A recent unpublished Appellate Division decision, National Loan Acquisitions v. Bridgeton Municipal Port Authority, has important consequences for the credit of New Jersey’s municipalities and should therefore, we think, be approved for publication. In it, the court instructs the Local Finance Board that it may not simply throw up its hands when an independent municipal authority fails, but must provide for payment of its debts, possibly imposing them on the taxpayers of the municipality.

National Loan Acquisitions arose from an abandoned development project. To insulate itself from the risks, the city of Bridgeton formed an independent municipal port authority. The authority borrowed $800,000, bought property, and defaulted when the project was abandoned. The mortgage lender foreclosed, but the Appellate Division held that a statute barred foreclosure against municipal property. The judgment was bought at a deep discount by a speculative investor, who sought a mandamus compelling the authority to pay and obtained a consent judgment for a lesser amount plus interest. However, the authority had no assets other than the property, and an attempted sale fell through. The trial court refused to order the property conveyed to the creditor. Thereafter, the creditor applied for relief to the Local Finance Board, which has authority under the Local Fiscal Authorities Control Law to dissolve the authority with provision for payment of its debts. The board ruled that, while dissolution would be in the public interest, it could not figure out a solution and simply encouraged the creditor, the authority, and Bridgeton to work something out. The creditor appealed.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]