Friday, 25 May 2012 00:00I would venture to guess that most residents are not aware that the Nassau County Executive is moving to privatize the sewer system and those that are aware have very little information about how it will happen. Even those of us who are elected to represent you at the legislature have been given no details by the administration as to how this plan is supposed to move forward. The county administration is only saying that a private firm, through a series of complex legal and financial arrangements, will take over from the county the operation, maintenance and improvement of the county’s wastewater management system in what would be the largest public-private sewer partnership in the United States. However, as we experienced when our buses were privatized and the police precincts were reduced, there are no documents for public review.
I am concerned that, like the ill-fated effort last summer to borrow up to $400 million for construction of a new Nassau County Coliseum, this project is moving forward without any notice or opportunity for the public’s questions and concerns to be heard in an impartial forum. Unlike the Coliseum proposal, there will be no opportunity for residents to cast their vote. From what we are told, this privatization proposes to incur monumental debt — perhaps more than one billion dollars — that our children and grandchildren will be paying off for years to come. Most people do not know that the county administration has gone ahead and hired Morgan Stanley at a cost of at least $5 million to engineer the deal between the county, an investor and an operator.
This past Thursday, May 17, the Nassau Interim Finance Authority (NIFA), which took control of Nassau County’s finances, voted against approving the Morgan Stanley contract. NIFA member George Marlin, called it “backdoor borrowing.” In short, the county is intending to pay off $465 million dollars of existing low interest tax-exempt county and sewer debt by incurring an additional $1 billion of debt with higher interest loans that are not tax exempt. Mr. Marlin called the county’s “Debt Reduction Plan” ill-conceived. He said, “It is an example of bad public finance and if implemented will give private-public partnerships a bad name.”
The public sewers currently are within the county’s control. Privatizing our sewers removes this vital public necessity from our scrutiny. Citizens will no longer have a voice on sewer operations. We are now told that United Water has been designated as the company that will take over. United Water’s history demonstrates that rates go up, not down, after privatization. The average rate increase in privatization is over 15 percent per year. Private companies are in business to make a profit and it would seem that they will have to significantly raise rates on Nassau taxpayers in order to recoup the almost $1 billion investment. There have also been adverse environmental consequences in some instances where privatization has occurred. In order to maximize profits, private companies have cut costs by slashing the workforce and by not making the necessary investments into the sewer system infrastructure. This can and has led to potentially dangerous and hazardous environmental problems. For example, billions of gallons of raw and partially treated sewage poured into Lake Michigan after United Water took control of Milwaukee’s sewers. In addition, in 2010, United Water and two employees were charged with 26 counts of violating the Clean Water Act by the Justice Department for allegedly tampering with daily wastewater sampling methods. Our children swim at our beaches and the surrounding waters; we must do all we can to protect them.
I would also like to know how we are going to pay for the service if it is privatized. Will costs be shared by communities without sewers? Will the current sewer taxes simply be absorbed into the total tax bill with sewer fees added to that? If the new state tax cap does not affect private companies, will there be no limit as to how fast and by how much rates can go up? Ultimately, an investor will be giving the county almost $1 billion. They will most certainly expect to be paid back and to make a profit. This is a one-shot infusion of cash that I fear we will be repaying for many years to come.
I hope that we will be able to obtain answers to these questions before the Legislature is asked to vote on this measure. Based on recent history, my colleagues and I may simply be asked to take a leap of faith and support the plan blindly. This troubles me greatly.
As always, I welcome your questions and comments. I can be reached at jbosworth@ nassaucountyny.gov or 516-571-6210.
Nassau County Legislator