The city is hiring a financial consulting firm through a $250,000 state grant to assist with identifying new revenue sources, long-term budget forecasting, cash flow projections, and strategic planning for the municipality.
Livingston-based PKF O’Connor Davies will provide the city 1,500 hours of consulting at $160 per hour, according to city records. The firm will also assist the city in integrating and implementing financial management systems the municipality purchased from Edmunds and Associates.
The firm will focus on identifying cost savings and revenues the city may be losing out on. For example, the firm will review the city’s 30 separate payment in lieu of taxes (PILOT) agreements to ensure developers are paying their fair share of taxes.
“We want to take a closer look at some of the PILOTs to ensure they are in compliance,” said Francis McEnerney, a partner at the firm, who address the city council on Tuesday night. He spoke with three colleagues Douglas Triplett, Richard Charles, and John Lauria.
McEnerney said the firm worked in Jersey City where it was able to find $2.5 million in revenue by reviewing PILOT agreements. He said it intends to do the same by helping the city recapture lost revenue.
Kenneth Morris, councilman at-large, said the older PILOT agreements are likely not in compliance with their agreement with the city. He said the older agreements were struck without taxpayers’ interest in mind, but to encourage development.
Paterson Parking Authority
The firm will also study the feasibility of dissolving the Paterson Parking Authority and bringing it within the city government as an utility. Lauria said dissolving the Montclair Parking Authority saved the Essex County municipality money.
“Is that an automatic for you?” asked council president William McKoy.
“It might not work here. It’s just another area to look at,” said Lauria. He said this may not be feasible if the authority is tied into restricted bond covenants.
Morris said outstanding debt will likely not allow for a liquidation of the authority. He said the consultant should conduct its review nonetheless.
The suggestion of dissolving the Paterson Parking Authority raised some eyebrows for council members. Lauria said he is not suggesting or recommending the city dissolve the authority, but will make a recommendation after it has been studied by the firm.
“It’s more of a general comment to look at it. There’s nothing here set in stone,” said Lauria.
McKoy expressed great interest in the firm’s suggestion to study the possibility of setting up a sewer utility to ensure city taxpayers are not subsidizing homeowners and businesses in surrounding communities that share the municipal sewer system.
“Surrounding towns have been taking us for a ride,” said McKoy. Prospect Park, Woodland Park, Clifton, Totowa, Wayne, and Haledon release sewage into the city’s sewer system. The council discussed setting up a sewer utility in early 2015, but the talk never turned into action.
The consultants will study the feasibility of establishing a sewer utility to evenly spread the usage cost fairly to all users. It will also review the agreements the city has with surrounding towns.
It will also review rate structure for billing sewer users.
Benefits for terminated employees
McEnerney said the firm will also look at employees who have been terminated, but may be collecting pension and health benefits at taxpayers’ expense. “You’d be surprised how many people are still getting paid while they are terminated,” he said.
Morris suggested the firm look at salaries of employees. He said in the past some employees were paid through several line items obscuring their actual salary amounts. McEnerney said the firm will look at the salaries for employees and compare salaries with W2 forms.
Finding new revenue
McEnerney said the firm will assist the city in identifying new revenue sources that other cities are taking advantage of like payroll tax, surface lot and garage parking tax on privately owned facilities, and arrangement with Uber for loss of livery and taxi license fees.
Consultants will also explore selling naming rights to city owned facilities.
Consultants will also study fee ordinances to ensure the city is charging fees similar to other similar size municipalities. Better aligning some of the fees will increase revenue for the city, said the consultants.
Forecasting and cash flow projection
McEnerney said the firm will also conduct long-term budget forecasting and cash flow projection for the city. This will include a three and five year forecast of where the city will be in the near future without changing the way government is run. It will conduct the same forecast by integrating identified new revenues and budget efficiencies to project where the city will be in three to five years.
Consultants will identify potential shortfalls before they happen and identify under-performing revenues, according to the firm’s presentation to the council.
The firm will begin working with the city soon after the contract is awarded, said the consultants. The contract is for a single year and will end at the closing of the 2016-17 fiscal year. Consultants will not have a final document or report, but will communicate their findings through memorandums to the administration.
The council will consider awarding the $250,000 to the firm on Tuesday night.
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