-New York City officials yesterday continued their feud over the selection of firms to serve in a special underwriting bracket of the city's general obligation bond syndicate, delaying the official selection of bond underwriters for yet another day.

The feud, between,officials working for Mayor Rudolph Giuliani and those representing city Comptroller Alan Hevesi, involves the selection of several woman- and minority-owned firms to this bracket of the city's bond underwriting group.

Underwriter selections are completed jointly by city hall and the comptroller's office.

The special bracket will have more seniority than the city's co-management bracket. According to municipal market sources, firms competing for selection include Artemis Capital Group., a woman-owned firm, and M.R. Beal & Co. and WR Lazard, Laidlaw & Mead, both minority-owned firms.

First deputy comptroller Michael Geffrard and city budget director Abraham Lackman could not be reached for comment on the matter.

One city source said both sides are "really not arguing about anything." But the source added that a "discussion" continues regarding the size and composition of the city's co-management group and the special bracket.

Another factor in the delay was yesterday's announcement that PaineWebber Inc. would purchase Kidder, Peabody & Co., a city source said. Both are city bond underwriters and have applied for top positions in the city's bond syndicate.

Another city hall source said the selection could have been made public late last night. But a source in the comptroller's office said that the announcement would not occur until after Monday.

The composition of the special syndicate is one of the last details to be hashed out until an announcement on the city's GO and water authority teams is made public.

The city is expected to select J.P. Morgan Securities; Goldman, Sachs & Co.; Prudential Securities; and Merrill Lynch & Co. as senior managers for its GO team.

The city is also expected to select Lehman Brothers and PaineWebber as senior managers for its water authority group.

Wall Street sources say the city will likely shrink the overall size of its comanagement group, as it has done with the senior manager class. Last year, former Mayor David N. Dinkins and former city Comptroller Elizabeth Holtzman selected seven firms to serve as senior managers in the city's GO syndicate.

Dinkins and Holtzman selected three firms as senior managers for its water authority team. More than 20 firms served as co-manager for the GO group.

In addition, Dinkins and Holtzman selected two firms, Grigsby, Brandford & Co. and Pryor, McClendon, Counts & Co., as senior managers in a special underwriting group for minority-owned firms. As part of their duties, both firms jointly worked as senior managers on a city GO deal.

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