PATERSON, NJ - For a city struggling with a fiscal crisis, the prospect of getting almost $8 million in American Recovery and Reinvestment Act bonds was a welcome bit of good news for Paterson.
Under the federal stimulus program, economically-depressed places like Paterson would get tax-exempt bonds that private companies could use for development. Several months ago, two companies submitted their plans for the bonds. It was just what the city seemed to need - new construction, new jobs and new tax ratables.
But instead of a boon, the stimulus bonds ended up becoming yet another bust for Paterson.
The developers apparently did not get the financing they needed and the bonds had to be issued by the end of 2010. And so, on December 21, the city council voted to relinquish its share of the recovery bonds, releasing the money to the New Jersey Economic Development Authority to distribute elsewhere in the state.
"It's another casualty of the economic environment,'' said Councilman Kenneth Morris, chairman of the committee that oversees economic development. "My understanding, and I haven't been able to confirm this, is that the developers couldn't secure the financial backing from the banks. A lot of folks needed to be at the table for this to happen. We were there. The county was there. The developers were there. But the banks weren't.''
Mayor Jeffrey Jones' administration did not return phone calls about the stimulus bonds. The bonds were going to be issued through the Passaic County Improvement Authority. Here are the two companies that applied for the funding:
*Accurate Box wanted to build a 100,000 square-foot expansion to its existing facility on 5th Avenue in Paterson as well as purchase extra equipment. The expansion would have added 25 new jobs to the existing payroll of 185 people. There also would have been 45 construction jobs, the application said. The application said the Accurate Box project would cost about $9.5 million, but company officials had indicated during a September city council meeting that they had scaled that down.
* GMBD Associates, or Longstreet Development of Mill Street, submitted an application to build an eight-story medical office building along with retail space on Main Street, near St. Joseph's Regional Medical Center. Longstreet's application said the project would cost $15 million project, though the developers were asking for $9.1 million in recovery zone bonds. Their application sad the project would produce a building worth between $10 million and $15 million, with 100 permanent jobs.
The county improvement authority asked the developers to submit documents on bank financing by October 19, according to improvement authority spokeswoman Nicole Fox. But the developers did not follow through, she said.
Officials at Longstreet and Accurate Box did not return several phone messages seeking their comment on what happened with the projects.
Most cities and counties that received stimulus bonds were able to find projects that could use them, according to the New Jersey Department of Community Affairs (DCA). New Jersey received more than $600 million in recovery zone funding, said DCA spokeswoman Lisa Ryan. About $105 million, including Paterson's allotment, had to be relinquished back to the state, according to the DCA.
Other governments could relinquished the funds were Morris, Monmouth, Hunterdon, Warren, Sussex, and Somerset counties, according to Ryan.
The state Economic Development Authority already has reallocated some of the money, including $10.58 million to Hudson County and $17.1 million to Camden County.