They’ve found a way to break their weeks-old deadlock.

Erie County officials and the state-appointed control board might soon borrow the millions of dollars needed for ongoing improvements to roads and bridges, Erie Community College, the zoo and other projects put on the books in 2007.

Officials have focused on a financing device called “mirror bonds,” which have been used before by control boards and the local governments they oversee. For Erie County, mirror bonds will prevent the control board from perpetuating its existence for the decades it will take to repay the $52 million officials want to borrow.

With mirror bonds, the county and the control board each sells a set of bonds. The control board sells its bonds to investors via Wall Street, and the county sells its bonds to the control board for the $52 million the control board will collect from its sale.

The county will then provide the tax revenue that repays the bond holders with interest. But most importantly to county officials, when Erie County’s ravaged credit rating rises into the “A” range some years from now, bond holders will swap their “Erie County Fiscal Stability Authority bonds” for Erie County bonds.

At that point, the control board is no longer a debtor and can’t cite debt as a reason to exist. But taxpayers still would have benefited because the control board, with its superior credit rating, would have secured the loan more cheaply than county government could on its own.

“It’s not a done deal yet,” said County Comptroller Mark C. Poloncarz, “because we still need to determine the financial ramifications.”

In other words, how much money will mirror bonds save compared with simply letting the control board become the government’s borrowing agent with no strings attached — which the County Legislature refuses to allow.

Unlike some other governments in New York with control boards, Erie County has never needed its state overseers to borrow on its behalf. But the control board insists on performing the service because it believes the savings make its involvement worthwhile.

The control board in mid- November refused to let Poloncarz arrange the 2007 loan. The board said it could arrange the deal more cheaply — as soon as the County Legislature asked it to do so, to meet a requirement under the state law governing the Fiscal Stability Authority.

But the Legislature, satisfied with Poloncarz and suspicious of the control board, saw no reason to ask.

So right now, no one has authority to borrow the $52 million for those ongoing repairs and improvements, and to finish paying for the high-definition scoreboard at Ralph Wilson Stadium.

Gov. Eliot L. Spitzer recently said the County Legislature was “not irresponsible” to fear that the control board was trying to perpetuate its existence by securing the long-term loan. He asked his Budget Division to help the parties settle their stalemate.

The Budget Division had found the control board could save $440,000 to $600,000 over the life of a 20-year loan — roughly $25,000 a year — mainly because it can purchase bond insurance more cheaply. Financial advisers are now determining whether those savings remain with mirror bonds.

“We’re open to anything that makes sense for the county,” said control board Vice Chairman Robert Glaser when asked about mirror bonds and their ability to solve the standoff. “We will continue to work with the county and state in terms of coming up with a solution, a good solution.”

Poloncarz and other county officials know they must secure the loan — officially a loan for 2007 — early next year, at the latest, to keep many road projects eligible for federal and state aid.

For example, the federal government will devote a total of $25 million to rebuild the Freeman Road bridge in Orchard Park; Wehrle Drive from Ellicott Creek to Transit Road in Amherst; and Como Park Boulevard from Union Road to Indian Road in Cheektowaga. But federal officials need to see that Erie County is able to contribute its $1.25 million share and seek construction bids by the middle of February, according to County Executive Joel A. Giambra.

When the control board and Poloncarz are OK with the mirror- bonds strategy, Poloncarz will present it to the County Legislature for approval.

The area’s road contractors are waiting. Their group known as FAIR — Fair Apportionment of Infrastructure Revenue — has asked legislators to stop delaying road repairs.

mspina@buffnews.com

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