NIFA Statement, September 2, 2011 – By George J. Marlin
George J. Marlin
Nassau Interim Finance Authority
September 2, 2011
It is essential for Nassau taxpayers to understand that the County’s initiative to privatize the waste water system is not a slam-dunk. There is no guarantee that a transaction can or will be finalized in 2012 or anytime thereafter or that the County will net the $375 million presently included in their 3-year fiscal plan. That is why I support the NIFA resolution calling for contingencies amounting to $150 million of revenues acceptable under applicable GAAP treatment in their 2012 plan.
Before any privatization transaction could be completed, a number of major issues must be addressed. They include the following:
1) The County must determine if the state legislature and the Governor must approve changes in Title 10-D of the New York Public Authorities law that created the Nassau County Sewer and Storm Water Finance Authority. I specifically refer the County to Section 1232-d, Paragraph 10 of the enabling legislation.
2) The County must determine if a wastewater privatization agreement requires the approval of the New York Public Service Commission.
3) The County must determine if their expectation of netting $375 million from a privatization of the County’s wastewater system is achievable. Proceeds from a transaction must first be applied to defeasing approximately $465 million of Authority and County bonded debt and interest payments to the first call date. Only remaining proceeds, if any, could be transferred to the County’s operating fund.
4) The County must determine if the County Legislature is willing to approve a privatization agreement containing terms that convey to private sector operators the authority to impose, to set and, if necessary, to increase residential and commercial usage fees. Presently, the County imposes on recipients of wastewater services assessment levies that are listed on the annual General Tax Bill.
5) The County must determine if the County Legislature is willing to approve a privatization agreement which gives for-profit operators the right to reduce significantly, or to eliminate entirely, the number of union employees at waste water facilities.
6) The County must determine if the County Legislature is willing to approve the use of any net revenues realized from a privatization transaction as a “one shot” to help balance the County’s operating budget. “One shots” do not eliminate structural deficits and excessive reliance on them is frowned upon by rating agencies and financial analysts.
The issues I raise are important ones. It is my hope that the County expeditiously addresses them.Articles/Essays/Op-Ed