Budget meeting suddenly postponed. Council will now meet Monday, debate options for filling $7.9M hole

Budget meeting suddenly postponed

Council will now meet Monday, debate options for filling $7.9M hole

04/03/2005  Hoboken Reporter

Despite a judge's recommendation for the Hoboken City Council to immediately start working together to approve a final budget, Mayor David Roberts canceled a special City Council meeting scheduled for this past Wednesday night.

The meeting was supposed to provide an opportunity for warring factions of the nine-member council to sit down and discuss the 10-month-late $72 million city budget.

But hours before the meeting was to be held, Roberts canceled it. He has instead scheduled a council meeting for Monday at 8 p.m. at City Hall.

He said that he and his budget team needed more time to get state approval for a new revenue plan, one that likely involves the sale of the city's municipal garage (see sidebar).

"We are in constant, daily contact with several key state officials, and we are working hard to gain approval to adopt a budget on Monday evening," said Roberts.

Roberts added that Tuesday's meeting would likely just have turned into "political theater and finger pointing that would solve nothing."

However, council members opposed to Roberts said they had the impression it was just supposed to be a meeting where they work on ideas, rather than take action. From the agenda that was presented, it seemed as though Roberts was setting it up to take action on his new plan.

Vote, or workshop?

"All we asked for a workshop," Councilman Tony Soares said last week. "We had no intentions of taking any action. We just wanted to sit down, in a public setting, and go over this budget line by line."

Even though the meeting was canceled, all four members of the minority and about 20 of their supporters still showed up at City Hall at 7 p.m. Wednesday.

The front doors were locked, but the minority entered through a side door and made some brief statements in the council chambers.

"I'm completely outraged," said Councilman Michael Russo as he sat at the half-empty council table. Russo is running against Roberts for mayor on May 10. "This cancellation is proof that Roberts really doesn't care about our ideas, and would rather play with the numbers behind closed doors. This is the first time in years that we have scheduled a real workshop to work in a cooperative way on the budget."

Why the hurry?

Hoboken runs on a fiscal year (July 1 to June 30), which is over three quarters over. Currently the city doesn't have a budget. It has been running on month-to-month budgets until a final budget is approved.

The budget currently contains a $7.9 million deficit, which the divided council is arguing over how to reconcile. The options on how to fill the hole have consequences that some council members do not like.

Frustrated with the mayor's budget, the council minority, a week ago Tuesday, declined to approve a temporary budget, which shut down all non-essential services for three days. Last Thursday, lawyers from the city and state went before Superior Court Assignment Judge Maurice Gallipoli to ask him to intervene in the city's fiscal and political crisis. The lawyers asked the judge to force the minority council to approve a temporary budget, and to allow the mayor to spend money without council approval.

Gallipoli said that he "would not bailout" the City Council and would not force them to vote a certain way on the temporary budget. Having little sympathy for Hoboken's political conflicts, Gallipoli said it was time for the Hoboken City Council to roll up their collective sleeves and agree upon a budget.

Later that Thursday night, the City Council held a special meeting, where the City Council minority agreed to appropriate enough money to get through May 7. That vote had the effect of reopening the city. In return, the council minority said they wanted a workshop scheduled, as per the judge's request.

Councilwoman Carol Marsh, who is also running for mayor, said last week that she voted for the temporary budget in good faith with the belief that the council would now work together on this budget in public.

"Judge Gallipoli charged us all with working night and day to get a budget passed and get on with governing the city," said Marsh. "I guess this makes sense for [Roberts] politically - if we ever get a chance to discuss the real issues, he'll have to stop accusing us of offering no solutions."

More than a workshop?

According to a public advertisement for the meeting, which was published in three area papers, there were two items on the agenda.

The first item was "budget review and action on budget, if appropriate."

The second item was "authorizing the sale of real property."

The property, although not identified by the agenda, was almost certainly the municipal garage on Observer Highway, which is what Roberts wants to sell to fill the budget gap.

"I was suspicious, because that was not what we agreed to," Marsh said.

She said that administration might have been trying to sneak the budget and garage sale through.

But...

For Roberts, there was one major problem.

At least one of his council members would not be able to attend the meeting because of other engagements, which means that for that evening the council would be at least spilt four to four.

With only four votes, Roberts and his council members wouldn't be able to pass the budget.

"They didn't have the votes, so they didn't hold a meeting," Russo said, "simple as that."

SIDEBAR

Garage sale critical - but which garage? What to expect at Monday's meeting

The Hoboken municipal government has a $7.9 million budget gap, which it needs to fill it before it approves the final $72 million budget for this fiscal year.

Mayor David Roberts has scheduled a meeting for Monday at 8 p.m. at City Hall to attempt to sell the garage and pass a final budget.

