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Private investor eyed to buy Nassau's debt

Nassau County Executive Edward Mangano (March 19, 2012)

Nassau County Executive Edward Mangano (March 19, 2012) Credit: Howard Schnapp

Nassau is proposing a novel plan for a private investor to buy $20 million in county debt to get around Democrats who blocked County Executive Edward Mangano from borrowing to pay property tax refunds this year.

The private investor would pay some 18,000 homeowners who have been waiting a year for their tax refunds, while the county would pay back the investor over time from operating revenue.

County officials and tax protest firms Tuesday lauded the plan as a way to make sure that homeowners receive their money and Nassau saves on interest and borrowing costs. But Democratic lawmakers, surprised by the unexpected legal maneuver, branded it illegal.

Democrats have blocked the county borrowing proposal in a dispute over an unrelated redistricting proposal. The state control board overseeing the county's finances during the fiscal crisis said it would support borrowing to pay the refunds, if the county made recurring cuts in its budget.

Nassau's chief Judge Anthony Marano Tuesday signed an order requested by County Attorney John Ciampoli to begin moving residential judgments from small claims court to the oversight of State Supreme Court Justice Thomas Adams, who generally hears commercial refund cases.

Ciampoli said in court papers that the residential tax protest firms have agreed to sell about $20 million in judgments against the county to a private investor, RPTF Llc of Uniondale.

RPTF will pay the refunds and interest -- which can total as much as 12 percent a year. The county in turn has signed an agreement with the firm to repay its costs over seven years at 5.95 percent interest, with only interest payments due during the first year.

"This settlement provides homeowners with their rightfully owed property tax refund while protecting all taxpayers," Mangano said in a statement.

Ciampoli contended that the deal does not need legislative approval because each residential refund will be settled separately by the court. He added that the county attorney has the authority to pay all claims under $100,000. He also said the deal does not need approval from the county's state control board because Nassau is already obligated to pay the debt.

"Ed Mangano's instructions to me was to find a way to pay taxpayers the refunds we owed them," Ciampoli said. "We managed to come up with a public-private partnership that gets the job done."

Principals of tax protest firms applauded the deal. "I think it's great," said Paola Orsini, owner of Re-Assessment & Evaluation Service Inc. "Residents have waited long enough."

Craig Norberto, of the Tax Correction Agency Inc. in Ronkonkoma, called the move "good news" for homeowners while Sean Acosta, head of Property Tax Reduction Consultants, said, "It's a great thing. The taxpayer is finally going to get paid."

However, Democratic Minority Leader Kevan Abrahams (D-Freeport) said Democrats still view the plan as borrowing, which requires legislative oversight and approval.

"At some point you're using some form of payment to pay them; that's bonding," Abrahams said. "If it looks like a duck, quacks like a duck, it's a duck."

RPTF shares the same address as Arbor Realty Trust, a publicly traded commercial real-estate finance company, but an Arbor spokeswoman could not confirm Tuesday evening whether the two were affiliated. Arbor's president and chief executive is Ivan Kaufman, according to the company's website; he founded the company in 1983.

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