CAPE MAY – City Council held a special closed session in which council members received an update on a Council on Affordable Housing (COAH) funds controversy that has, so far, defied resolution for almost 18 months.
When council convened after the closed session, there was no word to the public on the status.
The controversy stems from bonuses given to six city employees, some of whom have since left city employment, making use of monies from a restricted trust fund.
Disbursements
In two rounds of disbursements from the Affordable Housing Trust Fund in September and December 2019, former City Manager Jerry Inderwies Jr. authorized bonus payments to himself and five other city employees. Each person received the same amount in each round – just under $17,000 apiece total.
The rationale for the payments was that they were for affordable housing administrative work presumably above and beyond the work covered by each employee’s normal salary.
There has never been a public explanation for how six disparate employees at very different levels of administrative responsibility all qualified for the same bonus amount for doing what would have been very different administrative tasks.
The trust fund account is a restricted source of funds dedicated to support the building and maintenance of affordable housing in the city. Disbursements from the trust fund are governed by a court-approved spending plan that was part of a negotiated settlement between the city and the Fair Share Housing Center (FSHC).
Almost 18 months since the new city administration took office in January 2021, the issue of the payments made in 2020 still lingers.
Outside Agency Review
In January 2021, a new governing body was installed based on election results from the previous November. A new mayor took office, and a new city manager was appointed. These officials almost immediately became aware of the disbursements from the trust fund.
In February 2021, the council temporarily suspended disbursements from the fund and the governing body passed a resolution confirming the existing process that governs use of monies from the fund.
In March 2021, the city referred the payments issue to the state Department of Community Affairs (DCA) in Trenton. DCA did not formally respond until June, when the agency informed the city that the disbursements were indeed a violation of the approved spending plan. Then, DCA washed its hands of the controversy by claiming it did not have jurisdiction.
In June 2021, the city referred the matter to the county prosecutor. The prosecutor’s office took four months before saying it would not bring criminal charges in the matter.
Meanwhile, the FSHC had threatened the city with litigation if the bonus monies were not replaced in the trust fund. Upon hearing the response from the county prosecutor, FSHC Director Adam Gordon stated that “lack of prosecution isn’t a lack of civil liability.” He went on to demand that “the city take action to recoup these illegally diverted funds so they can be used to benefit working families in Cape May.”
In the City’s Hands
Following the reply from the county prosecutor, the city, as of Oct. 21, 2021, clearly had the hot potato squarely in its lap. The city assured the FSHC that it would make the trust fund whole.
At a November 2021 meeting of the council, city resident Robert Dreyfuss used the public comment period to press city officials for information on the almost $100,000 in total bonus payments.
At that meeting, one council member, Shaine Meier, took the position that very little wrong had occurred and the actions of Inderwies at the end of 2020 had been blown out of proportion by the media, most notably, Meier said, by the online news blog run by Dreyfuss.
Both Mayor Zack Mullock and Deputy Mayor Stacy Sheehan used that November meeting to recount all the city’s efforts to resolve the matter through referrals to DCA and the county prosecutor.
City Solicitor Christopher Gillen-Schwartz assured the public that the issue “has not fallen into the abyss.” City Manager Michael Voll said he expected a resolution of the situation soon.
Those were the comments as individuals prepared to carve turkeys and bake pies for Thanksgiving. Now, as the city readies for barbeques and fireworks for Independence Day, there is no way for the public to know if anything has changed.
What Does the Public Know?
What is known is that Inderwies filed a lawsuit against the city, Voll, Sheehan, and the FSHC, citing harm done to his reputation and a potential run for political office. Inderwies has since dropped the city, but not the other defendants, from that litigation.
The city hired special counsel in February 2022 to help resolve the issue. The FSHC has filed a motion to dismiss Inderwies’ claims against the center.
All this is known because a public vote was required to hire a special counsel and lawsuits are a matter of public record. The public knows nothing from the city on the status of the issue.
The argument that the matter must be handled in private sessions has so far trumped any notion that the public has a right to some insight into what is happening 18 months after the disbursements from the trust fund were last made.
The city solicitor has stated at a February 2022 council meeting that this “is a complex matter that requires time and care.” Following the June 7 council meeting, Gillen-Schwartz responded to the Herald’s request for comment and again emphasized that the city was working diligently to resolve the matter.
There is no reason to doubt the statement that the city is active in the pursuit of a solution. The question is, will residents be stringing Christmas lights when the Herald next checks in for a status?
To contact Vince Conti, email vconti@cmcherald.com.
