Overall costs on a parking garage financed with municipal bonds in Washington, N.J., have ballooned nearly five times from original estimates to $2.7 million, according to a state-level audit of the borough.
New Jersey Comptroller Matthew Boxer yesterday announced that poor fiscal management enabled costs on the project to reach $2.7 million from 1998 estimates of $568,311. The garage will serve the borough's Department of Public Works.
In addition, $2.97 million of bonds have been sold for the garage, with $278,000 of the proceeds transferred to accounts unrelated to the parking garage before construction began, a violation of state bond laws. New Jersey law stipulates that issuers cannot allocate bond proceeds to other projects before completion of the initial plan, unless the funds are no longer needed and the governing body authorizes such changes.
"Delays happen and projects sometimes go over budget, but in this case Washington borough officials didn't even have a budget for the project and didn't realize how much the borough had spent," Boxer said in a press release. "The result is that taxpayers have been paying for bonded debt on this project since 2000 and still don't have the benefits of a usable garage."
Officials used $600,000, $700,000, and $1.67 million of bond proceeds in December 2000, August 2005, and July 2007, respectively, for the garage. The municipality has spent $1.92 million on the garage and encumbered another $817,175 for construction, leaving a balance of $85,459. Officials anticipate the structure will be finished in July.
Washington has $18.65 million of outstanding debt, including bonds, notes, and state loans, as of February 2008, according to Moody's Investors Service analyst Erin Daugherty. Moody's rates the borough's $8.2 million of general obligation debt Baa1.
In addition to the escalation in parking garage costs, the audit indicates that from Jan. 1, 2006, through Dec. 31, 2008, officials did not award professional contracts via competitive bid, as required by state law. The comptroller also found several internal control weaknesses relating to fiscal operations.
Recommendations include updating the borough's 2005 purchasing policy and procurement manual, justifying purchases that exceed original estimates, and requiring the borough's attorney to review contracts.
In an April 20 letter to Boxer, borough manager Richard Phelan wrote that his office has begun implementing several of the comptroller's recommendations and will work towards addressing all of the audit's negative findings. Phelan started in his position in March.
The borough of Washington is located in Warren County in northwestern New Jersey and has a population of 6,695, according to the U.S. Census.
