Nassau Democrats and some legal experts Wednesday questioned the legality of County Executive Edward Mangano's plan to allow a private investor to purchase $20 million in county debt without legislative approval.
But Nassau County Attorney John Ciampoli said the plan adheres to the law and does not require legislative approval.
Under a deal orchestrated by Ciampoli, RPTF Llc of Uniondale will purchase $20 million in tax refunds the county owes some 18,000 Nassau County homeowners. The firm will purchase the judgments from residential tax protest firms representing the individual property owners, who will be paid immediately. The county, according to court documents, will repay RPTF over a seven-year period, with interest.
Ciampoli contends that because the transaction involves two private parties -- RPTF and the tax protest firms -- the measure does not fall under the purview of the county legislature and is not technically a loan or bonding.
But Mike Florio, a spokesman for the legislature's Democratic Caucus, called the plan a loan, because it involves the county paying off debt with interest, and thus needs to pass the legislature.
Florio said the nine Democratic legislators and their attorney are reviewing the proposal and considering legal action.
"If they try to do this by another means which bypasses the legislature, we would have to consider filing a lawsuit," Florio said.
Mangano previously had sought to pay the settlements through county bonding. But he failed to get the necessary votes from the county legislature after Democrats repeatedly blocked the borrowing in a fight over legislative redistricting.
The question of how to pay the settlements comes as Nassau grapples with a multimillion-dollar deficit for 2012.
"No municipality can enter into a binding agreement or contract with anyone in the absence of or without legislative approval," Sabatino said.
But Ciampoli countered that the county has not entered into a contract but rather a "memorandum of understanding and forbearance."
Sabatino said "Whether you call it a contract or a memorandum, or promise to pay . . . all of those things require legislative approval."
Peter Kiernan, former counsel to Democratic Gov. David A. Paterson, said the deal appeared to be a loan that is subject to legislative oversight.
"It's certainly a loan," Kiernan said. "When a county wants to finance a budget deficit, it has to have permission from the state. This is not being called a deficit bond, but this is a loan to pay for a deficit, which in the long term makes it subject to legislative approval."