Government

Questions Arise About Validity of Land Lease for Mind and Body Complex Supported by UC Freeholders

Anthony Esposito, above, raised concerns about the Roselle Mind and Body Complex during the public comment portion of a Union County Freeholders meeting on July 20, 2017. Credits: Rebecca Panico
Anthony Esposito, above, raised concerns about the Roselle Mind and Body Complex at a Roselle Council meeting in July 2017. Credits: Rebecca Panico

ELIZABETH, NJ - A Roselle resident says that the Union County Board of Chosen Freeholders guaranteed $59 million in bonds for a project that may not have a proper land lease.

Anthony Esposito, who formerly served on the Roselle Board of Education, has retained a lawyer who is preparing to challenge what he says are financial issues in the land lease for the Roselle Mind and Body Complex. The project includes a new school, library and community center in the borough.

Esposito and other residents have raised concerns at previous borough council meetings and freeholders meetings about how much the project will cost taxpayers.

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Michael Doran, Esposito’s lawyer, said he sent a letter around noon yesterday to County Counsel Robert Barry. The letter advised that the freeholders pull a scheduled special meeting vote regarding the issuance of bonds for the project until the land lease was looked into further.

“...[P]lease take note that should the County take any action regarding the issuance of bonds to fund this project, we will pursue all legal efforts to restrain the County’s action,” wrote Michael Doran in the letter that was obtained by TAP.

Yesterday’s special meeting vote -- which was slated to take place at 7 p.m. before the scheduled agenda-setting meeting -- was abruptly canceled just hours before it was supposed to take place. A county spokeswoman yesterday said the meeting was canceled "on advice of County Counsel."

Today, Union County spokeswoman Tina Casey declined to comment when asked if the county counsel received the letter from Esposito’s lawyer and whether the special meeting vote was canceled because of it.

THE LEASE AND FINANCING

In 2014, the Roselle Board of Education leased land on Chandler Avenue to the Roselle borough for the project. The lease stated the borough had to secure financing for the Mind and Body Complex by Dec. 31, 2015, otherwise the lease would be null and void.

But the borough apparently never obtained financing for the project before that date, Esposito says, which makes the land lease null and void.

The bonds, which will finance the project, were guaranteed in a September 2016 freeholders vote, which adopted an ordinance authorizing the Union County Improvement Authority (UCIA) to issue $59 million in bonds for the project.

Esposito’s lawyer called it “reckless” for the county to have guaranteed bonds in 2016 for the project after he says the lease had become null and void.

“To approve guaranteed financing for the Complex under such circumstances is at best reckless, and at worst voidable,” Moran wrote in a letter addressed to the county counsel.

MORE: View a copy of the lease

The bonds have been guaranteed, but not issued yet, Freeholder Chairman Bruce Bergen told TAP after the agenda-setting meeting yesterday.

The freeholders’ special meeting vote yesterday was supposed to provide the consent of the freeholders for the Roselle Board of Education, the borough and the UCIA to move forward on the project, Union County Clerk of the Board James Pelletiere said.

This year, the Roselle Board of Education amended the original lease, extending the timeframe for the borough to obtain financing for the Mind and Body Complex to 2018. The Roselle Council adopted a similar resolution on July 12 at a council workshop meeting.

MORE: Read the full borough resolution

Roselle Borough Attorney Rachel Caruso and the county spokeswoman declined to comment when asked if the lease between the board of education and the borough was null and void.

THE FREEHOLDERS' MEETING LAST NIGHT

Many people did not hear that the special meeting vote was canceled yesterday. There was a nearly full-house in the meeting chambers last night with residents -- including Roselle Mayor Christine Dansereau --  who were prepared to voice their concerns about the project in the slated public comment portion.

Because the vote was canceled, there was no public comment portion.

Meanwhile, preliminary findings from the UCIA last year showed that the average home in Roselle could see a property tax increase of anywhere from $491 to $500 for the project. 

MORE: See the preliminary findings

Roselle residents have said at previous freeholders meetings that if the borough defaults on paying the bonds back, that debt -- which will have incurred interest -- will have to be shouldered by all municipalities in Union County.

Bergen, the chairman of the board, said the only way that would happen is if Roselle went bankrupt. He said no municipality in New Jersey has ever gone bankrupt.

“The purpose of the county giving the [bond] guarantee is that it allows the project to borrow money based on the county's bond rating, which is more favorable than the borough's bond rating,” Bergen explained to TAP. “The county guarantee saves the [Roselle] taxpayers money because their project is borrowing at a lower interest rate than they can get without the county guarantee."

Bergen said the vote for the resolution that was slated for the special meeting "may or may not be" placed on the agenda at the freeholder's next regular meeting, which is scheduled for Aug. 17 in the County Administration building at 10 Elizabethtown Plaza.

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