New York City Mayor Rudolph Giuliani and Comptroller Alan Hevesi have fought another round in their battle over hiring minority-owned firms.
Giuliani's budget director, Abraham Lackman, recently blocked an attempt by first deputy comptroller Michael Geffrard to officially hire a minorityowned firm along with a. majorityowned firm for the position of financial adviser, according to city sources.
The city's standing policy has been to include a woman- or minorityowned firm in its deals, if necessary by hiring two firms apiece for the financial adviser, underwriter's counsel, and bond counsel slots. But Giuliani announced this spring that the days of inclusion are over.
In their latest tug of war, Hevesi said that P.G. Corbin & Co., a Philadelphiabased firm owned by a black woman, is needed along with Public Resources Advisory Group to fulfill the duties of financial adviser. The mayor wants to appoint only the New York City-based Public Resources.
Although both sides are still talking, city hall sources say the mayor is not going to give in. GiuliarA will only allow P.G. Corbin to be paid out of the comptroller's budget, not his own, the sources say.
For example, both firms recently worked on the city's $1.3 billion general obligation bond deal, but Giuliani is keeping P.G. Corbin from getting paid out of the city's budget.
Geffrard has argued that P.G. Corbin is not only qualified but that its inclusion is essential to the success of the city's massive capital program. In talks with city hall, Geffrard has pointed to Corbin's role in this month's GO deal.
Both Corbin and Public Resources worked on the transaction even though neither is under contract to the city. Staff members in the comptroller's office credit Corbin's owner, Patricia Garrison-Corbin, with helping the city to save money on its last bond deal by advocating an extended retail order period.
City officials say the extension allowed underwriters, led by Merrill Lynch & Co., to book about $300 million in retail orders and to significantly lower the city's borrowing costs.
In a telephone interview, Geffrard said he "continues to work with the mayor's people on this issue." He would not comment further.
Lackman did not return several telephone calls for comment. In a recent speech to a municipal analysts group, Lackman said that both sides have not resolved the issue, although the administration and Hevesi's office are "still talking."
The struggle over the city' s finance adviser appointment began last spring, following a report in The Bond Buyer that the Giuliani Administration had decided to end the city's policy of setting aside underwriting, legal, and finance positions for women and minority-owned firms.
The policy, launched under former Mayor David N. Dinkins, and former city Comptroller Elizabeth Holtzman, called for the appointment of two firms as the city's financial adviser, bond counsel, and underwriter's counsel. Under the policy, the city also carved out special underwriting roles for womanand minority-owned firms.
Giuliani said that the duplication costs too much, particularly given the city's difficult fiscal situation. Hevesi has fought for the inclusion of minority firms, such as Corbin, on the grounds that these firms provide the city with valuable advice on financial and legal matters.