But what will really happen that night?

Scenario one: The original plan

To be fully funded, Roberts' budget relies on a plan to sell the city's municipal garage to the Hudson County Improvement Authority, a quasi-autonomous county agency, for at least $7.9 million. The HCIA would then lease it back to the city for a little over $200,000 a year. Thus, the HCIA would be lending the city at least $7.9 million.

The garage property is really worth $10 to $20 million, so if the HCIA sold it later, it would give the profits to Hoboken.

The HCIA runs the county's solid waste management and recycling operations, but has also helped cities and the county with their budget crises by paying for revenue deals. Roberts' garage deal needed to pass in a separate vote before it could be included in the budget. It also needs, as a special revenue item, a two-thirds majority on the council, rather than the usual simple majority.

The four member council minority have voted against this plan several times, and will likely vote against it again. A final vote is again on the agenda for Monday night.

Scenario two: New alternative

If the plan fails, Roberts said that he will be prepared to offer an alternative plan to sell the garage on Monday. He said his budget team has been working "day and night" with the state on this new plan. As of Thursday he said that he couldn't give "too many specifics."

According to multiple sources inside City Hall, this new plan will likely still involve selling the garage to the HCIA, but the financing structure will be modified. How exactly, Roberts isn't yet saying.

According to the sources, the good news for Roberts is that this alternative method will only require a simple majority to vote. So the Council minority won't be able to block the deal, assuming that it gets that state's approval.

The bad news is that this plan would involve financing the sell at a significantly higher interest rate than Roberts' first plan.

On Monday, expect Roberts to attempt to force the council minority into approving his original plan by saying that the alternative is a plan will come with a higher interest rate.

Councilman Tony Soares said, "Here he goes again with another secret plan, which he isn't going to unveil until Monday, and then he is going to expect the council to vote on it immediately with a gun to our heads."

Scenario three: Upzoning the area

Another possible option, instead of selling the garage to the HCIA, would be to "up-zone" the area where the garage is located, allowing residential properties to be built there. That way, they could auction it to private developers and make $20 million or more. This type of rezoning also only needs a simple majority vote. But to do this quickly, the city can't just rezone that one block. It would have to rezone the whole area, which includes, most notably, the Neumann Leather building directly across the street.

Roberts has promised that the artist and small businesses that inhabit the Neumann Building will be protected, but many are still nervous. (See story at right.) Even the Sinatra family has come out in favor of protecting the building.

If approved, the proposed up-zoning would allow new buildings in the zone to rise 14 stories tall, which would double or triple the property values.

Another aspect of rezoning, according to the proposed ordinance, is that "10 percent of the total dwelling units in any high-rise development" must be affordable.

The introduced new zoning that would allow for office, retail, commercial and residential uses. If the area was rezoned, the city could then, through a public auction, sell the land to a private developer.

A public hearing for this up-zoning is set for Wed. April 6 at 7 p.m. at the Wallace School. It promises to draw a crowd. However, if the sale goes through with the HCIA, then the rezoning can be tabled.

Scenario four: Hike taxes

If none of these options pass, the city still has to find $7.9 million. A small amount could be saved through large-scale service cuts, but with only a couple months left in the fiscal year this amount would be minuscule.

So the other option is to raise taxes, and do it all in the fourth quarter tax bill.

The impact of an additional $8 million in one quarter would be enormous.

Scenario five: Sell 916 Garden?

Fifth possibility?

One side or the other discovers a new revenue source which fills that $7.9 million gap.

Councilman Soares said that if there had been a budget meeting last week, he was prepared to pitch his own idea. Instead of selling the municipal garage on Observer Highway, the City Council could sell the automated garage at 916 Garden St. to the HCIA.

After the sale, said Soares, the HCIA could either run the building as a garage or lease it back to the city.

This idea, said Soares, would have several advantages. Last summer, the city talked about selling the garage. At the time, city Business Administrator Richard England said the building might sell for about $8.5 million, but also said that the there is about $6.3 million remaining on its bonds.

Soares said that he is still very much against selling assets for budget relief, but selling 916 Garden is a better idea than rushing to sell the municipal garage.

"I would never recommend it in million years, but I never thought we would make to year a million and one," Soares said. "But right now, every option is an ugly option because of this administration's spending."

Roberts responded to Soares' idea last week. "Councilman Soares should be credited with coming forward with an idea," Roberts said. "It's a little late, but at least it's an idea. I wonder how long we are going to have to wait for the next one."

Roberts added that he believes that municipal garage is a better deal for the city because 916 Garden is now making about $30,000 a month in profit.

Meanwhile, he said, the city's municipal garage really should be in another part of town, and the property that it sits on is being underutilized, so a sale makes sense.


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