NIFA Statement, September 24, 2012 – By George J. Marlin
George J. Marlin
Nassau Interim Finance Authority
September 24, 2012
The County’s proposal to finance property tax judgments is another scheme to evade the approval process to borrow money.
If the County could execute a deal with RPTF LIC of Uniondale (a firm Newsday reports “has not been incorporated and does not have a web site or phone number listed in public records”) it would not be “selling” judgments it would be borrowing money for seven years at an outrageous annual interest rate of 5.95%.
When a government entity sells its unpaid bills or liens or uncollected judgments, it sells them at a deep discount (i.e., 10 cents on a dollar) then it writes down the receivables on its balance sheet and gives up any future claims. The vendor who purchases these government uncollectibles has the right to go out and try to collect the unpaid balances.
The County’s proposal is completely different. The County would not be selling receivables, it would be borrowing money at 5.95% to pay down tax refunds which are listed on the County’s balance sheet as liabilities. County Comptroller Maragos got it right last week when he said the proposal would be “adding millions of dollars of debt to the County’s books.”
The CountyAttorney claims he has the power to settle judgments under $100 thousand. This may be true. But it does not mean he has the authority to borrow money to pay the judgments he settled. That approval must come from the Legislature.
As for the 5.95% annual interest rate, the County announced it would be willing to pay on a seven-year loan—it is an egregious amount. The County could issue tax-exempt municipal bonds for seven years at an approximate rate of 1.50% or lower. The County’s claim that it can issue only 20 year tax-exempt bonds is wrong.
If the County does not abandon this ill-conceived borrowing scheme, County legislators should go into court and request a Temporary Restraining Order (TRO).