OLD BRIDGE TOWNSHIP COUNCIL
AGENDA MEETING
March 15, 2004
An Agenda Meeting of the Township Council of the Township of Old Bridge was held on Monday, March 15, 2004 at 8:00 p.m., in the Municipal Complex. The meeting was called to order by President Baker who invited all in attendance to participate in a salute to the flag which was followed by a short prayer.
Deputy Clerk Stella Ward announced that the meeting was being held in conformance with the Open Public Meetings Act and was published in the newspaper. Roll call by Deputy Ward showed the following answering present: Councilmen Butler, Gillespie, Greene, Testino,
Volkert, President Baker. Councilman Calogera and Councilwoman Panos were absent from the podium. Councilman Maher was absent.
Approval of Minutes
February 21, 2004 – Special & Executive Session
Ordinance for Second Reading
ORD.#05-04 - Bond Ordinance providing for the refunding of the Township's outstanding Callable: (1) General Obligation Refunding Bonds, Series 1996, dated February 1, 1996; (II) General Improvement Bonds, Series 1996, dated March 1, 1996.
ORD.#06-04 - Ordinance establishing rules for carry over of accumulated sick time for promotion or transfer from a collective bargaining unit to a non-union status.
No Discussion
Ordinance for First Reading
FR-1 Introduction of Salary Ordinance – Department Heads
Attorney Convery: I would just like to note that this was on the previous agenda, but we pulled it in order to add the Clerk to the list so that it can all be done at one time. There are some other minor corrections, but it is substantially the same,
Discussion Ordinance
DO-1 Ordinance rezoning certain properties and establishing a Planned Retirement Community (PRC) Zoning District in Old Bridge Township.
John Vincenti, Township Engineer: Last year the Council asked us to retain a planning consultant to evaluate implementing or establishing a Planned Retirement Community Zone. Over the last four months we have had a number of meetings with them and they have made various recommendations on properties throughout the township and this is their recommended first area. This will zone four parcels in town, three of which were previously dealt with by the Zoning Board. This is recognition of some use variances granted for age restricted communities. The fourth parcel lies in the Ferry Road area and is approximately 100 acres of land currently zoned as R12, which is single family residential zone that allows a density of up to 3 units per acre. Our Master Plan recommends that be shifted into an R15 zoning district that would allow up to 2.4 units per acre. The draft ordinance that you have in front of you would allow only age restricted residential development at a maximum density of 1.75 units per acre. We feel this is in accordance with the 2000 Master Plan reexamination report, and should be considered by the Council for adoption.
President Baker: This is the type of smart growth we have been talking about for years.
John Vincenti: I think that when people talk about various land use issues, they deal with different type of ratables attracting appropriate ones and minimizing school age children impacts and traffic. Compared to what would be allowed on this property to what we envision being allowed with this new zoning, it is going to cut down on traffic, increase the ratable and certainly decrease the number of school age children attending the schools, it addresses all three of the major concerns.
Attorney Convery: What would happen is you would have an ordinance for first reading which will show a change to the official zoning map of the township that will designate these four areas for PRC Zone. The ones that previously got a use variance and whatever granted, is already vested, but we would be showing a planned retirement community on our zoning map. As far as the proposed ordinance, I have reviewed it and gone over it with John and Sam, and I think it is a very good job of setting out the specifications for a PRC Zone and it is much better to have an ordinance than to have everyone come before the Zoning Board seeking to do a PRC, where there are no standards. I strongly recommend this and the sooner you do it the better.
Councilman Greene: We have the one map for the new proposed area, do you have maps of the other three?
John Vincenti: I intend on having a full size zoning map prepared for the Council prior to Monday's meeting. Just so you know, the three prior properties that we are referring to are the Birch Hill site, the Pheasant Park site on Spring Valley Road and the property on Jake Brown Road, next to Mannino Park.
Councilman Greene: Who owns the fourth parcel?
John Vincenti: Right now it is owned by Monroe Bowne and there is currently an application before the Planning Board on this parcel.
Councilman Greene: For senior housing?
John Vincenti: No, for single family housing.
Councilman Greene: So you would turn this application down?
John Vincenti: We would encourage an alternate development on that property.
Mayor Phillips: I thought this PRC was just going to apply to Ferry Road, but you are rolling in the other two that have been approved for this purpose already.
Attorney Convery: What that will do is show that they are going to be PRC's which will be shown on the official map and in the future if anyone requests any changes regarding a PRC, it will a PRC zone but they have vested any rights they have obtained by way of a use variance.
Mayor Phillips: I was able to meet with Sam Rizzo tonight and I am not sure whether everyone here is privy to this, but let me give you some statistics regarding if this property were developed as currently zoned or as it is going to be zoned. The way it is currently zone it is anticipated 252 residents; the proposed development will be 292 residents. The number of school age children as proposed is 56; the number going forward would be zero. The municipal tax revenue under the old system would be $144,000; under the new system it will be $297,000.
