Nassau County sees minimum of $700 million for sewer plant

Reuters News
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Posted: Jul 12, 2012 6:43 PM
Nassau County sees minimum of $700 million for sewer plant

(Reuters) - New York's cash-poor Nassau County received 13 responses from companies interested in privatizing its sewer and waste water authority for at least $700 million, a spokesman for County Executive Edward Mangano said on Thursday.

A state overseer Nassau's troubled finances and some board members have fiercely opposed a public-private partnership which they consider a one-shot that would fail to solve the county's long-term gap between spending and revenue.

Bruce Nevin, a spokesman for Republican County Executive Edward Mangano, did not say when Nassau might put out a formal request for proposals or select a financier.

"County Executive Mangano will engage in discussions with NIFA," Nevin said, referring to the oversight board, the Nassau Interim Finance Authority.

Located just east of New York City, Nassau is home to many Manhattan commuters. The county has a median income of $93,613, but its strong property tax base has not been sufficient to offset poor financial management. In 2000, the state created a control board to prevent the county from going bankrupt.

Though investment banks and hedge funds have raised hundreds of millions of dollars to invest in public-private partnerships, credit analysts say they should be reserved for new and high-risk projects, such as highways, bridges and tunnels.

Mangano, who took office in January 2010, faces growing demands for cash. On July 6, a judge ordered Nassau to start paying $41 million of refunds it owes on property taxes within 60 days or risk having twice that amount seized from county bank accounts, potentially halting services.

A union lawsuit has blocked Mangano from making unilateral cuts in contracts. Democratic legislators, who are in the minority, have refused to approve more borrowing.

A control board spokesman was not immediately available to comment on Mangano's bid to revive the public-private partnership.

Under Mangano's plan, the rates residents pay for the sewer and waste water authority's services would be frozen for two years; after that they would rise each year at the rate of consumer price index. "The market indicated a preference for maintaining the current billing structure," Nevin said.

In May, the control board rejected a contract for Morgan Stanley to serve as an advisor on a public-private partnership for the sewer and wastewater authority.

(Reporting by Joan Gralla; Editing by David Gregorio)