A dispute between the New York City Council and the administration of Mayor David N. Dinkins threatens to delay a multibillion-dollar plan to finance courthouse repairs and construction for the next 15 years.
At issue, city officials say, is the council's role in the financing plan. City Council speaker Peter F. Vallone maintains that the 51-member legislative body must review and approve the bonding program before it can be implemented.
But officials in the Dinkins Administration say the council has no authority to vote on the issue. In an Oct. 12 letter to Vallone, Fritz W. Alexander, the city's deputy mayor for public safety, said, "No formal submission to the council is required .... Authority to approve the terms of the lease agreement is instead vested in the mayor."
Despite the position of the Dinkins Administration, the power struggle may have an immediate impact on the timing of the first leg of the financing plan, which calls for the city to lease projects and transfer bonding responsibility to the New York State Dormitory Authority.
According to state officials, the Public Authorities Control Board is considering whether to postpone a vote on the issue, scheduled for today, because of the dispute. The board must approve bond issues by state agencies such as the Dormitory Authority.
"The situation is fluid," said Claudia Hutton, spokeswoman for the state budget division. "Talks are going on with all interested parties. We will see what we can resolve when the meeting is held." State budget director Rudy F. Runko is chairman of the board.
The financing program calls for the sale of $2.8 billion of bonds during the next 15 years to repair the city's courthouse infrastructure.
Under the plan, the city will lease its court facilities to the Dormitory Authority, which in turn will issue the bonds.
The lease agreement allows the city to diversify its debt load by selling bonds under a different name. In addition, the city can take advantage of some lower lease payments to the authority, which can issue bonds with level debt service.
Unlike the agency's debt, city general obligations are subject to the state's 50 % rule, which forces the city initially to make larger debt service allotments.
Although the courthouse program is mandated by state law, city officials have debated the size and scope of the plan for the past two years.
More recently, officials in the Dinkins Administration have argued with the Dormitory Authority over the selection of firms to underwrite the first deal, scheduled to take place sometime this fall.
But the dispute between the council and the Dinkins Administration adds a new wrinkle to the controversial bonding plan.
Vallone, in his Oct. 13 letter to deputy mayor Alexander, said, "As a first step, the council will formally request an opinion of the [city's] corporation counsel as to this matter."
Vallone, who has also written Dinkins and has formally informed board officials of the dispute, said in a Sept. 30 letter to Alexander that the "council must review the lease before it can authorize such lease as required by the Public Authorities LAW."
Mark Shaw, director of the council's finance division, said the council review is necessary because the members must vote on the yearly debt service appropriations to satisfy the lease agreement between the city and the authority.
The council, Shaw said, also wants a greater role in determining the need for additional bond sales under the court program. He said the council, if given the opportunity, will likely approve the proposed $400 million sale. PaineWebber Inc. will serve as bookrunner on the deal.
But Alexander said the mayor has complete authority to issue the bonds without council approval, based on the findings of the city's legal department.
O. Peter Sherwood, the city's corporation counsel, said he had no comment on the matter.
