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Friday, August 19, 2011

City Council approves hospital settlement paving way for sale to Holdco

In a party line 5-3 vote, the City Council cleared the way for the State to finalize a sale of Hoboken University Medical Center to Holdco next month by agreeing to a settlement on an outstanding $1.9 million owed to the City.

In agreeing to settle the almost two million dollar balance between the hospital management arm and the City, Holdco will be able to proceed with the purchase as explained by the attorney Paul Hollander who was retained to represent the City's interest.

It's unknown what the terms of the settlement on the outstanding debt to the city is until after a filing Friday with the court.

Based on the discussion surrounding the settlement leading into the vote, the same arguments leading into the sale of the hospital itself were rehashed by those both in favor and against the sale.

Councilwoman Castellano lashed out for the process not including the City Council in any part of the negotiations complaining in addition there was an appearance "we can't be trusted."

Councilman Mike Russo complained about his "concerns" saying the City Council had been kept out of the loop and also "misled" on the hospital transaction saying Holdco did not have $91 million in the transaction "in cash." He repeated the buyer's lack of cash several times before calling the sale "criminal... if this bankruptcy was fabricated."

Speaking for the majority vote, Councilwoman Jen Giattino summed up the settlement vote thusly, "We don't need to have this liability over our head any longer" stating she would vote for the settlement opening the door to the hospital's sale.

Councilman Dave Mello noted similarly supporting the settlement on a personal note saying he was "watching my friends and neighbors who have had a $50 plus million dollar gun to their head" awaiting to see if the city bonds would be called in and that it was time for "the albatross" to be removed from the taxpayers' necks.

Earlier the council also passed in the same 5-3 party line vote approval to accept the law firm to continue its work representing Hoboken in the bankruptcy proceeding.

Paul Hollander, the attorney hired by the City stated he had already worked 25-30 hours on the matter and would do so even above and beyond awaiting a future approved resolution for compensation as the matter required immediate attention. He stated his bill rate is $540 an hour, a rate Councilman Tim Occhipinti objected to leading into his earlier no vote.

The mayor spoke at the end of the evening thanking the council for their support and noting her efforts to save the hospital while identifying a buyer. She added the settlement agreement would be made public on Friday.

During closed session Councilmembers Dave Mello, Tim Occhipinti and Jen Giattino listen as the terms of the settlment were explained. This photo was taken from outside the chambers. Later on the vote, it was Mello and Giattino voting in favor noting the relief of $50 million to the taxpayers while Occhipinti never mentioned them once leading into his no vote.

Talking Ed Note: This is a complex transaction and it's obviously difficult winding down with all its moving parts. It's interesting to note that among the three no Council votes (Castellano, Russo, Occhipinti) not once did any of them address the importance of the $52 million in bonds at risk to the taxpayer. Not once.

The Council of No (minus an absent Beth Mason) focused on their lack of power in the process, the lateness of the documentation leading into the special meeting and details on other aspects without even once mentioning the risk the taxpayers have carried in three years since the City Council put them on the hook for $52 million.

The settlement may in fact, after a court filing deprive the City of almost $2 million owed but it's a small price comparatively to the $52 million at risk along with keeping the hospital open for years into the future.

Correction: The mayor indicated the settlement agreement would be made public after the bankruptcy counsel filed it in court.   The goal was to see it filed sometime by midnight tonight.

It will be available to the public after the court filing.