UNION COUNTYBONDING

Real World Example

Annual expenses: $60,000Annual income: $50,000But……..You are allowed to borrow whatever amount you want to make up the deficit as long as you spend it on what are deemed long-term purchases.

Union County Example

Annual expenses: $530 millionAnnual income: $500 millionAnd……..$30 million is added onto debt every year to make up the difference.

Local Bond Law N.J.S.A. 40A:2-1 et seq.

40A:2-3. Power to incur indebtedness, borrow money, issue bonds Any local unit, by bond ordinance, may incur indebtedness, borrow money, authorize and issue negotiable obligations for financing:

Local Bond Law N.J.S.A. 40A:2-1 et seq.

a. any capital improvement or property which it may lawfully make or acquire; b. any purpose for which it is authorized or required by law to make an appropriation, except current expenses, as may be defined by rule and regulation of the Local Finance Board, and payment of obligations (other than those for temporary financing); or c. the amount of any contribution by a local unit that is a sending municipality under a regional contribution agreement pursuant to section 12 of P.L.1985, c.222 (C.52:27D-312).

Ordinances

Every bond expenditure needs to be tied back to an ordinance delineating what the bonds will pay for. Since 2006 (the earliest available records) the following ordinances have passed:

Bond Ordinances2006

Ordinance Amount Reason632-2006 $37,506,027 Various

Bond Ordinances2007

Ordinance Amount Reason

648-2007 $ 5,281,609 Restoration of Lakes

653-2007 $29,204,825 Various

Bond Ordinances2008

Ordinance Amount Reason

665-2008 $ 3,000,000 Ventieri Building Complex

669-2008 $26,164,000 Various + $20 million for new Vo-Tech building

670-2008 $ 1,900,000 Various

671-2008 $33,441,260 Various

Bond Ordinances2009

Ordinance Amount Reason

684-2009 $ 6,000,000 Stanford Drive Park – Berkeley Heights

687-2009 $43,371,808 Various

688-2009 $ 2,400,000 Child Advocacy Center

691-2009 $14,700,000 Bollwage Parking Garage

692-2009 $ 2,500,000 Bollwage Parking Garage

693-2009 $ 4,000,000 Oakwood Park Improvements – New Providence

695-2009 $ 500,000 Loan to UCIA – Solar Energy Program

Bond Ordinances2010

Ordinance Amount Reason

702-2010 $ 200,000 Bunkers for Galloping Hill Golf Course

713-2010 $43,892,019 Various

Bond Ordinances2011

Ordinance Amount Reason

723-2011 $49,557,455 Various

40A:2-22: Bonding Can Be For

a) Buildings and Structuresb) Marine Improvementsc) Additional Equipment and Machineryd) Real Propertye) Streets or Thoroughfaresf) Utilities and Municipal Systemsg) Vehicles and Apparatush) Closure of a Sanitary Landfill Facilityi) Prefunding of a claims account for environmental

liability

Buildings and Structures

1. Bridges, including retaining walls and approaches, or permanent structures of brick, stone, concrete or metal, or similar durable construction, 30 years.

2. Buildings, including the original furnishings and equipment therefor: Class A: A building, of which all walls, floors, partitions, stairs and roof are

wholly of incombustible material, except the window frames, doors, top flooring and wooden handrails on the stairs, 40 ;

Class B: A building, the outer walls of which are wholly of incombustible material, except the window frames and doors, 30;

Class C: A building which does not meet the requirements of Class A or Class B, 20 years. 3. Buildings or structures acquired substantially reconstructed or additions thereto, one-half the period fixed in this subsection for such buildings or structures. 4. Additional furnishings, five years.

Marine Improvements

1. Harbor improvements, docks or marine terminals, 40 years.

2. Dikes, bulkheads, jetties or similar devices of stone, concrete or metal, 15 years; of wood or partly of wood, 10 years.

Additional Equipment and Machinery

1. Additional or replacement equipment and machinery, 15 years.

2. Voting machines, 15 years. 3. Information technology and

telecommunications equipment, 7 years, except that for items with a unit cost of less than $5,000, 5 years.

Real Property

1. Acquisition for any public purpose of lands or riparian rights, or both, and the original dredging, grading, draining or planting thereof, 40 years.

