Event of Non-Appropriation has occurred. However, the Authority would remain obligated to pay such Bond Payment Obligations, with interest thereon at the rate then in effect with respect to the applicable Series 2009A Bonds, and all future Bond Payment Obligations, to the extent State appropriations are subsequently made for such purposes.
From and after the occurrence of an Event of Non-Appropriation, and provided that there shall not have occurred and then be continuing any Event of Default under the Resolution, all applicable Pledged Property received by the Trustee shall be applied as follows:
First, to the payment of any prior applicable Bond Payment Obligations which remain unpaid by reason of the occurrence of such Event of Non-Appropriation in the order in which such prior Bond Payment Obligations became due and payable, and, if the amount available shall not be sufficient to pay in full all the applicable Bond Payment Obligations due on any date, then to the payment thereof ratably, according to the amounts of principal or Redemption Price and interest due on such date, to the Persons entitled thereto, without any discrimination or preference; and
Second, to the payment, to the extent permitted by law, of interest on the amounts described in paragraph First above at the rate in effect on the applicable Bonds, from the last Payment Date to which interest has been paid.
See “COPY OF BOND RESOLUTION” in Appendix II hereto.
Refunding Bonds
The Authority may, with the approval of the State Treasurer and subject to certain other conditions set forth in the Resolution, issue Refunding Bonds, in accordance with the requirements of the Resolution, to refund the Series 2009A Bonds in whole or in part. The Series 2009A Bonds is the first series of Bonds issued under the Resolution. Refunding Bonds are the only Bonds other than the Series 2009A Bonds authorized by the Resolution. See “COPY OF BOND RESOLUTION” in Appendix II hereto.
TAX EXEMPTION Federal Tax Exemption
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Bond Counsel is also of the opinion that, pursuant to the American Recovery and Reinvestment Act of 2009, interest on the Series 2009A Bonds held by corporate taxpayers is not included in “adjusted current earnings” in calculating alternative minimum taxable income for purposes of the federal alternative minimum tax imposed on corporations.
Although interest on the Series 2009A Bonds is excluded from gross income for Federal income tax purposes, the accrual or receipt of interest on the Series 2009A Bonds may otherwise affect the Federal income tax liability of the recipient. The nature and extent of these other tax consequences will depend upon the recipient’s particular tax status or other items of income or deduction. Bond Counsel expresses no opinion regarding any such consequences. Purchasers of the Series 2009A Bonds, particularly purchasers that are corporations (including S corporations and foreign corporations operating branches in the United States), property or casualty insurance companies, banks, thrifts or other financial institutions, certain recipients of Social Security benefits and individuals who may be eligible for the earned income tax credit under Section 32 of the Code are advised to consult their own tax advisors as to the tax consequences of purchasing or holding the Series 2009A Bonds.
In rendering this opinion, Bond Counsel has assumed compliance by the Authority with its representation, as stated in its Arbitrage and Tax Certificate to be executed by the Authority upon issuance of the Series 2009A Bonds, that the Authority expects and intends to, and will, to the extent permitted by law, comply with the provisions of the Code relating to actions to be taken by the Authority in respect of the Series 2009A Bonds after the issuance thereof to the extent necessary to effect or maintain the federal exclusion from gross income of the interest on the Series 2009A Bonds. Bond Counsel also has assumed compliance by the Borrowers with their covenants in the Arbitrage and Tax Certificate to be executed by the Borrowers upon issuance of the Series 2009A Bonds, that the Borrowers will comply with the provisions of the Code relating to actions to be taken by the Borrowers in respect of the Series 2009A Bonds after the issuance thereof to the extent necessary to effect or maintain the federal exclusion from gross income of the interest on the Series 2009A Bonds. These representations and covenants relate to, among other things, the use of and investment of proceeds of the Series 2009A Bonds and the rebate to the United States Treasury of specified arbitrage earnings, if any. Failure of the Authority or the Borrowers to comply with such requirements could result in the interest on the Series 2009A Bonds becoming subject to federal income tax from the date of issuance.
Bond Counsel is also of the opinion that the difference between the principal amount of the Series 2009A Bonds maturing on October 1 in each of the years 2024 and 2031 (collectively, the “Discount Bonds”) and their respective initial offering prices to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters or wholesalers) at which prices a substantial amount of such Discount Bonds of the same maturity was sold, constitutes original issue discount which is excluded from gross income for Federal income tax purposes to the same extent as interest on the Discount Bonds. Further, such original issue discount accrues actuarially on a constant interest rate basis over the term of each Discount Bond, and the basis of each Discount Bond acquired at such initial offering price by an initial purchaser thereof will be increased by the amount of such accrued original issue discount.
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the call premium. As premium is amortized, it offsets the interest allocable to the corresponding payment period and the purchaser’s basis in such Premium Bond is reduced by a corresponding amount resulting in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes upon a sale or disposition of such Premium Bond prior to its maturity. Even though the purchaser’s basis may be reduced, no federal income tax deduction is allowed.
Purchasers of the Premium Bonds should consult with their tax advisors with respect to the determination and treatment of amortizable premium for federal income tax purposes and with respect to the state and local tax consequences of owning a Premium Bond.
New Jersey Gross Income Tax
In the opinion of Bond Counsel, the interest on the Series 2009A Bonds and any gain realized on the sale of the Series 2009A Bonds is not includable as gross income under the New Jersey Gross Income Tax Act.
Future Events
Tax legislation, administrative action taken by tax authorities, and court decisions, whether at the Federal or state level, may adversely affect the exclusion from gross income of interest on the Series 2009A Bonds for federal income tax purpose, or the exclusion of interest on and any gain realized on the sale of the Series 2009A Bonds under the existing New Jersey Gross Income Tax Act, and any such legislation, administrative action or court decisions could adversely affect the market price or marketability of the Series 2009A Bonds.
EACH PURCHASER OF THE SERIES 2009A BONDS SHOULD CONSULT HIS OR HER OWN ADVISOR REGARDING ANY CHANGES IN THE STATUS OF PENDING OR PROPOSED FEDERAL OR NEW JERSEY STATE TAX LEGISLATION, ADMINISTRATIVE ACTION TAKEN BY TAX AUTHORITIES, OR COURT DECISIONS.
ALL POTENTIAL PURCHASERS OF THE SERIES 2009A BONDS SHOULD CONSULT WITH THEIR TAX ADVISORS IN ORDER TO UNDERSTAND THE IMPLICATIONS OF THE CODE.
LEGALITY OF SERIES 2009A BONDS FOR INVESTMENT AND DEPOSIT
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LEGAL MATTERS
The Series 2009A Bonds and the proceedings pursuant to which they are issued are subject to the approving opinions as to legality, validity and tax status of McManimon & Scotland, L.L.C., Newark, New Jersey, Bond Counsel. The proposed form of the opinion of Bond Counsel is attached hereto as Appendix V. Certain legal matters will be passed upon for the Authority and the State by the Attorney General of the State of New Jersey. Certain legal matters will be passed upon for the Underwriters by their counsel, Cozen O’Connor, Trenton and Newark, New Jersey.
LITIGATION
There is not now pending any litigation restraining or enjoining the issuance or delivery of the Series 2009A Bonds or questioning or affecting the validity of the Series 2009A Bonds or the proceedings and authority under which they are to be issued. Neither the creation, organization or existence of the Authority, nor the title of the present members or other officers of the Authority to their respective offices is being contested. There is no litigation pending which in any manner questions the right of the Authority to make loans to the Borrowers in accordance with the provisions of the Act, the Resolution and the Loan Agreement.
UNDERWRITING
Under the bond purchase contract entered into between the Authority and Goldman, Sachs & Co. (the “Manager”), as representative of the underwriters of the Series 2009A Bonds set forth on the cover page hereof (the “Underwriters”), the Series 2009A Bonds are being purchased by the Underwriters at a purchase price equal to $149,339,282.40 (such purchase price being equal to the aggregate principal amount of the Series 2009A Bonds of $152,925,000.00, less a net original issue discount of $2,717,397.85, less an Underwriters’ discount of $868,319.75. The obligation of the Underwriters to accept delivery of the Series 2009A Bonds is subject to various conditions contained in the bond purchase contract.
The initial public offering prices of the Series 2009A Bonds set forth on the inside cover page may be changed without notice by the Underwriters. The Underwriters may offer and sell the Series 2009A Bonds to certain dealers (including dealers depositing Series 2009A Bonds into investment trusts, certain of which may be sponsored or managed by the Underwriters) and others at prices or yields lower than the offering prices or yields set forth on the inside cover page hereof.
RATINGS
Fitch Ratings, Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies have assigned their municipal bond ratings of “A+,” “A1,” and “AA-,” respectively, to the Series 2009A Bonds.
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so warrant. Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Series 2009A Bonds.
CONTINUING DISCLOSURE
The Securities and Exchange Commission (the “SEC”), pursuant to the federal Securities Exchange Act of 1934, as amended and supplemented (the “Securities Exchange Act”), has adopted amendments to its Rule 15c2-12 (“Rule 15c2-12”) which generally prohibit a broker, dealer, or municipal securities dealer (a “Participating Underwriter”) from purchasing or selling municipal securities, such as the Series 2009A Bonds, unless the Participating Underwriter has reasonably determined that an issuer of municipal securities or an obligated person has undertaken in a written agreement or contract for the benefit of holders of such securities to provide certain annual financial information and event notices to various information repositories.
On the date of delivery of the Series 2009A Bonds, the State and the Authority will enter into the Continuing Disclosure Agreement with the Trustee, as Dissemination Agent, for the benefit of the Holders of the Series 2009A Bonds in order to comply on a continuing basis with the disclosure requirements of Rule 15c2-12. See “FORM OF THE CONTINUING DISCLOSURE AGREEMENT” in Appendix IV hereto.
The Treasurer of the State failed to provide the State's annual report containing its financial and operating data as required by the State's various Agreements with Respect to Continuing Disclosure entered into by the State in connection with its general obligation bonds. The annual report was due to the nationally recognized municipal securities repositories on March 15, 2009. The annual report was filed on March 31, 2009.
MISCELLANEOUS
Reference is hereby made to Appendix II hereto for information relating to the Bond Resolution, Appendix III hereto for information relating to the State Contract and Appendix IV hereto for information relating to the Continuing Disclosure Agreement, which Appendices should be reviewed by prospective purchasers of the Series 2009A Bonds.
The Borrowers have reviewed the information contained herein which describes the Borrower, its facilities and business and the 2009 Project, and have approved all such information for use within this Official Statement. The State has provided the information contained in APPENDIX I and the Cumulative Supplement thereto attached hereto. The information contained therein is not to be construed as a representation of the Authority. Information herein regarding DTC has been provided by DTC.
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This Official Statement, its execution, and its delivery and distribution to prospective purchasers of the Series 2009A Bonds have been approved and authorized by the Authority.
NEW JERSEY HEALTH CARE FACILITIES FINANCING AUTHORITY
By: /s/ Mark E. Hopkins__________________ MARK E. HOPKINS
APPENDIX I-CS1
Cumulative Supplement, dated May 20, 2009, to Appendix I, dated March 31, 2009
THIS CUMULATIVE SUPPLEMENT SUPERSEDES AND RESTATES ALL PRIOR SUPPLEMENTS TO APPENDIX I, DATED MARCH 31, 2009, WHETHER CHARACTERIZED AS A SUPPLEMENT TO APPENDIX I OR AS A SUPPLEMENT TO A PRELIMINARY OFFICIAL STATEMENT OR OFFICIAL STATEMENT WHICH INCLUDED APPENDIX I, AS SUPPLEMENTED HEREIN.
Please insert the following paragraphs on page I-9 of Appendix I, dated March 31, 2009, immediately above the heading captioned “FINANCIAL RESULTS AND ESTIMATES”.
Changes since the Governor’s Fiscal Year 2010 Budget Message
On April 22, 2009, the State reported that as a result of the enactment of the Fiscal Year 2010 Budget for the State of New York, which includes an increase in certain personal income tax rates, the State of New Jersey expects an estimated $300 million decrease in New Jersey’s Fiscal Year 2010 gross income tax receipts compared to the estimates made at the time of the Governor’s Fiscal Year 2010 Budget Message. This anticipated decrease occurs as a result of the effect of the New York rate increases on the amounts which New Jersey taxpayers, under certain conditions, can claim as a resident credit for tax paid to another state.
On April 30, 2009, the State disclosed revised estimates regarding the expected revenue shortfall from amounts reflected in the Governor’s Fiscal Year 2010 Budget Message for Fiscal Years 2009 and 2010. The State reported that for the period including the remainder of Fiscal Year 2009 and for Fiscal Year 2010 the aggregate revenue shortfall could be between $1.5 billion to $2.0 billion.
On May 14, 2009, the State disclosed a projected $1.2 billion shortfall for Fiscal Year 2009, an amount that was greater than that anticipated for Fiscal Year 2009 at the time of the Governor’s Fiscal Year 2010 Budget Message as a result of weaker than expected tax collections ($1.1 billion), increased spending needs ($26 million), reduction of previously planned contributions to the unemployment insurance fund of $30 million and a reduction of $88 million in federal fiscal stimulus funds which had previously been anticipated in Fiscal Year 2009 and are now expected to be received in Fiscal Year 2010.
Actions proposed on May 14, 2009 to eliminate the $1.2 billion budget shortfall for Fiscal Year 2009 were announced as follows:
Action Amount*
Decreases in spending . . . $300 million Delay in payment of School Aid into FY 2010 . . . 380 million Lapse of appropriations for Business Employment
Incentive Program grants not needed in FY 2009 . . . 70 million Use of FY 2009 opening fund balance . . . 450 million Total . . . $ 1.2 billion * rounded
Giving effect to such actions, the projected ending fund balance for Fiscal Year 2009 was anticipated as of May 14, 2009, to be $250 million.
Of the $300 million reductions in spending for Fiscal Year 2009 proposed on May 14, 2009, $157 million is a reduction in the State’s contribution to the defined benefit pension funds for Fiscal Year 2009. As a result, the State’s contribution to the defined benefit pension funds will total $106 million in Fiscal Year 2009, representing 4.8% of the actuarially recommended contribution, a significant reduction from the $1.047 billion included in the Fiscal Year 2009 Appropriations Act, which represented 46.9% of the actuarially recommended contribution. The reduced contribution to the defined benefit pension funds will increase the unfunded accrued actuarial liability of the defined benefit pension funds.
