Nassau Comptroller George Maragos has dropped his opposition to a novel proposal for paying $20 million in overdue property tax refunds after officials agreed to offer homeowners a settlement plan directly from the county.
The plan devised by County Attorney John Ciampoli originally called for tax protest firms representing about 18,000 homeowners to sell their debt to a private investment firm in Uniondale. That firm, RPTF, would immediately pay taxpayers their refunds with interest while the county would repay RPTF over seven years at 5.95 percent interest -- half the maximum 12 percent interest rate the county could owe homeowners.
Maragos last week opposed the deal as "third-party financing" that would increase the county's debt. Democratic legislators and some members of the county's financial control board, the Nassau Interim Finance Authority, also termed it borrowing that requires their approval.
Democrats have blocked County Executive Edward Mangano from borrowing to pay the refunds, which range from a high of $27,074 to a low of 62 cents, in an unrelated redistricting dispute.
Thursday, Ciampoli and Maragos announced they had agreed to revise the plan to allow taxpayers to deal directly with the county in setting up a seven-year payment plan at 5.95 percent interest. The payments would come from county operating revenue rather than borrowed funds.
Taxpayers could still choose to sell their refund judgments to an outside private investor, including RPTF, for an immediate payment. They could reach a payment plan with the county and sell that to a private investor. Or they could continue to wait for Nassau to pay their refunds directly.
The revisions "make it clear that the taxpayers who hold judgments are in charge," Maragos and Ciampoli said in a joint statement.
But Minority Leader Kevan Abrahams (D-Freeport) said, "The fact remains this deal is still costing taxpayers more than it has to."
The county's outside bond counsel has issued a legal opinion that the payment plan is not a form of borrowing. Ciampoli wrote a similar opinion.
With the changes, Maragos said Thursday, he now agrees, "It's not a loan. It's going to be paid through the budget process."
Maragos agreed with Ciampoli that the legislature and NIFA do not need to approve the payment plan because each refund will be settled individually by court order.
Tax protest attorney Fred Perry, who represents hundreds of Nassau homeowners who are owed refunds, declined to comment on the details of the deal. "Our clients just want their money," he said.
NIFA member Chris Wright said, "Staff will review the documentation to determine whether NIFA approval is required. However, to be clear, when you have to repay a stated amount of principle with a stated rate of interest, it's debt. And it will appear as debt in the county's financial statements."