
file photo by Boyd Loving
From the archives: Local towns paying heavily for Bergen County loan program meant to save time, money
DECEMBER 28, 2009, 8:47 PM LAST UPDATED: THURSDAY, JULY 22, 2010, 2:41 PM
BY STEPHANIE AKIN AND CHRISTOPHER SCHNAARS
STAFF WRITERS |
THE RECORD
This story was originally published Dec. 28, 2009.
A Bergen County loan program touted as a quick and easy way for local governments to pay for big-ticket items has instead plunged some of them into long-term debt.
The five-year-old Municipal Banc was supposed to let cash-strapped towns bypass conventional borrowing methods and get county-backed loans for emergency services and public works projects. The program promised 24-hour loan approval with no red tape, backed by the county’s AAA credit rating.
Most towns and school districts that used the program borrowed only what they needed and spent the money quickly. Many praised the program for its convenience and low fees.
But some towns took out loans for items as inexpensive as rope and firefighter boots, borrowed money long before they intended to make purchases and paid interest on money they never spent. In some cases, their applications were approved even though they provided little information about how the money would be used.
From 2004 to 2008, Rutherford, Fair Lawn and Hackensack let a total of more than $1.6 million in loans sit idly in Commerce Bank accounts while taxpayers paid more than $200,000 in interest and fees. Fair Lawn, for example, waited four years to buy a $130,000 generator.
“That’s like saying, ‘I’m going to buy a house, I’m going to pay a mortgage and interest on the house, but I’m not going to move in for three or four years,’” said Joseph Tedeschi, a Fair Lawn councilman.
TD Bank took over the program after it bought Commerce in March 2008.
Five consultants that donated more than $450,000 to Bergen County Democrats from 2004 to the end of 2008 were paid at least $1.8 million for professional services by the Bergen County Improvement Authority — the agency that oversees the Municipal Banc — including more than $180,000 for services tied to the loans.
Those consultants included Dennis Oury, the former counsel for the BCIA and the Bergen County Democratic Organization. Oury, who pleaded guilty to federal corruption charges in September, collected more than $1.1 million from the BCIA during that period. Oury resigned from the BCIA in early September 2008 after federal officials accused him of fraud.
The program auditor, Ferraioli, Wielkotz, Cerullo & Cuva, also was the auditor in three of the towns that were the heaviest users of the program: Fair Lawn, Hackensack and Rutherford.
https://www.northjersey.com/news/from-the-archives-local-towns-paying-heavily-for-bergen-county-loan-program-meant-to-save-time-money-1.1243384