The battle between New York City Mayor Rudolph W. Giuliani and city Comptroller Alan G. Hevesi over the selection of a financial adviser continued yesterday with both officials exchanging letters and Giuliani suggesting he can independently select a financial adviser without Hevesi's approval.
Officials from Giuliani's press office did not return repeated telephone calls regarding the matter, but according to a letter obtained by The Bond Buyer dated July 6, Giuliani has asked Hevesi to hire one firm, Public Resources Advisory Group, as the city's adviser.
Officials in the comptroller's office said Hevesi would respond to Giuliani in a letter. The letter will detail why he believes a second firm, P.G. Corbin & Co., a Philadelphia-based firm owned by an African-American woman, Patricia Garrison-Corbin, is needed to assist Public Resources. The letter was not available late yesterday.
Meanwhile, Giuliani said in a press conference yesterday that the March 25 request for proposal document delivered to potential financial advisers is tantamount to a legal contract, and suggested that he will unilaterally appoint Public Resources.
The request for proposal stated that "a financial adviser will be selected from among responding firms." This statement, Giuliani told reporters, means the city is legally required to hire one financial adviser, in this case Public Resources, the firm both his office and the comptroller's office rated the highest among competing companies.
The RFP was signed by Patrice I. Mitchell, Hevesi's deputy comptroller for finance, and Mark Page, Giuliani's deputy budget director.
"We're going to go ahead with the contract with the financial adviser," Giuliani said. "We have a contract. You can't vary it now by trying to put other conditions on it."
Officials in the comptroller's office said Giuliani is misreading the law to equate the RFP with a legally binding contract. These officials say the RFP is written in a way that gives the city latitude in its selections, and allows the city to hire two firms if it chooses.
Michael W. Geffrard, Hevesi's first deputy comptroller, also said that according to the city charter, the mayor's office cannot unilaterally issue bonds. All city bond sales need the comptroller's approval, Geffrard said.
"They don't have any way to do this without us, and they know that," Geffrard said.
One bond counsel familiar with regulations governing New York City's bond sales said Giuliani may act alone and select a financial adviser without Hevesi under "the city's general procurement policy." But he said Giuliani's argument about the binding nature of the language in the RFP is an issue that would have to be studied. In any event, the mayor would need the comptroller to approve any sale of bonds, the source said.
As both offices continue to haggle over the selection of a financial adviser, the city is facing a deadline in completing an important refunding of city debt. Without a financial adviser the city cannot complete a planned $1 billion refunding designed to provide $225 million in budget relief in fiscal 1995.
The city must refund these bonds before August if it is to include in the savings two large debt service payments. By not including these payments, the refunding saves less money and may not produce the $225 million needed to help close a budget gap.
Wall Street executives say the city must have a financial adviser and select underwriters by next week in order to have enough time to complete the refunding by August.