Westchester pols close to deal to unleash millions in spending via nonprofits
The president of Purchase College SUNY, Thomas Schwartz, wants Westchester County's Local Development Corp. to help him finance an innovative residential education center for seniors on his campus.
Political squabbles between Republican County Executive Rob Astorino and Democrats who control the Board of Legislators, however, have made Schwartz leery of seeking the LDC's assistance. So the $15 million project has languished for months as unemployed construction workers stand idle and seniors who might live and learn in the center go elsewhere.
"Politics is politics," said Schwartz, who said he speaks regularly to administration officials and lawmakers about the project. "At some point, you know, this needs to move aside. They should recognize how they are hurting people."
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Now, the politicians are taking Schwartz' advice.
Astorino and Democratic legislators on Wednesday said they are close to reaching a deal that likely would lead numerous county-based nonprofit organizations, including the group seeking to revamp Rye Playland, to apply to the LDC for aid in floating tens of millions of dollars in bonds for new construction and other expansions.
Under state law, LDCs can aid local nonprofits in floating low-interest, tax-exempt bonds that they wouldn't otherwise be able to sell themselves. LDCs don't necessarily possess assets, generate revenues or incur financial liabilities for taxpayers. Rather, they're a government mechanism designed to lend a hand to organizations fulfilling a public service.
Northern Westchester Hospital, for example, is seeking to ask the LDC for help in raising $36 million to build new operating rooms at its Mount Kisco facility. The hospital plans to save around $6 million in interest and other costs by using the corporation. The project is expected to create 29 long-term jobs.
A year in the making, the deal has the potential to be a rare meeting of the minds between Astorino, who is running for re-election, and Democratic lawmakers, including two who are seeking to unseat him in November. Board of Legislators chairman Ken Jenkins (D-Yonkers) and Legis. Bill Ryan (D-White Plains) are both seeking their party's nomination for county executive.
"The county executive's office and the board have been working on this project together, and they have been having a dialogue in this, and my expectation is that this matter will be resolved shortly," said Ned McCormack, the county executive's communications director.
Legis. Peter Harckham (D-Katonah) agreed, saying the Board of Legislators could vote on the deal next month.
"We're committed to getting an LDC done and getting it done correctly," Harckham said. "I'm confident we can reach a deal, and it will be sooner rather than later."
A key part of the agreement, which legislators are scheduled to discuss during a 10 a.m. committee meeting Thursday, is that lawmakers will appoint two new members of LDC's board, which will be expanded from three to five people. At present, Astorino appoints all three board members.
"In the beginning, people were concerned about transparency and accountability," Harckham said. "It's more democratic, as it were. It's more responsive."
The change allayed disagreements between the county executive and lawmakers that came to a head in October, when legislators refused to approve an Astorino-backed bill to create the LDC. Astorino in response established the corporation himself, claiming he had the legal authority to do so.
But IRS rules about whether the bonds sold through the LDC would be tax-free if the Board of Legislators didn't approve its creation raised questions among nonprofits about whether they wanted to seek the corporations' help.
The last sticking point between Astorino and lawmakers is making sure county taxpayers won't be on the hook to repay bond buyers if a nonprofit fails and can't repay its debt.
Legis. Michael Kaplowitz (D-Somers) said both sides were committed to making sure Westchester County doesn't repeat mistakes like those made by Ramapo officials, who underwrote bonds sold by the town's LDC to support the construction of Provident Bank Park, a minor-league baseball stadium.
Last year, state Comptroller Thomas DiNapoli found that Ramapo taxpayers might be on the hook to pay investors as much as $60 million because the stadium wasn't generating sufficient money to repay its debt.
If Astorino and Democratic lawmakers reach an accord and pass legislation that removes doubts that the LDC can help nonprofits save money, Schwartz said Purchase College SUNY would move quickly to refinance debt held by a nonprofit that's associated with the school.
The refinancing, which would be separate from building the senior residential education center on campus, would save the college about $300,000 a year in interest payments alone, Schwartz estimated.
"Right now, it's money going out the window that we could be devoting to our students," he said.