One discussion at the Mayoral debate covered Hoboken Hospital. This was very revealing. Peter said we got the hospital debt free, but never gave his figure for the new debt. He also stated that we haven’t used our full bonding capacity. Dawn stated that the figure was $52mm. The Moody’s report cited by Dawn confirms that the figure is indeed $52mm. We have bonded $52mm Peter. HUMC just last month refinanced a $10.8mm loan. We also have a $40.45mm loan outstanding. The actual total is $51.25mm (due to a slightly less issuance cost on the last loan). He also believes that that hospital is “thriving”. In fact the report stated that its cash position is a mere 7.6 days. A very precarious figure. The net income (loss) on a cash basis was minus $4mm last year. Including non cash items such as depreciation the total loss came to $11mm! Peter voted enthusiastically for the hospital, Dawn was not on the Council at that time. The centerpiece on the hospital’s revival is its new emergency room. Previously designed to handle 18,000 patient visits a year it currently handles 32,000. Emergency care is historically highly non insured. This is 40% of HUMC’s volume. Peter was completely unaware that $9mm in construction funds were cannibalized to pay for ongoing operating expenses. The money was supposed to be used for additional construction This move created higher costs to the city. When you use construction funds in this manner, you violate the tax exempt status of the issue, creating a taxable loan (at a corresponding higher interest rate). He calls the $9mm “minuscule”! Dawn was quite aware. This is about as big a red flag on Peter’s judgment as there is.
More amazing was Peter’s valuation on the property at a whopping $100-300mm. Two years ago the property was valued at $29mm. Only Peter believes that its value has risen. According to his math the land has a present value of $35-40mm ($50mm less his $10-15mm “potential liability” after a sale to Hoboken). If you bought real estate 2 years ago do you believe that its value is up? There is a method to his madness. If we “upzone”, meaning 50 story buildings in the center of town. Combined with 27 story buildings on Observer Highway is what Peter thinks this town needs.
This not the first time that Peter was numerically challenged. Last December I was making the point that real estate (including Hoboken) was in the early phases of decline and that we would receive lower tax receipts than forecasted. Only one Council member shook his head no, no, no. That of course was Peter Camaranno. I guess the developers, real estate agents and unions have made their point quite clear. No wonder Dawn kept repeating Roberts Camaranno, Peter made the analogy himself.
Scott Siegel
My Comment: Here are some addtional articles I have published on the HUMC's situation for additional Background information:
Two articles on the recent financing of the HUMC:
Recent interest only bond issued
http://thehobokenjournal.blogspot.com/2009/05/humc-refinances-bond-interest-only.html
Interest only financing? Isn't that partially what got this country in the mortgage meltdown in the first place? The only rationale for an interest only loan is either to play politics with the budget and make the numbers look good now in terms of total payments per year or that you think the Hospital will fail soon so why bother paying down the principal. Good grief, more of the same Roberts budget chicanery.
This shows the debt schedule
http://thehobokenjournal.blogspot.com/2009/05/more-on-humc-bonds-and-finances.html
Actually, in the debate Dawn Zimmer was right. The HUMC is tapped out of their recent financial commitments according to this debt schedule. All $52 million has been bonded for. Peter Cammarano was wrong on this and in his defense I don't think he has been following this closely. He put his trust in Harvey Holtzman and crew. Doesn't that make you stop and question his judgement on financing or his ability to informed or tell the truth? It does for me.
Peter Cammarano painting quite the rosy picture of the HUMC in June of 2008:
http://thehobokenjournal.blogspot.com/2009/01/humc-no-longer-rosy-picture-painted-by.html
Peter Cammarano on June 2nd, 2008 at a special council meeting on the HUMC stated that we should take the report from the HUMC on its face value and that they were the experts. To question the hospital bordered on paranoia. Look where we are now with the Hospital. You decide if Beth Mason was paranoid. I for one suspected she was right on this issue and now I know she was right all along.
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