Comptroller: Strong Market for N.Y.C. Debt

As New York City deals with a seemingly endless stream of bad economic news, its chief financial officer looks back to the 1970s for a lesson of what happens when capital investments don't get made.

"It was a dirty city, it was an unsafe city, it was a city that stopped and really didn't have access to capital markets," Comptroller William Thompson Jr., 55, said in an interview. "Things started to crumble around you, and really when it comes to maintenance and other things, you can't put it off forever, so I think we need to continue to issue capital debt."

As the city teetered on bankruptcy during that earlier crisis, it leaned on unions to buy the city's bonds, but that's not necessary during this time around, he said.

"There is a strong market for New York City debt," Thompson said. "We don't have to turn and look at the pension funds and our unions and say, 'Help buy New York City bonds.' There are purchasers both in the retail and institutional world that want to buy our bonds."

Thompson can call on his experience on two sides of the bond business as his office works with the mayor's office to bring debt to market. He was a senior vice president at underwriter George K. Baum & Co. working on municipal deals in the region in the early 1990s.

"He was that rare combination of a genuinely nice guy and a hard worker," said Joseph Bosch, an executive vice president at the firm who was hired at the same time.

Out of nine general obligation deals totaling $5.41 billion sold this year, the city has gone to market with three deals that were either above $1 billion or slightly below, according to Thomson Reuters, but that was before Lehman Brothers Holdings Inc. collapsed in mid-September and the markets froze up.

While the markets have partially thawed, the city has relied more on retail investors and is likely to bring deals to market in the $300 million to $500 million range rather than some of the larger amounts of the past, he said.

As comptroller, Thompson oversees the city's five pension funds and is looking to infrastructure and public-private partnerships as possible investment opportunities. The strategy is still developing and could eventually involve coordination among pension funds in other parts of the country.

"Maybe even some of us come together, maybe 10 of us wind up dipping our toe in together, and at that point it's a very large toe," he said.

Despite the tough times, city and state agencies are still projecting job losses and revenue shortfalls that are smaller than the last downturn, though the bad news continues to get worse. This makes Thompson's message mixed these days.

"Things are tough, things will get tougher, [but] we've been through tougher times before," he said.

Thompson took office amid another financial crisis in 2002 when the city was reeling from the dot-com crash and the Sept. 11, 2001, terrorist attacks.

Some City Council members claimed the city needed continuity in leadership to deal with its current crisis when they voted last month to overturn voter referendums on term limits for themselves and Mayor Michael Bloomberg.

The comptroller, who is running for mayor next year, called that argument "rubbish" and is party to a federal lawsuit that seeks to overturn the City Council vote. Oral arguments for the case are scheduled for Dec. 4.

Michael Cardozo, city corporation counsel, said in a statement that the council and mayor "believe the claims lack merit, and are confident that the court will determine that the amendment to the term limits law was proper and lawful."

According to a Quinnipiac University poll released yesterday, Bloomberg would beat Thompson 49% to 34% if the election were held today. The poll also showed that the billionaire mayor's popularity is sinking, to a 66% rate from 75% in October.

Thompson said he will run for mayor regardless of the outcome of the suit and that the city wasn't harmed in 2002 when a crowd of newcomers came into office.

"The city did better," he said. "We were in a recession, a recession that continued for another two years at least, but I think that group that came in helped to move the city forward."

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