This opinion editorial was written by Bloomfield residents Carol Humphreys, Russell Mollica and James Wollner – July 15, 2012
The NJ Local Finance Board, who oversees government authorities on behalf of NJ taxpayers, advised the Bloomfield Parking Authority that the Bloomfield Town Council’s presence was required at the continuance of the Bloomfield Parking Authority $9,000,000 bond application hearing.
On Wednesday July 11, 2012 the Bloomfield Parking Authority went before the Local Finance Agency in Trenton seeking a $9,000,000.00 bond to retire short term notes and funds to build a parking garage in downtown Bloomfield center. (Please note that the $9,000,000 additional bond request was never mentioned at any public Bloomfield Town Council meeting) Additionally, in their application a $3,000,000 contribution from the Township of Bloomfield to build the parking garage was sited but did not specify whether it was authorized and/or received. During their testimony the Bloomfield Parking Authority advised that the $3,000,000 had passed the 1st resolution and 2nd resolution was forth coming. It was also stated that the $9,000,000 approval for funding was needed in order for the $3,000,000 from the Township of Bloomfield to pass the second reading.
Also, the BPA application highlighted that $500,000 was need for environment remediation and insurance.
After their presentation, members of the Local Finance Board questioned the Bloomfield Parking Authority as to why the payback of bonds was so little upfront and greater in the future. Bloomfield Parking Authority advised that the larger income stream was not to take place until the whole redevelopment was complete.
The Local Finance Board advised that EPA study required with the application was not received by the Local Finance Board. The Chairman said he was very uncomfortable in granting their application request especially without having those studies. Mr. Neff, the chairman, then went on and said there were three concerned citizens who asked to testify regarding the request by the BPA.
Russell Mollica, Carol Humphreys and James Wollner were those citizens.
Mr. Mollica was first to testify and prefaced what we were about to say was that we (Taxpayers of Bloomfield) all want responsible development and especially one that brings ratable into the township and relief to the beleaguered taxpayers. Mr. Mollica also made it very clear that in no way were we (Ms. Humphreys, Mr. Mollica and Mr. Wollner) accusing anyone of malfeasance, illegality or attacking any professional conduct or reputation of any individual associated with the matters (the application) at hand.
He then went on in great detail about the BPA’s application and pointed out some very serious concerns for the Taxpayers of Bloomfield.
Mr. Mollica highlighted that the BPA wanted the Taxpayers of Bloomfield to give it $3,000,000 so it could build a garage in the downtown center.
Mr. Mollica described two pro-forma income statement projections given to the Bloomfield Town Council. The 1st showing that Bloomfield Parking Authority would sustain operational losses in the event it did not receive the taxpayer backed $3,000,000 from the Township of Bloomfield because the revenues of the parking garage could not support the added interest and principal payments,
The 2nd pro-forma income statement projection showed that the Bloomfield Parking Authority would be cash positive if the Taxpayers of Bloomfield assumed the $3,000,000 of debt (interest and principal) on behalf of the Bloomfield Parking Authority.
In both pro-forma income statement projections given to the Bloomfield Town Council, it was stated that the BPA revenues from the new parking garage were going to be approximately $973,300 in 2015. Mr. Mollica then went on to give a dollar by dollar account of how this parking garage would only provide income of $540,000.00. The $433,000 difference was taxpayer money from the PILOT payment. The PILOT payment should have benefited Bloomfield’s taxpayers. Instead it was being used to pay interest on a Bloomfield Parking Authority $12,480,000 bond.
Mr. Mollica then highlighted with 224 apartments with a total of 346 bedrooms it can be projected that at least 10 children would be living in the facility, and those children would need to be factored into the Bloomfield School System budget which is paid with our property taxes. He also pointed out, according to the Department of Education 1 in 10 children is a special needs child. That is important to know because the cost to educate a Special Needs child is on average $50,000 per year. He was conservative in his estimates and did not include the one child at $50,000.
10 children x $12,000 per year = $120,000 per year x 28 years = $3,360,000 the Taxpayers of Bloomfield would have to pay in their property taxes to cover the cost of the new children in the Downtown Redevelopment. If there were more children, and our estimates appear to indicate such, the numbers would be much greater than those above.
