Chaotic Harrison Council Meeting
In a chaotic meeting of the Mayor and Council, Mayor Raymond McDonough walked out of the council chambers after announcing that he was moving to adjourn the meeting. As the Mayor walked out, a crowd of residents jeered and booed while others expressed approval. A large contingency of town workers were in attendance at the meeting matched by an as large contingency of town residents. Town Clerk Paul Zarbetski advised that the Mayor had taken the vote and had enough votes to adjourn the meeting. This is not the first time the Mayor abruptly ended a council meeting. In June of 2008, the Mayor walked out of a council meeting in a similar manner.
On the Agenda tonight were two items involving the Harrison Commons project. The first, a Resolution of the Town of Harrison, in the County of Hudson, New Jersey approving an agreement by and among the Town, the Hudson County Improvement Authority and Harrison Commons, LLC relating to the issuance of Redevelopment Area Bond Anticipation Notes and Providing for the Repayment thereof. The Second item, the introduction of Ordinance 1215 which proposes to authorize the Mayor and Town Council to enter into a Financial Agreement for Certain Property Within the Waterfront Redevelopment Area. Both of these items were removed from the Agenda.
Mayor McDonough promised me in the open session of the meeting that these two items would be discussed in the future at a regularly scheduled meeting of the Mayor and Council. The Mayor and Council have in the past scheduled Special Town Meetings at noon and 5 p.m. when the Agenda contained very important items effecting the redevelopment and town finances.
The documents attached to the meeting Agenda state that CJUF II Harrison Holding,LLC (CJUF) apparently has obtained financing from PNC Bank, N.A. for the construction of Building 1 in the Harrison Commons project. CJUF the names of three entities on its letter to the town; CJUF II Harrison Holding, LLC, CJUF II Harrison Phase I Urban Renewal Company, LLC and Harrison Commons, LLC. Their mail is directed to c/o the Pegasus Group, 1018 Washington Street, 3rd Floor, Hoboken, New Jersey.
The letter states that although financing has been obtained that in addition to the financing Harrison Commons will require public financing in the form of Bonding by the Town of Harrison. The letter states that "in light of the prevailing conditions in the bond market, the Town, the Hudson County Improvement Authority, and CJUF believe that it is not prudent to issues the Supplemental Series D Bonds at this time. Accordingly, in lieu of issuing the Supplemental Series D Bonds at this time, the Town of Harrison would issue bond anticipation notes in an amount not to exceed $8.2 million and make those proceeds available to CJUF.
It appears from the information available that the Town is partially funding the building of Building 1 on behalf of Harrison Commons. Harrison Commons is building rental apartments next to the PATH station along Middlesex Street consisting of 253 residential apartments and 14,325 sq ft of ground level retail space. Two additional buildings are proposed.
Bond Anticipation Notes are short term financing which are issued for a period not exceeding one year and may be renewed from time to time for two additional years in one year increments with special repayment criteria. My understanding is that short term financing is not traditionally used for this type of project.
In my opinion, if the Bonding market is not favorable, the Town should not bond for this project. Harrison Commons should finance the project on their own or wait until the market is more favorable. More troubling than the bonding is the proposed Financial agreement for Long Term Tax Exemption contained in the meeting package. The Long Term Tax Exemption is for thirty-five (35) years from the date of execution of the agreement or thirty (30) years from the following January 1st date following the issuance of the first Certificate of Occupancy. Thirty years is a long time to give someone a property tax exemption.
What benefit will the Town of Harrison receive in exchange for its bonding? I welcome anyone who wants to explain the benefit to the taxpayers of Harrison to send me an explanation. I will post it on this site.
The proposed agreement also contains a troubling section that states, "Notwithstanding anything to the contrary herein, if the Entity fails to make any payment of the Annual Service Charge or Land Taxes set forth in this Financial Agreement, the sole remedy of the Town shall be in Rem Tax Foreclosure, and in no event shall the Entity be liable for payment of all or any portion of the Annual Service Charge or Land Taxes."
In other words, Harrison Commons LLC and its various CJUF entities could walk away from the project and not be obligated to make the Annual Service Charge. If PNC Bank is in first place with a Mortgage, the Town could foreclose and not recover the necessary funds to pay back the bonds. Why isn't Harrison Commons and its principals personally guaranteeing the payment of the Annual Service Charge which is designed to pay back the Loan (Bonds)?
When the average person purchases a home, the bank holds a Mortgage and a Note. The Mortgage insures that you do not sell the house without first paying the amount you owe on the Note. In today's economy, banks are allowing homeowners to sell their house for less than they owe (called a "Short Sale") in order to release the Mortgage on the property. The bank however still holds the Note and can collect the difference between what was owed and what was paid back through the Short Sale. Why should Harrison Commons be any different than an average person when it come to paying back the bond?
