Nassau Comptroller George Maragos has called on County Executive Edward Mangano to abandon his plan to allow a private investor to buy $20 million in tax refund debt.
Maragos contends the arrangement, unveiled last week, would jeopardize Nassau's credit rating by adding millions of dollars of debt to the county's books. Nassau already has $3 billion in debt, the highest of any county in New York State.
"I am not comfortable with the deal as proposed," Maragos said in a rare public criticism of a proposal by Mangano, a fellow Republican. "It represents a high level of risk."
But County Attorney John Ciampoli said he plans to move forward with the deal. "The taxpayer needs to be paid 100 cents on the dollar for whatever they are owed," he said.
The plan calls for a private investor, RPTF Llc of Uniondale, to pay some 18,000 homeowners their tax refunds and interest, which can reach as high as 12 percent per year. The county would repay the firm out of its operating budget over seven years at 5.95 percent interest.
The county would consider a similar arrangement, Ciampoli said, to pay off $20 million in commercial tax refunds.
A more fiscally prudent plan, Maragos said, is for Nassau to cut out the financier and petition Supreme Court Justice Thomas Adams to allow the county to reach an identical payment plan and interest rate with the homeowners directly.
Ciampoli said he would take Maragos' suggestion to the homeowners' attorneys. But, he said homeowners who have waited a year for their refunds are not likely to accept a deal that would pay them more slowly, and with lower interest.
Maragos claims the county's proposed arrangement constitutes a financing agreement -- similar to a property owner seeking a home-equity loan to consolidate his bills -- which would be treated as debt on the county's ledger. The increased debt, he said, "presents a risk to the county's credit rating."
Nassau's charter allows the comptroller to review contracts and claims that would increase the county's debt, although it's not clear Maragos can block the deal.
Ciampoli said Maragos has a fundamental misunderstanding of the deal. "This is not borrowing," he said. "It's not a contract and does not create debt."
RPTF officials declined to comment.
Financing agreements, Maragos said, present an added complication: requiring the approval of the county legislature and the Nassau Interim Financing Authority, a state watchdog in control of the county's finances.
Ciampoli also disagrees on those points and contends he has the authority to pay all claims under $100,000 without legislative approval. The deal, he said, does not require NIFA approval because Nassau is already obligated to pay the debt.
"We agree with . . . [Maragos'] position that the proposed deal is essentially borrowing and under the law must come for approval before the legislature and NIFA," said Mike Florio, spokesman for legislative Democrats, who have threatened a suit to block the plan.