Nassau County legislators on Monday delayed approval of a nearly $700,000 contract to study a potential $1 billion lease of the county’s sprawling sewer system to a private investor, citing concerns about possible rate increases and borrowing costs.
The Rules Committee voted unanimously to table a $690,000 contract amendment with Manhattan-based KPMG after 40 minutes of questions, largely from Legis. Howard Kopel (R-Lawrence). The contract extension would allow KPMG to begin exploring firms interested in bidding on the sewer lease.
Kopel suggested the county, which is tax-exempt, can borrow money to repair the system at a lower rate than a private investor and be able to better control the impact on ratepayers.
“We want to make sure we have an analysis that leads to a solution . . .,” he said.
Kopel voted last year to postpone approval of the first phase of the KPMG contract, worth nearly $200,000, but weeks later joined GOP colleagues in approving the agreement.
Nassau County Executive Edward Mangano selected KPMG to examine how a 40-year lease of Nassau’s three sewage treatment plants, 53 pumping stations and 3,000 miles of sewers could impact rates.
A lease could provide Nassau with $750 million to $1 billion in upfront cash to retire outstanding sewer system debt, estimated to reach $572 million in 2019, county officials said. While the legislature would still set rates, the investor would operate the system, make capital improvements and administer a contract Nassau has with a private company, Suez North America, for daily operations.
Eric Naughton, Nassau’s deputy county executive for finance, testified that the county largely has depleted its sewer reserves. Without an investor, businesses and homeowners should expect sewer bills to increase by 11.8 percent in 2018 and 17.5 percent in 2019, Naughton said.
If Nassau maintains the system for the next 40 years, he said, rates would likely increase an average of 3.95 percent annually, compared with 3.4 percent under a private investor — largely through efficiencies such as contracting improvements.
“This is a win-win scenario. We get a system that is debt-free, operated efficiently and properly,” said Naughton. A concessionaire would seek a profit of 11.5 percent to 15 percent a year, he said.
Minority Leader Kevan Abrahams (D-Freeport) called the KPMG contract a “waste of taxpayer dollars.” Abrahams noted that Mangano’s term ends in December and each of three declared candidates for the job is on record opposing a sewer lease.
“It does not make any sense for this legislative body to consider a proposal that, at a future time, the next county executive may totally throw in the trash” Abrahams said.
Mangano, a Republican, has pleaded not guilty to federal corruption charges and has yet to disclose whether he will seek a third term.
Monday also was the final legislative meeting for Legis. Dennis Dunne (R-Levittown), who resigned his seat to pursue an appointment on the Hempstead Town Board. Dunne, an original member of the legislature when it formed in 1996, is expected to be appointed to the board Tuesday to fill the seat of Gary Hudes, who is retiring.
Dunne’s 15th Legislative District seat is expected to remain vacant until November when Nassau Chief Deputy Clerk John Ferretti Jr., a Republican, faces Democrat Michael Sheridan, who operates a group home for developmentally disabled adults.