Nassau County, N.Y., Readies $125M Amid Fiscal Uncertainty

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Nassau County, N.Y., plans to competitively market $125 million of general obligation bonds this week as questions linger about its finances.

Earlier this month, Moody’s Investors Service downgraded the county’s long-term ratings one notch to A1 and a county official mentioned that there had been talk of the imposition of a control period by the board that monitors its finances.

The Nassau County Interim Finance Authority, the oversight board, this month hired an outside law firm to review its statutes and powers for the first time.

The deal is being marketed on Thursday in two series: a tax-exempt series with a par of $53 million and serial maturities from two to 15 years to finance tax-certiorari settlements; and a taxable Build America Bond series with a par of $72 million with maturities from 16 to 25 years to finance various ongoing capital projects.

Public Financial Management Inc. is financial adviser on the deals and ­Orrick Herrington & Sutcliffe LLP is bond counsel.

The deal comes into a crowded end-of-year market with $11.27 billion of bonds scheduled to be sold this week, according to Ipreo LLC and The Bond Buyer.

“Though I’m concerned about the potential supply out there raising my interest rates, I take what the market gives me and I need to close this deal by this year,” said county budget director Jeffrey Nogid.

The pending expiration of the BABs program at the end of the year, unless renewed by Congress, was not a factor in the deal’s structure or timing, Nogid said.

“The deal is the size of what we need for the next six months worth of expenses, roughly,” he said.

Bonding to pay for tax certioraris — successful challenges to property tax assessments — has been a contentious issue. County Executive Ed Mangano asked the county legislature for the authority to sell $75 million of bonds next year for the settlements.

Earlier this month, county lawmakers passed a $2.6 billion operating budget that drew criticism from the NIFA, in part due to plans to sell bonds for the settlements. New York created the oversight board in 2000 to issue bonds and oversee county finances at a time of fiscal crisis.

NIFA has never imposed a control period on the county, which would give the authority powers that include withholding state aid, approving or disapproving contracts and borrowings, and modifying the county’s financial plan.

Speaking at board meeting this month of the Metropolitan Transportation Authority about negotiations between the county and the MTA over funding for Long Island bus service, Mangano’s representative on the MTA board, Patrick Foye, deputy county executive of economic development, raised the issue of a control period.

The “county’s broke,” Foye told the board. “In certain circles, talk about a NIFA control period has increased.”

The authority has retained former New York Court of Appeals Chief Judge Judith Kaye, who is now of counsel at Skadden, Arps, Slate, Meagher & Flom LLP. NIFA chairman Ronald Stack said there was not a particular reason for the timing of the review.

“Our entire statute is being reviewed by Skadden,” Stack said. The review is “just giving us a view of what our powers and responsibilities and obligations are.”

Asked whether NIFA was considering imposing a control period on the county, Stack said, “I can’t comment on any hypotheticals or speculative issues.”

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New York
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