Occhipinti: No $63 million bill for Hoboken

Editor's note: The Hoboken City Council will vote Sunday on whether to grant a parking waiver to the company trying to purchase Hoboken University Medical Center, to allow the sale of the hospital to proceed. Six council members need to approve the measure, but in a recent vote, only five did so, putting the sale of the hospital in jeopardy. In this article, Councilman Tim Occipinti questions the sale. In a letter to the editor, posted on the Hoboken Patch front page, Dr. Jonathan M. Metsch argues in favor of the sale.

Mayor Dawn Zimmer is sending out the wrong message about the Hoboken University Medical Center deal, said Hoboken City Council Member Timothy Occhipinti. “Mayor Zimmer is intentionally setting a panic button,” he said.

The mayor has claimed that the city would have to pay $63 million in 60 days if the sale of the hospital to HUMC Holdco does not close. But Occhipinti said, “That isn’t true.” He said the bond holders bought the bonds with a 20-year return. Hoboken taxpayers have guaranteed their return, said Occhipinti, but if the hospital collapses, the bond holders are not going to ask for the lump sum of $63 million.

He said that if the Hoboken Municipal Hospital Authority defaults on its payments to the bond holders, Hoboken taxpayers are on the hook to pay them, but the city could pay in smaller amounts, as the authority would have. In the bond agreement, said Occhipinti, it states that the authority has to pay the bond holders about $4.5 million a year in two separate payments, and the next payment wouldn’t come due until Jan. 12, 2012. “It comes down to the fact that if the authority can’t make that payment and risks default, I am pretty sure the city of Hoboken can make that payment for them; therefore, they pay their bill and the bond holders are happy,” said Occhipinti. He added that if the authority is in good standing with the bond holders, the bond holders have no right to ask for all of the money. “There is no $63 million coming due,” said Occhipinti.

Occhipinti said that in general, he is not happy with what’s been negotiated. “The whole thing is a bad deal, from the hospital sale to the parking agreement,” he said. To make the deal better, he said he’d like to see a deed restriction mandating that the property be used as a hospital for at least seven years.

Occhipinti acknowledged that the deal the hospital authority negotiated with the buyer, HUMC Holdco, requires the facility operate as a hospital for seven years. But, he said, if HUMC Holdco starts operating at a loss, he believes it could close the hospital before the seven years are up. Occhipinti said it’s optimistic to think the hospital could stay open another seven years anyway. “It’s been operating at a loss,” he said. “It’s getting better, but it is still operating at a loss.” And if HUMC Holdco has to close the hospital, said Occhipinti, he’s afraid a developer might obtain the land and build condos, with the bonus of the parking agreement tied to the hospital.

The parking agreement, said Occhipinti, should also be restricted in that it should only be in effect if the property is operating as a hospital. He added that if a developer has the benefit of parking at the Midtown Garage next to the property, the developer might find a way to get around having to provide parking underneath any residential units the developer builds on the site.

Occhipinti also said he just doesn’t trust the Alabama-based company, Medical Properties Trust, that is helping HUMC Holdco make the purchase. “These guys are in this for the real estate value,” said Occhipinti. “This is about real estate.” He added that MPT is pushing for the immediate enforcement of the parking agreement because the company doesn’t want there to be any time to petition. “They want to waive those 20 days, basically ripping the public’s right to petition against the law and put [the parking agreement] into effect immediately,” said Occhipinti. He added that he would rather see a non-profit buy the hospital.

Though he was one of the four Council members who voted against the parking agreement last week, Occhipinti said he is still thinking about his vote for Sunday’s Council meeting. “I am considering everything,” he said.