Source: Nassau revisits LI Bus deal

A preview of NICE bus, which will replace A preview of NICE bus, which will replace LI Bus when Veolia Transportation takes over operations of the bus system in Nassau County. Photo Credit: Handout

advertisement | advertise on newsday

Nassau County Executive Edward Mangano plans to take a new look at rejected private bidders to run Long Island Bus after the chosen company's corporate parent said it will sell off its mass transit holdings, a source close to the situation said Wednesday.

As county officials met with Veolia executives to air their concerns and seek assurances on the deal, which still awaits its final approvals, one previous bidder offered to come in and take over Veolia's contract at a cheaper price.

Mangano hedged his bet on Veolia Transportation to run the county bus system following the announcement Tuesday that Veolia's Paris-based parent company, Veolia Environnement SA, is looking to exit the transit business.

Veolia is preparing to take over the bus system, which carries 100,000 daily riders, on Jan. 1, but the contract still must be approved by the county legislature and the Nassau Interim Finance Authority.

The source said Mangano plans to work with financial firm Morgan Stanley to consider other proposals for the bus system, which was put out to bid last year. The other bidders were MV Transit, based in Fairfield, Calif.; and First Transit, based in Cincinnati.

In a letter to Mangano written Wednesday, MV president and chief executive Kevin Klika said MV is willing to assume the county's contract with Veolia "as is" and for $1 million less than Veolia's $106 million-a-year fee.

"The news . . . that Veolia is facing significant financial challenges and plans to exit mass transit raises serious questions about their ability to follow through on the commitments required both for the work and the financial requirements," Klika wrote.

First Transit spokeswoman Jen Biddinger said her company "would certainly be willing to take a look at it if a rebid for the Long Island Bus service would make sense for our business and Nassau County's transportation needs."

Mangano is scheduled to meet with Metropolitan Transportation Authority executive director Joseph Lhota on Tuesday and will discuss a potential extension of its deal with the MTA, which has operated LI Bus for 38 years, sources said.

MTA sources said the agency would want an enforceable new contract and possibly payment up front, if MTA were to continue operating Nassau's buses.

The MTA and Nassau went their separate ways earlier this year after the MTA said it would no longer make up for the county's funding gaps of its bus system and would need $35 million a year to keep existing levels of service. Nassau had been paying $9.1 million and has budgeted just $2.6 for its bus system in 2012.

Veolia senior vice president Dick Alexander said that company representatives met with Mangano and Nassau legislators Wednesday to answer questions and offer assurances that Veolia remains the best option for county bus riders.

"Nothing has happened that would or should change the decision that the county already came to," said Alexander, who noted that the Veolia subsidiary, based in Illinois, is still 50 percent owned by French financial firm Caisse des Dépôts and is keeping its same management in the United States. "A change in one of the stockholders of the company is not reason for it not to be selected."

Legis. Kevan Abrahams (D-Hempstead) was among those who met with Veolia officials Wednesday. He said lawmakers will have to do "some homework on our own" to determine whether Veolia is a safe bet.

He said he was not convinced that Veolia officials who took part in a public hearing on Monday did not know about the sale plan before the news surfaced the next day.

"The perception was that these guys were there on Monday night, and this bomb drops on Tuesday morning," he said. "And they did not mention word one about this."

Alexander said Veolia Transportation officials learned of the planned sale when the parent company made the announcement Tuesday morning.

You also may be interested in: