Mayor Alex B. Morse
City of Holyoke
Honorable City Council
536 Dwight St.
Holyoke, MA 01040
Re: Settlement for Maria Ferrer
Greetings Councilors,
It is my understanding that you have requested that I find another source of funds within the city
to pay the settlement owed to Maria Ferrer. This letter is an attempt to clarify why the
stabilization fund is by far the most appropriate source to fund this expense, We must do what is
right by a local business owner.
Please remember that the Essex House collapsed - causing damage to Ms. Ferrer’s property and
forcing her to close her business and relocate. Ms. Ferrer had worked her entire life to build this
business. This was not her doing - this is something that happened to her. Despite the pace of this
process, Ms. Ferrer has demonstrated great patience and professionalism, and she should be
‘commended for that. She remains committed to Holyoke and to her clients, and continues to give
back to our community in myriad ways.
Some of you may be of the opinion that the city should not have taken ownership of the Essex
House in the first place. That argument should not prevent you from supporting what is owed to
Ms. Ferrer at this time. Furthermore, itis the city’s responsibility to ensure the public’s safety,
and the city would have been responsible for the expenses related to the demolition even if we
didn’t own the property. In addition, as has been discussed with the City Council in the past, the
city did have a signed contract with NASDI, the demolition contractor, that required them to
secure and protect the adjacent properties from any damage. Therefore, the city has filed suit
against NASDI to recoup damages, and we have also withheld their final payment for services. 1
assured and continue to assure the Council that if and when the city is successful in securing
funds from this lawsuit, I would appropriate that money back into the stabilization fund.
Thave heard some of you say that you fully support paying this settlement to Ms. Ferrer but that
‘you just can’t support it if the money is coming out of the stabilization fund. This is not a
genuine argument. There is no other source of funds at this time. If you support making Ms.
Ferrer whole, you should support this appropriation. The Stabilization fund exists for
536 DWIGHT STREET « MAYOR'S OFFICE « HOLYOKE, MASSACHUSETTS 01040-5019
PHONE: (413) 822-510 - FAX: (419) 822-5521 - EMAIL: morsea@holyoke.org
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unexpected, one-time events. This is one of those events, Furthermore, per the Council's request,
ve consulted with the city’s outside financial advisor, who confirmed that this was an
appropriate source and that approving this would have no negative impact on the city's bond
rating or credit.
Let’s also look at the numbers. There seems to be a myth that my administration is keen on
tapping the stabilization fund, That is false. When I took office in January 2012, the stabilization
fund was at $10,716,342 or 9.2% of the overall city budget, Today, the stabilization fund is at
$11,990,247, an increase of $1,273,905, and 9.5% of the overall budget, which is the highest it
has been in the last five years. Furthermore, since January Ist of this year, the stabilization fund
earned more than $600,000 in interest. Paying the settlement for Ms. Ferrer from the stabilization
fund wouldn’t even use 50% of interest. If this doesn’t make strong financial sense I don’t know
what does. [fa homeowner has a leaky roof that needs to be fixed, they go to their savings
account, We should do the same.
Free cash is not an ideal source of funds for this expense. Free cash won't be certified until
sometime in November, and every month we wait, the city will continue to pay $1,500 a month
for Ms. Ferrer's rent at her relocated business. Therefore, by waiting another 6-8 weeks to
approve the settlement, the city will incur at least another $3,000.
Free cash should also be protected. Because the Council failed to act on a sewer rate increase, we
now anticipate a significant deficit in the sewer fund. Therefore, as usual, we will need to usc a
big chunk of free cash to balance the sewer fund. To be prudent, we should also anticipate
needing free cash for some operational and unexpected expenses throughout the remainder of the
fiscal year, particularly due to some of the cuts made by the Council this past Spring,
In short, there is no need to wait. We owe Ms. Ferrer this settlement. It is no longer acceptable or
fair to make her wait. There is no basis to the argument that the city can’t use the stabilization
fund for this expense. In fact, it makes the most financial sense for the city and will have no
negative impact on our finances. I've also promised to replenish the fund if and when we prevail
in our lawsuit, or if we have extra free cash at year end.
“er lice consideration of this request,
Alex B. Morse, Mayor