No sixth vote on Hoboken garage bond; postponed
Jun 14, 2010 | 2849 views | 3 3 comments | 16 16 recommendations | email to a friend | print

HOBOKEN -- The city administration could not get a critical sixth vote on a $16 million bond ordinance to buy back the city's public works garage at their special Sunday night council meeting, so they postponed the vote until Wednesday in the hopes that the council members voting against it may change their minds.

The city and the council majority -- allied with Mayor Dawn Zimmer -- scheduled the vote for a special meeting for Sunday night, because they expected 6th Ward Councilman Nino Giacchi, who leaves for a two-week family vacation today, to fairly assess the situation and vote in favor of the bond. At least they believed he would assess it more fairly than council members Beth Mason, Michael Russo, and Theresa Castellano, who are often critics of Mayor Dawn Zimmer's council majority. All three had said they were not available for the Sunday meeting.

Nonetheless, Mason and Russo still made special arrangements in order to make the meeting, they said.

After hours discussing the importance of the measure and hearing some enlightening testimony from financial professionals handling the garage, Giacchi decided there was more time for the city to pursue buying back the garage. He agreed to do so with the understanding that buying it back is a last option and not a priority. The city is actually hoping to sell the garage, but wants to reserve buying it back as an option.

The city already has a contract to sell the garage to a developer, S. Hekemian Group, for $25.5 million. But that sale is contingent upon state environmental approval. If approval fails, the city may buy back the garage. They must vote ahead of time to bond for the money in case they need to do so.

Selling the garage is a priority, said Giacchi Sunday night, and the administration seems to be publicly confident that they will be able to do so on Aug. 13. If they don't, they could be sued by the developer for damages in breach of contract.

The property is presently owned by the leasing division of the private firm NW Financial, but the financing program that allows the city the opportunity to buy back the pawned-off garage is run by Capital One. A representative of Capital One told the council last night that his company wants the city to pass the bond ordinance in a show of "good faith" in order for the bank to extend the city's financing program from its expiration on July 1 for three months.

Oddly, the rep also said he did not know the city had pushed back their closing date with Hekemian from July 1 to Aug. 13, which was brought to light by a hard line of questioning by Giacchi, a lawyer in his day job.

The administration in left with five votes, but needs six - a supermajority - to pass the bond ordinance, which has already been approved by the state. But they must do so on Wednesday without Giacchi.

Giacchi presented an e-mail from April at the meeting that said Capital One would extend the financing with conditions, but passing a bond ordinance was not one of them.

He said he hoped they would reconsider and stand by their April arrangement.

Meanwhile, Councilwoman Beth Mason sent out an e-mail to supporters Monday morning claiming that the city favors putting a new garage to Eighth and Hudson streets (although the city has not said so) and blasting Zoning Board Chairman Tony Soareas for, according to her, attacking her and her family on the internet regarding the heated garage relocation issue. -- TJC

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June 14, 2010
A few points:

1. The assertion by the lender that they didn't know the closing date had been changed is absurd on its face. Why would the City need an extention if the closing date hadn't changed? Answer: they wouldn't so the lender was obviously "confused."

2. Buying back the garage is probably the best thing for the city, Councilman Giacchi is wrong when he calls it an "option." Its a contingency that is likely to occur whether the city likes it or not. If the environmental isn't done the city will default. If the City is prepared to close, then the developer is likely to default since they've said the property is worth almost $11 million less than the purchase price. In either case, it is not within the City's control, and therefore not an "option." Either way we'll need to pay off the debt. When Giacchi says it should be a "last option" he is being disingenuous at best and I'm being polite.

3. If the City is not prepared to close, the developer cannot, as Tim said, sue for damages. They get to terminate the contract and receive their down payment back. This may be the second best result possible for the City - the first being that the developer defaults, in which case the City also can't sue, but they get to keep the $2.5 million.

4. The only way this deal closes if if the developer is willing to pay $25.5 million for a property they think is worth less than $15 million. Giacchi said they have to close because the City rejected their offer for a sweetened deal. I don't know what planet he practices law on, but here on earth people don't volunteer to lose $11 million when they could easily limit that loss to $2.5 million. Giacchi knows that buying back isn't a first or last "option." Its almost certainly an inevitable fact.

5. There's been alot of talk about "transparency" from this council. The most important element in transparency is truth. Its time Councilmembers stop posturing and tell the truth. A disgraced former Mayor/councilman liked to say everyone is entitled to his own opinion, but not to his own facts. This is one thing he was right about, and this Council should take heed.
June 14, 2010
If any council person votes "NO" for this on Wednesday, you can thank them for the additional $16 million tax burden.

Council members Michael Russo, Teresa Catellano, and Beth Mason are seemingly opposed to the issue. (Nino Giacchi is leaving town and will not return until June 29th.)

Please contact these council members to express your support of doing the fiscally responsible action, and to vote YES for the bond ordinance.



June 14, 2010

Without passing the bond, said former Finance Director Nick Trasente, the city will be in default of a $15.6 million loan, which could cause Hoboken's bond rating to go down, making it very hard for the city to get a loan in the future. Trasente referred to not passing the bond as a "fiasco."

Raising his voice to make his point, Trasente added, "In the finance community it would look horrendous if we default on this loan."

The bond can only be used to re-finance the current garage, and not to acquire a new one. The money will only be needed if Hekemian is unable to close on Aug. 13.