After citing ‘severe budgetary restrictions,’ Union City granted $6M loan from DCA

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Despite already receiving $20 million from the state in transitional aid, the New Jersey Department of Community Affairs granted the City of Union City a $6 million loan after Mayor Brian Stack claimed the municipality was facing “severe budgetary restrictions.”

By John Heinis/Hudson County View

“Severe budgetary restrictions have caused the city to only allocate funding for emergency or priority projects. Several project’s involving the city’s infrastructure have not been completed due to this financial constraints,” Stack said in an October 18th, 2018 email to then-Acting Director of DCA Division of Local Government Services Melanie Walter.

“If the city does not dedicate funding to these projects, emergency repairs will continue and result in a more costly expenditure for the city.”

Stack does not name any of the projects directly, but also notes that “an extraordinary amount of employees” became ill during last year’s flue season, with city insurance plans covering nearly $2.6 million in medical expenses between 15 different employees.

Eight months later, on May 16th, DCA Loan Approval Officer Cher Smith signed off on a six million loan that must be repaid in full in 90 calendar days, according to a copy of the agreement between Union City and the state.

The loan comes with no interest and can be repaid in “cash payments or reductions in future aid payments,” also stating that Union City must institute a non-essential spending freeze for the duration of the loan term.

Union City has already received $20 million in transitional aid this fiscal year, a type of financial assistance provided by the state.

The North Hudson municipality has been provided at least $8.7 million in transitional aid since 2010, according to public records.

Stack, who once called former Gov. Chris Christie (R) “the greatest governor we ever had” now also enjoys a cordial relationship with his successor, Phil Murphy (D).

Murphy came to a large-scale block party hosted by the mayor, also the state senator of the 33rd Legislative District, last month and was one of just a handful of non-Union City officials in attendance.

Additionally, less than two weeks ago, Stack and his two legislative running mates, Assembly members Raj Mukherji and Annette Chaparro, came out in support of Murphy’s proposed millionaire’s tax, despite the fact that the bill currently appears unlikely to be posted in either house.

DCA spokeswoman Tammori Petty said that Union City received the third most transitional aid in the state this year (behind Camden and Paterson), adding that it was not unusual for these municipalities to receive loans.

“The Transitional Aid Act permits treasury to issue cash flow loans to address particularized cash flow crises in Transitional Aid program participant municipalities for up to a year, with zero interest, repaid in cash or via a reduction in future aid,” she said in an email.

“These loans help bridge limited duration fiscal challenges that can arise during program participation. The City of Union City experienced a tax revenue timing challenge that necessitated a short-term loan to avoid a cash flow crisis. The short repayment period here reflects that.”

 

Editor’s Note: This story has been updated with a comment from DCA spokeswoman Tammori Petty.

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