On his way out as the head of Nassau County’s financial control board, Jon Kaiman sounded an alarm that should be heeded on the county’s on again-off again plan to lease out its sewer system in return for $600 million to $800 million in cash that would then be repaid by residents and businesses over the next 50 years.
The operations of the three treatment plants, pumping stations and pipes have already been taken over by a private company because the county was so admittedly atrocious at running the system. The management savings have already been reaped. All that’s left, then, is a desire by County Executive Edward Mangano to borrow money without calling it borrowing. But if the entire essence of the transaction is the county getting all that money and using it for whatever it chooses, it’s just a loan. And as Kaiman said, the lender will want a profit that sewer users will have to provide, likely with higher-than-necessary fees.
The Nassau Interim Finance Authority has blocked versions of this plan for years. Last year, it refused to let the county hire a consultant that would have pursued the deal and made a handsome profit if it closed. But NIFA also hired its own consultant to look at the “lease” idea, and the consultant recently said there might be a way for the county to hire a financial adviser to pursue a lease or a backdoor borrowing deal.
The county shouldn’t pursue it, and if it does, NIFA shouldn’t allow it. These tawdry financial schemes are why Gov. Andrew M. Cuomo must select someone with financial smarts and the independence to speak out against short-sighted deals that burden the next generation.
The county has more-accepted ways to borrow money; indeed, it has done so to the tune of more than $3.5 billion. If Mangano needs to borrow more, he should issue bonds and be honest about it.
— The editorial board