HOBOKEN — Mayor Dawn Zimmer of Hoboken is asking taxpayers to pay up to $5 million to help settle creditor’s bankruptcy claims against the city’s hospital and to ease its sale, according to memo issued today. The city has already agreed to forego $2 million it is owed by the hospital, and Zimmer said that while there is no...
The Hoboken University Medical Center is shown in this file photo. Mayor Dawn Zimmer wants taxpayers to pay up to $5 million to help settle creditor's bankruptcy claims against city hospital and facilitate its sale.HOBOKEN — Mayor Dawn Zimmer of Hoboken is asking taxpayers to pay up to $5 million to help settle creditor’s bankruptcy claims against the city’s hospital and to ease its sale, according to memo issued today.
The city has already agreed to forego $2 million it is owed by the hospital, and Zimmer said that while there is no guarantee the additional $5 million will satisfy creditors, it represents the administration’s last effort to keep Hoboken University Hospital from closing.
"I know this is an unusual approach, but given the enormous importance of this matter to our residents and taxpayers, I believe it is my obligation to present this to council in this manner," Zimmer said. "If either no bond ordinance receives six votes on first reading, or if the amount approved is ultimately not sufficient to reach an agreement, then the hospital will be forced to close, most probably by the end of October."
The mayor has five allies on the nine-member council, but she needs six votes to approve the bond issue.
The $5 million would represent the latest infusion of taxpayer money to the sale, which has divided the Hoboken community. A group of investors that owns the Bayonne Medical Center wants to buy the hospital for $65 million and turn it into a for-profit enterprise.
Gov. Chris Christie allowed an $11 million earmark to remain in his pared down 2012 budget to help pay the interest on $52 million in bonds that will be retired as part of the sale. Bayonne Medical Center has contributed $25,000 to Reform Jersey Now, an advocacy group with ties to Christie’s closest advisers.
In addition, before State Assemblyman Ruben Ramos (D-Hudson) sponsored the earmark, he received two $2,600 contributions from Lakshmi and Latmipathi Garipalli, a Colts Neck couple that had never before donated to his political career. They are the parents of Vivek Garipalli, a member of the prospective ownership group HUMC Holdco LLC.
Ramos has since contributed the money to charity.
The events leading to the bankruptcy and the sale have come under scrutiny in recent weeks as the hospital’s former attorney, Donald Scarinci, of the firm Scarinci & Hollenbeck, accused the city of forcing the institution into bankruptcy. Scarinci said the goal was to ensure the private ownership group gained possession of the hospital.
Sources with knowledge of the bankruptcy negotiations who were not authorized to speak publicly said creditors were seeking more than $10 million from Hoboken University Hospital as a part of a broad settlement that would allow for the sale of the cash-strapped facility.
The hospital has asked a bankruptcy judge for a settlement that would give creditors about $5 million of the $34 million owed, or 15 cents on the dollar. The hospital is also asking the court to block creditors from seeking more money from the city and the Hoboken Hospital Authority, which oversees it.
The creditors, from unions to medical vendors, said today they would agree to settle if the hospital came up with an additional $10 to $12 million to cover outstanding bills, according to the sources.
Councilwoman Beth Mason, who has criticized the handling of the sale, said she would consider issuing the bond if the prospective buyers agreed to a deed restriction — which is unlikely — that would ensure the site remains a hospital and that depositions of city officials be made public.
The group wants to buy the hospital for $65 million, and most of the proceeds from the sale will go toward paying off $52 million in bonds.
State Sen. Loretta Weinberg (D-Bergen), chairwoman of the Health, Human Services and Senior Citizens Committee, has asked the U.S. Attorney and the state Attorney General to investigate Scarinci’s accusations before the state approves a transfer of the hospital’s license.
A lawyer with the Hoboken Hospital Authority says critics are purposely mischaracterizing the events leading to the bankruptcy.
"Advice apparently was given to the hospital that it had an unlimited source of funding from the Authority and from the city." the attorney, Ken Rosen, said in an e-mail.
He said that "when the Authority members discovered the extent of the hospital’s losses," they directed it to "take appropriate measures to assure that expenses did not exceed revenue."