The school revenues under the old system $427,000; under the new system $882,000. School costs under the old system would be $352,000; under the new system zero. I think this a smart growth concept, time will tell, but certainly is something different and puts us in line with what other communities are doing in trying to control growth. It does add revenue to the township without necessarily adding expense you would have with residential housing. I would urge the Council to look at this favorably.
Councilman Testino: I certainly support the concept, but I was wondering with the recreational usage, it seems a little light to me. I thought we were going to require something more in depth in terms of recreational components as part of the planned adult retirement community package or is there going to be another ordinance down the road with more in-depth, will there be two different phases on this, because I don't think this covers nearly all the open space that could be developed.
John Vincenti: You are absolutely correct. We envision a number of sizes of communities. One I would consider a large scale, another a small scale and this one is a medium size; long term, I think we would have up to three PRC zones. As these developments represent a certain number of units, there are appropriate amount of recreational amenities within the development. On the side of the very large development, there could be included a golf course, a recreation center, some of the rec. centers in Ocean County are over 35,000 square feet. It depends on the size of the development itself as to what recreational amenities are included. On the smaller scale developments, 150 units, what we would envision here is a relatively modest recreation building with an outdoor pool, tennis court, bocce court and some walking trails. Unfortunately, the income that you generate on your monthly fee by the residents here will only support so much in the way of common elements. So, with regard to this development we are probably talking about a 6,000 square foot building.
Councilman Testino: Does this component allow for some creativity by the builders?
Attorney Convery: This particular ordinance after consultation with our consultants, this one is close to Monroe which has a minimum site of 55 acres, so as John has said you have to factor this into a smaller PRC to be able to carry the recreational program Again, the Planning Board will have the opportunity to see how large the development will be and to work with the developer to see that the recreational facility is adequate. Most of these developers use the club house and the swimming pool as a way of attracting people into the development and it is a big selling point. These are the minimum requirements, and there is no reason why the Planning Board and the developer could not come up with a better program and if we go to a larger PRC, we would include other amenities. This is a good starting point, but it is up to the Planning Board to look at the overall plans for the club house and the recreation package and approve it.
Councilman Testino: The open space requirement is 60%, if they seek less will it require a variance?
Attorney Convery: Yes.
Councilman Testino: We are anticipating clustering with 60% open space and 50 foot buffer, is that correct?
John Vincenti: We are anticipating a 50 foot buffer, which is in line with our current ordinance.
Councilman Testino: We are trying to maintain the nature of Old Bridge by requiring wooded areas, open space and perimeters around the developments. The rest of how it will look will be left in the purview of the Planning Board.
John Vincenti: If you compare the buffer requirement as it currently stand, that is a residentially zoned property and there is no buffer requirement. So if a plan were submitted today under the current zoning, there is no requirement to buffer residential vs. residential and we are increasing that buffer by this new zone.
Councilman Testino: I did not see anything about a gated community and whether it is required, but I guess the developer will have an option on this when it comes before the Planning Board.
John Vincenti: Yes.
Councilman Testino: I think that feature of security sells well. I know that there have been some missteps with presentations of gated communities in Old Bridge, I just want to make sure that when the buyer comes forward they know that there will either be security or not. We know that there are some developments that have guard sheds, but no guard.
John Vincenti: The way that I will address that is if it one of the selling points to get a project approved, the board will generally make that a condition of approval. After that there is a sales area map ordinance that is enforced and those types of items should be included in the sales literature.
Councilman Testino: I think that down on Laurence Parkway somebody missed the ball and they did not get what they thought they were getting. All I am saying is that the amenities they are promising should be delivered so that we don't get citizen complaints.
Councilwoman Panos: I am looking at the parking spaces, it states they should be 10 feet wide. Aren't handicapped spaced supposed to be 13 feet wide?
John Vincenti: According to the Americans With Disabilities Act, those accessible spaces are supposed to be 8 feet with a 5 foot aisle, if it is a van accessible space; and if it is not then the aisle would be 3 feet wide and the parking requirements will comply with both in all the ordinances.
Councilman Volkert: Are there two spaces for each dwelling unit, one of which may be an enclosed garage? With regard to Bridgepointe, that was originally the way it was supposed to be, but the streets were made narrower so you cannot really park on the street and most homes have two cars.
