McManimon & Scotland, L.L.C. Assists in Closing $46,800,000 Construction Loan for Elberon Development Co., L.L.C. Using Recovery Zone Facility Bonds.
On December 30, 2010, McManimon & Scotland, L.L.C. closed a $46,800,000 financing transaction for Elberon Development Co., L.L.C. which included the issuance of $44,499,000 in Recovery Zone Facility Bonds. The project includes the demolition and construction of a 524,000 sq. ft state-of-the-art warehouse for Wakefern Food Corp. in Elizabeth. Wakefern, operating under the names ShopRite and PriceRite, is a member-owned wholesale distribution cooperative, supplying over 200 stores with groceries and other merchandise along the eastern seaboard, including New Jersey, New York and Pennsylvania. The new warehouse will replace an existing structure that has housed Wakefern’s operations for over 50 years. For each of those 50 years Elberon Development Co. and its affiliate, Elberon Development Co., L.L.C., has owned and managed the site while maintaining a strong commitment to the City of Elizabeth.
The Recovery Zone Facility Bonds were issued by the Union County Improvement Authority under the federal 2009 American Reinvestment and Recovery Act which terminated after December 31, 2010. The RZFBs were a federal bond program permitting governments to issue tax-exempt, private activity bonds to spur private investment in new projects. Despite the State of New Jersey’s sizable allocation of volume cap for RZFBs many projects were not able to take advantage of the benefits of the RZFBs due to a variety of factors, including project readiness, credit worthiness of the borrowers, and the time constraint on the issuance of the RZFBs.
In spite of these obstacles, the project received volume cap allocation from the City of Elizabeth ($3,931,000), the County of Union ($15,568,000) and a reallocation of volume cap from the State ($25,000,000). The construction loan was secure through TD Bank, N.A., which purchased the RZFBs and provided a construction term loan and a revolving line of credit to assist in the construction of the Project.
Through the tireless efforts of the entire working team, which included Elberon’s executive staff, Wakefern, the City of Elizabeth, Union County, Union County Improvement Authority, and its bond counsel, TD Bank and its counsel and McManimon & Scotland, L.L.C., Elberon entered into a new lease with Wakefern and the financing for the project closed and funded in the early hours of December 30, 2010. Construction of the Project is expected to commence in 2011 and be substantially completed around early 2013.