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Despite comptroller's 'compromise' offer, city bond spat could head to court

The Buffalo comptroller has come up with a deal – with strings attached – to pay for $1.6 million in emergency demolitions and tree maintenance and avoid a possible court showdown with the Brown administration and the Common Council.

However, a Wednesday deadline looms for the Council to accept the deal, and there's some question among lawmakers about whether Comptroller Mark J.F. Schroeder's proposal is even allowable under the City Charter, because it would entail the current council binding the hands of future councils.

The $23.2 million capital budget put forward by Mayor Byron W. Brown and approved by the Council this month includes the funding for demolitions and tree maintenance, but Schroeder says those items do not meet the definition of capital projects. He has said he will refuse to sell long-term bonds to fund them because it would stick taxpayers with interest costs for items that should be included in the city's operating budget.

His compromise is to take out short-term bond anticipation notes that would cover $1.6 million while eventually bonding the rest of the capital budget package. That way, the city could pay off the $1.6 million sooner, thereby lowering interest costs, Schroeder said.

But he said he will only agree to do that if lawmakers pass a resolution by their Wednesday meeting that says the Council will never again approve a capital budget that includes emergency demolitions and tree maintenance, and that money for those items would be included in the citywide operating budget from now on.

If the Council doesn't meet the deadline, the offer is off the table "because it takes a lot of prep time to get ready to go to the bond market" in March and April, Schroeder said. But, he added, "my door is always open if they want to talk about it in January and February."

"I tried to come up with the third alternative, and I tried to do it in such a way that we wouldn't be taking it to the  bond market, but there was a creative way I thought that I could do this that would save the taxpayers money," said Schroeder, who outlined his plan during a meeting with Buffalo News editors and reporters to review the city's annual financial report. "I was hopeful that when I went to see them (Council leadership) – it was two weeks ago – that I would hear back from them in a week or so. I haven't heard back from them, so I don't think we're going to hear back."

Council President Darius G. Pridgen said he informed the mayor about Schroeder's proposal and that the council is reviewing it. But he said it's questionable whether the council has the authority to implement such a resolution.

"Today is not the 26th," Pridgen said. "He gave us a deadline for a deal, and we are talking to the membership of the Common Council about his proposal. However, what I have learned thus far is that there is some resistance from council members to limit future councils from making decisions based on a resolution from this present council.

"There is a question whether that takes away the powers of the Common Council and future Common Councils," Pridgen continued. "If you're going to take away the power of the administration, the comptroller or the Common Council, there's a charter way that has to happen, and I'm not positive that can happen simply by resolution because it takes away the power of one of the bodies of government."

The Brown administration did not respond to a request for comment.

If Schroeder refuses to go to the bond market for the disputed items – which have been included in the capital budget as far back as 2002, the Brown administration and some Council members have noted – it would be up to the council to determine a course of action.

Schroeder has argued that it's a bad idea to keep borrowing to pay for emergency demolitions and tree maintenance because the projects' costs increase as the city makes interest payments, that the items do not meet the definition of "capital projects" and because the city's Capital Debt Management Policy requires that bond proceeds be spent only on projects that improve city assets.

Instead, Schroeder recommends funding such items in the citywide operational budget to avoid interest costs.

On the advice of Corporation Counsel Timothy A. Ball that the items, in fact, do fall under the category of capital improvements, the council unanimously approved Brown's $23.2 million capital budget.

Now Schroeder and other officials have not ruled out the possibility that the impasse could end up in court.

"Well, I suppose. I mean I've heard that," Schroeder said. "There had been some talk about that. I don't know really how that works."

At a Finance Committee meeting last month, committee Chairman Richard A. Fontana of the Lovejoy District raised the prospect of a court fight,  saying, "It looks to me like a judge might be deciding this one down the road."

Buffalo capital budget approved; impasse remains over demolition funding

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