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Nassau County lawmakers consider study of sewer system lease

The Theodore Roosevelt Executive and Legislative Building in

The Theodore Roosevelt Executive and Legislative Building in Mineola, which serves as the seat of Nassau County government, is seen here on June 26, 2012. Photo Credit: Amy Onorato

Nassau lawmakers on Monday are set to consider a contract that would study a potential $1 billion lease of the county’s sprawling sewer system to a private investor.

The County Legislature’s Rules Committee, which approves all contracts on behalf of the full legislature, last Friday added the agreement with Manhattan-based financial advisers KPMG to its agenda — after initially saying it would not call the item.

County Executive Edward Mangano submitted the contract to the legislature last week, after removing a lucrative incentive for the firm. The administration wants KPMG to analyze the pros and cons of a lease, which could provide the county with $650 million to $1 billion in upfront cash to retire debt.

In return, an investor would run the system for decades and collect its user fees. Nassau has three sewage treatment plants, 53 pumping stations and 3,000 miles of sewers.

The advisory contract would pay KPMG as much as $887,568 over two years. Mangano says the company is only guaranteed $197,925 for the first phase of the study to assess the impact of a lease on sewer rates, and whether the county would be better off with the status quo.

If KPMG determines that a lease would benefit the county, it would assess interest from potential investors and review responses.

When Mangano initially submitted KPMG’s contract in July, it had a “success fee” of at least $2.3 million that would be paid to the adviser upon execution of a lease.

After complaints from some county lawmakers and the county’s financial control board, Mangano removed the provision. Payment of the fee would require a separate contract.

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