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Poloncarz alleges loan efforts were undermined

The Erie County comptroller on Friday said a professional adviser to the state-appointed control board undermined his ability to borrow money for the government by phoning some of the firms he wanted to use to talk them out of prices they had offered.

"I thought the control board was here to help us," Comptroller Mark C. Poloncarz told control board members as they insisted that their organization and their stable of consultants, not Poloncarz's, should borrow money on the county government's behalf.

The board's vice chairman, Robert Glaser, said a control board lawyer should start "a small investigation" into the accusation. But the six members present still unanimously barred Poloncarz from handling this year's loan for major projects, reasoning they can borrow the $52 million more cheaply. Like Poloncarz, they would repay the sum with county tax dollars.

The control board still needs a County Legislature request to borrow money for government projects. So far, most legislators have been reluctant to ask. Like Poloncarz, lawmakers foresee a day when the control board is no longer necessary but don't see it being dismantled if it's repaying a 20- or 30-year loan.

The control board's vote means that some institutions aching for county money to sustain their ongoing projects will not see checks in the next few days or weeks.

The Buffalo Zoo needs the $4 million the county had promised for its South American Rain Forest Exhibit. And the Buffalo Bills need a total of $5 million to pay Mitsubishi for the high-definition scoreboard it placed at Ralph Wilson Stadium.

Soon after taking Poloncarz out of the borrowing business, the control board then ensured it will stay a so-called hard control board -- able to reject contracts and other decisions made by elected leaders -- by declaring as out of balance the budget County Executive Joel A. Giambra proposed for next year and his four-year forecast.

Giambra and his budget officials predicted the government should not need to raise its tax rate through 2011, well after he leaves office, if certain economies take hold. But the board called some of his predictions unlikely and said income will not meet expenses. Budget Director James M. Hartman tried to show the members flaws in their logic, but it did not matter.

Similarly, Poloncarz's accusations about the control board's financial adviser did not melt the control board's resolve to supplant him as Erie County's borrower. Poloncarz and the control board have dueled in recent weeks over who can borrow more cheaply. Poloncarz agreed the board can get a better price on bond insurance because it has a better credit rating. But he negotiated better fees in most other areas, he said.

On the morning of Oct. 12, Poloncarz and the control board's staff took part in a conference call with officials at the state budget division in Albany. Also on the call was Richard Tortora of Capitol Markets Advisors, the financial adviser serving the control board. Tortora was speaking from an office in Great Neck.

When the parties turned to the rates for bond insurance that Poloncarz had circulated the previous day, Tortora questioned the figures, Poloncarz told the control board Friday. Then Tortora, according to Poloncarz, stated that he had called the firms involved and learned they no longer backed their quotes. Poloncarz was furious.

He didn't accuse the six voting members of complicity. He aimed his charges only at Tortora.

"Instead of being pleased that the county obtained a reasonable rate, the [control board's] representative attempted to increase the county's costs," Poloncarz said. "He admitted it on the teleconference."

At that, control board Executive Director Kenneth Vetter, who had taken part in the conference, tried to shout Poloncarz down.

"That is absolutely not true. Mr. Poloncarz. Stop this. Stick to the facts, please," Vetter said.,

"Well I can stick to the facts," Poloncarz responded. "I believe that on the teleconference, Mr. Tortora specifically said, 'the facts speak for themselves.' "

Poloncarz said that later, he called around to the bond insurers who had informally provided prices. They confirmed what Tortora reported on the conference call: Two no longer stood by their offers as Poloncarz understood them. The third was now offering a range that maxed out at around $100,000 more than before.

Tortora, who works out of Great Neck, could not be reached late Friday to comment.


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