LIPA trustees on Wednesday provided further evidence that the authority is focusing its energies on its financial duties, approving a new chief financial officer from the investment banking community and awarding contracts to oversee its more than $1.3 billion in cash assets.
At a meeting of its board of trustees in Uniondale, authority board members approved the appointment of Joseph A. Branca, a managing director at Bank of America’s Merrill Lynch unit, who previously served as chief financial officer of the state Empire State Development Corp. under Govs. Mario Cuomo and George Pataki.
Branca, who will earn $250,000 when he joins the authority in three months, replaces Tom Falcone, who in March was promoted as the Long Island Power Authority’s chief executive officer. Falcone said he has known Branca for 15 years.
In advance of Wednesday’s board meeting, there had been indications that as many as two LIPA trustees had reservations about the appointment because Branca, 62, had not worked at a utility and that an internal candidate could be better suited. But the board’s personnel committee and the full board voted unanimously to approve the appointment.
“We’re very fortunate that Tom Falcone is in a position where he can guide him and mentor him,” trustee Jeff Greenfield said of Branca after the meeting.
The board also voted to approve five separate financial measures, including awarding a five-year contract to PFM Asset Management to manage $1.3 billion of LIPA cash assets. PFM, according to LIPA officials, scored highest in a technical evaluation, while bidding the lowest price (along with another contender). LIPA will pay PFM and another firm that won for a related contract some $450,000 annually for the services, less than the $600,000 it had paid JPMorgan Chase.
The PFM award is the third such contract that firm and its subsidiaries has received since Falcone joined LIPA in January of 2014. As previously reported, Falcone in 2014 led an evaluation committee that awarded Public Financial Management a $5.4 million, five-year contract for financial advisory services, although another firm had bid less than half that amount.
PFM director Eugene Devlin and Falcone had worked together as investment bankers at Morgan Stanley. In addition, according to LIPA documents, Devlin recommended Falcone for the LIPA job. LIPA last year reviewed the matter and found there was not a conflict in Devlin’s recommendation of Falcone and the awarding of the contract.
LIPA officials this week said that PFM’s was the best presentation for cash management services and that Falcone was not on the committee that evaluated PFM.
PFM also has a contract for other financial services at LIPA valued at more than $6 million in total, more than PFM has with any other New York state agency, according to state records. (It has two contracts with the state Division of Budget valued at $3.66 million and a $750,000 contract with the state Thruway Authority).