A state agency has recommended that a $15.5 million bond plan for the Middlesex County Improvement Authority (MCIA) be approved, but the board’s chairman is still seeking answers on how a portion of $400,000 in fees will be spent.
Tom Neff, chairman of the state Local Finance Board, which advises governing bodies and public organizations on finances, said at the board’s Aug. 14 meeting in Trenton that the board had multiple questions regarding the technical process, the salary of MCIA Executive Director Richard Pucci and the additional fee paid to salaried Middlesex County Counsel Thomas Kelso.
“Issues with the [fees at the] MCIA caused us to take a more serious and stringent look at their application,” Neff said at the meeting. He noted that the MCIA bonding program had not come under scrutiny since its inception in 1992.
The MCIA was created by the county freeholder board to provide financial and management assistance for towns within the county.
Approximately $60,000 of the $400,000 in fees in the bond plan is directly related to the operating expenses of the MCIA. Pucci previously said that only $175 of the $60,000 will go toward his salary. The MCIA pays Pucci $210,000 and also provides a car allowance. He also earns $13,500 for serving as the mayor of Monroe Township.
Also included in the fee is $15,000 for legal fees for the county counsel, who earns approximately $170,000 per year.
“I certainly have a lot of questions about [Kelso’s payments], and I think it’s every bit as disgusting as the executive director’s salary and compensation that exceeds a quarter-million dollars per year,” Neff said.
Pucci said the $15,000 payable to Kelso was for his work on the bonds.
“The county counsel has to give an opinion, and his firm is liable on that opinion,” Pucci said. “If there is a major lawsuit on the bonds [although there never was one], the firm becomes liable, so they carry quite a bit of insurance. This has been part of the application for years. … Mr. Neff did not raise an issue for the last two years he was on the board. I’m rather surprised that he brought it up.”
The MCIA had filed an Open Public Records Act (OPRA) request to examine the fees of other agencies. This involved more than 300 files that Neff said were not related to the MCIA application.
“They were certainly entitled to make the request, but I have a real concern: How is this being paid for?” Neff asked. “They asked for files that have nothing to do with this application … but are these fees [the $15,000 in legal fees] being used to finance the fishing expedition of an executive director for having a hissy fit because I called him out for having a disgusting salary? It sounded to me [that] when we got that OPRA request, it was something to intimidate us and make us go away.”
Neff then told the MCIA bond attorneys to tell Pucci that “we will be back here again and asking the same questions again.”
“You can send me another 50 OPRA requests if you like, but if he [Pucci] thinks this is going to go away, he’s got another thing coming. The more things like this happen, the more smoke there is, and the more fire there probably is, so we will keep looking and digging to find out what’s wrong.”
Pucci said that the OPRA request was filed to learn of the fees that other authorities charged and to see if the MCIA was in line with the average amount of fees charged.
“Our fee is on the low end, so we sent some people to look at other fees,” Pucci said. “We looked at 300 different financings that occurred that were not exactly the same, but were similar, and we found that our range was on the lower end, and other applications charged much lower fees. … That was an issue that disturbed us because we knew that this fee was not in any way a substantial fee in comparison to the fees charged by other programs.”
Pucci was not present at the Aug. 14 meeting, but he was represented by bond attorneys from the Wilentz, Goldman & Spitzer law firm.
“Normally, we send financial advisors and attorneys and they handle the application for us,” Pucci said late last week. “Neff requested I was there the first time, but my attendance typically isn’t necessary after that.”
The MCIA bond plan originally totaled $19.5 million, but that was reduced by roughly $4 million when Old Bridge officials decided not to pursue financing through the agency. Representatives of the Local Finance Board commented that they did not want projects budgeted by municipalities to be put in jeopardy because the application was held up, so they recommended that the bonding plan be approved.
Pucci previously said that the arguments over the MCIA bond plan were “political” in nature, but Neff denied that claim.
In addition to concerns about the fees, Neff said that the MCIA’s application raised technical questions about the financing process — including the municipality’s exemption to making down payments on items for which it plans to bond, which goes against typical bonding practices — and concerns that the municipalities’ financial officers do not seek cheaper rates, but use the MCIA’s AAA bond rating by default.
Contact Stella Morrison at [email protected].