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Boro OKs $9 million to pay debt to county
Party-line vote ensures town will hold on to National Lead project
BY MICHAEL ACKER Staff Writer
The Sayreville Borough Council got the fourth vote it needed to adopt a $9 million bond ordinance Saturday, despite concerns that the move will put taxpayers at risk if the National Lead redevelopment falls through.
With the deadline looming for an agreement to be reached on the 427-acre redevelopment project, the council majority felt it had no choice but to approve the bonds in order to provide money owed to Middlesex County. The Sayreville Economic Redevelopment Agency (SERA) owes the county $42 million in principal and interest on county loans that allowed the agency to purchase the former National Lead property through eminent domain in 2004.
Had the council not come up with the money, the county Board of Chosen Freeholders would have the authority to take over the redevelopment project at a time when SERA is reportedly close to reaching a redevelopment agreement with a private developer, O'Neill Properties, of King of Prussia, Pa. The agreement and subsequent cleanup and redevelopment of the waterfront acreage is expected to yield major revenue for the borough.
County officials said their 2008 budget anticipates $7.2 million in money owed by SERA, and that the bond ordinance would be necessary. The state Local Finance Board would not approve a county budget that simply anticipates a redevelopment contract to be signed, with the money expected to come from a developer.
"SERA came up with a way to protect the county and stop them from taking back the property," Borough Council President and SERACommissioner Dennis Grobelny said.
Grobelny and the council's three other Democrats voted in favor of the ordinance Saturday. The two Republicans voted in dissent.
Republican Mayor Kennedy O'Brien said he wanted to see O'Neill take on the risk involved in thematter, as he estimates that the developer stands to gain at least $200 million from the eventual development of this site.
"Since we do not profit from the property, it is not our function to take risk," O'Brien said.
The borough, he said, made an attractive offer to O'Neill by allowing it to build 2,000 residential units on the National Lead site, along with offering potential tax abatements. He said the borough should not have to take a risk by issuing the $9 million in bonds.
"They now have Sayreville taking a risk position without profit," O'Brien said. "This is why I am opposed to it. I am the biggest cheerleader for the redevelopment of NL [National Lead] in the borough of Sayreville, but I am not in favor of the people of Sayreville being part of the risk, because we are not profiting from this, nor should we be."
Grobelny said the borough will gain from the taxes generated by the redeveloped NL site.
"There is no doubt that it is going to be a very big windfall for Sayreville," he said.
Grobelny also said that while the ordinance allows the council to issue bonds, it does not call for their immediate issuance, and can be cancelled, if an agreement is reached and the developer's money can be used.
"What we are all hoping is that these bonds will never have to be issued," Grobelny said.
SERAattorneyMichael J. Baker, who is the borough's bond counsel, explained the ordinance to the governing body at O'Brien's request on Saturday. Baker said it calls for the borough to secure bond anticipation notes, which are annual notes as opposed to permanent bonds. If the redevelopment deal is not reached between the various parties and the borough is unable to find another developer, then SERAwould not be able to pay the notes and the borough would be called in for support, Baker said.
However, the involved parties are close to signing a deal, as the only remain issue dealswith language in one paragraph of the document, Baker said. If the deal is signed and the sale of the property can be closed on this spring, the county will receive a sum much larger than $9 million toward the debt, and the borough's support would no longer be necessary.
In response to questions from Republican officials, Baker said that O'Neill did not agree to take the risk involved in this bond ordinance because the firm anticipates writing a large check for the property sometime in the next few weeks. He added that the developer has agreed to contribute to the local school district and the water plant, and to construct a public walkway on the site. O'Brien said those contributions are promises for the future, and he is concerned about the present.He said he thinks O'Neill is asking the borough to sweeten the offer.
"I think it's very unfair," themayor said.
Democratic Councilman Rory Zach disagreed with O'Brien's comments, saying that O'Neill is not involved in this bond ordinance.
"SERAis asking the borough to support their position to pay the county," Zach said. "That has nothing to do with O'Neill."
Baker noted that the developer has invested in the project already. He said that at least $3 million in environmental engineering and other related expenses were necessary on the site, as well as over a quarter-million dollars in agency fees. He said the approval of this bond ordinance would not put the borough at risk for now.
"Its an opportunity to move the project forward without taking immediate risk," Baker said.
Democratic Councilwoman Kathy Makowski said the council should approve the bond ordinance and help SERA with this project.
"The risk that we take is we lose the project if we don't do this," Makowski said.
Grobelny said the governing body should be focused on its obligation to the county.
"If we don't [approve the bond ordinance], there is a very good possibility they will take the property," Grobelny said. "I would not want to see the county take back this property."
The council had voted 3-2 to introduce the bond ordinance, with Democrat Stanley Drwal absent for that vote, but the fourth vote of support was needed Saturday for the measure to be adopted.
Drwal attended the meeting and said it was time to move forward with the project, especially since the governing body had reassurances from SERA's professionals that they were close to a signed agreement for the redevelopment.
"This borough has lacked bold leadership," Drwal said. He urged officials not to give up on the project now, as the risk is worth the benefits of the project.
"I think the risk isminimal compared to the payoff," Drwal added.
Republican Councilman David Kaiserman said the borough risks losing the project and taking on additional debt if the various parties fail to reach an agreement. Drwal responded that if the council doesn't approve the bond ordinance now, the borough would lose everything anyway.
Kaiserman said later that the redevelopment of the NL site can be a good thing for the community, as long as it is done responsibly. He feels the taxpayers are being asked to take on a burden that could result in a significant tax increase if the project falls through.
"As a councilman, it ismy responsibility to look out for the needs of my neighbors," Kaiserman said. "O'Neill should put up the risk ... not the homeowners."
In response to Kaiserman's comment, Grobelny said O'Neill is not getting a free ride.
"It's not O'Neill's fault and he has made a substantial investment in the project already," Grobelny said.
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