What Will Our Fancy New Bridges Cost Us?

On Nov 23, 2022 the Herald published a Cape Issues article regarding the County’s Comprehensive Bridge Replacement and Improvement Plan.  The Plan anticipates a total cost between $603 million and $806 million.
It is estimated that between 50% and 70% of the total could be funded by the State of New Jersey and/or the Federal Government.
Short Term Issues
Three years before the Plan was published, the County Commissioners knew that many bridges need to be replaced, particularly the Ocean Drive Bridges, and that the financial burden would be severe.  Accordingly, they developed a plan to improve the financial health of the County in order to demonstrate to the financial markets that it could sell and repay bonds issued to cover the County’s total portion of the total cost.
To do so, it needed to raise tax revenues by way of increasing the appropriations in the annual Budget.  The County raised appropriations for the Current Fund through “Deferred Charges to Future Taxation” and the Current Fund Balance (Year End Accumulated Surplus) increased in the below chart. It should also be noted that NJ Local Bond Law requires a 5% “Down Payment” for all bond issues.
Long Term Issues
The County’s plan is to spread its bridge project over 15 years.  Assuming that each year the County will issue 30-year Grapbonds and the final issue will be in 15 years in 2036, the County payback will be spread over 45 years.  Each bonds requires an accompanying 5% down payment, the last of which will be in 2037, the same year the County would have 15 issues of bonds outstanding.  Accordingly, the most expensive year of the project will be 2037.
In the year 2037 and based on an assumed home value of $1 million and a total cost of $603 million, the tax increase per home will increase 7.06% or $706 on 70% matched financing and 11.77% or $1,176 on 50% matched financing.
In the year 2037 and based on an assumed market value of $1 million and a total cost of $806 million, the tax increase per home will increase 9.44% or $944 on 70% matched financing and 15.73% or $1,573 on 50% matched financing.
It constitutes a lot of money, but it is a price which we pay to live in our matchless natural environment.