State watchdog scolds Newark for $5.4M ‘illegal’ ice rink upgrade

The Office of the State Comptroller accused the city of Newark Wednesday of illegally awarding a no-bid, $5.4 million contract to a private, New Jersey Devils-related firm to renovate a public ice rink, with investigators saying this was the third time since 2008 the city broke state laws intended to protect taxpayer dollars and avoid favoritism in construction contracts.

Investigators claim the city circumvented the public bidding process and misused the state’s Adopt-a-Park statute. That 1992 law is intended to allow municipalities to directly hire private entities and nonprofits to develop public parks, as long as the project costs the municipality nothing and the nonprofit or private entity absorbs the cost. State law otherwise requires governments to publicly advertise projects and hire the lowest responsible bidder.

But Newark hired a firm in 2018 to renovate the ice rink at the Sharpe James and Kenneth A. Gibson Recreation and Aquatic Center — and financed the whole $5.4 million cost, incurring $5.2 million in municipal debt, without publicly bidding the project. James is the former Newark mayor sentenced to 27 months in federal prison in 2008 following a conviction on fraud charges.

Investigators further discovered that Newark used the Adopt-a-Park statute to improve five other park-related projects since 2008, including upgrades of baseball diamonds, skate parks, and basketball courts — and paid more than $2 million to partially cover the cost for at least two of them, in violation of the statute.

By flouting the law, investigators said, Newark undermined public confidence in government and failed to protect public money from possible waste and corruption.

“Municipalities that renovate parks are required to follow an open and transparent process that invites competition to avoid favoritism and advance the economic interests of taxpayers,” Acting State Comptroller Kevin D. Walsh said. “Newark violated state law when it simply selected its preferred contractor without seeking competition through a public bid.”

Kenyatta Stewart, the city’s corporation counsel, said Newark officials “disagree” with the comptroller’s findings.

“We relied on advice of outside counsel and will continue to comply with the law,” Stewart said in a statement. “Most importantly, Newark’s youth can enjoy skating on a first-class ice rink built by the Jersey Devils.”

The comptroller’s office routinely reviews public procurement contracts over $2.5 million to ensure there is no favoritism, cronyism, or corruption. The problems with Newark’s ice rink contract were discovered during such a standard review.

Investigators allege that Newark contracted with the Devils Renaissance Development (DRD), a private company associated with the New Jersey Devils. Under the no-bid contract, DRD wasn’t compensated, donating its services as general contractor. But the subcontractors doing the work got paid, with DRD acting as the go-between, forwarding to the subcontractors the money Newark paid.

In defending the contract to the comptroller’s investigators, Newark officials said they followed all necessary steps such contracts require, including appearing before the Local Finance Board to apply for muncipal bonds, getting City Council’s approval for the contract, and submitting the contract to the comptroller’s office as state law requires.

Investigators acknowledged that Newark took those steps. But Newark still “improperly relied on the Adopt-a-Park statute and failed to comply with all applicable procurement laws,” investigators wrote.

“There are legally permissible and transparent ways for the city of Newark to partner with companies and nonprofits while also complying with public contracting law, but that did not happen here,” Walsh said. “The public bidding process in New Jersey exists to prevent both favoritism and the appearance of favoritism when taxpayer money is being spent.”

Investigators recommended ways Newark — and all New Jersey municipalities — should ensure they abide by procurement laws and properly spend taxpayer dollars.

Newark agreed to implement the recommendations, which include educating staff and elected officials about public bidding and the Adopt-a-Park statute and updating the city’s policies and procedures to ensure the law is followed.