Paterson Top Stories

Paterson Goes Deeper Into Debt to Cover 2013 Payments

PATERSON, NJ – Unable to afford the $8.9 million in debt due this year, the City of Paterson is planning to borrow more money to cover the payments.

Under an $11.6 million restructuring plan outlined at Tuesday night’s City Council meeting, Paterson would reduce its debt payments this year by almost $5 million. The city’s 2014 payments would drop by $4.2 million and its 2015 debt by $2.3 million.

But its debt payments in 2020 would rise by $4.3 million and the extra cost in 2021 would be slightly more than $7 million.

Sign Up for E-News

Over the eight-year life of the new bonds, Paterson the restructuring will produce a total of $3 million in additional debt for the city.

City officials clearly were not happy with the plan, one that’s similar to the practice of taking a cash advance on one credit card to pay off another one.

“This is not something that I would recommend anyone doing,’’ said City Council Finance Chairman Kenneth Morris.

But the New Jersey Department of Community Affairs is mandating the bond restructuring as part of the agreement that will provide Paterson with state Transition Aid this year, according to Morris and City Finance Director Anthony Zambrano.

“I don’t think we have much of a choice on this one,’’ said Councilman William McKoy.

The city has done smaller debt restructuring deals each of the past two years in an effort to resolve budget crises.

Paterson’s problem is not that it has a great deal of debt, according to its financial advisor, Neil Grossman. The $86 million in bonds that the city would end up with under the proposed deal is less than half the $200 million maximum under state law, officials said.

But the size of the payments strains Paterson’s limited financial resources.

The proposed 2013 budget currently includes about $3.9 million for debt payments. If the city were to try to make good on the full $8.9 million that is due, the current structural deficit in the budget would grow to $13.5 million, officials said.

The proposed restructuring is scheduled for an initial vote on December 18 and a public hearing and final vote would be held in January.

In conjunction with the restructuring, the city also plans to issue $22.5 million in bonds to cover sewer, street repair and other projects thatdate back to 2008. The city has been using short-term Bond Anticipation Notes to cover those costs, which would have required a $1 million payment on principal this year. But officials have decided it would be best to convert the short-term debt into long-term bonds to take advantage of the current low interest rates.  

TAP Into Another Town's News:

You May Also Like

Sign Up for E-News

Paterson

Upcoming Events

Sun, April 30, 2:30 PM

Peg Williams Gallery at Short Stories Bookshop & Community Hub, Madison

Group Art Show: Optimism in Action

Arts & Entertainment Business & Finance Education Giving Back Health & Wellness

Sun, April 30, 3:00 PM

Visual Arts Center of New Jersey, Summit

In Discussion: Walking as a Radical Act

Arts & Entertainment Education

Mon, May 1, 2:30 PM

Peg Williams Gallery at Short Stories Bookshop & Community Hub, Madison

Group Art Show: Optimism in Action

Arts & Entertainment Business & Finance Education Giving Back Health & Wellness

Paterson Activist Corey Teague endorses Republican Robert A. Quinn at Campaign Kickoff in Piscataway

April 26, 2017

(Somerset, NJ) – Robert A. Quinn, officially kicked off his campaign for New Jersey Assembly April 20, at Gabriele's Bar & Grill in Piscataway, one of the five towns in Legislative District 17. 

Supporters and fellow candidates from all levels of state and local office attended. 

In a statement on Facebook and during his speech, Corey Teague, a  Democrat said, ...