Holy Cow! Nassau Control Board to refinance $1.4 billion in debt

NIFA meeting materials

 

 

The Nassau Interim Finance Authority definitely won big in its Game of Chicken with Nassau Republicans.

Remember, Republicans who control the county legislature held up voting on a "declaration of need" that would allow the state-appointed financial control board to refinance county debt.

In return, to pressure Republicans, NIFA held up approval of a new Superior Officers Association contract.

Because Republicans support police, the GOP legislators gave in and approved a declaration of need last month.

But the  declaration of need was a blank check. It didn't limit the amount of refinancing.

When asked after the vote about the amount that was to be refinanced, legislators and staff waived off the question, suggesting maybe $250 million. Newsday reported maybe $500 million. Curran budgeted $473 million in refinancing.

Instead, everyone focused on how much cash would be generated for Curran in this year, when she is running for re-election, and next.  Proponent gushed that the county would save a total $435 million in debt service in 2020, 2021 and 2022. 

Financial watchdogs pointed out that the transaction would cost Nassau much more over the 15-year term of the new borrowing, which would also extend NIFA's life.

It was like the magician's trick of telling the audience  to look at this shiny object in my left hand and don't look at what my right hand is doing.

Now we know what the right hand was doing. It was planning to issue $1.4 billion in general obligation bonds.

Above see the explanation of the resolution NIFA directors are being asked to approve tonight.

Hmmm. No where in the memo does it calculate the cost of issuance.

And here is further explanation:

From NIFA meeting materials 

Again, the shiny object is the $435 million in "budgetary relief" , ie cash, for Curran's budget this year and next.

Notice the part that says "there may be dissavings associated with this transaction" but no amount is stated. Presumably "dissavings" means additional costs.

Ironically, NIFA was created in 2000 during the administration of the late Republican County Executive Tom Gulotta to end Nassau's practice of borrowing to pay operating expenses.

Gulotta today would be proud.