Nassau's financial control board notified County Executive Edward Mangano on Monday that it will hire its own consultant to examine the county's plan to study leasing its sprawling sewer system to a private investor for as much as $800 million.
Jon Kaiman, chairman of the Nassau Interim Finance Authority, wrote in a letter to Mangano that the NIFA board is not comfortable with the county's proposal to hire consultant KPMG for $45,000 a month for a year to examine the benefits and risks of a possible lease of the county's three sewage treatment plans, 53 pumping stations and 3,000 miles of sewers.
The Republican-controlled Rules Committee of the county legislature approved KPMG's contract last month, but NIFA, which could halt the plan, put off consideration of the deal at its July 1 meeting.
"Our position at this point is neither to accept nor reject the proposal but to give it the in-depth look that a measure of such sweeping proportions requires," Kaiman wrote.
He warned that it will probably take two to three months for NIFA to "explore nature and scope" of the proposal, "the legal and fiscal impacts and risks" and "the best practice and process for obtaining financial firms' expertise . . ."
Mangano Monday said he was "fully supportive" of NIFA taking the time needed to study the deal. "We're all on the same page here," Mangano said. "The goal is to analyze whether that transaction can meet the intended goals." Mangano has said the intent is to reduce debt, stabilize sewer rates and ensure future investment in the wastewater treatment facilities.
After examining proposals received from different consultants, Mangano had selected KPMG, an international audit, tax and advisory firm, as the county's financial adviser.
Democratic legislators on the Rules Committee voted against the contract, questioning whether KPMG could provide an objective opinion because the company would receive 0.45 percent of an adopted lease value. KPMG, for example, would get nearly $3.4 million if the county decides to go with a 49-year lease that would net Nassau $750 million.
NIFA, with a different majority and different chairman, in 2012 had turned down an earlier version of leasing the sewer system, calling it a form of "backdoor borrowing."