A failed vote at Monday’s Hoboken City Council meeting could pave the way for a state takeover of the city’s finances if the issue isn’t resolved by Nov. 30, when the city will not be able to pay its bills.
Mayor Dawn Zimmer, her City Council allies, and the state Department of Community Affairs couldn’t convince any of the four anti-Zimmer council members to vote to approve a line item transfer in the current budget.
The council needed six votes to approve moving $2 million from one area of the budget to another. Zimmer has five allies on the council.
Councilman Michael Russo said he asked for more information about where the money was going and why before the meeting, but said he never received an explanation. Councilwomen Beth Mason and Theresa Castellano and Councilman Tim Occhipinti also voted no.
Zimmer, who made a rare appearance at the meeting, said the city needed the transfer in order to pay its bills, including for the city’s bankruptcy attorney and wages for its firefighters.
The bankruptcy attorney in question, Paul Hollander, represented the city in the recent litigation surrounding the sale of Hoboken University Medical Center. At Monday’s meeting, he discussed his role with the council. Hollander is paid $540 per hour for his services.
He said the creditors who were owned money due to the bankruptcy of the hospital’s past operator originally wanted the city to kick in $25 million for a settlement, but he would not accept that proposal. He said that the creditors committee then asked the city for $22 million and $19 million, respectively, but he would not budge. The creditors finally asked the city for $5 million for a settlement, an amount Zimmer wanted the council to approve so that the hospital could be sold to new owners. But the council minority shot down that request.
Eventually the new owners received a parking discount in the Hoboken midtown municipal garage, which Hollander said amounted to approximately a $150,000 savings for the purchaser. After the council voted down the $5 million for the settlement, the state kicked in the money to the creditors’ committee.
Hollander said he often worked until the late hours of the night on the case.
Firefighter pay may be delayed
Part of the resolution included moving money so the city can pay Fire Department salaries.
“So you don’t want to pay the fire people?” Council President Ravinder Bhalla said to the council members who spoke against what he called a “routine” transfer. These transfers are usually done at this time of the budget year, and they have been approved in the past.
Russo said he’s asking for accountability, and compared the situation to the time, in 2008, that Zimmer was part of a council majority that failed to approve former Mayor David Roberts’ underfunded budget, causing a state takeover. At the time, several of the council people (including Peter Cammarano, Zimmer, and Mason) were planning to run for mayor themselves, and Roberts felt that they were stalling city business because of political motivations.
In the current situation, the line item transfer is more routine. It would not authorize the spending of additional money, but would move money around in the budget.
A special meeting is expected to be announced soon, because it is against state law for a city to spend money on items that have not been properly appropriated.
The mayor said that as of Nov. 30, the city will not be able to pay its bills without the $2 million transfer.
Garage bond refinance fails again
The four council members opposed to Zimmer also again rejected the idea of refinancing the midtown municipal garage bonds. A refinance would save the city $50,000, but not refinancing will cost the city $4.5 million to pay off the bonds, a move that Zimmer said will result in layoffs of municipal workers. Her opponents said they believe layoffs will not occur. The refinancing needed six votes.
The midtown municipal garage is next to Hoboken’s hospital. The bonds date back to when the garage was built in the early 2000s, but because the city built the garage, the tax status of the bonds were non-profit.
In order to avoid hefty IRS penalties, the city must change the tax status of a portion of the bonds because the new hospital owners, who are for-profit, are using a large portion of the midtown garage as part of the hospital sale agreement. The options are either to refinance the bonds or pay off the portion of the bonds.
If the council does not vote to refinance, the city would be forced to use the Hoboken Parking Utility’s surplus to pay off the bonds, costing more.
But Councilman Tim Occhipinti said the city would pay almost $200,000 in contracts to refinance the bonds, and claimed that the recipients of the contracts are politically connected.
“You’ve made a point of saying that people will make money working on bonds in municipalities – well, duh!” said Councilwoman Carol Marsh to Occhipinti.
Finance Director Nick Trasente said the interest rate would be less than 1 percent if the city refinances, which will result in the city saving money.
Other business
• The council passed a resolution thanking the Hoboken Municipal Hospital Authority, a city board consisting of resident volunteers, for their work selling the hospital. The vote passed 8-0-1, with Beth Mason voting “present.”
• After the particularly long and heated meeting, Patricia Waiters, a former council and mayoral candidate, urged the council to consider implementing a caucus session before meetings. Caucus sessions are public meetings held before the regular council meeting, sometimes an hour or two earlier, or on a different day. They allow the council to get explanations and ask questions about ordinances, which should lessen the time that the regular meeting will take. The council used to hold caucus meetings on Mondays, but ended the practice during the administration of Mayor Anthony Russo, preferring to handle all of their discussions in one night.
Ray Smith may be reached at RSmith@hudsonreporter.com
SIDEBAR****
Food truck vendors oppose $2,500 parking permit, other rules
The City Council introduced an ordinance on Monday that some food truck vendors fear will force them out of town. A subcommittee meeting to discuss the proposed ordinance will be held on Nov. 22 at 5 p.m. in the City Hall basement conference room.
Before the law goes into effect, the ordinance will need to be adopted at the Dec. 7 meeting. Members of the public can comment before the vote.
The ordinance, generated by the Zimmer administration and the Parking Utility, was introduced with seven votes. Beth Mason and Michael Russo voted no.
Currently, food truck vendors pay $500 per year for city permits. They also feed parking meters all day to park on the street.
However, if the proposed law goes into effect, in addition to the $500 fee, the food truck vendors will have to pay $1,250 for a parking permit application and $2,500 for an actual permit, on top of other new fees.
The city will also issue no more than 25 mobile retail food vendor permits annually. Currently, there are approximately 45 food trucks in the city, according to Joe Glaser, who runs La Vita Bella dessert truck.
The proposed rules would also prohibit the trucks from parking within 100 feet of a restaurant.
The city would put a global positioning system on the food trucks to enforce the rules, something that Glaser thought was a little too “Big Brother” for his liking.
“It’s impossible for us to continue to do business in Hoboken if this is passed,” said Adam Sobel, who runs a vegan food truck in Hoboken.
Sources say that some local business owners have complained to the city about the trucks taking away business.
“We serve a completely different clientele,” Sobel said. “Even if we didn’t, that’s the nature of the marketplace…it’s up to the consumer to decide where they want to eat.” – RS