Thursday, September 7, 2017

Council President Giattino Alarmed by Zimmer's Lack Of Disclosure of $8.35 Million Liability

Official release:

 For the past several weeks I have been reviewing in subcommittee Mayor Zimmer’s proposal to extend the Suez Water contract with the City of Hoboken.  My fellow finance subcommittee colleagues, Councilmembers Cunningham and Fisher and I had raised a number of concerns to the Administration – in particular the approximate $8.35 million liability that had not been previously disclosed to the public.  In an email to the Administration on August 30th, we expressed this concern and requested a meeting with the City’s auditor to review the accounting, disclosure and appropriations treatment for the liability.  The Administration declined our request.    

The auditor and the City’s financial consultant attended last night’s council meeting and after hearing both speak on the matter, my concerns are now greater that the substantial liability has not been properly accounted for and that an independent investigation into this matter is warranted.  I cannot speak for them, but I am confident that the majority of the City Council feels similarly.   

I am also offended by the prepared remarks read by the Mayor at the meeting, attacking me and my council colleagues and alleging the concerns raised by the council were politically motivated.  I am disappointed that after over six years supporting her and her agenda, that Mayor Zimmer would feel compelled to make such politically charged and baseless statements.  She should know that I will always challenge and engage in healthy debate to ensure we are doing what is right and what is best for Hoboken.  I am hopeful that all involved will consider the best interests of our residents and work to resolve this serious matter.

Please feel free to contact me if you want to share your views or discuss further.

-    Jen

Heavy fire exchanged with Mayor Zimmer's disclosure of unpaid $8.3 million bill to City

The following report comes courtesy of Jeannette Josue for the Hudson County view:

The Hoboken City Council meeting was extremely heated, beginning with Mayor Dawn Zimmer going on the offensive regarding the new proposed contract with Suez Water, with several members of the council happy to return fire in a lengthy, tense exchange.

First, Councilman-at-Large Ravi Bhalla recused himself while 1st Ward Councilman Mike DeFusco attempted to ask whether he was truly conflicted or not.

From the story:

When it came to the renegotiated contract with Suez, council members had many questions and in particular for accounting, and appropriations especially with the $8.3 million liability the City that has been accruing for four years from the increasing water rates and improvement costs...

“This is actual liability, and yet no one thinks to ask what it is? And you as our auditor don’t think that its meaningful enough to be disclosed?” asked 2nd Ward Councilwoman Tiffanie Fisher....

For the complete story, please see the Hudson County View:

Horse Sense: Hoboken Watergate to trigger $9 million tax increase and investigation?

Questions on who knew about the four year red ink accumulating lead to Mayor Zimmer

The revelations of $8.3 million in red ink owed to Suez, the contracted water vendor to the City of Hoboken came to light last night and the questions started coming fast and furious with the disclosure.

Council members raised questions wondering what's next even with the lack of transparency from the mayor's administration on how the red ink accumulated over four years.

Some of the council's questions point to a possible investigation by the NJ Department of Community Affairs. In his closing remarks, Councilman Peter Cunningham gravely wondered if such an investigation would cause Hoboken further harm.

Million dollar Hoboken WaterGate headache. The City Council reacts to the news of a $8.3 million dollar deficit with
the contracted water vendor Suez last night. Not getting answers on its origin hidden over four years, the council
rejected the proposed contract renewal with Suez proposed by Mayor Zimmer.

Back in 2009, the State took control over Hoboken's finances when the previous administration rang up similar red ink and kept the deficit running while withholding the truth from the City Council.

Getting to the bottom of how the City of Hoboken's red ink deficit to Suez came to pass may not be so easy. A number of professionals spoke last night and none postulated a coherent response. Each sought to punt questions posed to them at the earliest opportunity.

The City auditor Steve Wielkotz claimed ignorance on the entirety of the deficit until just the other day. Others pointed to awareness of the problem two months ago and another separately a year ago.

Mayor Zimmer did not take questions from the City Council and sought the retirement of the deficit by obtaining approval with a new Suez contract where the deficit would be absorbed.

Don't look at me I'm just the auditor. Hoboken Auditor Steve Wielkotz told the Hoboken City Council he had just
learned of the $8.3 million dollar deficit owed to Suez, the water vendor to the city the other day.
Another consultant admitted knowledge two months prior and the BA said one year ago.
When did Mayor Zimmer know?

The City Council not obtaining any answer on the deficit or details on the financial analysis of the Suez contract over months, balked at approving the mayor's contract proposal. City Council President Jen Giattino concluded the issue by removing it from the agenda seeing not a single council member willing to sponsor the mayor's memorandum of understanding to renew a contract with Suez.

Additionally, some council members raised the idea of taking the Hoboken water contract out to bid. Speculation that Suez held the City of Hoboken over a barrel and the new contract while an improvement over the drastically bad current is thought far too favorable to the vendor.

Some believe the lack of open bidding for the new contract was tied to the administration's efforts to bury the four years running deficit and roll it into another Suez contract. The council wasn't buying.

Attempts to blame the City Council for the actions of the mayor's administration aren't likely to gain much traction with the public. Hoboken is not "stuck" with the existing bad contract. It needs to look at all remedies to get the best outcome.

Unfortunately, the red ink accumulated in the last four years and unaccounted for by any of the financial professionals or the mayor may trigger a tax increase, a lawsuit or both.

Mayor Zimmer has a lot of explaining to do. To this point, she's not inclined to do so. None of it however looks favorable to a Zimmer third term under Councilman Ravi Bhalla.

