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The original item was published from 7/18/2014 4:22:45 PM to 7/18/2014 4:46:44 PM.

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Posted on: July 18, 2014

[ARCHIVED] Sewer System Privatization Will Save Over $11 M Annually and Benefit the Environment

Mineola, NY-The proposed Agreement with United Water to privatize the County Sewer and Storm Water System’s operation and maintenance is projected to save over $11 million per year or approximately $240 million over 20 years on a Net Present Value (NPV). The Agreement also includes a number of provisions and penalties to improve sewage treatment, and odor controls among other environmental safeguards. The Agreement and Memorandum of Understanding (MOU) with the CSEA Union will not result in any employee layoffs. These operational savings, however, will not be sufficient to overcome the growing shortfall in revenues to fund the Sewer & Storm Water District (“SSW”) as a result of the expected depletion of the fund balance by year-end 2014.

Comptroller George Maragos emphasized, “While the United Water Deal is a solid step towards balancing the financials of the Sewer District, it is quite clear that the $11 million in annual savings from the deal will not be sufficient to overcome the $65 million deficit expected in 2015. Other steps must be taken to increase the Sewer revenues in order to close the deficit gap.”

The SSW will face growing annual financial deficits beginning with 2015 due to expenses for interest cost and capital repayment on SSW debt (managed by the Sewer & Storm Water Finance Authority). The use of the SSW fund balance to subsidize SSW operations will be depleted by year-end 2014 creating an annual deficit of approximately $65 million beginning with 2015, $51 million in 2016 and $50 million in 2017, assuming that United Water will be the operator. Without United Water, these deficits would be even greater.

The Administration had anticipated the projected deficits and decided to enter into the contract with United Water to reduce costs. In addition, the Administration enacted legislation to introduce a sewer fee for non-profits connected to the system in order to generate approximately $14.1 million in new annual revenues. This fee initiative has been suspended by court order at this time.

The Administration and NIFA must find new revenues to fund the SSW operations even under United Water. The projected SSW deficits will place increased pressure on County finances, increase borrowing or result in higher sewer fees depending on how the Administration decides to address the deficits.

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