The Hoboken Tax Reform Coalition
Do you want to pay an additional $16 million in taxes?
Last night, the City Council tabled the issue to vote on passing a special bond until Wednesday (6/16).
This bond is necessary to fulfill the bank requirements to extend our city's loan to the closing date of the garage (8/13). The bank is asking the City to pass the bond to show a "good faith effort" that the sale (from the city's side) will go through.
If the bond is not passed, the bank will not extend the loan. If the bank does not extend the loan, the city will owe that money on July 1st, and will default on the sale. If the city defaults on the sale of the garage, lots of bad things begin to happen:
The important dates to consider:
Council members Michael Russo, Teresa Catellano, and Beth Mason are seemingly opposed to the issue. (Nino Giacchi is leaving town and will not return until June 29th.)
Please contact these council members to express your support of doing the fiscally responsible action, and to vote YES for the bond ordinance.
Russo: councilmanrusso@aol.com
Castellano: email@castellanoforhoboken.com
Mason: beth@masoncitycouncil.org
Thank you.
Greg Lincoln
This bond is necessary to fulfill the bank requirements to extend our city's loan to the closing date of the garage (8/13). The bank is asking the City to pass the bond to show a "good faith effort" that the sale (from the city's side) will go through.
If the bond is not passed, the bank will not extend the loan. If the bank does not extend the loan, the city will owe that money on July 1st, and will default on the sale. If the city defaults on the sale of the garage, lots of bad things begin to happen:
- Our bond rating as a city will tank
- We will lose any chance to recoup the $16 million dollars through the sale of the garage
- Our taxes will go up
- The loan is extended, and the sale will go through unless the buyer backs out.
- If the sale goes through, the proceeds pay off our debt, and the bond is not needed and will not be used.
- If the sale falls through, we have the bond in place to retain the garage.
The important dates to consider:
- June 23rd- If the bond is passed by June 23rd, we can get very low rates that will save the city about $600,000.
- June 30th- If the bond is passed by June 30th (but after June 23rd), we can still have a bond, but at much higher rates.
- July 1st- If there is no bond in place, the bank does not extend the loan, and Hoboken is in DEFAULT.
Council members Michael Russo, Teresa Catellano, and Beth Mason are seemingly opposed to the issue. (Nino Giacchi is leaving town and will not return until June 29th.)
Please contact these council members to express your support of doing the fiscally responsible action, and to vote YES for the bond ordinance.
Russo: councilmanrusso@aol.com
Castellano: email@castellanoforhoboken.com
Mason: beth@masoncitycouncil.org
Thank you.
Greg Lincoln
Views: 0
Replies to This Discussion
-
Permalink Reply by Lincolnlogger on -
Also, this was distributed at the meeting last night:
ANSWERS TO QUESTIONS ABOUT THE PROPOSED GARAGE BOND AUTHORIZATION
WHY DO WE NEED THIS BOND AUTHORIZATION NOW?
Due to a number of factors, the City is aware that the sale of the Municipal Garage may not close as scheduled on August 13th. The City needs to be prepared for that contingency, or it faces enormous risks which could require another substantial tax increase. Fortunately, avoiding that risk is easy and costless for the City.
When people are considering buying a new house or condo, they often get "pre-approved" for a loan that they will only use if they buy something. The "pre-approval" is costless but. facilitates a potential future transaction. That is essentially what the City is doing here. This Bond authorization ensures that the City will be in a position to borrow the money it needs to refinance what is in effect a "home equity loan" on the Garage as cheaply as possible. We will need to do that, if the sale of the Garage does not take place as scheduled on August is"
CAN THIS BOND BE USED TO RELOCATE THE GARAGE?
No. The Bond will permit the Garage to stay where it is if the sale to the developer, Hekemian doesn't close on August 13th. This is a real possibility because the real estate market has declined. Hekemian has requested changing the agreed terms to delay the closing a year, as well as to significantly reduce the value of the transaction to the City.