John Vincenti: What governs the parking in a residential development is the State Residential Site Improvements. Essentially our Zoning and Planning Boards and the Council have no say on parking requirements. The State has come in and superceded local authority on a number of issues, one of which is parking. The citation of parking in the ordinance are in accordance with the Residential Site Improvement Standards. I will say that when you compare Bridgepointe to the standards, that development would not comply if it were to be approved today. The roads are too narrow, they should be a minimum of 28 feet wide, and they are only 24 feet wide, the number of parking spaces that you have there, one garage space and one driveway space. When Rondinelli originally had it approved, he had very few visitor or service parking spaces. I know when Kara came in with their approval, they got more parking than what was originally proposed and also their parking exceeds the standards. The problem that you are seeing is the storage. The units are lacking sufficient storage and the people are using the garage spaces for storage.
President Baker: The numbers here are staggering, we will not have 252 units, but rather 292 units with no schoolchildren. My compliments to everyone involved, hopefully it is the first of many steps that Old Bridge will take as promised for the smart growth and helping the Board of Education control their costs.
Consent Agenda
Bingo/Raffle BA25-04A Jewish Community Center of Madison Township
BA26-04A Jewish Community Center of Madison Township
RA51-04, RA52-04 – St. Bernadette Church
RA53-04, RA54-04 – Dare, New Jersey
RA55-04 – Knights of Columbus #8478
Discussion Resolutions
DR-1 Payment of Accumulated Time (Retirement) to Ronald Concannon in the amount of $7,120.36.
Councilman Calogera: I have some questions about this, but I am hesitant because maybe it should be discussed in Executive Session as I am not sure I can ask questions in an open public meeting.
President Baker: We can have a legal interpretation, but I believe the gentleman is entitled to his money.
Attorney Convery: It is my understanding that he retired and that his retirement was accepted by the Pension Fund and he retired from the township and it too was accepted by the fund and under our ordinances, he is entitled to whatever the finance department verifies in the amount in question.
DR-2 Payment of Jerome J. Convery, Esq. as Zoning Board Attorney for January 2004 and one meeting in February, 2004 – in the amount of $2,812.50
No Discussion
DR-3 Extension of Professional Services Contract for legal representation for the Old Bridge Zoning Board by Jerome Convery, Esq. (Nunc Pro Tunc) in the amount of $425.00 for Jerald Development vs. Old Bridge Zoning Board
No Discussion
DR-4 Resolution authorizing preparation and distribution of offering documents in Connection with the sale of General Obligation Refunding Bonds, Series 2004
No Discussion
DR-5 Resolution authorizing contract for ERM Engineering Firm for Environmental Studies in connection with the settlement of Sommer vs. Old Bridge Township (going to be substantially funded by the monies certified in settlement which
we negotiated)
Councilman Testino: I thought we were holding fast on this, who is certifying the funds?
Attorney Convery: This is a matter from the settlement of Sommer vs. Old Bridge Township. ERM Engineering specifically Tom Griffin is the one who has been doing the engineering background information on this. He is highly recommended by the township attorneys who are defending this matter. Certain engineering tests are required such as Phase I and Phase II. He would see to it that it was done in a timely fashion. It is substantially funded by the monies in the settlement. It is my understanding that the township is responsible for 15% of the cost of the Phase I and Phase II studies. The estimate and it is only an estimate, is that it will cost approximately $305,000 total, so the township would have to pay 15% and the balance would be paid by the settlement fund. I would strongly recommend that you continue with this firm because they have been on the case and they do come recommended. Our engineer has received a copy of the resume and the brochure and I don't think he has had an opportunity to look much further into it, but this is an international company and it would appear they are the best people to go forward with at this time.
Councilman Testino: I did not hear if the funds are certified yet.
Himanshu Shah: What we have planned is because this is being funded through the insurance company and our exposure is 15% of the total cost, we are not certifying funds directly from the township at this time. We are going to recommend that they use the money through the deposit from the insurance company and hopefully sometime in May or June, we will transfer the balance and next year we will make available the money that our share of the total amount will be for the cost of these services. You need to authorize this in order for them to use the insurance company's deposit towards this settlement.
Councilman Testino: Who holds this money?
Attorney Convery: The final papers have not been provided to the judge. Upon all papers being presented, the insurance companies together will deposit just over six million dollars into what is designated the Old Bridge Settlement Fund. That fund will be administered by one of the lead insurance companies USF&G, which is now part of St. Paul and it will be reviewed regularly by the attorneys Kenney & Kearny who are defending the Township of Old Bridge.
Councilman Testino: Doe that mean if the settlement papers don't get signed that Old Bridge is not liable for any cost expended here?
Attorney Convery: No work will be done by ERM until the trigger mechanism, which is that the judge has acknowledged all the documents have been signed and that allows for ERM to begin their work. Unless and until all the documents are signed and received by the judge no work will be done. This just authorizes a contract with them and they are not expecting any money up front from the Township of Old Bridge, but we need to be able to show the court that we are going forward with what was agreed upon.
