Good Morning
Good Morning
Long IslandColumnistsJoye Brown

Nassau sewer lease proposal needs thorough vetting

Nassau County Executive Edward Mangano discusses a new

Nassau County Executive Edward Mangano discusses a new sewer privatization plan on Wednesday, May 18, 2016 in Mineola. Credit: Howard Schnapp

Has Nassau County Executive Edward Mangano — after being rebuffed twice by a state financial control board — found a way to pull in at least $600 million by tapping an investor to run the county’s three sewage plants, 53 pumping stations and 3,000 miles of sewers?

Don’t be surprised if he has, although it’s early in the process.

But what impact would such a plan have on the quality of service for Nassau’s water district residents — and how much they pay?

That, it turns out, will be the, at least, $600-million question — and the one that Nassau officials may want to keep front and center as they examine the implications of such a deal.

In 2011, and again in 2015, Mangano wanted to hire a consultant to help the county navigate its way through the benefits and pitfalls of bringing in an investor.

But the county was stopped, cold in its tracks, by the Nassau Interim Finance Authority, which refused to approve the consultants’ contracts. Back then, the financial control board considered the idea to be a bad one — amounting to what former NIFA board member George Marlin called “backdoor borrowing.”

Now, the situation has changed, with new NIFA chairman Adam Barsky saying he’s open to the county’s hiring an adviser to drill down on the proposal to see whether it’s workable.

So far, there’s interest, as was apparent last week, when nine financial management companies submitted bids to serve as Nassau’s adviser on the project.

In February, NIFA had received a report from its own consultant. The report, by Lamont Financial Services Corp., noted that there was interest among some investors in running Nassau’s system.

How would an investor earn a return of $600 million, and, according to the NIFA consulting report, possibly more? In part from fees the county would collect from residents in Nassau’s sewer districts.

Who would set customer service rates? At this point, officials said, it probably would be Nassau. But there’s a wrinkle — because fees and projected increases could be set by a contract, of up to 49 years, between Nassau and the investor.

Mangano, in an interview Monday, said he was not wedded to going through with a deal. “I’m approaching this with an open mind, weighing what are our options and getting the facts,” he said.

As a report from the county’s independent Office of Budget Review noted last week, Nassau will have to come to some decision on how to fund its sewer needs.

As it is, residents are not being charged the full expense of the service — because the cost, for years, has been subsidized by surplus sewer district funds.

Those funds are projected to be gone by 2018. Before then, Nassau will have to make a few policy decisions:

Should the county raise water district fees? And if so, should the fees rise enough to reflect the actual cost and upkeep of the system?

That’s one possibility. Another is bringing in an investor, who would bear the responsiblity and the cost of making capital improvements. Another benefit, Mangano said, is that the county could use the investor’s upfront payment to pay down debt.

Is that good public policy? Or is it, as NIFA — under former leadership — once described it: Short-term gain for fiscally stressed Nassau, in return for long-term pain for water district residents?

The ball on the proposal is rolling again.

Latest Long Island News