Erie County, N.Y., Will Meet With Control Board to Settle on Ban Plan

Erie County, N.Y., officials plan to meet Wednesday with the county's control board to settle on what entity will issue bond anticipation notes for the county, in what appears to be a resolution to a standoff that has gone on for more than a year.

Under a new agreement, whichever entity can sell the Bans more cheaply will issue it. The county and the Erie CountyFiscal Stability Authority have reached agreements in principle on the sale before only to have them collapse, and this one still has a few hurdles to go through. However, authority executive director Kenneth Vetter said that the notes could go to market as soon as the beginning of October.

"There still is some of the construction season left in Erie County - not much, but enough to do some federally funded road projects and to do some things that need to be done," Vetter said. "Everybody realizes the clock is ticking. We need to get together on this."

Neither the authority nor the county can borrow without the other giving its approval. The control board, which has a higher rating, is likely to be able issue the debt more cheaply.

The county and control board had come to an agreement on the Bans in May that said if the authority could have saved more than $100,000, it would do the borrowing; but if savings were projected at less than $100,000, then the county would do the borrowing. That deal appeared to fall apart after the New York Legislature passed a bill that would have allowed the county sell bonds without the control board's approval. Gov. David Paterson has said he intends to veto the bill.

Although County Executive Chris Collins has said he will never allow the control board to do a long-term borrowing, his spokesman Grant Loomis said Collins had suggested the latest compromise which was worked out just before the authority's chairman, Anthony J. Baynes, resigned for health reasons earlier this month.

"As long as we're talking about a 12-month borrowing, a 12-month Ban situation, we are all about saving whatever money we can," Loomis said. "If the control board can save as little as a dollar, the control board should do it."

The Ban proceeds would be used to fund the county's 2007 and 2008 capital programs. The use of short-term borrowing means that at some point the debt would likely be taken out by bonds. Vetter said the Bans could be rolled over for several years.

The note issue was originally expected to be for $63.1 million but county Comptroller Mark Poloncarz's office said the final amount could be as high as $90 million.

The comptroller's office issued a request for proposals for underwriters for the Bans in June but then reissued the RFP this month following upgrades by both Standard & Poor's and Moody's Investors Service.

Moody's raised the county's rating earlier this month to Baa2 with a stable outlook from Baa3. The upgrade followed Standard & Poor's upgrade last month to BBB-plus from BBB. Fitch Ratings assigns it BBB-minus rating. Only Moody's rates the Fiscal Stability Authority, giving it an Aa2.

"It's been a very contentious issue because a lot of people feel the fiscal stability authority has overstepped its bounds," said Maria Whyte, the Democratic majority leader of the county Legislature.

Whyte said that some legislators shared Collins' concern about extending the control board's existence to match the term of any debt issued in its name for the life of 30-year bonds if the board was to issue such debt. The concern arises especially when the county was not at its taxing or debt limits.

Though the county Legislature, which would need to approve borrowing by the control board, might be more receptive to 12-month Bans than it would be to long-term bonds, Whyte said she couldn't say how lawmakers would respond.

"The discussion is moving forward, which is exciting because we have to have something to get us out of this gridlock," she said.

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