Ronald A. Stack, chairman of the Nassau County Interim Finance...

Ronald A. Stack, chairman of the Nassau County Interim Finance Authority or NIFA, speaks with reporters following a meeting in Uniondale. (July 14, 2011) Credit: Newsday/John Paraskevas

The state control board that took over Nassau's finances in January Thursday expressed reservations about County Executive Edward Mangano's plan to redevelop the Nassau Coliseum with up to $400 million in borrowed money.

The Nassau Interim Finance Authority reported that the total of borrowing to fund the project will exceed $800 million over 30 years when interest costs are included and that property taxes will have to increase 3.5 percent to 4 percent to pay for it.

NIFA also rejected Mangano's recently revised multiyear financial plan, removing $225 million in projected revenues and savings that the county executive had included in his budget for next year, and ordered the county to submit new deficit-closing solutions by July 28.

With just over two weeks until residents head to the polls to vote for the redevelopment project, NIFA issued its most critical review to date of the Coliseum proposal. The control board's approval is needed for the lease agreement with the Islanders hockey team and the borrowing.

The Aug. 1 referendum will ask voters to allow the county to borrow up to $400 million -- $350 million for a new Coliseum, and up to $50 million for a minor league baseball park. Supporters say the project would create jobs, generate increases in tax revenues, and keep the Islanders on Long Island.

While chairman Ronald Stack said NIFA would issue no formal opinion on the project as it is not yet before them, board members made their reservations clear.

"This is a referendum on a property tax increase," said Leonard Steinman. "We will be watching closely to see if the residents of Nassau County, the highest-taxed county in the nation, have an appetite for a property tax increase."

Thomas Stokes said the county had provided "insufficient details" on how their revenue assumptions were derived.

A NIFA fact sheet said individual homeowners would be on the hook for a property tax increase of up to 4 percent, regardless of revenues from the project. That is estimated by the independent Office of Legislative Budget Review to be $58 per year.

County officials concede taxes will go up, but argue that increased revenue from the new arena and ballpark would be used to offset future property tax increases. The county will receive 11.5 percent of all funds at the Coliseum, or a minimum of $14 million annually, officials said.

Mangano, in a statement, said, "Once again NIFA's radical views ignore the revenue (11.5 percent of gross revenue, ticket tax, hotel tax and sales tax) that will be generated as a result of the hub plan. Last year NIFA said we would not have a surplus and, in fact, we ended with a $26 million surplus."

Deputy County Executive Tim Sullivan said the Coliseum revenue would go into the county's general fund. If the referendum is approved by voters and by two-thirds of the county legislature, NIFA will fully examine the project in the context of the county's financial condition, Stack said.

Meanwhile, for the first time since the state agency imposed financial controls, all six board members expressed anger over Nassau's failure to fix the county's $2.6 billion budget. "Take very seriously what we're suggesting and ordering," said board member Chris Wright.

In rejecting Mangano's four-year fiscal plan, NIFA eliminated $150 million in projected revenues from leasing the county's sewer system to a private operator, saying the county had not provided proof it was feasible. It also removed, among other things, $23 million in additional revenue from expanding the red-light camera ticket program, which has been included in past budgets but never realized.

Although Mangano was not at the NIFA meeting, his staff heatedly rejected NIFA's complaints. Sullivan, a former NIFA staff member, said the control board is ignoring its legal responsibility to recommend alternative financial strategies.

NIFA, which calculated a $176 million budget deficit in January, now estimated the fiscal "risks" at $118.8 million despite Mangano's efforts to cut costs through layoffs, early retirements, police reorganization and other measures.

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