The city is borrowing $1.63 million to pay for large tax appeals, according to municipal documents.

The biggest appeal is connected to the Barnert Medical Arts Complex – once site of the defunct Barnert Hospital — which is entitled to a $1.42 million settlement after going through the state tax appeal process, according to city officials.

21 entities housed in the Barnert Medical Arts Complex filed the tax appeal, according to city officials.

There’s also $210,000 in other tax appeal settlements, according to city records.

The city is taking on the debt at the recommendation of the state so as to avoid enlarging its already massive budget deficit, said city officials.

“It’s a better option for us to bond than take this out of our existing budget at the moment,” said business administrator Nellie Pou. The city’s dire financial straits have forced the municipality to take on debt to settle tax appeals in the past number of years.

Council members gave preliminary approval to a bond ordinance on Tuesday evening. “If we didn’t borrow, we’d have had to come up with the $1.6 million out of operations which would increase our overall structural deficit,” said Kenneth Morris, councilman at-large, chairman of the finance committee.

Morris said the state’s Department of Community Affairs (DCA), which monitors the city’s finances, recommended the municipality take on the debt or risk losing an equivalent amount in financial assistance from the state.

Morris did not think it prudent to borrow money to pay tax appeal settlements.

A public hearing and final vote on the borrowing measure is scheduled for February 9th, 2016.