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Nassau Interim Finance Authority backs almost all contracts amid county's financial woes

Jon Kaiman, chairman of the Nassau Interim Finanace

Jon Kaiman, chairman of the Nassau Interim Finanace Authority, speaks with Directors Adam Haber, to his left, and Paul J. Leventhal, to his right, during a NIFA meeting held inside the Marriott Long Island Hotel in Uniondale, on Wednesday, Aug. 19, 2015. Credit: Steve Pfost

As Nassau contracts undergo heightened public scrutiny, the state board that oversees county finances is rejecting fewer of them than ever, records show.

The Nassau Interim Finance Authority since 2011 has had final say on most aspects of the county budget, including all contracts of $50,000 and above. It has reviewed 2,349, voting down 11, or less than 1 percent, a Newsday analysis found.

Only one of those disapprovals was after 2013. And in recent months, the NIFA board stopped holding public votes on outside legal counsel and lobbying agreements -- the kind that composed the bulk of what had been previously turned away.

At the same time, large contracts have received automatic approval more frequently. Because NIFA doesn't hold regular meetings, eight pacts have been finalized within the last two years after the board was unable to convene within the 60-day limit for consideration.

That hadn't occurred once during the previous two years.

Two of those contracts -- a $12 million deal with AbTech Industries to treat storm water and $12 million to VIP Splash Waterways Recovery Group to clean storm debris -- have emerged this year in different criminal probes, though neither had generated controversy when NIFA reviewed them.

"The optics of it obviously generates different kinds of perceptions," said NIFA board chairman Jon Kaiman, noting that the unscheduled or canceled meetings that led to the automatic approvals had nothing to do with any contracts.

Still, in light of new scrutiny on the county's contracting process, Kaiman said, "There's a larger question of what role should, and could, NIFA play."

Since April, when reports of criminal probes involving specific county contracts first surfaced, comprehensive reviews of the system were launched by both acting Nassau District Attorney Madeline Singas, a Democrat, and County Executive Edward Mangano, a Republican.

NIFA leaders say they're limited by law to judging contracts on how they impact the budget. More commonly, they say, they exert influence over county borrowing. Good-government advocates, though, say the board can stay within its requirements related to contract oversight and still stop wasteful spending.

"Much of government is about doling out contracts," said Blair Horner of the New York Public Interest Research Group, a watchdog group. "So it would seem it's entirely appropriate for a control board to use its authority in the broadest sense to protect taxpayers."

NIFA policy only requires that contracts above $5 million be considered by its full board at open meetings. Those falling below that threshold are approved either by staff or by the board chairman or his delegate.

The board for several years had made a special exception and held public votes on county attorney contracts of any dollar amount because it initially believed that the Mangano administration wasn't providing needed information for them. Those contracts often go to politically connected law firms.

But Mangano replaced County Attorney John Ciampoli with Carnell Foskey in late 2013, months after Gov. Andrew M. Cuomo replaced NIFA chairman Ronald Stack with Kaiman, a former North Hempstead Town supervisor.

Ciampoli had once sued NIFA for what he alleged was its overreach, while Stack was a frequent critic of the administration. Foskey and Kaiman improved communications between the two sides, leading to the decision this summer to let staff again handle most attorney contracts, officials said.

"From what I see, people are working together as they should," Ciampoli said of the current relationship between Mangano's office and NIFA. Stack could not be reached for comment.

Mangano said Kaiman "has brought governmental administrative experience, which has aided in communication with the county, as well as advanced a solution-based relationship."

While Kaiman recently expressed doubts on contracts to install artificial turf fields at a county park and to hire a consultant to explore leasing Nassau's sewer system to a private investor -- delaying their consideration -- his board hasn't voted down a contract since January 2014. That was to add $125,000 to an agreement with attorney Edward Ambrosino, a Republican Hempstead Town councilman who has held several outside counsel roles with GOP-connected agencies.

Focus only on finances

Under Stack, the NIFA board rejected eight contracts between 2011 and mid-2013, including $22 million to rebuild the county Aquatic Center and, four different times, deals for Nassau to hire lobbyists in Albany.

NIFA has rejected three contracts during Kaiman's tenure, two in late 2013, right after he took over -- though one was approved at the next meeting -- and Ambrosino's pact. His board also approved one of the lobbying contracts that had been voted down under Stack.

Asked whether NIFA should change its contract reviews, Kaiman said, "There needs to be greater clarity on what our role is."

He noted that NIFA's enabling legislation empowers the board to evaluate contracts primarily based on how they fit into the county's multiyear financial plan, not on purpose or the vendor's political ties.

"We're looking to see if they fit within the approved budgetary scheme," Kaiman said.

Mangano last month named his panel to independently review the contracting process and suggest reforms. The panel is being led by Frank Zarb, the first NIFA board chairman.

But regardless of what the panel suggests for NIFA, Chris Wright, a longtime board member and an outspoken critic of county financial practices, pointed out that by the time a contract gets to the authority, it has already been reviewed and approved by the county executive, the county legislature and the elected county comptroller.

"However competent or incompetent, truthful or deceitful, effective or ineffective the others in the process are or may be, unless the approval of a given contract is either outside the budget framework or would blow up the budget, NIFA isn't able to be a counterweight to underperforming elected and appointed officials," Wright said. "That's a matter for other regulators and government officials -- and, ultimately, the voters."

Approval by default

NIFA regulations also require that contracts must be decided on within 60 days from when they are submitted to the authority for review or be automatically approved, even if they would otherwise require a board vote at a public meeting.

Since September 2013, eight contracts have been automatically approved; two later became a subject of the corruption probes.

In October 2013, when NIFA didn't schedule a meeting in time, it automatically approved the $12 million contract with AbTech Industries -- a pact central to a federal corruption case filed in May against state Sen. Dean Skelos (R-Rockville Centre), then Senate majority leader, and his son, Adam.

Prosecutors allege Dean Skelos improperly exerted his influence to get AbTech, which employed Adam Skelos, its contract. County officials were not accused of any wrongdoing, while Dean Skelos denies steering the contract.

Then, in August 2014, NIFA canceled a scheduled board meeting when Kaiman needed a medical procedure. One of five contracts automatically approved as a result added $8 million to the existing storm debris cleanup pact between the county and VIP Splash.

Newsday has reported that VIP Splash incorporated a month before Nassau solicited bids for the job, and that its principals had ties to a nonprofit group that later changed its opposition on a nearly $1 billion deal to privatize management of Nassau's sewer system. VIP Splash also gave $2,925 to the political committee run by Mangano's chief deputy, Rob Walker, a contribution dated in the state elections board system for the same day the administration executed the $8 million amendment, which brought the contract's total value to $12 million.

Singas' office is investigating the VIP Splash contract, though no charges have been filed.

Questions on role

To avoid future automatic contract approvals, Kaiman said NIFA may soon schedule regular meetings. The board now meets only when there is enough business, usually once every four to eight weeks.

"Then this would be less likely to happen," Kaiman said.

As for how far NIFA should wade into evaluating the content of contracts -- along with their budget impact -- he said "there are questions about stepping on other folks' responsibilities. On the other hand, we want to be sure we're comfortable with what we approve."

George Marlin, a former NIFA member who has criticized the current leadership, said the board should lean toward exerting more oversight.

"It's time for NIFA to employ the same review they did in earlier years," Marlin said, "to carefully review legal contracts and others that appear to be politically connected."

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