Nassau sewer system to be managed by NJ firm under multimillion-dollar deal

Nassau County Executive Edward Mangano has reached a deal for a private company to manage the county's massive sewer system, saying the plan will save at least $233 million over 20 years and improve environmental protection.

The contract between Mangano and United Water of Harrington Park, New Jersey, calls for Nassau to pay the firm $57.4 million a year -- adjusted annually for inflation -- to operate its three major wastewater treatment plants, 53 pumping stations and 3,000 miles of sewers.

The deal needs approval by the GOP-controlled county legislature and the Nassau Interim Finance Authority, a state monitoring board in control of the county's finances.

Most of the savings would come from transferring county workers to United's payroll. Workers that the firm can't absorb will be offered vacant positions elsewhere in county government, Mangano said.

A Wall Street financial consultant hired by Nassau to review the agreement said United Water can save the county $233 million over 20 years through personnel reductions alone.

Counting projected savings due to reduced county overtime, and other reduced expenditures, the agreement could save a total of $379 million, the consultant said.

The county's 2014 sewer district budget is $89.4 million.

"This allows us to tap into industry knowledge, be assured that our managers are staying on top of the learning curve, [and] will implement tested efficiencies which create environmental benefits and savings to all of our taxpayers," said Mangano, who compared the deal to the county's privatization of its NICE bus system in 2011.

Will run three plants

Under the deal, United Water will operate the Bay Park Sewage Treatment Plant in East Rockaway, the Cedar Creek Water Pollution Control Plant in Wantagh, and the Glen Cove Water Pollution Control Plant, which serve a total of 1.16 million residents.

The contract comes as the county is rebuilding Bay Park, which was flooded during superstorm Sandy in 2012 and knocked offline for 57 hours, resulting in spills of untreated and partially treated sewage. The Federal Emergency Management Agency will pick up 90 percent of the $830 million in needed repairs at Bay Park, with the state and the county picking the rest of the bill.

United Water, a subsidiary of Paris-based Suez Environment, is the nation's second-largest private water systems operator. It manages about 100 water or wastewater systems nationwide, including those in Indianapolis and throughout Bergen County, New Jersey.

Gary Albertson, United Water's chief operating officer for the Long Island team, said the company expects to hire at least half of the county's sewer workforce of about 300 people, who currently are paid a total of $39.3 million. All are members of the Civil Service Employees Association, and Mangano said those who aren't hired will take vacant county spots.

Savings required

United Water must provide at least $10 million a year in savings to the county by taking on the salaries and benefits of sewage treatment workers, according to the agreement.

CSEA president Jerry Laricchiuta said he was "not thrilled" the county was privatizing operation of the plants. But he said the union agreed to the deal because Mangano had signed a no-layoff agreement.

"My main concern is making sure that my people stay employed," he said. "So, as long as they follow the agreement, we will not fight this."

Presiding Officer Norma Gonsalves (R-East Meadow) said legislative Republicans "will be supportive of any agreement that has proper environmental controls and is in the taxpayers' financial and economic best interests."

Minority Leader Kevan Abrahams (D-Freeport) said he favored the "concept" of privatizing the sewer system but said Democrats would need time to review the deal.

"This is a multi-million dollar deal," said Abrahams, who plans to ask the independent Office of Legislative Budget Review for a financial analysis. "It deserves at least a couple weeks of scrutiny."

last week the board will conduct a financial analysis of the contract to determine if it's "part of the solution or part of the problem in the county's financial picture."

County officials first discussed the sewer privatization earlier this year as one of the cost-saving methods Nassau would use to pay for $130 million in wage hikes for county employees, Kaiman said. But Mangano said the sewer deal is not related to the labor contracts and is not needed to pay for wage hikes.

Rob Weltner, president of Operation SPLASH, a Freeport-based environmental group that works to improve local water quality, said he initially opposed privatization but changed his mind after touring Bay Park and seeing how it had "fallen into disrepair."

He said the plant needs a private operator with the experience, capital and technology capable of turning it around.

"I am not blaming anyone but I don't believe the county has the capability" to manage the plant, Weltner said.

United Water said it can produce cost savings without rate hikes. Mangano said Nassau will continue to set sewer rates and that the contract would not cause rates to rise.

Skeptical of claims

But Emily Wurth, director of the water program at Food and Water Watch, a Washington, D.C., nonprofit that seeks to ensure food and water safety, said sewer privatizations typically result in rate increases, service problems and workforce cuts.

She said private operators can lack the transparency and accountability of governments.

"The number one goal of a private company is to generate money for their shareholders," Wurth said.

Michael Deane, executive director of the National Association of Water Companies, a Washington, D.C., trade group with United Water as a member, said sewer privatizations are commonplace.

Roughly 73 million Americans -- or nearly a quarter of the population -- are served by private operators, he said.

"Private companies can provide more cost efficiencies and better technology that can save in operating costs," Deane said.

County officials said United Water will have to provide monthly reports on maintenance and operations. Nassau would conduct annual inspections of plants.

United Water would take over management of Cedar Creek and Bay Park upon the contract's approval. The Glen Cove plant is now managed by Severn Trent Services of Fort Washington, Pa. United Water will take over Glen Cove's operation when Severn Trent's contract expires in 2020.