Mayor Jose “Joey” Torres’ administration is seeking city council approval to borrow $21.64 million to cover retirement payouts for employees, sewer repairs, and installation of ventilation systems at the Paterson Museum and the police headquarters.
Torres’ latest round of bonding pushes up the city’s total debt to $124.9 million, according to municipal records. This reduces the city’s debt incurring capacity down to $79.5 million.
Council members raised a number of questions about the bonding measures.
“We have re-occurring expenses that we have been using debt to pay down which is a practice I never agreed to,” said Kenneth Morris, councilman at-large, chairman of the finance committee. “Demolition, sewer repairs, these are things that are happening year after year.”
$12.47 million is going towards sewer repairs. With its combined sewer system, the city is releasing raw sewage into the Passaic River during heavy rainfall. The federal government has ordered the city to rectify the issue.
$5 million is to cover retirement payouts for employees. Luis Velez, 5th Ward councilman, thought the administration should have had a better handle on the retirement payouts.
“Why didn’t the administration plan ahead and budget? You knew this was coming,” said Velez pointing out the Torres administration is in its fourth year.
“That’s absolutely not true,” replied business administrator Nellie Pou. She said the city cannot determine the exact amounts it has to pay out beforehand. It can only do so after retirement papers have been submitted.
The administration did not have a list of employees receiving payouts on Tuesday.
$3.66 million is going towards installation of new heating, ventilation, and air conditioning (HVAC) systems at the Paterson Museum and the Frank X. Graves Public Safety Complex.
“This doesn’t seem responsible to me,” said Michael Jackson, 1st Ward councilman, of the HVAC repairs. He said the administration made no mention of the repairs needed at the two locations during the two years he has been on the council.
In the museum’s case, the city has been ordered to make repairs to the HVAC system until the court decides who is responsible for maintenance of the building at 2 Market Street, said Morris and law director Domenick Stampone.
There’s an ongoing dispute whether it’s the city’s responsibility or the third-party developer. “In the interim, it can’t be without adequate heating and cooling,” said Stampone. There’s a second court order that requires the city to ensure temperature at the police headquarters is 73 degrees.
“I find it rather amusing that we have to maintain a certain standard of comfort for grown men who are highly trained police officers, yet in our Paterson school system there’s no air conditioning and the courts don’t mandate that our children have a certain level of comfort. I just find that absurd,” remarked Morris.
Stampone said the city considered free standing and windows units, but that could not happen because the building is so old and could not hold electrical loads.
“You don’t even have a breakdown of each of the building,” remarked council president Ruby Cotton.
“We do,” replied Pou. $1.1 million is being spent on the museum and $1.3 on the police headquarters. The rest will go towards repairs to the broken elevators at the public safety complex, said public works director Manny Ojeda.
$500,000 is being spent on the Allied Textile Printing Site for environmental remediation.
Council members received an overall picture of the city’s debt situation from the city’s bond advisor Neil Grossman of GB Associates.
Grossman told the council the city’s debt service will peak in fiscal year 2018, this year, and decline to under $15 million by 2020. The 2018 fiscal year debt service is approximately $18 million.
If the city does not take on any new debt for the next five years, debt service will drop to $2 million by 2033. However, that is unlikely.
Morris expressed concern at the city’s eroding debt capacity. The debt incurring capacity is based on equalized property valuation of $6.35 billion. This could drop leading to a reduction in the debt incurring capacity.
“There has to be a little more caution as to what we bond for. We’re constantly applying to the credit card and the credit card balance is increasing and our debt capacity is decreasing,” said Morris.
Council members will consider the borrowing measures for a preliminary vote on Sept. 19, 2017.