Newark Mayor Ras Baraka plans to use most of an additional $155 million from a lease agreement with the Port Authority of New York and New Jersey to help pay back a loan it received from the county to replace homeowners’ aging lead pipes.
Essex County Executive Joseph DiVincenzo, Jr. announced last month that the county’s improvement authority would loan the city $120 million to replace 18,000 lead service lines. The $120 million will slash the city’s original 10-year timeline for the project to just 24-30 months.
The city has been grappling with elevated lead levels since 2017, when the chemical it used at one of its treatment plants became ineffective at preventing lead from leaching off from pipes.
The extra cash from the Port Authority will not hasten the lead service line project, but it will help pay back the debt service on the county’s loan. The city will have to pay $6 million in debt service over the course of the county’s 30-year loan, Baraka told reporters Tuesday.
“It helps us to pay the debt service without raising the taxes or water bills,” Baraka said.
The city is leveraging some of its most lucrative assets to pay back the loan: the land on which Port Newark and Newark Liberty International Airport sit. The Port Authority rents that land from the city and has been paying about $110 million to the city annually for it.
The new agreement was approved by city council on Tuesday and extends the lease by 10 years to 2075. The Port Authority will give $5 million upfront before Jan. 15, 2020 to the city and will pay an additional $5 million in rent for the next 30 years, according to a copy of the agreement obtained by NJ Advance Media.
The mayor is still hoping President Donald Trump will sign federal legislation that would allow New Jersey to use $100 million from its clean water fund to help pay for lead line replacements in cities like Newark. If that happens, the city would be able to use the extra $155 million for something else.
“We are going to try to go after some of that money, which will allow us to get 0% interest and pay on this debt without using money that we just acquired," Baraka said.
The land and lease agreement has been a source of contention between the mayor and the Port Authority for years.
Baraka either wanted the Port Authority to buy the land or pay more in rent. The mayor claimed the agency hasn’t been paying its “just share” for the land, which Baraka estimated to be worth billions.
In 2014, the mayor called on the agency to pay up to help close a budget deficit. But former Port Authority Chairman John Degnan said the city should go elsewhere if it were looking for more money.
“We’re not a piggy bank,” said Degnan at the time. “You can’t come to the Port Authority every time you need money.”
No members of the Port Authority were at the press conference on Tuesday. But a spokesman for the agency, which has seen a change in leadership in recent years, said the Port Authority’s Board of Commissioners approved the new lease on “favorable terms.”
“This extension advances critical infrastructure projects including Port Street Corridor Improvements and the replacement of the aging Newark AirTrain, as well as resolves several outstanding disputes between the parties,” Port Authority spokesman Steve Coleman said.
The mayor has made some concessions to get the additional funds.
The $5 million upfront will be paid by the Port Authority so that the city will release any claims it had about the underpayment of rent. The city will also not be able to legally challenge the agency about its transactions for the next 10 years, the agreement says.
The Port Authority will hire an administrator who will act as a liaison for the city too. That’s something Baraka has been asking for since he first took office in 2014.
Newark will also allow the Port Authority to use its high-speed internet at the airport and seaport for a discounted rate, which will be negotiated later.
The Port Authority will be allowed to make improvements to Port Street for a massive overhaul of the aging AirTrain. Baraka last year contended Port Street belonged to the city, even threatening at a commissioners meeting to block it off with trucks so the Port Authority wouldn’t be able to access it.
“We’re just happy that we were able to come to an agreement with them at this particular time,” said Baraka when asked if Newark was getting its fair share from the agency. “I wanted to make sure that any agreement we came to with them did not kind of hamstring anybody else who would come after us.”
Rebecca Panico may be reached at rpanico@njadvancemedia.com. Follow her on Twitter @BeccaPanico.
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