Going into the Wednesday's meeting, there was a political stalemate, as the four-member council minority said they would not approve any more temporary budgets until the third and fourth quarter tax bills were rescinded.
Despite being seven months into the fiscal year, Hoboken is without a budget to cover municipal expenses. To pay its bills and salaries, the City Council has been approving temporary budgets that carry the city month to month.
The tax bill issue
In January the city's tax collector sent out "final" tax bills to every Hoboken property owner.
The City Council minority has cried foul. They said that the tax collector should never have sent out the final bills without a budget.
The minority of council members, Carol Marsh, Tony Soares, Michael Russo and Theresa Castellano, have said that the bills should be rescinded. Both Marsh and Russo plan to run against Roberts for mayor in May.
This is a particularly timely issue this election season, because a major portion of both Marsh and Russo's campaign platforms will be that Roberts has not been prudent in how he has spent the city's money. By sending out tax bills prematurely, they said, Roberts is attempting to push off a tax increase until after the May 10 election.
A game of brinkmanship
But how could the four-member minority force the issue?
The temporary budgets have to be approved by a two-thirds vote of the council, rather than the usual simple majority. This gives the four-member minority an unusual amount of leverage to force the administration's hand.
At the Feb. 16 City Council meeting, Russo, Castellano, Marsh and Soares each said they would not vote for another temporary budget until the tax bill situation is resolved. Without a temporary budget, the city workers would not have been paid and the city would have theoretically shut down Thursday morning.
This possibility did not sit well with the state officials. Susan Jacobucci, the director of the state's Division of Local Government Services, in a Feb. 22 letter, ordered the council to approve its temporary budgets.
"The city will not be able to continue delivery of essential services for health, safety and public welfare of its residents," Jacobucci said. "Additionally, the city will not be able to fulfill its contractual agreements, resulting in a loss of services and potential litigations." The council minority was clear that their intentions were never to close the city, but did say that they wanted to place pressure on the administration to resolve the situation with the illegal tax bills. Council members Soares and Marsh have, in writing, appealed the DCA's order.
"These bills are illegal and need to be fixed immediately," Russo said.
Rescinded
The city's attorney, Joseph Sherman, also concluded that the city's third quarter tax bills should have said "estimated" on them, and there is no state statute that allows them to send out estimated fourth-quarter bills without a budget.
So on Wednesday, the council minority got its wish. After a bit of haggling, Russo was allowed to introduce a resolution that voided both the third and fourth quarter tax bills. The resolution passed unanimously.
In return, the council minority voted in favor of a $5.6 million temporary appropriation which will pay the city's salaries and expenses until the next City Council meeting. According to Roberts, the city will send out a "notice" immediately to inform residents that the third quarter bill was only an estimated bill, and not to pay the fourth quarter portion of the tax bill until a final budget is approved.
But for Russo and the council minority, just sending out a notice is not good enough. Russo's resolution clearly states that new bills should be sent out. He added that Roberts is defying the will of the council, by not sending out an actual "corrected tax bill." Roberts responded Friday by saying that he has been in close contact with the state, and this is how he was advised to deal with notification.
Far, far from over
But this is not the end of the political maneuvering. Still looming over the budget process is a $7.9 million deficit that has to be resolved, and quickly. Otherwise, taxes may have to rise.
Roberts had, in the past, proposed selling the city's municipal garage to the Hudson County Improvement Authority, who then would lease the property back for an annual rent equal to the interest on the HCIA's bond, about $250,000 per year.
Roberts' plan had short- and long-term objectives. In the short term the city would use $7.9 million to fill a budget gap. In the long term, the city would up-zone the area, which would drive up its value from around $11 million to between $20 and $30 million. Once the property is rezoned, it could be sold to a private developer. The proceeds would pay off the HCIA debt, fund the construction of a new garage, most likely in the city's northwest corner, and provide $10 million or more for "a lockbox" that could only be used for open space acquisition.
The council minority has questioned whether there is any language in the ordinance that legally binds the administration to actually spend this money on open space acquisition.
Dead in the water
But from the beginning, the council minority has said it will not OK the sale of the garage to pay for budget relief. Like the temporary budget, the sale of a city asset to the HCIA would take a two-third majority vote to pass. The council minority said that it is illegal to borrow money to pay operating expenses and added that they will not be forced to pay the bills for what they characterize as Roberts' "out of control" spending.
This has left the budgetary process in limbo, because the final budget can't be struck until the garage issue is resolved, or $7.9 million in new revenue is appropriated or cut.
Can instead sell directly to a developer
Now the administration is embarking on a new strategy. Roberts said Thursday that the administration now plans to cut the HCIA out of the process, rezone the area immediately, and sell the land to a developer.
It only takes a simple majority to rezone an area, according to Sherman.
On Wednesday, the administration introduced an ordinance that would rezone the municipal garage block and the block where the Neumann Leather Building is located. The proposed zoning would allow for office, retail, commercial and residential uses. If approved, the buildings in the zone could be up to 14 stories tall. 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.
But this is a process that will take some time. The ordinance must first go before the Planning Board, which has 45 days to review it. Then every property owner within a 200-feet radius must be notified 10 days before the City Council can hold a public hearing. Sherman added that if the rezoning goes through, a simple majority of the council could vote to put the garage up for public auction. This could be a way to bypass the council minority's attempts to block the sale.
But given the fervor of activism in Hoboken, there are going to be many people that are against rezoning any area in Hoboken for 14-story high-rises. Also there is already concern circulating about the fate of the Neumann Leather building, whose tenants are mostly local artists and small businesses.
But if the mayor is successful in his rezoning bid, he could put the property up for sale before the end of the fiscal year.
Going once!
Roberts said that he hopes the valuable property would go for between $20 and $30 million. Roberts said $7.9 million would go towards budget relief, $3 million would go to build a new garage, and the rest would go "into an open space trust fund."
"We have a good plan that has obvious benefits to the taxpayers and every resident," Roberts said Thursday. "Our plan allows for a balanced budget with a stable tax rate, while generating revenue for a new garage and $10 million or more for the acquisition of open space." Roberts added that the affordable housing component of the rezoning plan also shouldn't be overlooked.
Robert said that he doesn't like having to sell assets to pay down the budget, but at this time, it's the best option available.
"The use of one-time revenues is not something that I condone, but they have been used for the past 25 years," Roberts said, "and certainly something that this administration plans to get away from in future years."
Councilman Tony Soares said that Roberts' announcement to rezone the property and sell it directly to a developer is just another stalling tactic to put the city's budget problems off until after the election.
He also said that filling a budget gap shouldn't be the motivating factor in community planning and zoning. He said that will only lead to projects that are out of line with the community's scale and character.
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