Lastly, Mr. Mollica described the $3,000,000 debt the Bloomfield Parking Authority wanted the Taxpayer of Bloomfield to give to the BPA so they could build a garage for the developer of the downtown center.
He described how the Taxpayers of Bloomfield would incur the cost in their property taxes to repay approximately $7,060,000 interest and principal over 28 years.
Pilot Payment to Pay BPA interest: $12,340,000
Additional Students: $ 3,360,000
$3,000,000 for garage: $ 7,060,000
Total Potential out of Pocket $22,700,000
for the Taxpayers of Bloomfield
Instead of discussing the tax burden placed on the people of the Bloomfield, the Bloomfield Parking Authority talked about bond rates for the Township.
Mr. Mollica then pointed out that just before he left to attend the local finance board meeting, he unofficially heard that the lawsuit against the developer, Bloomfield Center Urban Renewal, and the Bloomfield Parking Authority was being appealed.
Now it is known that on July 3, 2012 the appeal was filed. By July 11, 2012 the Bloomfield Parking Authority had to have known of the appeal. Yet, the Bloomfield Parking Authority chose to leave out this critical piece of information in their presentation to the Local Finance Board. Without Mr. Mollica presenting this critical piece of information the Local Finance Board would not have been able to perform a proper analysis to protect the best interest of the Taxpayers of Bloomfield. Mr. Mollica advised that the Local Finance Board should wait for this reason:
(Because) If the revenue stream from the real estate development is (will be) delayed or if the appeal is successful then the revenue stream from the redevelopment will be lost and the taxpayer of Bloomfield are stuck with a larger debt bill of $9,000,000 more than the $16,000,000 debt we currently are guaranteeing!
The next person to testify was Mr. James Wollner. Mr. Wollner asked the Board if they had read an article in the NY Times from June 26, 2012 regarding the use of Bonds and how taxpayers are stuck with the Tab. Most stated they had not so the Board was given a copy. Mr. Wollner then stated that he would refer to parts later in his testimony, as the parallels were uncanny. Mr. Wollner then went on to state that the BPA’s application asked for $9 million of which a portion would be used to retire short term notes. It was pointed out that this was the very same tactic used in Harrisburg PA, by selling new bonds to pay for older ones. It was also pointed out that by working with independent authorities town governments could bypass legal limits placed on them. Mr. Wollner then asked how the BPA could include the $3,000,000.00 million from the township when no resolution was made or voted on by the Town Council. In addition what if it wasn’t passed will the BPA be able to carry the interest payments, “I don’t think so.” He said.
Ms. Carol Humphreys was next to speak and the focus of her testimony was that the taxpayers were not getting any benefit from the project and no studies have been done to assess the risk that taxpayers would incur. She asked “What were the taxpayers going to get out of this development project?”
In addition, Ms. Humphreys indicated that if this project were separate from all other projects in the town, then perhaps $3million was not of particular significance. However, since there were no financial impact studies done, the number was just the “tip of the iceberg” in terms of what the taxpayers might be responsible for, including police, fire, infrastructure, schools, and other projected costs, and that the Township council and all town boards could not, tell anyone with certainty what the financial risk to the taxpayers would be.
She likened Bloomfield to towns across the country, such as Stockton, California, that has declared bankruptcy because of poor planning and Scranton, PA, in which all public employees are now on hourly salaries to prevent taxes from going up 78%; again from poor planning.
She indicated to the Board that there are three other proposed projects that have not been fully vetted as to the potential financial risk for the taxpayers, and that this Board should ask for a full analysis of the downtown redevelopment project, or Bloomfield could very well be on its way to a huge spike in taxes.
Finally, Ms. Humphreys said that townships should enjoy a balanced tax base along with reasonable property values and that further unnecessary taxation would destroy the integrity of people’s finances, and with higher taxes home values would in turn be lower.
Following the testimony from the public, Mr. Neff, the Chairman of Local Finance Board, spoke and expressed his concerned that the Bloomfield Town Council was fully aware of the tax implication for the taxpayers of Bloomfield. At that time he made the request that Bloomfield Town Council be present at the next meeting when the Bloomfield Parking Authority returned to discuss the $9,000,000 financing application.