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Hempstead sees hurdles and Sea Cliff sees profits with the acquisition of New York American Water

Two local governments investigating the prospects for an acquisition by the city of Nassau County Infrastructure in New York American Water said the proposal would benefit one while the company was preparing to sell, but not so much on the other. I found that there was no profit.

According to state filings, the town of Hempstead will see “serious” consequences if it spends an estimated $ 500 million to acquire the property of the town’s New York American Water and publicize the system. Let’s do it.

Conversely, the village of Sea Cliff, which was also considering acquiring a service area in northern Nassau for 4,365 New York American Water customers, said the proposed acquisition was “for the public good and a pending sale feasible. It’s an alternative. ” $ 607 million Liberty Utilities.

Last year, the State Civil Service Commission called on state authorities and districts to offer a public takeover offer instead of a sale. After completing the investigation, Masapequa Water District has decided that it is possible to acquire the company’s East Masapequa District.

However, Hempstead’s submission suggests a major hurdle for the town’s 114,000 American Water customers.

For one, the town has discovered that removing the Water Department from the tax office would require a tax increase to cover the lost income, so customers wouldn’t see a net cost reduction. The buyout “does not reduce the customer’s net cost because the customer absorbs these costs in their property tax invoice.”

In addition, the $ 500 million cost of acquiring an asset would require Hempstead to issue a $ 500 million debt. “The issuing jurisdiction will experience a debt-bearing scenario that poses a serious risk to the government’s Wall Street credit rating,” said a filing from Hempstead Water Director John L. Reinhardt. “Negative credit rating adjustments will increase the cost of borrowing projects for all municipalities,” Filing said.

The town will also have to spend money to cover the costs associated with dealing with “serious water quality complaints,” that is, costs that can “damage nominal savings” from transactions.

Reinhardt proposed that the state legislature be involved in this process. This is to help address the “massive acquisition costs” associated with the transaction. .. Governor Andrew M. Cuomo has submitted a utility reform bill calling for a survey of the municipalization of Nassau’s New York American Waters region, which has approximately 120,000 customers.

New York American Water is a frequent target for payers and lawmakers for high rates and water quality, and state studies will prove to be “best suited to provide customers with safe and reliable water services.” “. “The deal with Liberty Utilities is in the best interests of our customers,” Linda Dimena said in a statement Wednesday.

DiMenna says that the “fastest way” to lower a customer’s water bill is to “address a special franchise tax that is unfairly imposed on the customer. This is an important issue that must be addressed in both declarations. I admit it’s a problem, “he added.

Meanwhile, a Village of Sea Cliff study found that the newly created North Shore Sea Cliff Water District would be separated as a municipality into a “reliable system with significant financial savings.”

The district uses two existing groundwater wells and two elevated storage tanks currently used by New York American Water, and research shows that the value of the system, including water pipes and fire hydrants, is estimated at $ 19.2 million. Studies show that the current tax paid by New York American Water will save customers even if it is assumed to be a voluntary payment instead of the tax from the new water district. The savings come from abandoning the benefits and eligibility of grants currently unavailable to water companies, as well as exemption from state and local taxes on equipment and other purchases. Studies show that fees could be $ 430 to $ 492 lower annually, and even paying property taxes saved money.

According to a Sea Cliff survey, the area is currently the most expensive body of water on Long Island, and the nearby Jericho waters are the second cheapest. The Seacliffe filing, signed by Mayor Edward L. Lieberman, said: “Ownership is the only reason for this unfair disparity. Municipalities and listed companies motivated solely by the greed and interests of investors. Is. “

David Dennenberg, a consumer watchdog at Long Island Clean Air, Water and Soil, praised Sea Cliff’s discovery, but said Hempstead’s research was inadequate.

“Even if it’s worth $ 500 million, it’s affordable, given the number of payers over 30 years, and profits and taxes,” Dennenberg said of the cost of publicizing the Hempstead district. You can save a lot by removing it from the equation. “

Hempstead sees hurdles and Sea Cliff sees profits with the acquisition of New York American Water

Source link Hempstead sees hurdles and Sea Cliff sees profits with the acquisition of New York American Water

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