Many municipal market players last week said New York City would be better served by only one financial adviser, despite the city comptroller's contention that two firms are needed.

The debate over the city's selection of a financial adviser began last week, after officials representing Mayor Rudolph Giuliani announced they would block a move by Comptroller Alan Hevesi's staff to appoint two firms as the city's financial adviser, including one minority-owned enterprise. Both the mayor's office and the comptroller's office select firms to serve as financial advisers and bond underwriters.

While both offices have agreed to appoint the New York City-based Public Resources Advisory Group, only Hevesi wants to include a second firm, P.G. Corbin & Co., a Philadelphia firm owned by a black woman, Patricia Garrison Corbin. Both Public Resources and P.G. Corbin served as the city's financial advisers under former Mayor David N. Dinkins and former Comptroller Elizabeth Holtzman.

Hevesi's office said that based on a detailed analysis of the city's financing needs, two firms are required to handle the volume and complexity of work. Hevesi made the analysis public last Thursday.

But Giuliani's office, which has not offered a similar analysis to support its position, said only one firm is needed based on reports of how both firms have worked in prior years. The mayor's office has said the city could save about $500,000 by hiring just Public Resources.

Both offices consider Public Resources their top choice. Hevesi said P.G. Corbin ranked second on its scale, while Giuliani said Corbin rated fourth.

Both sides remained deadlocked late Friday, though unofficial meetings between representatives of the mayor and the comptroller continued.

Amid the stalemate, Wall Street bond underwriters and financial advisers are siding with Giuliani on the issue. Municipal market executives said Public Resources, which has agreed to do the job for about $500,000, has proven it can clearly handle the job by itself.

In addition, several firms that applied for the adviser slot said the cost estimates given to the city were made on the basis that only one firm would handle all the work without help from another party.

"This has everything to do with political patronage and nothing to do with finances," said Mark D. Schwartz, a lawyer and former investment banker. "The city doesn't need two firms."

One financial adviser who does not handle city business but competes with both firms said Public Resources "is clearly the firm that the city looks to."

Officials with Corbin and Public Resources could not be reached for comment.

On Friday, Hevesi continued to insist that the city needs joint financial advisers. In a statement, Hevest said the city can hire two firms for less than the cost of one. Hevesi said the last time the city used one financial adviser was 1989, when CS First Boston charged the city $1.09 million.

Hevesi said Public Resources and P.G. Corbin cost the city $506.000 in 1990, and when the city rehired the firms in 1992, their combined fees amounted to $770,000, still less than the cost of hiring First Boston alone.

"It would be racist to assume that just because P.G. Corbin is owned by an African-American woman the firm is not competent," Hevesi said.

While many municipal market executives have argued the merits of the city's selection, race has played a much wider role on the political front. And last week, the controversy reached a fevered pitch after Deputy Mayor John Dyson used the word "watermelon" in describing City Hall's disagreement with Hevesi. Dyson later apologized for the remark following criticism that the statement was racially motivated.

On Friday, black leaders continued to criticize Dyson's remarks. The Rev. Al Sharpton, speaking on the steps of City Hall, joined other black leaders in calling for Dyson's resignation.

Alphonso E. Tindall Jr., chairman of the National Association of Securities Professionals, a trade group representing minority-owned bond firms, called Dyson's remarks "clearly racist" in a letter to Giuliani.

Hevesi has refused to meet with Dyson on the matter, although a Hevesi spokesman on Friday said the comptroller may be reconsidering. His first deputy, Michael Geffrard, also said he will not meet with Dyson.

Market participants, while denouncing the deputy mayor's comments, lamented that the debate has turned on race and not the issue at hand. "I consider the [watermelon] statement to be deplorable," Schwartz said. "But either P.G. Corbin or [Public Resources] should be the financial adviser. It is clear two firms are not needed."

Steven Dickson and Sharon R. King contributed to this article.

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