The sale of Hoboken University Medical Center to a group from Bayonne Medical Center was once again in jeopardy leading into the weekend, after the potential new owners canceled a planned closing of the sale on Wednesday.
In order for the sale of the state’s oldest hospital to be completed, the potential new owners want a parking agreement with the city to be effective immediately. But on Tuesday, the mayor’s four critics on the nine-member City Council refused to vote to implement the law before the usual 20-day ordinance waiting period, citing problems with the terms of the deal. In order for the city to implement it quickly, it needs six votes.
Mayor Dawn Zimmer scheduled a Sunday council meeting for Oct. 30 at 6 p.m., hoping that one of her council foes would change their minds and vote to implement the parking agreement immediately. The implementation would pave the way for a sale closing, Zimmer said.
The parking agreement will remain in effect for 99 years.
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In 2007, under the administration of David Roberts, the City Council voted to guarantee $52 million in bonds for the survival of the hospital after it faced closure due to financial problems. After Zimmer took office, she wanted to relieve taxpayers of the bond guarantee by selling it to private owners.
The Hoboken Municipal Hospital Authority (HMHA), the municipal board selling the hospital, which has Zimmer as a member, received bids from potential buyers last year and then began negotiations with Holdco.
The process hit some roadblocks. Hudson Healthcare Inc., the operator of HUMC, declared bankruptcy. In October, the company reached a settlement after long negotiations with creditors, to the tune of approximately 30 cents on the dollar.
Zimmer said that if the parking agreement is not approved on Sunday, she will have to go back to the creditors to tell them the hospital will not be able to pay the settlement, and they will have to renegotiate. If the sale of the hospital fails, Zimmer said the city will be hit with a massive tax increase and massive layoffs to pay off over $60 million in bonds.
Hospital workers: ‘Save our hospital’
Zimmer held a press conference on Friday at the hospital to give employees and the press an update on the sale.
A group of workers chanted ‘Save our hospital’ during the remarks of Toni Tomarazzo, the HMHA chairperson.
Catherine Lapinski is a nurse at the hospital.
“I think politically it would be a game for [the council minority] because they have an agenda against the mayor,” Lapinski said. “I have no agenda. I just work here. But as a nurse, this community needs its hospital.”
Marjorie Boyden-Edmond is the chaplain at HUMC, and said the whole process has been a strain on the workers, who are worried about losing their jobs.
The parking agreement
The council voted by a 5-4 margin on Tuesday in a special meeting to execute a parking agreement with the new owners. For the first three years, the employees will pay only $45 per month. For the remainder of the agreement, employees will pay $65 per month.
Since the agreement was passed by ordinance, there is usually a 20 day waiting period before the legislation becomes law. The mayor wanted to make the agreement effective immediately on Tuesday night, but the resolution “declaring an emergency” failed to garner the needed six votes to support the move.
The agreement provides 1,000 transponders for access to three city garages in downtown Hoboken. Since employees will now be parking in underutilized spots in Hudson Street garages as well as the midtown garage, Parking and Transportation Director Ian Sacs said he will be able to free up spaces on a resident waiting list for the midtown garage.
Hospital workers are allowed to park for eight hours per day. The resident rate for parking in the garage allows for 24 hours access, and costs $185 per month.
On Wednesday, Louis Modugno, an attorney for the potential owners, said in a letter to city and hospital attorneys that since the city did not have the required parking agreements in order before the closing originally scheduled for Oct. 26, the buyers were not in a position to close this past Wednesday as expected.
The deal has already been approved by the state commissioner of health.
Ninety-nine years
The parking agreement will remain in effect for 99 years, but if the building stops operating as a hospital and becomes something else, like residential buildings, the property owners would retain the rights to 400 transponders to park in the midtown garage. However, they would be required to pay market rate. The property owners can back out of the agreement by not paying or by nullifying the agreement, but the city is bound by the terms of the deal.
As part of the sale agreement, the hospital must remain an acute care facility for seven years.
Critics and supporters
Councilwoman Beth Mason, a Zimmer critic, funded a television commercial against the parking agreement which aired over the weekend of Oct. 22, and also during the World Series and Monday Night Football.
Sacs responded to critics by saying the deal will eventually result in $52 million in revenue for the city. Spots that are currently vacant in garages on Hudson Street will be filled at a rate of $45 and $65 per month, and new spots are opening for residents at a rate of $185 per month in the midtown garage.
“All of the residents on the [midtown] waiting list won’t be waiting anymore,” Sacs said at the council meeting.
Mason said she wanted the agreement to go to a public vote, or referendum. The result would delay the sale of the hospital until the matter is voted on, according to sources.
“I say give the power back to the people,” Mason said on Tuesday. “Let them decide if they want [the deal].”
Zimmer said on Friday that she would recruit an “army of volunteers” to convince people not to sign on the referendum. “If you sign on to the petition, you are signing on for the closing of this hospital,” Zimmer said.
Zimmer said in an interview on Tuesday that the deal was crucial to the sale of the hospital.
“It was intense negotiations to get to this point,” Zimmer said. “But without this agreement, we have no hospital.”
She also noted, “The state has given anywhere from $7 million to $11 million in stabilization funds annually. [If the sale is finalized], we’ll be completely off of state subsidies. We’re saving the state money [in the future] and we’re able to make sure we still have a hospital here.”
For the latest updates on the sale, visit HudsonReporter.com.
Ray Smith may be reached at RSmith@hudsonreporter.com