The two Democrats on the Westmoreland County Board of Commissioners hired a financial consultant on Thursday to invest proceeds of a $38 million loan taken out earlier this month.
Republican Commissioner P. Scott Conner voted against the hiring of Arthurs Lestrange and Co. Inc., saying the move was a return to policies enacted by previous administrations of turning over financial work to favored firms without first seeking a better deal.
"It's a real sad day that my colleagues have decided to resort to the policies of the past," Conner said.
Conner had called on commissioners Tom Balya and Tom Ceraso to delay awarding the investment contract and instead solicit proposals from other banking firms.
Conner's call went unheeded, and as a result the company that helped engineer the multimillion loan approved earlier this month will invest those proceeds until they are needed to pay for the various capital projects for which the money was borrowed.
The company will be paid about $41,000 for the work and it is expected those investments will yield the county an additional $200,000 in revenue, according to county finance director Jody Keating.
Arthurs Lestrange, as the county's financial adviser, was paid more than $40,000 in commissions for brokering the $38 million bond issue. The company also receives a $1,500 monthly retainer from the county.
"Arthurs Lestrange has become our agent. That's not independent advice. This administration has said in the past that we need to make sure we're getting the best deal for the taxpayers," Conner said.
After reviewing proposals from several firms, the county initially hired Arthurs Lestrange in September to guide it through its first financial deal in years. Previously the board of commissioners used an unpaid financial adviser, who in turn received hefty commissions for enacting deals that it proposed.
That arrangement was roundly criticized for years by Balya, who called for the process to be opened up to competitive bidding or at least for alternate proposals for financial work to be sought.
Balya yesterday said Conner's criticisms are unfounded.
"He's had weeks to draw up a (request for proposals). All he does is sit on the sidelines and wait until someone proposes something, then criticizes it," Balya said.
Yesterday's hiring was not one that required seeking alternate proposals, Balya said. The actual borrowing to pay for a new high-band radio frequency system for 911, an expanded juvenile detention center, the hiring of an energy savings consultant, and other equipment was competitively bid.
"We haven't had one other firm step up and offer to invest these proceeds. Initiative should be rewarded," Balya said.
Ceraso also said no additional proposals were necessary in this case.
"In a free market system I think it's incumbent upon people who want to do business with the county to contact the county. It's not unique that we have given work to people without (requests for proposals)," Ceraso said.
