Report: Nassau sewer deal would save $158 million

Nassau County Executive Edward Mangano with Bertrand Camus, Nassau County Executive Edward Mangano with Bertrand Camus, CEO of United Water discuss sewer privatization on Thursday, June 26, 2014 in Mineola. Photo Credit: Howard Schnapp

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Privatizing management of Nassau County's massive sewer system would save at least $158 million over 20 years -- $73 million less than County Executive Edward Mangano has projected, according to a new legislative budget analysis.

The Office of Legislative Budget Review Monday released its report on Mangano's deal with United Water to run the three major county wastewater treatment plants, 53 pumping stations and 3,000 miles of sewers. It came as the full Nassau County Legislature held a hearing on the privatization in advance of a scheduled Rules Committee vote Friday.

"This is an opportunity to improve our local environment, protect our communities and infrastructure, and make wiser investments in our future," Mangano told lawmakers. He said that even using legislative figures, "Clearly, there's a significant cost reduction here."

Nassau would pay United Water $57.4 million a year -- adjusted annually for inflation -- to run Bay Park Sewage Treatment Plant in East Rockaway, Cedar Creek Water Pollution Control Plant in Wantagh, and Glen Cove Water Pollution Control Plant. The plants serve 1.16 million residents.

A Wall Street financial adviser hired by Mangano estimates that the deal would save $233 million over 20 years, largely from transferring county workers to United Water's payroll. The New Jersey company says it expects to hire about half of the county's 300 sewer workers; the county says the remaining workers would get jobs in other county departments.

The adviser, The PFM Group, said $76 million more could be saved by shifting sewer workers to other departments. The added workers would help reduce overtime and generate increased permit revenues at those agencies, PFM said.

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Nassau would continue to set sewer rates.

Legislative budget office director Maurice Chalmers told lawmakers that his projections were lower than The PFM Group's largely because he didn't include all of the consultant's assumptions about savings on utilities and general expenses.

Still, Chalmers said, the deal "could potentially generate significant savings."

A range of local environmentalists support the privatization. But Eric Weltman of Food & Water Watch, a Washington, D.C., nonprofit consumer rights group on food and water safety, said of United Water's plan to operate with fewer workers: "Experience has shown that significant downsizing following privatization frequently leads to worse customer service."

County officials said regular plant inspections and community meetings will be held and Nassau would remain responsible for all capital improvements.Legislative Republicans and Democrats appeared receptive to the agreement, unlike with a2012 privatization plan.

"We're encouraged by the fact that the new agreement contains some significant protections for taxpayers that were not part of the original plan," said Minority Leader Kevan Abrahams (D-Freeport).

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