If the Bond is not passed it becomes far more likely that the Garage will have to be relocated. It also makes negotiations with Hekemian more difficult, because they will know that we will have few. options available to us.
HOW MUCH ARE WE BORROWING ON THIS BOND NOW?
Nothing. We are not borrowing anything unless and until we need it. All we are doing is authorizing a Bond, making it possible to borrow if it becomes necessary.
WHEN WILL WE BORROW ON THIS BOND?
Perhaps never. If the sale of the Garage closes on schedule on August 13, no borrowing will occur. The Bond will be used to refinance the existing debt on the Garage ONLY if the sale to Hekemian fails to close on August 13th.
HOW MUCH DOES AUTHORIZING THIS BOND COST THE CITY?
Nothing. We are not borrowing anything at this time, or perhaps at all. The Bond provides a free insurance policy in case the sale of the Garage is delayed or canceled, a contingency that we know could occur.
ARE THERE ANY REASONS TO WAIT UNTIL LATER?
NO. Authorizing the Bond prior to June 22nd costs the City NOTHING and failing to do so exposes the City and its taxpayers to substantial cost and unnecessary risk.
HOW MUCH WILL IT COST HOBOKEN TO WAIT UNTIL LATER?
The interest on the Bond would be approximately $20,000 per month, far lower than the existing cost which has reached as high as $100,000 per month.
If we wait until after the HCIA deadline of June 22nd , but pass the Bond authorization before July i-, the annual unnecessary cost to the City would be approximately $600,000. This is because our borrowing costs will be far higher. We will have lost the opportunity to get the best possible rate through the HCIA pool.
If we wait until after June 30th, our costs could be higher still or we may not be able to borrow at all, because our existing debt could be in default. If the City cannot borrow we will either lose the Garage or have to raise taxes significantly to payoff the $16 million.
WHY ELSE IS THE BOND NEEDED?
Our existing debt on the Garage matures on July 1st . The sale of the Garage isn't scheduled to close until 1 and 1/2 months later on August 13th". This means the loan will have to be extend d to avoid a default by the City. Capital One, the lender on the existing debt, has insisted that we authorize this bond as a condition of allowing us to wait until after the Garage is sold on August 13th to payoff the loan. If the Garage is not sold, the Bond will give us the money that we need to refinance the existing loan as cheaply as possible.
WHAT HAPPENS IF WE DON'T PASS THE BOND?
If the Bond is not passed and the existing loan is therefore not extended, then Hoboken will owe Capital One approximately $16 million on July 1st. We will not have the money to pay, because the sale to Hekemian will not have closed. The resulting default could cost the City its rights to the Garage, and damage Hoboken's credit rating for years to come, costing taxpayers millions of dollars.
-
Permalink Reply by Dave Kaplan on -
Thank you for providing this useful Q&A. This issue has me concened, particularly since I have not heard or understood the counter arguments to this issue.
I truely hope that our council can either pass this issue, or in the alternative, make a clear, convincing case that this should not be passed.
Lincolnlogger said:Also, this was distributed at the meeting last night:
ANSWERS TO QUESTIONS ABOUT THE PROPOSED GARAGE BOND AUTHORIZATION
WHY DO WE NEED THIS BOND AUTHORIZATION NOW?
Due to a number of factors, the City is aware that the sale of the Municipal Garage may not close as scheduled on August 13th. The City needs to be prepared for that contingency, or it faces enormous risks which could require another substantial tax increase. Fortunately, avoiding that risk is easy and costless for the City.
When people are considering buying a new house or condo, they often get "pre-approved" for a loan that they will only use if they buy something. The "pre-approval" is costless but. facilitates a potential future transaction. That is essentially what the City is doing here. This Bond authorization ensures that the City will be in a position to borrow the money it needs to refinance what is in effect a "home equity loan" on the Garage as cheaply as possible. We will need to do that, if the sale of the Garage does not take place as scheduled on August is"
CAN THIS BOND BE USED TO RELOCATE THE GARAGE?