Sign of the Times: Councilman Ravi Bhalla Suez recusal as red ink hits $10 million

Councilman Ravi Bhalla left the dais and parked in the rear of the council chambers listening to the discussion on
the failed Suez contract proposal as the public looked on. Public interests is rising as MSV saw an increase in views
yesterday to over 6,200 and the mayoral race enters full swing.
Mayor Zimmer upped the red ink owed Suez from $8.3 to a cool $10 million?

Talking Ed Note: MSV followed up on the never-ending Condon Affair with the NJ Department of Community Affairs. Some Bhalla campaign supporters complained sources who claimed the matter would be further reviewed by the State mentioned in an earlier "Talking Ed Note" under the next NJ governor was incorrect.

The Public Affairs office of the DCA responded to MSV's inquiry writing:

"While we are aware of the Appellate Division's ruling in this matter, there is no further action to report."

An update will follow pending further details from the DCA if/when available. The last action took place in December 2014 on the ethics complaint saga going back to 2010. The administrative judge who ruled the ethical complaint frivolous was overturned back in December 2014.

Mayor Zimmer's remarks to the City Council on the failed Suez contract proposal

Official release


Mayor Dawn Zimmer spoke before the City Council tonight regarding the proposed renegotiated agreement with Suez Water. Her prepared remarks are below:

Council Members,
I am here to urge you to put politics aside and give honest and fair consideration to the proposed renegotiated contract with Suez Water.
As you have learned since we first introduced the proposed agreement nearly 2 months ago on July 11th, the agreement includes over $31 million in capital investment and repairs for the City of Hoboken. It also includes $10 million in debt forgiveness and future savings for bulk water costs. This represents a total of over $40 million in net economic benefit for the City and its taxpayers.
This agreement would put Hoboken on a strong track to annually fund much needed water main upgrades. It would forgive debt for water and maintenance agreed to under the existing extremely unfair agreement. It would create a fairer system by making additional future costs for water and maintenance the responsibility of water ratepayers based on water usage, such as car washes, laundromats, and commercial operations, rather than leaving a substantial portion of the burden paid on taxpayers as the current agreement requires.
I think it is great that the Council has asked a lot of questions and taken time to seriously review the proposed agreement. Had such a review taken place back in 2001 when the City entered into the disastrous amendment which is the cause of the urgency we face today, perhaps we would have had a better result.
Councilman Ramos voted for that amendment. He rubber stamped an agreement that actually reduced Suez's maintenance obligation from $550,000 per year to $350,000 per year for 23 years and created the enormous bulk water liability for the City that everyone is so concerned about. I want to repeat that because it is truly baffling – he voted to reduce Suez’s maintenance obligation by $200,000 per year. Far from benefitting the City, that agreement actually cost the City of Hoboken over $17.6 million dollars. This includes agreeing to new water terms that are estimated to cost $1.3 million annually starting in 2014 and it reduced Suez’s maintenance obligation by $200,000 starting in 2001 and going until 2024, costing the City $17.6 million (water: $1.3x10=$13 + $200,000x 23=$4.6 million).
And what did we get in exchange for this enormous $17.6 million cost? We got a mere single $2.6 million payment that Mayor Russo, with the support of Councilman Ramos, used to plug a budget hole. This funding was not even used to invest in the water main system. Councilman Ramos was recently quoted by Hudson County View saying "we still have a number of years left on this deal so we have no real urgency to move this forward right now." I strongly disagree. It is time to stop the bleeding caused by this disastrous decision.
I’ve heard a lot of misstatements from members of the Council since this proposed agreement was announced. I think it’s important that however you decide to vote, the public should know the facts.
Councilman Mello told Hudson County View that the contract put in front of us doesn't seem to be any better in any facet than the existing contract other than it is going to put more money into maintenance, which the Councilman claims will be on the backs of taxpayers. The Council has repeatedly been provided with information making clear that this is not true - there is a $40 million benefit to the City and its taxpayers.
Councilwoman Fisher, supported by Councilman Cunningham and Council President Giattino, have made references to unspecified unanswered concerns while demanding that we hold numerous additional meetings out of the public eye, while at the same time claiming to champion transparency.
This proposed agreement was provided to the Council almost two months ago. We have held two subcommittee meetings. Including this meeting, it will have been discussed at two City Council meetings, and the City has twice provided written answers to the questions asked by Council members. We have made those questions and answers public so residents can fully understand the issue. The demand that we engage in an endless process behind closed doors is simply a transparent attempt to avoid taking a vote on a critical issue because there's an election coming up and the politics are complicated.
As you all know, this issue is critical to the people that we represent. I urge you to put the politics aside and to do the job that we were all elected to do which is to act in the best interests of the City that we have each taken an oath to serve.
This includes having an honest discussion about the merits of this agreement without political grandstanding, and then taking a vote. I hope everyone will support this. But if you do not, then please say clearly what you would support so that the City can move forward. For example, if you believe that the $40 million benefit to the City is insufficient and we should instead settle for nothing less than $60 million, please say so. If you believe that the City should simply terminate the contract and bid it out, then say so.
Simply saying “I have concerns" or "this agreement isn't good enough", or that "Mayor Zimmer is a lame duck who should no longer be permitted to do her job as mayor" is not fair to the public that we serve and does not provide the information needed to consider next steps.
Suez now has a very important 10-minute presentation on leak detection and smart water technology that I hope you will allow them to present today.
Thank you.

Reaction of the council during Mayor Zimmer's comments on the proposed Suez contract later removed from the agenda. From left: City Council President Jen Giattino, council members Peter Cunningham, Dave Mello, Tiffanie Fisher and Ruben Ramos.

Photos courtesy of Jhnny "to the butter" Newman

MSV's flash analysis at the meeting appears below: