CAPE MAY – Cape May City Council approved yet another arrangement, July 3, that allows one of the employees who received bonus disbursements in 2020 to repay the Affordable Housing Trust Fund.
In this case, the employee surrenders 40 days of accumulated leave and time off, plus agrees to forgo city paid health insurance waiver payments for the final two quarters of 2023.
The employee is the fifth of seven to reimburse the city for the 2020 payments, which used affordable housing trust fund monies to pay roughly $100,000 in bonus payments without governing body approval. The payments violated the trust fund spending plan agreement with the Fair Share Housing Center (FSHC).
In 2020, then-City Manager Jerry Inderwies Jr. authorized two disbursements of bonus payments in September and December to six employees, including himself.
The payments were allegedly for work done to further affordable housing goals during the year. Just as Inderwies was leaving office at the end of December 2020, he also authorized a smaller disbursement to a seventh individual. That seventh individual was the first to return the funds to the city early in 2021.
The city is in the third year of an effort to reclaim the funds from the other recipients and repay the trust fund. With the July 3 agreement, the city has recovered the funds from four of the remaining six individuals.
In each case, the method of repayment has involved some unique arrangement for reimbursement. Many of the arrangements have involved surrender of accumulated leave, which the city would have eventually paid out.
This is the first public case involving the forgoing of employee health insurance waiver payments. The July 3 agreement states that two quarters of savings on the waiver payments nets the city “$2,500 in forgone payments.”
Health insurance waiver payments are not well understood by some taxpayers. They represent an offer of payment from a local governing unit to an employee in exchange for waiving health care coverage.
The amount of the payment is based on a calculation of the local unit’s savings due to the waiver of coverage. The amount paid to the employee is capped by law at a maximum of 50% of those savings.
The calculation is done annually and is not open to employees whose alternative coverage through a spouse or domestic partner is itself state health plan coverage.
Discussions continue with the remaining two bonus payment recipients. Thus far, repayment agreements have been reached without recourse to city-initiated litigation. Mayor Zack Mullock says the city has kept the FSHC apprised of all developments.
Mullock said he looks forward to a complete resolution of this matter, so the city can concentrate its attention on “what we are supposed to be doing with the fund – helping create much-needed affordable housing.”
Contact the author, Vince Conti, at vconti@cmcherald.com.
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