Councilman Testino: I still don't understand this. What is the real size of this engineering contract because it does not seem to me that $305,000 is the end and I think that we could be voting on something that could be upwards of one million dollars.
Attorney Convery: We will provide you with a copy of the contract from ERM and I will also copy a portion of the settlement document that shows that the township is responsible for 15% of the Phase I, Phase II.
Councilman Testino: Aren't we really backing into the ultimate clean-up of the property when we have someone start at this end?
Himanshu Shah: Phase I and Phase II are required in order for us to agree to the final settlement and clean-up and Phase I and Phase II are supposed to tell us how much it will cost for the clean-up. At that point, if we decide not to go forward with this, we do not have to go forward, at least this my understanding.
Councilman Testino: How do we get off these engineers if we buy the property?
Attorney Convery: There are many phases before we ever get to that. Regarding Phase I and the Phase II, if the results of those tests are such that the place is much worse than had been anticipated, and all parties agree that the proposed settlement would not allow for a clean-up, the settlement is set aside. Furthermore, after those tests are done, the information is provided to insurance companies to get environmental insurance for the clean-up. If no insurance company will agree to provide the insurance for the clean-up, the settlement is set aside. So there are stages that have to be done. This is one of the initial stages to get an engineering firm to do both phases and to say what the status of the property may be. Without that no further determinations can be made. The township would never buy the property until after both phases are complete and all other DEP requirements are satisfied plus there would have to be environmental insurance in place and we would have to be satisfied that the insurance would cover the clean-up. Only at that stage would the township go forward with the purchase.
Councilman Testino: I understand all that, but what I don't understand is that I think we are buying into a lifetime arrangement with these engineers and I don't think we will be getting away from them after the Phase II study. Once the insurance companies discover and based on whatever fix determine based on these reports, they are going to want these guys to live it out.
Attorney Convery: That is true but we don't pay them. At that point we only pay for 15% of Phase I and Phase II. At the end of Phase II, you are either going to continue with the settlement or not. If we continue you do not pay, they are paid out of the fund.
Councilman Testino: I just don't get a “warm, fuzzy” feeling about this.
Mayor Phillips: I just would like to add that you should have not had this feeling when you agreed to the settlement.
President Baker: On November 23, 2003, we agreed to this and this is the next step going forward, the township is only into it for “x” amount of dollars and then we have a parachute to get out. I am quite comfortable going forward with this and that this is in the best interest of the township.
Mayor Phillips: Just for the record, counsel, would you explain to the Council who has to sign this document.
Attorney Convery: Under normal circumstances, any and all documents are signed by the Mayor and witnessed by the Clerk.
Mayor Phillips: Considering I am not going to sign this one, what will happen?
Attorney Convery: I will have to research that and get back to you.
DR-6 Resolutions authorizing the cancellation of real estates taxes for two (2) In Rem Foreclosed properties; Block 1003, Lot 40 in the amount of $4,542.99 and Block 13003, Lot 23.12 in the amount of $1,159.17 for a total of $5,702.16
No Discussion
DR-7 Resolution of needs for N.J.H.M.F.A. – Funding (Old Bridge Special Needs)
No Discussion
DR-8 Resolution authorizing Balanced Housing Home Express Application (Old Bridge Special Needs) No Discussion
DR-9 Resolution authorizing payment in lieu of taxes agreement (Old Bridge Special Needs)
No Discussion
DR-10 Resolution adopting the Amended Neighborhood Plan (Old Bridge Special Needs)
No Discussion
DR-11 Award of Contract – Park's Riding Mower – Millbrook Power & Marine Equipment Co., (Replacement through insurance reimbursement in the amount of $9,373.10 for large deck mower stolen from Parks/Public Works Yard.
No Discussion
DR-12 Payment of Accumulated Time for Retirement of Lt. Kasey Lenning in the amount of $63,465.24
No Discussion
DR-13 Cancellation of Bond Coupon Account unreconciled general ledger balance in the amount of $27,785.00
No Discussion
DR-14 Resolution authorizing an emergency Purchase from Large Doc Solutions in the amount of $6,000.00 for scanning of records.
No Discussion
DR-15 Change Order #2 Nunc Pro Tunc for Blaise Batko for the 9-11 Memorial Monument in the amount of $6,500 (Funded from Donation Account)
No Discussion
Councilman Testino: I was told last week that this change order resulted from a structural need and this week I read in the memo that it is for aesthetic reasons approved by Mayor Cannon.
Himanshu Shah: I met with Mr. Batko and in the conversation with Diane Amabile who was involved with Mayor Cannon at the time, some of the information passed on previously was either misunderstood. In speaking with Mr. Batko he explained the size of the stone that was put in was changed to make it aesthetically correct and acceptable to the committee. There was some problem with the paperwork which due to the retirement of the engineer caused payment to be delayed.
