After having deeded its land to the city of Bayonne for development in the beginning of this decade, the U.S. Army still wants to make sure the city complied with the conditions of the agreement.
For the second time in a little over a month, the assistant director of property for the Army has issued a letter demanding an accounting of proceeds from the former Military Ocean Terminal of Bayonne’s land.
In what appears to be a continuing probe by the U.S. Army into the use of funds obtained by Bayonne from the sale of portions of the MOTBY, Joseph Calcara, deputy assistant secretary of the Army for Installations and Housing, said the Bayonne Local Redevelopment Authority has still failed to provide relevant financial data as requested in early July.
He said this in a letter to BLRA Executive Director Chris Patella on July 29.
“Although we have received the financial statements and accompanying audit report, these documents by themselves do not support proper reinvestment of proceeds from either the sale or residual exchanges,” Calcara wrote.
Under a Memorandum of Agreement between the City of Bayonne and the Army (signed in 2001), all money obtained from the sale or leasing of land on the MOTBY must be reinvested into preparing the site for redevelopment for at least seven years.
For several years, the city borrowed sale money from the BLRA to help balance the city’s budget. By borrowing, the city believed they were still within the terms of the agreement. But last year, assuming that the grace period had ended, the BLRA simply transferred the funds to the city for budget use.
The Army, however, said the money from the sale of land to PortsAmerica earlier this year was still bound by the previous restrictions, and the Army is seeking to know how $55 million has been spent from the last exchange of the city, as well as $23 million, $20 million and $25 million from previous years.
The Army had given the city until Aug. 5 to provide the information.
“Based on information received to date, my office is missing accounting data for $70 million in proceeds from the BLRA,” Calcara said in his letter.
“My office is missing accounting data for $70 million in proceeds from the BLRA.” – Joseph Calcara
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Although the Army was concerned over a cash swap between the BLRA and the city, the issue came to a head earlier this year when the BLRA received $90 million from PortsAmerica.
The Army asked for an accounting of money in early July since the BLRA oversees the development of the MOTBY and the sale of the 153-acre portion known as “the Maritime District” to PortsAmerica.
The BLRA transferred more than half of the money from the sale to fill the gap in the municipal budget in order to help the city avoid a massive tax increase.
The Army gave the 430-acre MOTBY site to the city as part of a 2001 agreement. After the seven-year period, the Army would review the situation to determine if enough had been done to allow the Army to lift the restriction.
Last October, however, the BLRA announced that the Army had lifted the restriction and, because of this, transferred money from the sale of land to the city earlier this year.
But the Army said the restriction has not yet been lifted, and that the funds should have been used to build up the MOTBY for redevelopment, not to fix the municipal budget.
After receiving the first letter, Patella said he was to meet with the Army to straighten out the matter and believes that the BLRA and the city have acted properly in transferring funds.