Mangano Vows To Forge Ahead With Nassau Sewer Privatization


Though none of Mangano’s top aides or advisors were present in the basement conference room of the Long Island Marriot in Uniondale to witness NIFA’s dismissal firsthand, the timing couldn’t have been worse—it came roughly two hours before Mangano and his team were to host their third and final public-information session touting the plan’s merits.

Morgan Stanley had been hired by Mangano as an advisor to broker the complex financial transaction and would have received a $5 million finder’s fee if it successfully married the county with a private investor to fund it. The contract aside, the May 17 NIFA meeting quickly devolved into an evisceration of Mangano’s entire sewer plan, with board members seizing upon the opportunity to lambast the deal as nothing but a very costly shell game.


NIFA Director George Marlin was the first to draw blood, initiating the motion to squash the Morgan Stanley arrangement, and likening the sewer scheme to “drawing down the credit line on one’s VISA card at 15 percent interest per year to pay down one’s home mortgage which has a 4-percent annual interest rate.

“This is a form of back-door borrowing,” he blasted. “Potential financial investors who invest money to public-private partnerships expect annual returns of 10 percent to 15 percent. To suggest that a private operator will achieve enough efficiencies to cover most of that cost and that assessments or user fees will increase no more than the rate of inflation—well, anyone who believes that, I have a coliseum in Hempstead I would like to sell them,” Marlin added, taking a jab at Mangano’s failed public referendum last year to have taxpayers pay $400 million for a new Nassau Veterans Memorial Coliseum.

Marlin then attacked what had been one of Team Mangano’s key talking points justifying privatization—that Nassau County’s Sewer Fund Authority is facing “bankruptcy” in 2014, as warned by a 2009 NIFA report—calling it “nonsense,” a “dubious claim,” “false statement” and “red-herring.”

“As for the county’s so-called ‘Debt Reduction Plan,’” he continued, “in my 35 years as an investment banker, I have never come across such an ill-conceived plan. It is an example of bad public finance and if implemented will give private-public partnerships a bad name.”

Marlin’s colleagues on the NIFA board were equally unsparing in their criticism.

“It’s been suggested to us that one of the problems that NIFA has with the project is that we don’t understand it,” charged NIFA Director Christopher Wright. “I would suggest to you that the problem we have with the project is that we do understand it. It’s not a partnership. It’s not some innovative structure that’s going to get trophies handed out at dinners where people send congratulatory notes to each other afterwards. It’s not a wondrous vehicle from municipal finance that’s making its first appearance on the market’s stage.

“It’s a very expensive loan,” he continued. “And it doesn’t deserve approval… I can’t see spending scarce county resources in pursuit of various configurations of a deal I have no intention of approving.”

The board voted 5 to 0, with one abstention, to reject the contract, with other board members also saying that they would ultimately shoot such a sewer proposal down if it ever officially came before the body for a vote.

Despite the thrashing, a defiant and determined Mangano vowed to forge ahead with the controversial sewer privatization proposal, dismissing suggestions that the board’s overwhelming denial was a death sentence.

Mangano stated his intentions during an interview with the Press in his office shortly after NIFA’s rejection and just moments before his administration held its final public-information session on the potential deal.

“We’re going to continue to pursue all the options that I’m discussing in this public meeting and move forward with an RFP [Request for Proposals] to determine whether this option is a good option for the people of Nassau County,” said Mangano, calling NIFA’s comments “a fundamental misunderstanding of the public-private partnership.”

The Republican county executive had hoped NIFA’s board members would have accepted his offer to meet for a briefing “before they entertained the contract,” he said. “Instead, they put the contract down and voted it down.”

Besides, he says: “We didn’t even send them the contract. They obtained a contract and voted on it, on their own.”

“My intention is to again offer to the NIFA board an opportunity to come on in and meet with Morgan Stanley, as well as United Water, so they could really understand the basis of this transaction,” continued Mangano.

“It is not a borrowing,” he insisted. “It is not a loan.”

Mangano’s senior policy advisor, Brian Nevin, told the Press NIFA was “clearly confused” about the sewer plan, adding that the administration has weathered tough words from the fiscal watchdog before.

“They beat up the bus before the bus passed,” he said, referring to the county’s privatization of Long Island Bus last year with Veolia Transportation. “They beat up public-private partnership for inmate health care. That’s passed and has been successful,” he continued, citing the privatization of health care at Nassau County jail. “They’ve beat up the Mitchel Field leases. Those have been successful.”

“We’re going to keep pushing,” he added. “We’re going to keep pushing because it’s in the best interest of the taxpayers.”

Besides NIFA, Mangano’s sewer plan would also require approval from the GOP-controlled county legislature. Presiding Officer Peter Schmitt (R-Massapequa) is “open” to the concept. So is Nassau Republican Chairman Joe Mondello, who told the Press last November a sewer privatization would probably be a “good idea.”

NIFA’s Marlin adamantly disagrees.

“It is the one-shot of one-shots!” he tells the Press. “It is classic, old-fashioned back-door borrowing to get a one-shot revenue that the taxpayers and the ratepayers and the people who use water and sewers will be paying back for the next 30 years so they can plug in the holes in their budgets now.”

A host of others share Marlin’s unhappiness with the proposal.

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