OK of Nassau plan to sell rent rights seen

A state control board probably will approve Nassau County Executive Edward Mangano's plan to sell the rights to more than $108 million of rental income for a one-time payment of $37.5 million even though it has repeatedly criticized the deal, officials said.

Although the county has yet to close on the sale of 30 years worth of rental payments from 18 Mitchel Field leases, the county legislature two weeks ago approved using money from the deal to cover the Nov. 3 police payroll.

Deputy County Executive Tim Sullivan told lawmakers Monday that he expects the Nassau Interim Finance Authority, a state monitoring board that controls the county's finances, to approve the plan and allow the money to be spent this year.

"If we do approve the transaction, it will only be because the county appears to really need the money in 2011," NIFA member Chris Wright said in an interview. Projections show that Nassau's budget could have a deficit of more than $100 million this year.

But Legis. David Denenberg (D-Merrick) said: "Do I think NIFA should allow one-shots to balance a structural deficit? No. What do you do next year? The practice of using one-shots to balance budgets is a recipe for fiscal disaster."

Denenberg had quizzed Sullivan on Monday during a meeting of the legislature's Finance Committee.

"Do you believe that NIFA will approve the use of the $37.5 million from Mitchel Field securitization for this one shot before the end of the year?" Denenberg asked.

"I believe they will," Sullivan responded, adding NIFA officials had indicated they "would approve it on a budgetary basis for 2011."

NIFA has criticized the Mitchel Field deal since Mangano first proposed it last year. "It's borrowing. It's taking 30 years of revenue and getting it today," NIFA chairman Ronald Stack said in August 2010. NIFA cited the plan as one of the reasons it took control of the county's budget in January and directed Mangano in July not to budget the transaction's revenue.

Since then, Stack has tentatively agreed to allow Nassau to borrow $450 million over four years to pay tax refunds, court judgments and employee severance if Nassau can achieve $150 million in recurring labor savings. Stack referred comment about the lease deal to Wright.

Although the Mitchel Field money will be used to help close the 2011 deficit, the budget technically still won't be in balance. That's because NIFA will view the lease proceeds as borrowed money, which is not revenue under state-required accounting standards, Wright said. A NIFA board meeting to consider the deal has not been scheduled.

On Monday, county legislative committees were asked to formalize a transfer of $35 million from Nassau's contingency fund to cover a shortfall in the police budget. Lawmakers agreed to the transfer when the administration polled them by telephone two weeks ago.

Denenberg noted that the contingency fund was supposed to consist of $25 million from land sales that have yet to occur and $30 million from the Mitchel Field deal, which has yet to close. "We're transferring money that doesn't exist," he said.

County officials said the contingency fund will only be considered to be in deficit if the money doesn't materialize by year end. Until then, the county can pull other money available in the general fund, they said.

Sullivan said the county's deal for the lease revenue with RXR Mitchel Field Investor, a company headed by developer Scott Rechler, should close in three weeks. The legislature approved the contract in April.