Fool’s gold? Public must learn details of NYPA loan

THE RIGHT QUESTIONS J.G. Wentworth offers steep discounts on structured settlements. Instead of doing the real work of cutting waste from the Niagara Falls city budget, Fruscione wants to know if the mayor’s plan to borrow against Niagara Falls’ structured NYPA ettlement is a foolish one? Will he trade a $37 million annuity for $13.45 million, which will be used in part to fund a lot of waste that would otherwise have been cut? Does the public realize that the casino money was never meant to balance the budget? and that the mayor is borrowing against the future to spend today? Could a balanced budget be achieved by curbing a spendthrift mayor and reducing the amount of the NYPA loan?

The Mayor presented his 2013 budget on November 1st at 4p.m. in the Council Chambers. It was a stealth budget: prepared in secret and delivered to the City Council under the radar thirty days late.

Delaying bad news isn’t political leadership, it’s political gamesmanship.
Once revealed, it was easy to see why the mayor withheld the bad news-- News of a tax hike, reduction of services and layoffs. In addition, the spending plan is filled with costs for consultants and unaffordable projects.

The City Council was deep into the process of repairing the mayor’s budget damage when suddenly on Friday, November 9th, the mayor announced a “loan” from the New York Power Authority (NYPA) of $13.45 million.

While the Mayor spoke glowingly to the media of the bail-out-deal, the reality is quite different: Mayor Dyster appears to have pulled a J.G. Wentworth on us.

J.G. Wentworth is the company that pays pennies on the dollar for the money you are owed from a structured settlement. For example, if you won $100,000 in a personal injury suit and you are scheduled to receive $10,000 per year for ten years, you can “sell” your settlement to J.G. Wentworth.

They pay you, possibly, $10,000 in a lump sum. You get $10,000, they get $90,000. There goes your $100,000.

Niagara Falls is scheduled to receive $850,000 per year from NYPA for the next 44 years due to the NYPA relicensing agreement. That totals $37,400,000 for the city. Do the math and you’ll see that Mayor Dyster’s deal nets the city $13,450,000, while NYPA keeps $23,950,000 over the life of the relicensing agreement. Mayor Dyster has negotiated a deal that could damage the city’s finances for decades.

While the Mayor told the press he wants the Council to approve this loan as soon as possible, we’ve seen none of the key details. How long does the city have to pay back the money before losing the 44 year payout?

What if the city does default, do we simply say goodbye to the $23,950,000? Or do we say goodbye when we sign for the lump sum?

What if the casino funds never arrive? With no casino funds how do we pay back the NYPA loan? And, who wrote the restrictive language into the loan that limits how the money can be spent?

The mayor told the media this agreement took weeks of careful negotiation. That’s hard to believe. The average person can phone J.G. Wentworth and be hooked up with an equally proportionate bad agreement in a week. Also, I have to question the NYPA board in believing this loan is good for Niagara Falls.

Since the release of the mayor’s budget my phone hasn’t stopped ringing. City residents have expressed frustration in being targeted for more taxes. The mayor is wrong to reach into their pockets when he has spent millions in casino revenue, mismanaged the construction of the courthouse, given unconscionable amounts of money to consultants and is moving full speed ahead on a train station we can’t afford to maintain.

The fact is, the Council has worked with the mayor in good faith and we have given him wide berth on any number of occasions. We waited patiently as he held his budget secret for thirty days. And now Mayor Dyster has thrown another curve at the Council and taxpayers, with this questionable NYPA arrangement.

The City Council will move forward to develop a budget for 2013. When it’s complete we’ll present it to the mayor in good faith, knowing that we’ve done the best possible job under unusual circumstances. To that end we have a plan to reduce the mayor’s proposed tax increase, restore services, and avoid layoffs.

Throughout the course of the budget deliberations the City Council has been fair and responsible in representing the interests of our residents. We will continue in a spirit of transparent government to shape a better, more thoughtful spending plan for the city.

At 7p.m. on Tuesday, November 13th, 2012 the City Council will hold a public hearing at City Hall, allowing our residents to share their thoughts on the 2013 budget. At that time we will also review the NYPA loan.

I hope to see you at City Hall on November 13th.

Sam Fruscione is the Chairman of the Niagara Falls City Council. He resides in the city with his wife and two daughters.