Governor Says He Will Allocate $5M to Settlement to Sell Hoboken Hospital

Governor Chris Christie has said he will make $5 million in state money available to spend on a settlement agreement that is supposed to facilitate the sale of the Hoboken University Medical Center to private buyer HUMC Holdco LLC. 

Mayor Dawn Zimmer, who attended bankruptcy settlement hearings on Thursday in Newark, said that the governor's proposal came in on Thursday afternoon and had not been one of the city's options before.

On Wednesday night, the city council didn't approve a $5 million bond that would go toward the settlement agreement. After the meeting, Zimmer as well as Chairwoman Toni Tomarazzo said that the hospital would be forced to close. If it closes, roughly 1,200 jobs will be lost.

"There are two primary issues that stand in the way of keeping Hoboken University Medical Center open," Christie said in a press release. "First, the refusal by local unions to provide necessary concessions and secondly, the city council’s rejection of $5 million in funding which is vital to securing the hospital’s future."

It's not the first time the governor is helping the city out with the hospital sale. Previously, the governor earmarked $11 million in the state budget to help the city pay off the interest on the $52 bond obligation it holds on the hospital.

The unions involved—JNESO and 1199J—were also in negotiations on Thursday, with the new buyer of the hospital. As of Thursday afternoon a little before 3 p.m., the parties had not yet come to an agreement.

Part of the agreement is that Holdco has offered roughly 95 percent of the current employees jobs once they take over, laying off five percent of the hospital's more than 1,200 employees.

The contract stipulates that no less than 75 percent of jobs are to be maintained at the hospital.

Negotiations between the Hoboken Municipal Hospital Authority and Holdco have been subject to extensive criticism over the last few months. Members of the council minority said they wanted more information, after being told the city council would have no role in the sale.

The hospital's management company—Hudson Healthcare Inc.—filed for bankruptcy on Aug. 1, after PSE&G sent the hospital a letter, threatening to turn off their services. The hospital had not been paying their electricity bills and has been operating in the red. The mayor has said that on Oct. 7 the HUMC will run out of money.

If the unions are not on board with the sale, Zimmer said, the judge will not approve a bankruptcy settlement. With the $5 million from the state, the creditors of the bankrupt hospital will be offered between 25 and 30 cents on the dollar. (or, $10 million of a $34 million debt).

In his press release, Christie put the responsibility with the unions, saying that the deal now hinges on their approval.

"They got to choose," Zimmer said. Adding that if the unions do not come to an agreement with the new buyer, all jobs will be lost when the sale falls through.

Zimmer, a supporter of the governor, said she was "stunned" after calling it "reckless behavior" in the name of politics.