On the Agenda tonight were two items involving the Harrison Commons project. The first, a Resolution of the Town of Harrison, in the County of Hudson, New Jersey approving an agreement by and among the Town, the Hudson County Improvement Authority and Harrison Commons, LLC relating to the issuance of Redevelopment Area Bond Anticipation Notes and Providing for the Repayment thereof. The Second item, the introduction of Ordinance 1215 which proposes to authorize the Mayor and Town Council to enter into a Financial Agreement for Certain Property Within the Waterfront Redevelopment Area. Both of these items were removed from the Agenda.
Mayor McDonough promised me in the open session of the meeting that these two items would be discussed in the future at a regularly scheduled meeting of the Mayor and Council. The Mayor and Council have in the past scheduled Special Town Meetings at noon and 5 p.m. when the Agenda contained very important items effecting the redevelopment and town finances.
The documents attached to the meeting Agenda state that CJUF II Harrison Holding,LLC (CJUF) apparently has obtained financing from PNC Bank, N.A. for the construction of Building 1 in the Harrison Commons project. CJUF the names of three entities on its letter to the town; CJUF II Harrison Holding, LLC, CJUF II Harrison Phase I Urban Renewal Company, LLC and Harrison Commons, LLC. Their mail is directed to c/o the Pegasus Group, 1018 Washington Street, 3rd Floor, Hoboken, New Jersey.
The letter states that although financing has been obtained that in addition to the financing Harrison Commons will require public financing in the form of Bonding by the Town of Harrison. The letter states that "in light of the prevailing conditions in the bond market, the Town, the Hudson County Improvement Authority, and CJUF believe that it is not prudent to issues the Supplemental Series D Bonds at this time. Accordingly, in lieu of issuing the Supplemental Series D Bonds at this time, the Town of Harrison would issue bond anticipation notes in an amount not to exceed $8.2 million and make those proceeds available to CJUF.
It appears from the information available that the Town is partially funding the building of Building 1 on behalf of Harrison Commons. Harrison Commons is building rental apartments next to the PATH station along Middlesex Street consisting of 253 residential apartments and 14,325 sq ft of ground level retail space. Two additional buildings are proposed.
Bond Anticipation Notes are short term financing which are issued for a period not exceeding one year and may be renewed from time to time for two additional years in one year increments with special repayment criteria. My understanding is that short term financing is not traditionally used for this type of project.
In my opinion, if the Bonding market is not favorable, the Town should not bond for this project. Harrison Commons should finance the project on their own or wait until the market is more favorable. More troubling than the bonding is the proposed Financial agreement for Long Term Tax Exemption contained in the meeting package. The Long Term Tax Exemption is for thirty-five (35) years from the date of execution of the agreement or thirty (30) years from the following January 1st date following the issuance of the first Certificate of Occupancy. Thirty years is a long time to give someone a property tax exemption.
What benefit will the Town of Harrison receive in exchange for its bonding? I welcome anyone who wants to explain the benefit to the taxpayers of Harrison to send me an explanation. I will post it on this site.
The proposed agreement also contains a troubling section that states, "Notwithstanding anything to the contrary herein, if the Entity fails to make any payment of the Annual Service Charge or Land Taxes set forth in this Financial Agreement, the sole remedy of the Town shall be in Rem Tax Foreclosure, and in no event shall the Entity be liable for payment of all or any portion of the Annual Service Charge or Land Taxes."
In other words, Harrison Commons LLC and its various CJUF entities could walk away from the project and not be obligated to make the Annual Service Charge. If PNC Bank is in first place with a Mortgage, the Town could foreclose and not recover the necessary funds to pay back the bonds. Why isn't Harrison Commons and its principals personally guaranteeing the payment of the Annual Service Charge which is designed to pay back the Loan (Bonds)?
When the average person purchases a home, the bank holds a Mortgage and a Note. The Mortgage insures that you do not sell the house without first paying the amount you owe on the Note. In today's economy, banks are allowing homeowners to sell their house for less than they owe (called a "Short Sale") in order to release the Mortgage on the property. The bank however still holds the Note and can collect the difference between what was owed and what was paid back through the Short Sale. Why should Harrison Commons be any different than an average person when it come to paying back the bond?
Posted by John Pinho at 10/6/2009 10:13 PM 
Categories: Council Meeting, Property Taxes, Mayor, Politics, Police, Budget
Categories: Council Meeting, Property Taxes, Mayor, Politics, Police, Budget
Mayor McDonough will get back to you.
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