Roselle’s Folly (12) – Local Finance Board Revisit

After a preliminary review on April 22, 2015 the Roselle Mind and Body Complex came before the New Jersey Local Finance Board again on September 14, 2016 to get the project rubber stamped.

Some excerpts:

MR. McMANIMON: from McManimon, Scotland and Baumann, bond counsel to the Union County Improvement Authority……….Since the Board approved this  project last year, actual public bids went out through proposal requests and it reduced the increased amounts to both those facilities that causes to increase the 30 million for the community center to $35 million and the 19.5 million for the Board of Education early childhood learning center to $24 million. That is, again, the result of actual bids that they received, rather than projected, which is what we had when we came here. Since then, the applicant has also added the guaranty of the county…………..In this instance, the improvement authority is much more than a conduit. They are actually a party who is undertaking the project and construction, managing it and leasing it back and so they have a much more substantial than normal pass-through entity.

CHAIRMAN CUNNINGHAM:So, I just should note, I should make both the applicant and the Board aware that we have received some constituent inquiry on this from a resident of Roselle. And the first question that was posed to us, I think something that we were prepared to ask anyway, was if you can talk about the increased cost of the project from the last time it came in front of the Board and I think that was answered. I don’t want to intimate at all that it was, but I think it was answered in the application document itself. I would like to put it on the record and the transcript. So, if you can speak to the reason for the increased cost, I think that would be helpful.

MR. SULLIVAN: Yeah. Well, the authority, when this agreement went out and went out to bid to look for a developer and we got a response from the developer that’s on the record, AST Roselle right now. So, those numbers are generated by the developer himself looking at the project. There was various things that were changed, made changes, the addition of a pool, the library and what have you. So, those are the numbers that have come back.

CHAIRMAN CUNNINGHAM: Let me just make sure I understand. Was it, so, between the time this application originally came in front of the Board, did the scope of the project change and there’s new components?

MR. SULLIVAN: I wouldn’t say the scope of the project has changed. There were a couple of things within it in terms of the community center part, more the Roselle Borough part, as opposed to the school part.

CHAIRMAN CUNNINGHAM: Did I hear that a pool was added?

MR. SULLIVAN: That was always part of the conversation.

MR. ENRIGHT: There was always a pool in there.

MR. SULLIVAN: There was always a pool in it. I think it was just the determination of what was the cost, the size and what have you.

MR. ENRIGHT: When the selected developer priced out the deal based on the architectural design, it was even higher than this. So, they did some value engineering to get it back down to, you know, a lower number.

CHAIRMAN CUNNINGHAM: And that’s what-

MR. ENRIGHT: The architect’s estimates were a couple years old.

CHAIRMAN CUNNINGHAM: And that’s what I want to be really clear on the record. I think that’s a very good clarifying statement. So, we have architectural estimates that were a bit dated and when it actually went out for pricing, the pricing came in higher than expected and that necessitates the increased project costs?

MR. ENRIGHT: Correct. We actually negotiated it down from higher than this.

CHAIRMAN CUNNINGHAM: And I quote from the application, I think it’s the first page of the application, “Based upon the results of the proposals, the UCIA is now anticipating actual costs for the borough project in the amount of,” and it goes on to set forth what those amounts are.

MR. ENRIGHT: Correct.

CHAIRMAN CUNNINGHAM: The other question I had….talked about the need for the county guaranty or the prudence of the county guaranty, but I think that Mr. McManimon already addressed that on the record. It’s a low risk. It saves overall money, so I don’t have an issue with that. Again, when we received a constituent inquiry, I think there was questions about whether or not the Freeholders took the appropriate action for that county guaranty. Is it my understanding that they’ve taken the steps needed to authorize the guaranty?

MR. ENRIGHT: They’ve introduced the ordinance.

CHAIRMAN CUNNINGHAM: Fine. And I just want to note for the record, because, again, it came out of the constituent inquiry, I think it’s good to have it in the transcript, that at the time the application came first in front of us there was an accounting guaranty deal. I addressed that with Mr. Jessup at the time, it was in the record, and Mr. Jessup said that, my understanding, that there was an accounting guaranty deal, it was correct. There’s no county guaranty contemplated, but, and I3 quote, “Obviously if the county got involved we’d have to come back to you for additional approvals,” and that’s part of the reason why you’re in front of the Board today.

MR. SULLIVAN: Correct.

CHAIRMAN CUNNINGHAM: So, I think that I understand the transaction. I understand the pricing and the breath of the project. Are there any questions from other members of the Board about this minor process?

MR. AVERY: Mr. Chairman, could I just clarify, the actual costs that are reflected in this proposal are the result of a negotiation or a competitive bid?

MR. McMANIMON: It was an RFP.

MR. AVERY: RFP. Okay. Thank you.

MR. LIGHT: There was a question here or a statement that the audit for 2015 for the authority had not been received. Has that come in yet or is it still out?

CHAIRMAN CUNNINGHAM: The audit, have we gotten the improvement authority audit?

MR. LIGHT: 2015.

MR. SULLIVAN: The improvement authority audit will be, we have draft formed it. It will be submitted within the next two weeks.

MR. LIGHT: Thank you. I’ll move the application be approved.

CHAIRMAN CUNNINGHAM: Okay. Mr. Light moves.

MR. BLEE: Second.

MS. RODRIGUEZ: I’ll second.

CHAIRMAN CUNNINGHAM: Roll call, please?

You know the rest.  Nothing about this tripling the Roselle debt or this new borrowing being equivalent to the total amount taken annually from Roselle residents in all property taxes (local, school, and county).

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: