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Nassau panels delay vote on sewer hookup for Oheka Castle condos

A view of the Oheka Castle property in

A view of the Oheka Castle property in Huntington in 2010. Credit: Kevin P. Coughlin

Nassau County Executive Edward Mangano’s administration is advancing a six-year-old proposal for a cross-county sewer hookup for a condominium plan at Oheka Castle.

In a 63-page filing in advance of a legislative vote this month, two Mangano administration agencies have given their approval for the project — a Nassau sewage connection for Cold Spring Hills Development, a 191-unit condominium project by Oheka Castle owner Gary Melius in West Hills. The castle is in foreclosure proceedings that Melius is contesting in court.

While the property is in Suffolk County, it borders Nassau County.

Three committees of the Nassau County legislature had been expected to review the proposal Wednesday, but the legislature’s GOP majority pulled the item, citing incomplete campaign finance disclosure forms, said spokesman Frank Moroney. The item, he said, will be reconsidered once the forms are updated and resubmitted.

The $425,000 that Melius has already paid to connect to the Nassau sewer system in advance of legislative approval is about 10 times less than it would have paid had it connected to the sewer system in Suffolk, and it’s about half of what another, smaller project a short distance away paid for a similar cross-county hookup, according to records and interviews.

A change three years ago in the way Nassau’s Department of Public Works calculates the fee resulted in lowering the charge for Cold Spring Hills, and other developers, by hundreds of thousands of dollars or more by basing it on the predevelopment value of the property instead of the anticipated value once the development is complete.

Joseph Davenport, chief sanitary engineer for Nassau Public Works, was asked specifically why Kensington Estates, a proposed development of 80 garden apartments and three single-family homes, was paying twice the fee for one-third the wastewater. He noted in a timeline that Cold Spring Hills agreed to its charges and fees in January 2014, while Kensington’s connection fees and other charges were agreed to in May 2012.

“Subsequent to Kensington, that formula has been revisited and now we’re using the existing assessed value of the property,” he said. “That’s why the costs have been less.”

Three other out-of-district projects — Glenwood Landing, Bristal at Jericho and Glen Head Commons — have benefited from the change, a Nassau official said.

“We hope they appreciate the merits of the application and approve it,” said Michael McCarthy, an attorney for Cold Spring Hills. “It certainly makes sense from an environmental perspective,” he added, noting that the sewer-system hookup would prevent the need for an on-site septic or treatment system.

Melius: ‘They didn’t do that for me’

In an interview Tuesday, Melius said his company paid the fee negotiated with the county, and he declined to speculate on why Nassau had changed the fee structure.

“I have no idea why they did that,” he said, noting he was told the terms for the connection and he paid them, nothing more. “They didn’t do that for me.” A Nassau official indicated the change came about as a result of a request by another developer in 2012.

Melius said he has been “talking to everybody” in an attempt to find a partner or another way of developing the condo project.

The project will go before the legislature as Mangano is expected to end his two-term tenure at year’s end. He is facing federal charges of accepting bribes and kickbacks from local restaurateur Harendra Singh. Mangano and his wife, Linda Mangano, who was separately indicted on obstruction of justice and other charges, have pleaded not guilty.

In the filing for the Cold Spring Hills Development, Melius discloses that he has complied with a June 2014 federal grand-jury subpoena seeking records of “my various businesses’ regularly conducted activities.”

In addition, the document notes, Melius, Oheka Castle and the Elena Melius Foundation, named for his mother, were issued separate subpoenas by the state attorney general’s office for documents and information about his nonprofit foundation and his court-appointed receivership work. All have been subjects of Newsday investigations. Melius has strongly denied any wrongdoing.

Melius in the filing notes the investigations have not resulted in any charges and says the inquiries “have been prompted and continued based on misleading and unfair press coverage, which itself is politically motivated.”

The application by Cold Spring Hills lists “none” under the question of whether Melius, his company or officers made campaign contributions to county officials dating to April 1, 2016 — the start of new county disclosure rules — including the county executive, clerk and legislators. Melius signed the disclosure on April 27, 2017.

Records show Melius and his wife, Pamela, donated $500 on April 11 to the campaign of Nassau legislative presiding officer Norma Gonsalves (R-East Meadow). Melius also gave $500 to the campaign of county clerk Maureen O’Connell in February, the records show.

Lawyer: Omission my oversight

Cold Spring Hills attorney McCarthy said his client contacted Nassau Public Works Wednesday to add the recent contributions to the form. McCarthy said the oversight was his own, saying he neglected to ask Melius if there were updates to a previously filed form before he refiled it earlier this year.

In a separate section of the filing called the Sewage Disposal Agreement, Cold Spring Hills discloses it would pay several one-time fees: a $425,000 “equalization” (connection) charge, $23,000 for a sewer permit, $1,118 for an industrial waste review, an unspecified amount for a construction inspection and an undisclosed annual service fee.

The application includes signed approvals by several county agencies and one state agency that reviewed the project. For instance, it has already received approvals from the county Department of Health and Department of Public Works, signed by Deputy County Executive Rob Walker on June 13, 2016. The project also has the approval of the state Department of Environmental Conservation, according to the documents, which has asked for certain pipe replacements that Nassau said would be paid by Cold Spring Hills.