No. The Bond will permit the Garage to stay where it is if the sale to the developer, Hekemian doesn't close on August 13th. This is a real possibility because the real estate market has declined. Hekemian has requested changing the agreed terms to delay the closing a year, as well as to significantly reduce the value of the transaction to the City.
If the Bond is not passed it becomes far more likely that the Garage will have to be relocated. It also makes negotiations with Hekemian more difficult, because they will know that we will have few. options available to us.
HOW MUCH ARE WE BORROWING ON THIS BOND NOW?
Nothing. We are not borrowing anything unless and until we need it. All we are doing is authorizing a Bond, making it possible to borrow if it becomes necessary.
WHEN WILL WE BORROW ON THIS BOND?
Perhaps never. If the sale of the Garage closes on schedule on August 13, no borrowing will occur. The Bond will be used to refinance the existing debt on the Garage ONLY if the sale to Hekemian fails to close on August 13th.
HOW MUCH DOES AUTHORIZING THIS BOND COST THE CITY?
Nothing. We are not borrowing anything at this time, or perhaps at all. The Bond provides a free insurance policy in case the sale of the Garage is delayed or canceled, a contingency that we know could occur.
ARE THERE ANY REASONS TO WAIT UNTIL LATER?
NO. Authorizing the Bond prior to June 22nd costs the City NOTHING and failing to do so exposes the City and its taxpayers to substantial cost and unnecessary risk.
HOW MUCH WILL IT COST HOBOKEN TO WAIT UNTIL LATER?
The interest on the Bond would be approximately $20,000 per month, far lower than the existing cost which has reached as high as $100,000 per month.
If we wait until after the HCIA deadline of June 22nd , but pass the Bond authorization before July i-, the annual unnecessary cost to the City would be approximately $600,000. This is because our borrowing costs will be far higher. We will have lost the opportunity to get the best possible rate through the HCIA pool.
If we wait until after June 30th, our costs could be higher still or we may not be able to borrow at all, because our existing debt could be in default. If the City cannot borrow we will either lose the Garage or have to raise taxes significantly to payoff the $16 million.
WHY ELSE IS THE BOND NEEDED?
Our existing debt on the Garage matures on July 1st . The sale of the Garage isn't scheduled to close until 1 and 1/2 months later on August 13th". This means the loan will have to be extend d to avoid a default by the City. Capital One, the lender on the existing debt, has insisted that we authorize this bond as a condition of allowing us to wait until after the Garage is sold on August 13th to payoff the loan. If the Garage is not sold, the Bond will give us the money that we need to refinance the existing loan as cheaply as possible.
WHAT HAPPENS IF WE DON'T PASS THE BOND?
If the Bond is not passed and the existing loan is therefore not extended, then Hoboken will owe Capital One approximately $16 million on July 1st. We will not have the money to pay, because the sale to Hekemian will not have closed. The resulting default could cost the City its rights to the Garage, and damage Hoboken's credit rating for years to come, costing taxpayers millions of dollars.
-
Permalink Reply by Hoboken Reformer on
-
Dave Kaplan said:Thank you for providing this useful Q&A. This issue has me concened, particularly since I have not heard or understood the counter arguments to this issue.
I truely hope that our council can either pass this issue, or in the alternative, make a clear, convincing case that this should not be passed.
There seems to be one simple counter argument: Anything and everything talked about, proposed by, done by the current mayor and her council majority is outright unethical, non-transparent, divisive, against the interests of Hoboken's citizens or even borderline criminal. Only the true representatives of this town's population (i.e. Castellano, Russo, Mason and Giacchi) know what is right and have infinite wisdom and professional qualifications to responsibly resolve any problems that arise.
I can't wait for the next city council elections where (hopefully!) these four @@@@ (substitute your favorite noun here) will be shown the exit door!
© 2012 Created by Administrator.
Powered by