Councilman Testino: I don't accept the explanation and I will not be supporting this.
DR-16 Resolution authorizing contract with William Ruggierio, Esq., regarding William Cerra vs. Barbara Cannon, Appellate File in the amount not to exceed $5,000.00 with further authorization.
No Discussion
DR-17 Resolution authorizing Subordination of CDBG Mortgage for James Horner (Blk. 18060 Lt. 23) to Penn Federal Savings
No Discussion
DR-18 Resolution approving municipal employee's insurance benefits relating to Domestic Partnership Act
Prior to the motion the following discussion took place.
Councilman Gillespie: In looking at the resolution before us tonight it appears this is a boiler plate resolution that we probably got from another town, and it specifically references the State Health Benefits Program, which we do not participate in, so I don't know if this is correct. After going through this and looking at it, I don't think that we are really ready to do this yet. I know there is support here to do it, but I don't believe that we are ready, I think that we have a couple of issues that we have to work through. Certainly, this resolution is not in proper form and I don't know that we are really in a position to vote on this as of yet.
President Baker: Can you put your opposition into a question form for the attorney?
Councilman Gillespie: There are several items here the first one being that we are referring to the State program, a program that we do not participate in and points out that this boiler plate is not a “one size fits all”. Secondly, in paragraph #4, we are creating an expectation of benefits that is going to bind us with our employees, when we already have on record a letter from one of our insurance carriers telling us that they are not going to provide this coverage. To me that creates a problem of unequal treatment, we will have people in one bargaining unit treated separately from those in another and that does not even address the cost. Thirdly, the problem with this resolution, is that we do not have any administrative procedure about verifying that someone has a bona fide domestic partner agreement executed. Nor, is there any way for us on an ongoing basis to be sure that the domestic partnership agreement is still valid. At the very minimum we need to have some administrative procedure to verify that the person that we are going to cover is an eligible recipient of these benefits. So, I see a whole host of problems with this and the other question is what is this going to cost us. Based on the material that I have seen I could give you an estimate, but it would be better coming from administration.
Attorney Convery: This was discussed within the administration, Marsha Rosenbaum on behalf of the township wrote to our plans and got a reply letter from Blue Cross/Blue Shield, where they estimate that it will cost approximately $31,000.00 in additional premium to add coverage for domestic partners. Frankly, I read this and previously it was going to be $34,000.00 and this does not answer the question of why the premium is $31,000.00. I have said to Marsha that we should look into this and see whether or not this is happening at other municipalities and what is the State's position regarding any increase in Blue Cross/Blue Shield. I would agree that there is an outstanding question as to why the township would have to pay this cost. The second issue is that the Teamsters Local Union #469, which also provides benefits has clearly indicated by letter, that they do not intend and that they do not have to offer benefits through their plan for domestic partnerships. This information was just received, and I would agree that there are some outstanding questions as to coverage as well as the cost of same that should be looked at before a decision is made. As far as proving someone is in a domestic partnership relationship, I think the State laws is going to cover that and whether or not people sever their relationships that will also be covered by State law, but that will not go into effect until July 12th .
Councilman Gillespie: The problem with doing this under this sort of a boiler plate resolution, is that obviously this was intended for a community that participates in the State Health Benefits Plan, which we do not for a lot of good reasons. In the State plan you do not bust out your coverage based on your bargaining unit, you get one bill, and you pay a lot more than we are paying now for health benefits coverage. You are also very limited in terms of what you can negotiate in terms of your coverage. I am not endorsing the idea that we go join State Health Benefits, however, it seems clear that this resolution was written for a municipality that participates in this program. We are not under any sort of a state mandate in which to do this and while I believe we should do it leaves us a lot of flexibility in terms of how and what cost is going to impose on the taxpayers. I don't know that we should proceed forward without having those issues answered. We have a letter back from two of our insurance carriers and I understand that there are four more we have not heard from and if you apply the cost based on Horizon to the other carriers, and we have to operate on the assumption that this is not just for one person. We have to assume that it could be one person from each of our bargaining units, and if that is the case, what is it going to cost? If the other costs are similar to the one from Blue Cross/Blue Shield, then the cost could be substantial.
President Baker: We are not under any gun this evening to pass this resolution. We put it on here to discuss it and this something that we must cross the “t's” and dot the “i's” going forward. Let's continue the discussion and see if we can get some answers.
Councilman Calogera: I agree with Patrick and I think that he stated the case eloquently. I think that we table this for the time being until we get more information.
Councilman Greene: I know that we discussed this at the last meeting and I just want to know who put this on for this evening, there are not initials next to it.
President Baker: I did it.
Councilman Greene: I just want to add my voice that I would like to hear from all the insurance companies regarding the medical as well as if there is any additional costs for the other fringe benefits such as dental, eyeglasses and prescriptions. I want to get a full picture as to what this is going to cost, because I believe that it will be an expensive proposition for the township, and I am not going to support this.