2. Improvement of airport, cemetery, golf course, park, playground, 15 years.

3. Stadia of concrete or other incombustible materials, 20 years.

Streets or Thoroughfares

1. Elimination of grade crossings, 35 years. 2. Streets or roads, from 5 to 20 years.3. Sidewalks, curbs and gutters of stone,

concrete or brick, 10 years.

Utilities and Municipal Systems

1. Sewerage system, whether sanitary or storm water, water supply or distribution system, 40 years.

2. Electric light, power or gas systems, garbage, refuse or ashes incinerator or disposal plant, 25 years.

3. Communication and signal systems, 10 years. 4. House connections to publicly-owned gas, water or

sewerage systems from the service main in the street to the curb or property lines where not part of original installation, five years.

Vehicles and Apparatus

1. Fire engines, apparatus and equipment, when purchased new, but not fire equipment purchased separately, 10 years.

2. Automotive vehicles, including original apparatus and equipment (other than passenger cars and station wagons), when purchased new, five years.

3. Major repairs, reconditioning or overhaul of fire engines and apparatus, ambulances, rescue vehicles, and similar public safety vehicles (other than passenger cars and station wagons) which may reasonably be expected to extend for at least five years the period of usefulness thereof, five years.

Closure of a Sanitary Landfill Facility

The closure of a sanitary landfill facility utilized, owned or operated by a county or municipality, 15 years; provided that the closure has been approved by the Board of Public Utilities and the Department of Environmental Protection.

Prefunding of a claims account for environmental liability

The prefunding of a claims account for environmental liability claims by an environmental impairment liability insurance pool pursuant to P.L.1993, c.269 (C.40A:10-38.1 et al.), 20 years.

Culverts

underground duct: a covered channel that carries water or cabling under a road or railroad, or through an embankment.Of the $182,476,250 Bond Anticipation Note floated in 2010 $3,235,000 was specifically designated for fixing culverts based on ordinances passed in prior years.

Culvert OrdinancesOrdinance Date Amount Improvement Description

555-2002 8/22/02 $ 157,000 Replace Culverts

576-2003 5/29/03 $1,328,000 Bridge and Culvert Improvements

616-2005 8/18/05 $ 246,000 Culvert Repairs

632-2006 8/1/06 $ 554,000 Culvert Repairs

653-2007 8/23/07 $ 950,000 Culvert Repairs

How Was Culvert Money Spent

Was $3,235,000 what was actually spent to fix culverts in Union County? Were accurate records kept of culvert expenses?Based on past experience with the county keeping track of records…………………

MusicfestHow much do they spend exactly? We’ll never know. Why? Because the county employees and officials running the event and the concessionaires keep shoddy records — if they keep any records at all.In Union County, they use the “trust me” accounting method.

• How many cars parked at $10 a pop? We’re not sure, because the parking lot counter isn’t accurate, but trust me, the money is all there.• How many beers were sold at the Beer Garden?We’re not sure. We took the bartenders’ word, but trust me, the money is all there. • How much was made on the kiddie rides?There’s no method for counting the tickets, but trust me, it’s all there.

To which we reply: This is New Jersey. We trust no one with cash, and for good reason. For years, trying to follow the MusicFest money has been dizzying. Who knows how much could have been skimmed? So this year, the Union County Prosecutor’s Office decided to investigate. It found the bookkeeping was so lousy last year — and probably every year — that nobody can tell whether money was stolen. Receipts? Records? What are those?The prosecutor’s office found no criminal wrongdoing (because, ironically, there were few records), but discovered that a vendor nearly ripped off the county for $24,281.68. A refund has been ordered. If Union County — which spends roughly $800,000 to stage the event — lost this much in 2010, was it cheated out of money the other 13 years? And why didn’t a county official spot this?

Star Ledger editorial 9/1/11

Other Screw-Ups

OPEB calculations in audit Claiming a government insignia can be trademarkedRubber-room employees (Lapolla, Kolbeck,…)

What it looks like

Union County is running a structural deficit that they are hiding with additional debt justified on dodgy grounds.They need to get grants, set up trust funds, build unnecessary projects so as to can skim off a portion of the proceeds to pay operating expenses. That’s why they manufacture projects.

Projects

• Galloping Hill Clubhouse • Solar Panels• Bollwage Parking Garage• Family Courthouse• Child Advocacy Center• Ice Rinks in Oak Ridge Park• Replacing Culverts• Oakwood Park – New Providence