A similar filing by Triangle Equities, which is developing Kensington Estates near the proposed Cold Spring Hills project, offers a comparison of the cost to connect across county lines before Nassau changed the fee formula.

The Kensington Estates proposal of 80 apartments and three homes would produce about 43,200 gallons of wastewater a day. The contract calls for a connection fee of $969,318 and a sewer permit of $43,077 (plus a $25,000 nonperformance bond).

By comparison, Melius’ development, servicing 191 condos, Oheka and the adjacent golf club, would produce more than three times the wastewater (156,000 gallons) but pay an equalization charge that is less than half: $425,000. The sewer permit would also be less, at $23,000.

Triangle Equities spokeswoman Megan Romano said in a statement, “It’s our understanding that the sewer connection fees are calculated with a formula based on the number of units being developed. Therefore, we wouldn’t know why the Oheka Castle development project would have a lower fee.”

Lester Petracca, president and chief executive of Triangle, is a director of the Nassau County Interim Finance Authority.

Fee based on predevelopment value

Davenport said the county sometime in the past three years changed the formula for the connection fee to base it on the predevelopment value of the property instead of the anticipated value once the development is complete. The effect is to markedly lower the charge for more recent applications.

“The equalization charge methodology was changed so as not to be such a burden that it would hinder future development, but to still protect the interests of those who had contributed towards the capital construction costs of the wastewater facilities,” Davenport said in emailed answers to Newsday questions. It’s unclear why Cold Spring Hills’ sewer permit fee is lower.

The email included a 2012 letter from Glenwood Landing developer Glen Harbor Partners proposing the change in the formula, which Davenport said was ultimately made by the public works commissioner “in consultation with the Office of the County Executive.”

Cold Spring Hills made an “initial inquiry” to the county about a sewer hookup in 2011, Davenport acknowledged, but the county Health Department “did not issue a formal memo in support of the out-of-district connection until January 2015.” Negotiations for the connection fee took place during 2015 and 2016, he said.

Added Melius, “I didn’t get any special treatment. It took me longer than anybody to get my approval. I didn’t get any favors.”

In July 2014, Nassau County legislators approved privatizing the county’s sewer system, agreeing to pay New Jersey-based United Water $57.4 million a year to run its three major wastewater treatment plants, 53 pumping stations and 3,000 miles of sewers.

A handful of out-of-district projects have been processed using the new formula, including Cold Spring Hills.

Davenport noted the change in the calculation “wasn’t handed down as an edict,” but rather was the result of “discussions internally.”

He also said, “Where we calculate the fee we have been open to negotiating how the fee is developed.” Cold Spring Hills paid its fee upfront, he noted, while Kensington will pay in installments as parcels are developed, a factor that worked in Cold Spring Hills’ favor, he added.

Another recently approved project, Glen Head Commons, a 53-unit residential complex in Glen Head that will produce 15,900 gallons of wastewater a day, reached agreement to pay a $101,700 equalization charge, county records show.

Davenport said the county executive isn’t involved in negotiating the fee on such projects, though he is briefed on the project. Mangano would be involved “when the developer first approaches us with the thought they’d like to come into the district. We’ll broach it with the county executive’s office to make sure they approve it.”

Davenport said it’s “not usually” the county executive who signs off on such projects. Walker signed off on the Cold Spring Hills sewer approval in June 2016, according to county documents.

Suffolk planning panel OKd project in 2013

In 2013, the Cold Spring Hills project received the blessing of the Suffolk County Planning Commission. Two major factors in that approval, according to former commission chairman David Calone, were that the condo project would avoid an in-ground septic system and that the estimated 156,000 gallons of sewage a day it would produce would go to Nassau’s Cedar Creek Water Pollution Control Plant via Nassau sewers, and not Suffolk’s Bergen Point Plant Wastewater Treatment Plant in West Babylon via Suffolk’s sewers.

“It’s a relatively simple extension and it made sense to go that way instead of into Suffolk,” Calone said.

Had Cold Spring Hills been forced to tap into the Suffolk sewer line, it would have incurred millions of dollars in costs per mile to reach a connection from Route 25 east to Route 110, near the Walt Whitman Shops. “To run it [to Suffolk] would have been cost-prohibitive,” Calone said. “And the Nassau [connection] is right there.”

Cold Spring Hills lawyer McCarthy agreed. “From a practical standpoint, that [Suffolk site] just isn’t a connection that nearly makes as much sense as Nassau County,” he said.

Had Cold Spring Hills decided to connect to Suffolk’s system, the hookup fee alone would have been $4.68 million, according to a Suffolk official.

Gil Anderson, commissioner of Suffolk County’s Department of Public Works, said there is no negotiating the $30-per-gallon fee, which was set in place by legislation after the county funded a study examining sewer district infrastructure costs.

“It’s a set fee,” he said. “We don’t have any discretion with it.”

The Ronkonkoma Hub project, for instance, has an estimated daily output of 400,000 gallons, and the connection fee is $12 million.

But that’s only part of the cost.

Cold Spring Hills “would have to pay for the construction costs to get to the district,” he said. “They’d have to run piping . . . They would do the construction.”

McCarthy said the Nassau legislature’s OK is “obviously a critical approval.”

“With this we can finalize the subdivision application, and with the map filed and any luck, someone is going to build this project,” he said.

With Robert Brodsky

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