President Baker: It my hope and understanding that a lot of these unanswered questions would be answered tonight and if not tonight, by next Monday. If we are looking to remove it we can and then continue with a discussion.
Councilman Calogera: Once again, I just don't think we can move forward with this at this time and I think it should be tabled.
Councilman Volkert: I asked the attorney last week if this had to be done through a resolution or could it be done through negotiations, it is taxpayer dollars and I don't think it should be done by resolution but rather negotiated with the unions and let them put it forward and then get a neutral cost by them giving something back in return for this. It is something to think about and I wonder if the attorney has looked it up yet.
Attorney Convery: State law indicates that if you choose to extend the benefits as a municipality to the domestic partners, it is done by resolution, but I don't think that means that you cannot look into the issue of negotiations with the unions regarding the issue. I think that you would probably need more information regarding the costs and other benefits before I would recommend to this Council that we take action on this.
Himanshu Shah: Just to add to that, I believe in the memo that Marsha sent you a survey was done with other municipalities and some are considering it in negotiations with their bargaining units regarding this benefit.
President Baker: This does not become a law until July 12th, I have not heard much dialogue up here saying that they cannot endorse this if it is prepared and written correctly, so I think we will go with Kevin's motion until we get more homework done.
MOTION
Motion to table this resolution made by Councilman Calogera, seconded by Councilman Greene and so moved on the following roll call vote.
AYES: Councilmen Butler, Calogera, Gillespie, Greene, Testino, Volkert, Councilwoman Panos.
NAYS: President Baker.
ABSENT: Councilman Maher
Mayor Phillips: Just as a suggestion, I hear a lot of people saying that they don't know certain answers. We in the past have put together sub-committees so we can become more informed. I know that Marsha is going to work on this as hard as she can, but if there are three of you up there that would like to volunteer and form a sub group on this to get more information before it comes back to the Council, I would like administration to be as prepared as possible. I would be willing to work with this sub group of the Council to address this issue.
Councilman Gillespie: I would be willing to be on this committee.
Councilman Butler: I will work on it.
President Baker: If we need a third person I will volunteer.
Mayor Phillips: Hopefully, the three of you will come up with some questions for Marsha based on your sentiments and we will try to get as many answers as possible from the various insurance companies. My guess is that many of these insurance companies are not responding because they do not know how to respond. I think that we have time and that I agree with the Council that you should make an intelligent informative decision.
Councilwoman Panos: Do we have a broker?
President Baker: We do, Bruce Kaplan.
DR-19 Resolution entering into a Professional Services Agreement with CME Associates in the Amount of $2,600 for the preparation of Phase I Environmental Report for Nike Site. Evaluation Block 7000, Lots 4.14 and 4.15.
No Discussion
DR-20 Rescind Resolution #171-04 Release of Performance Guarantee Park's Edge wording incorrect, time frame missing and adopting corrected resolution.
No Discussion
President Baker opened this portion to the public. Seeing no hands, he closed the public portion.
Presentation
Gene Farrell – Auditor
Mr. Farrell: Basically, we have completed our audit of the township for the period ending June 30, 2003. We filed the report and I was asked to make a presentation before the governing body and respond to any questions that you might have as related to the audit. As I stated in the past the important things that you look for in the Auditor's Report is the auditor's opinion, the management letter comments and the financial condition. Our opinion is unqualified which is the highest level an auditor can lend as it relates to the financial statements. In this year's audit report there is no management letter comments and that is basically a credit to your administration, Himanshu Shah and Natasha. We went through an exercise in total as it relates to the collection of cash receipts, which is something of a positive note. Your ratings are good with regard to the financial position of the township. You increased your fund balance from 6.7 million to 8.6 million, but you have to take into consideration that last year you had $1.254,000. 00 in emergencies which was basically raised in the subsequent year's budget. Your percentage of collection is very high 99%. The word of caution that I bring you is that if you really take a look as the results of operation, you make a tremendous amount of money here as it relates to your added omitted taxes, which is in excess of 2 million dollars and that is the direct result of the growth that the township is experiencing. We are in a period right now which is very comparable to what happened in the 1980's. There was a bubble in the real estate market and we experienced significant tax appeals and that is why I want to caution you. The other thing that you should be aware of is as a result of what happened with Enron and World Com, the level of standards has been increased, plus there is a new auditing standard which just came out and deals with the level of fraud awareness. It defines the responsibilities that an auditor has as well as the responsibility that you have as a client.
