LI CLEAN AIR WATER AND SOIL
COUNTY PLAN TO LEASE OUR 

SEWAGE TREATMENT PLANTS


We had a great victory on Monday, September 12, 2016 at the Nassau County Legislature.


LI CAWS wrote to the Nassau County Legislature asking that they reject the contract with KPMG for up to almost $900,000 to seek an investor to lease our sewage treatment plants.  We pointed out that this deal is nothing more than a one-shot influx of $1 billion to pay off county and sewer debt that the County would not have to pay back.  In actuality, we the people, would have to pay the investor back through separate sewer bills.  One legislator saw the light. The Rules Committee tabled it. 


The County is asking the Legislature to approve a contract to evaluate County Executive Ed Mangano’s plan to lease Nassau’s sewage treatment plants (“STPs”) for at least $750 million.


The County’s intent is to pay off $500 million of its bonds for sewer improvements, fill its budget gap and retire some of its county-wide debt. The deal is that Nassau gets at least $750 million, a financial firm gets a guaranteed return of at least 4-8% for 49 years and the taxpayers get to pay it through their sewage rates/tax.  Of course these firms will find it’s a great deal for Nassau -- $600 million plus that is then paid back with a lot of interest by sewage tax/rate payers, who will be billed by a private investment firm.  Found money at other people’s expense!  Unfortunately, we, the taxpayers and really the current owners of Nassau’s STPs, are the other people.  For the County to refinance its debt in a way that will hold its citizenry hostage for 49 years under monopoly conditions by an investment firm that needs to make a profit for its stockholders, is unconscionable.

Bonding for sewer projects is similar to mortgaging your home. A $500 million loan is easily manageable for a sewer system worth $ billions that serves 85% of Nassau County’s residents. Municipal bonds average between 1-2% and are paid back by homeowners and businesses living within the sewer district through their taxes. However, under the County's plan, the proposed investor will set our sewer rates for the next 49 years.  Investors expect at least a 15% return for their investment. We will see our sewer rates skyrocket as sewer charges won’t be subject to the 2% tax cap.  Nassau County will get well over $600 million, and its elected officials will tell us that they created a surplus without raising taxes – but sewer rates will sky rocket to pay off this one shot and the private investment firm’s huge profits. The private investment firm will be given a monopoly over a public necessity and the right to raise rate 4-8% or higher, every year.  There is no other way to see this one shot. In 2012, when Nassau County first contemplated this back-door borrowing, it was reported in Bloomberg News as the “THE BIGGEST ONE-SHOT EVER FOR A NEW YORK MUNICIPALITY.”

 In 2012, NIFA rejected this same plan. "It's not a public-private partnership," said NIFA member Chris Wright, "It's a loan.”  “It's backdoor borrowing," said NIFA member George Marlin. "To use such costly funds to pay down low-interest, tax-exempt county and sewer debt makes no sense. This would be like drawing down the credit line on one's Visa card at 15 percent interest per year to pay down one's home mortgage, which has a 4 percent annual interest rate." 

Mangano needs this deal because he has driven the county into debt and he can only raise county taxes 2% per year. And now that Gov. Cuomo and Mangano have replaced NIFA with political allies, the deal is back. Most of the NIFA members who opposed this back-door borrowing back in 2012 have been replaced with members whom favor private-public partnership, one of whom actually works for the financial firm that first sought to broker the deal.  Of course, the Nassau Legislature should protect the tax payer, but the Republican majority has been nothing but Mangano’s lap dogs.  Under Tom Suozzi, the Republicans opposed privitazation; that changed the day Mangano took office.

Unlike Suffolk, Nassau does not have a policy that prevents the County from using sewer district funds for county-wide purposes.  So, the County can take the sewer district’s account and pay off county-wide debt. It's unfair that only those residing in the sewer district will be paying these sewer charges to the investor, while those who do not live or do business in the district will not see this huge tax increase.

This is a very attractive proposition for both the investor and the county.  The investor will be guaranteed profits from 85% of Nassau County’s residents for the next 49 years and the County will fill its budget-gap for one year and end NIFA's control of its finances.  But the investor will never put a dime back into the STPs, the current improvements and the “ideas” for ocean outfall will all be paid by the upfront lease payment to the county and the county will supposedly then have a ‘surplus.’

 And the burden will fall on us, the people.