Council Calls for Moratorium on Management Corp. Funds

The Scotch Plains Township Council is seeking to freeze all funds held by the Scotch Plains Management Corp. in light of its recent decision to spend the bulk of its budget on management salaries.

The mayor and council had a heated discussion on the issue before and after their regular meeting on Tuesday evening, with some members calling the special improvement district's hiring of two managers as opposed to one an improper use of money. The Scotch Plains Management Corp. (SPMC) is supported by businesses in town, which are billed a $400 flat fee. 

Mayor Nancy Malool said the township would be consulting with its attorney on Wednesday to determine what legal right it has to halt the SPMC budget. Malool said she thinks they should be able to do so based on other information that calls into question whether the SPMC passed its budget legally.

"I am concerned in learning what I have learned over the last couple of weeks," Malool said. "I honestly think – and we'll consult the attorney tomorrow – that we do have the ability to put a hold on their funds until further resolve of these issues. The goal is to get this SID back on track so it can help the businesses at a time when they need them most."

The SPMC was established in 2008 to help boost business in the township's commercial sector, but since then it has faced some heat for getting off to a slow start. The township council voted 4-1 in June to approve the organization's $67,200 operating budget, which is funded through those $400 fees paid by local businesses and is effective from July 1, 2009, to June 30, 2010. The township provided $5,000 to the SPMC in its first year in 2008, but gave no money in 2009.

At the time of the budget's approval, SPMC Chair Jim Watson told the council that about half of that money - $35,000 – would be allocated to hire a manager.

But at its meeting last Wednesday, SPMC's Board of Directors voted to spend more than that so that it could hire two managers- the East Orange-based FirsTEAManagement to oversee administrative responsibilities and Scotch Plains resident Lisa Schiller to handle direct issues with local businesses. Schiller, the wife of SPMC treasurer, Ted Schiller, had already been serving as events and promotions coordinator, helping to plan efforts like the Memorial Day Music Festival and the group's TV program "This Week in Scotch Plains."

SPMC Vice-Chairman Jeff Kowalczyk defended the decision last week, telling Patch that the board of directors wanted Schiller to continue to be SPMC's "face on the street" for local businesses, but that they also wanted FirsTEAManagement's guidance to oversee legal matters. FirsTEAManagement, which specializes in downtown development management and consultation, would be paid a monthly consultation fee, while Schiller would be paid a salary for 20 hours per week.

Kowalczyk would not disclose the total cost of the two managers, but did say that it would be more than SPMC had originally planned to spend. He defended the move by saying that the management corporation plans to use some money it has in surplus to make up for the extra expense.

On Tuesday night, Councilwoman Mary DePaola noted that the decision "smacked of favoritism."

"It doesn't look good for Scotch Plains," she said. "It's a difficult economic time for some of (the businesses) to continue to pay this fee, part of their hard-earned money. Now it's all going for salaries. This is a front-burner, immediate concern and it needs to be resolved."

Councilman Jeffrey Strauss, though, sees the issue a little differently. Strauss attended the SPMC meeting last Wednesday on behalf of the mayor, who could not make it, and told his colleagues Tuesday night that he was impressed with how the SPMC went about their business.

"There was a new excitement and I felt they were very profesisonal and very creative in their meeting," Strauss said after the council meeting. "I was not on board with the heated comments yesterday. We need to defer to the 16th (the next council meeting) and work cooperatively."

The mayor and other council members, though, said they hope to amend the ordinance that created the Scotch Plains Management Corp. to get the organization back in a direction they feel is in the best interest of the business owners who fund it.

Councilman Dominick Bratti, who was an original proponent of the SPMC, called for the management contracts to be frozen and no one paid until the issue is settled.

"It has the appearance of impropriety," he said. "And even if there isn't impropriety, it's clearly going to be contrary to what needs to be done in regards to the SID. We need to resolve those problems and allay the fears of those business people."

"It's advisable that we have a moratorium on the decision passed last week," echoed Councilman Kevin Glover. "We need to develop a good working relationship with the SID, and somehow we've lost that."

For some members of the SPMC, the real issue is that they think the mayor, who spearheaded the group's creation, is trying to have too heavy a hand in their operations. Lisa and Ted Schiller were in the audience of the council meeting Tuesday, and Ted also attended the discussion on the SPMC that continued afterwards.

The council is expected to discuss the matter further at its Feb. 16 meeting. Also at that time, Lisa Schiller is slated to give a presentation detailing the progress of the Management Corp. thus far.