The investment community’s first sniffs around the Nassau County sewer system must have smelled pretty good.
Nine firms, including some big players, have submitted bids to become the county’s financial adviser on what could be a $1 billion deal and net them lucrative fees. The county must vet the competing offers carefully — and without political interference — to select a firm with deep experience in restructuring.
This is the third time in five years that County Executive Edward Mangano has tried to pull the county out of its deep financial hole by cashing out a most valuable asset. The county is looking to get more than $600 million up front. The Nassau Interim Finance Authority put the brakes on the first two attempts. Adam Barsky, the latest chairman of the state oversight board, says the plan could have some substantial benefits.
The keen interest in the deal suggests there is a good market now as institutional investors seek assets that guarantee steady returns. And Nassau does have something to offer. Superstorm Sandy held a silver lining for the county as it got $800 million in relief funds from the federal government to repair a system that had been in bad shape. The county has already given up on trying to run the massive waste system effectively. In 2015, it awarded United Water of New Jersey a 20-year contract to manage its three wastewater plants, 53 pumping stations and thousands of pipes.
The county needs to find an adviser that can negotiate a plan that protects ratepayers from huge fee increases and/or less service, and taxpayers from any responsibility for the system’s infrastructure. If not, the deal won’t fly. Nassau County doesn’t have a lot of escape routes from its heavy debt; it should navigate the one it does have very carefully.
— The editorial board