NIFA to Mangano: No Deal on Sewer Plan

Ronald Stack
Ronald Stack, chairman of the Nassau Interim Finance Authority, left, speaks to the media during a public meeting in Uniondale, N.Y., Wednesday, Jan. 26, 2011. The authority voted unanimously to take control of the county’s finances after it determined that Nassau will most likely run a deficit of more that 1 percent. The decision could eventually lead to a wage freeze for thousands of county employees. (AP Photo/Seth Wenig)
Ronald Stack, chairman of the Nassau Interim Finance Authority, left, speaks to the media during a public meeting in Uniondale, N.Y., Wednesday, Jan. 26, 2011. (AP Photo/Seth Wenig)

A watchdog panel that controls Nassau County’s finances is refusing to sign off on a key contract that would have paved the way for a controversial deal allowing a private company to run the county’s sewer system.

The Nassau Interim Finance Authority voted 5-0 Thursday against a contract with Morgan Stanley worth up to $5 million if the financial services firm were to broker a two-part deal to have an outside company run two of the county’s three sewage treatment plants and a private financier fund the complex financial transaction.

“This is a one-shot,” said NIFA board member Christopher Wright. “One-shots are bad.”

One NIFA member, Robert Wild, abstained from the vote. The GOP-controlled county legislature’s rules committee had approved the contract along party lines last week before sending it to NIFA. Democrats who voted against it in the legislature and local environmental advocates have been critical of the proposal.

Republican County Executive Ed Mangano’s administration had picked New Jersey-based United Water, a subsidiary of Paris, France-based Suez Environnement, to take over operations and maintenance at the troubled Cedar Creek and Bay Park sewage treatment plants, pending fiscal backing including $750 million to $1.3 billion as an upfront lump sum payment and $300 million to $400 million throughout the next 10 years for necessary capital improvements from the as-yet-unnamed financier. The county’s third plant in Glen Cove is currently under contract with another private operator, UK-based Severn Trent.

“The NIFA board is clearly confused about the potential public-private partnership for Nassau’s sewage treatment plants,” Mangano said in a statement after the vote, noting that the plan “is not a loan or borrowing.”

He said without the deal, the sewage plants will fall into further disrepair and the county will be forced to raise property taxes. He had planned to use the estimated $750 million generated from the deal to pay down 25 percent of the county’s $3 billion debt.

NIFA took over Nassau’s finances last year, declared a fiscal crisis and froze county employee wages. The action prompted Mangano to lay off hundreds of workers, privatize the county bus system and consolidate eight police precincts into four.

George Marlin, the most outspoken member of the NIFA board, likened the proposed sewer deal to using a credit card to pay a mortgage. He called Mangano’s sewer plan an “ill-conceived back-door borrowing scheme.”

When asked if the vote was a death sentence for the proposal, Marlin replied, “I hope so.”

The vote came as Mangano has been hosting public meetings with United Water officials to answer questions about the proposal. The third meeting at his office in Mineola was scheduled for Thursday, just after the contract was nixed.

“This is a swift death to the sewage deal,” said Mike Florio, spokesman for the legislative Democratic minority.

-With Rashed Mian