New York City Comptroller Alan G. Hevesi yesterday lashed out at officials in the administratation of Mayor Rudolph W. Giuliani for refusing to appoint a firm owned by a black woman as one of the city's financial advisers.
"It would be terribly wrong to operate on the presumption that because a firm is owned by a minority it is automatically incompetent," Hevesi said in an interview with The Bond Buyer.
Hevesi's office and the Giuliani Administration have been wrangling for almost two weeks over the selection of a financial adviser, a decision that the mayor and comptroller must make together.
Officials with Giuliani, citing the need to save money, said only one financial adviser is necessary, the New York City-based Public Resources Advisory Group.
But Hevesi's financial staff wants two firms, Public Resources and P.G. Corbin & Co., a Philadelphia-based firm owned by an African-American woman, Patricia Garrison-Corbin. Both Public Resources as well as P.G. Cotbin were appointed by-former Mayor David N. Dinkins and former Comptroller Elizabeth Holtzman.
Hevesi's staff, led by first deputy comptroller Michael Geffrard, says the size and complexity of city bond deals make two firms necessary. Public Resources and P.G. Corbin rank first and second on their scale, they say.
The aides said they based their conclusion on a detailed analysis of the city's use of financial advisers. The analysis found that in recent years using two financial advisers has cost the city less than using one, the aides said.
Aides to Hcvesi also say the comptroller, like Dinkins and Holtzman before him, wants the city to make a special effort to include firms owned by women and minorities in city bond issues. But that's not the issue with P.G. Corbin, they said.
Earlier this month, The Bond Buyer reported that Giuliani's finance staff, citing the need to reduce costs, will reverse the Dinkins-Holtzman policy.
But if the city goes without a financial adviser much longer, it may miss the opportunity for a valuable refunding opportunity needed to balance its fiscal 1995 budget. Among other things, the adviser helps the city select underwriters for bond issues, including the planned refunding.
Giuliani's finance team, headed by deputy mayor John Dyson, corporation counsel Paul Crotty, Budget Director Abraham Lackman, and finance commissioner Mark Shaw have determined that hiring a second firm could cost the city as much as $500,000 in additional fees.
"This is another example of the Dinkins policy of hiring on racial criteria," Dyson said. "They are fighting what appears to be like to the death on a black and minority firm based in Philadelphia. We could understand a little bit of their vigor on P.G. Corbin if they were a local firm."
Hevesi, who requested an interview with The Bond Buyer to discuss the matter, said the Giuliani policy is misguided.
"The two firms we recommended are the best in the business," he said. "I hope there is not an ideological commitment to a single financial adviser. We need the expertise of both organizations, and it would be fiscally imprudent not to" hire both.
Hevesi would not say if he has discussed the matter with Giuliani, but sources in City Hall say he has. The mayor, sources say, is fully committed to the recommendations of his financial staff, and has delegated all but the final decision to these officials.
Speaking for the staff, Dyson said that even if the city were to select two financial advisers, P.G. Corbin would not have been one of them. Dyson said P.G. Corbin ranked fourth on City Hall's rating scale, behind the first- placed Public Resources and two other firms.
P.G. Corbin "in our opinion and in the opinion of everyone on Wall Street, all the professional people in my office, or in the budget office, adds very little value" to the city, Dyson said in a telephone interview.
Dyson said Public Resources gave the city a "firm bid" of about $ 550,000 plus $15,000 in expenses to complete all the financial advisory work over the next year. Dyson said P.G. Corbin would do the job for $450,000 plus "undefined" expenses.
"By hiring one firm we save $500,000," Dyson said. "This is consistent with the downsizing of government, which we've been doing."
"Most jurisdictions in the United States have only one financial adviser. There's nothing so unique about what New York is doing that we can't use one," he said.
"The comptroller ought to know a bid from a watermelon," Dyson said.
