Mayor Dawn Zimmer met with her directors on Thursday and told them to prepare for layoffs after a proposed bond issue for capital improvements and a refinance bond for the midtown garage failed by a 5-4 vote at Wednesday evening’s City Council meeting. The failure to pass the bonds created a $7.3 million budget gap which Zimmer says must be closed by staff reductions.
On Thursday, all city employees were provided with a general advisory concerning possible layoffs, according to a statement from the mayor’s office.
Mayor Dawn Zimmer has five allies on the council, but needed six “yes” votes to pass the bond ordinances on Wednesday.
Zimmer says paying down the garage bonds and making the necessary capital improvements will proceed, but the costs have to be offset by the layoffs.
‘Am I angry? No. Am I disappointed? Yes.’ – Police Chief Anthony Falco
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“I deeply regret that this action must be taken, but unfortunately the City Council minority’s blocking of these essential bond ordinances leaves me no choice,” she said. “Layoffs should not be necessary at all, but the City Council minority has intentionally created an easily avoidable budget gap that must now be addressed in a fiscally responsible manner.”
In an interview on Thursday, Zimmer said given the enormity of the budget gap, there’s no way to avoid layoffs.
“I don’t want to do this at all,” Zimmer said. “I feel terrible for the city employees; it’s unfair for them to be caught up in this but I have to make a decision based on my options, and I have to act accordingly to make sure that the community has what it needs as far as services.”
The city has a bonding capacity of $365 million, based on real estate values. Hoboken has bonded for approximately $112 million thus far.
Police, DPW improvements needed
Finance Director Nick Trasente delivered a presentation at the meeting before the capital improvement bond vote, outlining the city’s bond capacity, as well as providing photos of the equipment in need of repair.
“We’re down to one street sweeper, which is borrowed from the parks department,” Zimmer said. “And Secaucus has lent us another one.” Zimmer also said that the city’s pay loader, which helps during construction in the city, is rusted out with a broken floor, and rust falls on the heads of employees who use it.
Although the city has an approximate $5 million surplus, that money has been allocated largely for retroactive pay for employees, including the fire department, as union negotiations are ongoing, Zimmer said.
“I don’t have enough money in the budget [for the improvements],” she said. “These are things that should be covered by bonds. You can’t pull from an operating budget to pay for things like that.”
Police Chief Anthony Falco asked the council to vote in favor of the capital improvements. Falco said that there isn’t an operable heating and cooling system in the police station and he has no storage space for evidence in headquarters. The police department also wants safety glass installed at the front desk, like a bank, similar to other departments throughout the state.
“I’m imploring the council to take [the needs] into consideration and set politics aside for once,” Falco said before the vote. “Do what’s right for my officers. There are basic needs [that need to be met].”
Councilman Michael Russo, who said he does not plan to vote for bonds in the future, said he believes the capital improvements should be done through a capital improvement plan, not by bonding.
“You don’t pay cash out of your budget [for capital improvements],” said Councilman Peter Cunningham, countering Russo.
“Just because you have a credit card for $20,000 doesn’t mean you have to spend $20,000,” said Councilwoman Theresa Castellano, who voted “no.”
“Our employees and residents have not been receiving top tier equipment and top tier services,” said Councilman David Mello, who voted yes. “We need to put an end to that. We need to do it in the proper, responsible financial way by bonding.”
Councilwoman Beth Mason said she did not agree with some of the items up for improvement, but said if just the police items are put forth on a different agenda, she would vote for them.
The council voted down the bond ordinance by a 5-4 vote.
“Am I angry? No. Am I disappointed? Yes,” Falco said after the vote. “But I assure everyone we will be on patrols 24 hours a day, seven days a week, no matter what our building is like.”
Garage refinancing fails
A deal to refinance bonds for the city’s midtown parking garage adjacent to the hospital also failed by a 5-4 vote, with the “no” voters saying that the bond is too-closely tied to a parking agreement with the potential new owners of Hoboken University Medical Center, the sale of which they oppose.
Since the new owners, HUMC Holdco, will turn the hospital into a for-profit facility and will be using the city-owned parking garage, a portion of the garage bonds need to be changed to a taxable status.
Non-taxable bonds can benefit the local government, but since the city is no longer operating the hospital, the parking bonds for the for-profit facility must become taxable.
The administration says the city needs to come up with $4.5 million to pay off the garage construction bonds. The refinance would have avoided this cost, Zimmer said, and saved the city $50,000.
The bonds date back to the city’s construction of the parking garage in 2002, when Bon Secours, a non-profit operator, owned the hospital.
As part of the parking access agreement, the new owners will have access to 400 spots in the midtown garage, and 600 spots spread throughout two other parking garages on Hudson Street.
Parking and Transportation Director Ian Sacs said that the agreement is great for his department because it means fewer employees will park in the midtown garage, freeing up spots for residents on a waiting list. The employees would pay $45 per month for the first three years, and $65 after that time. The resident rate is $185 per month for that garage.
Toni Tomarazzo is the chair of the Hoboken Municipal Hospital Authority, the board selling the hospital to HUMC Holdco, a for-profit ownership group from Bayonne Medical Center.
“People won’t use the medical facility unless we have these parking spaces available,” Tomarazzo said at the meeting.
As part of the agreement, the new owners have access to the garage for 99 years, although there is only a seven-year agreement that the building remains a hospital.
“We’ve negotiated as hard as we can on the parking agreement,” Zimmer said. “There’s no room to negotiate any further.”
The hospital transfer of ownership is scheduled for this week.
“If you do not pass [the bond], the $4.5 million payment would be necessary,” said city attorney Melissa Longo before the vote. “Layoffs will come.”
Russo said he was concerned that his constituents pay $185 per month to park, while the employees would pay less. Sacs said, mathematically, after three years, the employees would be paying about the same rate because they park for eight hours per day, or a third of the time residents are allowed to park.
Councilman Tim Occhipinti said he believes the hospital sale is simply a real estate transaction, and worries that after the seven year agreement expires, the building will become residential. If that were the case, the new owners would have access to the city’s parking garage, but would pay market rate.
Resident Scott Siegel spoke out for the agreement.
“I want the jobs protected and I want the games to stop,” Siegel said to the council.
Occhipinti said he would not vote in favor of the refinance because he does not like the parking agreement.
“I realize that people are working very hard to complete this deal and sell the hospital but I must say this parking agreement is just too good of a deal for a for-profit company,” Occhipinti said.
The refinance bond did not pass, with the council voting 5-4.
The parking agreement will be up for a vote in a special council meeting on Tuesday at 7 p.m. The council only needs five votes to approve the parking agreement and it is believed that it will pass by a 5-4 vote.
Ray Smith may be reached at RSmith@hudsonreporter.com
SIDEBAR
Hoboken baseball teams honored
Mayor Dawn Zimmer and Council President Ravinder Bhalla, alongside Health and Human Services Director Leo Pellegrini, issued proclamations to the Hoboken Little League baseball team and the Hoboken Redwings varsity baseball team for successful seasons.