Board approves plan to refinance Nassau County, NIFA debt
The Nassau Interim Finance Authority voted Thursday to refinance up to $1.4 billion in existing county and NIFA debt in a bid to save Nassau $435 million over two years as it copes with the economic fallout of the coronavirus pandemic.
Directors of NIFA, a state board that controls county finances, approved the deal Thursday night by a vote of 4-0.
The plan would save Nassau $285 million in debt service in 2021 and $150 million in 2022. NIFA and county officials said refinancing was needed to avert massive budget cuts and staff layoffs.
In December, the Nassau Legislature gave NIFA permission to refinance the county's debt.
It took months for Republicans, who control the Legislature, to agree to allow NIFA to refinance the debt. After months of negotiations, Republicans finally agreed to granting NIFA the permission, which is called a "declaration of need."
Both county and NIFA officials advocated strongly for the refinancing. NIFA has a higher credit rating than Nassau, which gives it access to better interest rates. NIFA would carry Nassau's debt through 2035.
NIFA Chairman Adam Barsky said in an interview, "it may be one of the most important transactions Nassau County has ever had." In 20 years, he said, it may be viewed as instrumental in "how they get out of the pandemic in unprecedented times."
"It will be the lowest rate the county has ever seen in its history, and true for NIFA as well," Barsky said earlier Thursday.
NIFA hasn't been able to refinance county debt since 2007. State legislation, approved last spring, lets NIFA restructure the county debt through 2021. The bonds must mature by no later than 2051.
Republicans had balked at the proposal, expressing concern that extending NIFA's debt would also prolong the board's existence for decades to come.
But NIFA officials received a legal memo from outside counsel, Skadden Arps, that said NIFA can stick around until 2051, so long as it is fiscally prudent.
On Thursday, the Fitch Ratings agency assigned NIFA's bonds with a triple-A rating, the highest rating level. That designation reflects the "lowest expectation of default risk."
The State Legislature established NIFA in 2000.
By restructuring bonds, Nassau and NIFA will make smaller-sized debt payments to creditors over the next two years, but larger payments in future years.
The restructure will free up dollars that Nassau will use to plug budget holes.
With NIFA able to postpone large debt payments, it can provide more sales tax revenue to the county.
NIFA has first rights to the sales tax due to Nassau, and uses it to fund its operating budget and debt before providing the rest to the county.
Scott Eidler is a deputy editor for the towns department at Newsday. Scott has worked at Newsday since 2012 and previously covered municipal government and education.