What we have been doing is making recommendations to our clients to basically incorporate something in their management policies manual as it relates to educating the personnel within the township on the issues of fraud awareness. That is a very critical thing right now especially in the overall economy. Basically what this does is in the past if you followed all of these cases, the majority of people that were involved in management, their primary defense was that they were unaware of these events that were taking place. With the implementation and new standards by GAO and new auditing standards, that no longer is a conceivable defense, so this something that I encourage the township to do.
Himanshu Shah: Gene and I had a preliminary discussion and hopefully there is going to be more information through our professional organizations as how to proceed with training and implementation of this fraud protection. We will be coming forward to the Council if we need your approval or it may be done administratively.
Gene Farrell: Basically that is the overall picture. It is a very good situation when an auditor has no management letter comments and hopefully you have a very strong balance sheet which is evidenced by the bond ratings that you have been getting. You don't have excessive debt here and I would be glad to entertain any questions that you might have.
Councilman Gillespie: What are you basing the “bubble” on because I have heard conflicting things about this and whether or not this factor is in the picture.
Gene Farrell: It is inevitable because it is basically that if I had the ability to forecast exactly when the markets would turn, I would not be here. If you take a look at all the indicators right now what is driving the real estate market is the low interest rates. These rates cannot be sustained forever, so in some period of time the rates will be increased and changes will take place.
Councilman Gillespie: Have we seen any uptake in the numbers because in the early 90's one of the things we got hit with was the number of tax appeals.
Gene Farrell: The trend that you have to be very careful with is that you have some very large commercial ratables now along that Rt. 9 corridor and one of the things that I suggest is that EDC have a level of communication with these entities so that you don't have a situation like what happened in Edison where you have the majority of your large commercial ratables moving, that is the most devastating thing that you could have happen. The other thing is as you alluded to before is you want to become more diverse. Primarily we are a “bedroom” community and we want to move and get clean ratables. Interestingly enough I had a meeting with a community in Ocean County and they are the second highest community in the State as it relates to ratable value and there are no corporate campuses in Dover Township. Their wealth is coming from a hospital, big infusion of senior housing and what is happening is they have augmented each other in that area of growth and that is the kind of ratable that you want to bring to the township.
Councilman Gillespie: When do we expect to get our next set of financial's?
Himanshu Shah: Before I answer that I can tell you one thing, Gene mentioned a large increase in ratables. If you talk to Brian Enright as of January 1st the increase in our total ratables was a lot less than what was last year, so that one indication. The second indicator is because of the new State statute where he does not maintain the ratio, the gap is growing, and as a result he will see some appeals from the apartment complexes, and this is what he anticipates. So we are not sure what is going to happen, April 15th is the deadline and we should know after that what the status is. Another area of concern is the collection rate, which is 99% the highest it could ever be. That is a concern because we have a lot of refinancing and I don't want to totally rely on that collection rate because once the refinancing stops, the picture could quickly change for us. I think we are still in a good financial position and we have been on top of some of the issues. We have already started working on next year's budget, I do not want to overly caution you on any of those things. We will give you the unaudited financial statements the first or second week of July and then budget and so on. The audited financial statements will not be ready until September thru December period.
Councilman Butler: I want to thank Mr. Shah, Natasha and all the financial people for the great job they are doing and I also want to thank you, Mr. Farrell for being here with us this evening. In reference to the investments of the extra cash we have will you confirm that Mr. Shah and the finance department are doing a good job?
Mr. Farrell: You aggressively invest the money, but unfortunately the rate of return on your investments is nominal dollar amount. When you are a community like this and you have a tremendous amount of growth, for the most part it is all new homes and those homes are all predicated upon mortgages so the banks are going to protect their money and make sure that the real estate taxes are paid. The only real devastating impact that you have is the large commercial ratables that could move out or close down.
Councilman Butler: Do you see any trouble spots on the horizon?
Mr. Farrell: The only thing and this is from a perspective as an auditor, we don't validate every single transaction, we validate the material events that are taking place in the township. Insofar as what I mentioned before fraud awareness, that is really the critical issue.
Councilman Butler: We have had a problem for years regarding the liability in reference to our employees. We started doing things differently a few years ago and do you feel it is going the way it should in reference to keeping our liabilities down?
Mr. Farrell: It is a significant thing, because if you take a look at the fringe benefits, you have to look at your budget and the cost drive incorporated within the budget. You still have significant increases in the areas of insurance, pensions and you have double digit increases on your health insurance, which is a very significant factor within your operating budget.
Councilman Greene: Mr. Shah you mentioned that we may see some appeals from the apartment complexes, could you give an explanation?
Himanshu Shah: That was the comment that I received from our tax assessor. Basically, it is because the ratio of our market vs. assessed value is going down. It used to be 100% market of assessed value and the law changed and it is limited to what you can do in that regard and the market value has continued to grow in residential and as a result the ratio has increased and that is one of reasons he feels that he may expect appeals from the apartments.
