HOBOKEN BUDGET DEAL FAST, QUIET - Journal story spurs state officials to question city plan

June 27, 2006 JERSEY JOURNAL

HOBOKEN - Officials at the state Department of Community Affairs pressed city officials about a $5 million revenue source for its 2006 budget after reading a story in Friday's edition of The Jersey Journal.

On Wednesday, the City' Council approved an ordinance nance to allow a paper corporation, NWF Leasing Corp, to take over a sale/leaseback agreement from the Hudson County Improvement Authority by borrowing $15 million from North Fork Bank, allowing the city to plug a $5 million budget shortfall.

The arrangement stands to cost the city an additional $600,000 to $700,000 a year in added interest and administrative costs.

City officials needed to go the private financing route because they did not have sufficient time to get state approvals to refinance the bonds with the HCIA; however, city officials' say, the deal doesn't require state oversight because it's private financing.

Sean Darcy, a spokesman for the state Department of Community Affairs, agreed with that assessment-but said he had no idea Hoboken had swung the deal until he'd read about it in the newspaper.

"We were unaware of the Leasing Corp. arrangement until we read about it in The Jersey Journal and called toe get background," Darcy said. 'It is a private financing deal so the local finance board has no statutory authority."

Michael Lenz, the city's former chief financial officer and a frequent critic of Mayor David Roberts called the city's efforts "an end-run around the law"

"It's a sham transaction," he said.

Roberts defended the way his administration arrived at the revenue source, saying it would allow the city to realize roughly $8 million in additional revenue from the sale of the city's municipal garage.

"I am sure everyone who is objective would understand the benefits," Roberts said. "I do not expect Michael Lenz, who is a partisan politician, to approve."

City officials, who had intended to sell the garage outright and use part of the revenue to plug the budget, reversed course after they received just two underwhelming bids for the property;

The city is now seeking new -bids, and Roberts expects someone will offer about $30 million for the property' which would be $8 million more than the higher of the two previous bids.