Councilman Greene: Does it have anything to do with the rent stabilization?
Himanshu Shah: It does play a role because we have limited rent increase and even though the value is going up, the apartments are basically on income basis.
Councilman Greene: One of the important things that the bond rating outfits focused on last year was the reserve, do you feel that you are going to have any problem in maintaining a reserve which is suitable?
Himanshu Shah: We always cautiously look at that issue and I know that Council made a commitment to the rating agency and that is one of the reasons that we recommended and Council agreed to increasing our reserve balance. That is one of our goals to increase some level of the reserve balance so that our rating is not affected. It all depends on what happens to our bottom line. If we come to you with a large increase in the tax rate, and we have a large reserve balance that may be questionable at that point. As long as we can maintain a reasonable tax rate we will recommend increasing that reserve balance and continue to maintain our commitment to the rating agency. At this point, it is a little early in the game for me to predict because our revenue and collection rate really play a major role in that.
Councilman Testino: I am not clear on that SASS 99: does the Council have to put a policy into place?
Mr. Farrell: As stated the thing that you want to do is inform people, because before there was always a defense as it relates to people who claim that they were unaware. There has been quite a bit of literature and articles related to this issue of fraud. It is not only in the private sector, but also in the governmental arena. Our suggestion to our clients is to have a meeting with the levels of management and discuss the areas of potential issues as it pertains to fraud, but the thing that we are recommending is to incorporate something right into your policies and procedures manual that addresses this issue. Also, you might have a session with your employees and have them sign off that they have read these things.
Councilman Testino: Could you provide us with an example of this policy?
Mr. Farrell: I could do that. My suggestion is that we work through Himanshu on this and have a committee to discuss the issues.
Councilman Testino: With regard to our audit, you reviewed our accounting control and are there any procedures that you are recommending changing or increasing?
Mr. Farrell: Part of our responsibilities is to take a look at the overall internal control environment and if there are any deficiencies within the internal control environment my responsibility as the auditor we would have to disclose them. There were none so there was nothing to report. An auditor does not validate every single transaction, he gives you assurance that the financial statement are materially correct. What you really want to do is focus your assets and your costs associated with safeguarding these assets.
Councilman Testino: Do we have a criminal liability policy?
Himanshu Shah: As part of our JIF we have an omission coverage and we have this protection through them.
Mr. Farrell: The critical issue here when you discuss the issue of fraud, the responsibility really lays with administration, but you as the Council have a responsibility to make sure that there are some safety nets in place. What we are suggesting gives you a firewall, so when you incorporate this in your policies and procedure manual and you have the employees sign off that they read these things, that is your protection. You have sessions on harassment in your employee training and you might want to incorporate a session in fraud awareness.
Councilman Testino: With the assessment exposures, is this town looking at a reassessment program in the near future where the tax appeals would be impacted?
Himanshu Shah: I believe that the changes in the law does not permit the assessor to do the reassessment as previously done. It has to be an evaluation which is a very expensive undertaking and could cost millions.
Councilman Testino: So the answer is “no”?
Mr. Farrell: It is driven by the ratio of true value and my suggestion would be to have Brian put together a report.
Himanshu Shah: We would need the Council's approval to do a reassessment.
Mr. Farrell: The critical thing is the area of your ratio to true value and in all probability that is going down and where that lies in comparison with the County. I have four or five clients who were ordered to do revaluations and the values have increased anywhere from 1 ½ to 3 times the value, and the cost is extensive. Dover Township is doing a reevaluation and it is costing them four million dollars. As part of your overall management and you have very strong management people within the township, you should operate this township as a business and you want to structure a business model and see where your costs will be in five years. You are a growing community and you have needs. Old Bridge is going through tremendous growth and you have to address these issues.
President Baker: Mr. Farrell, I want to thank you for coming this evening.
Presentation – (3/22/04)
Assemblyman Samuel Thompson making presentation
Certificates of Award – (3/22/04
Commendation certificates to our Special Olympic Speed Skating Team for their outstanding performance at the New Jersey Special Olympics at Morristown, New Jersey on February 8th – 10th , 2004.
Hearings – (3/22/04)
H-1 Release/Reduction Performance Guarantee – Bridgepointe at Harbor Heights
H-2 Release/Reduction Performance Guarantee – Forest Gardens – Rt. 34
President Baker opened the meeting to the public. Seeing no hands, President Baker closed this portion.
MOTION
Motion to adjourn at 9:30 p.m., made by Councilman Butler, seconded by Councilman Greene and so ordered on the following roll call vote:
AYES: Councilmen Butler, Calogera, Gillespie, Greene, Testino, Volkert, Councilwoman Panos, President Baker.
NAYS: None.
ABSENT: Councilman Maher
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William Baker, Council President
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Rose-Marie Saracino, Township Clerk
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