The acquisition of Hempstead’s water system turned out to be “feasible” despite a letter called “serious risk”

An independent study of the potential acquisition of Hempstead in the Hempstead region of New York American Water by Hempstead concluded that buyouts were “feasible” and that savings to customers ranged from $ 70 to $ 383 per year.

The survey is in stark contrast to the summary of the survey submitted by the town’s water director in a letter to the State Civil Service Commission, where the deal poses a “serious risk” to the town’s bond rating and is “large.” Accompanied by “acquisition.” cost. A December 31 letter by Hempstead Water Department Commissioner John Reinhardt said, “Water charges will be reduced, but customers will absorb these costs in their property tax invoices, thus reducing net costs. It must not be done. “

However, this study by Walden Environmental Engineering does not draw such direct conclusions, and even finds customer savings if the scenario takes into account “full” payments instead of taxes. The survey also pointed out that the acquisition cost could be about $ 465 million, lower than the “nearly $ 500 million” mentioned in the town letter to PSC.

The town provided a copy of the study on Friday’s . Reinhardt said in an interview that the investigation was submitted to the PSC, but in a publicly-faced proceeding of a state agency considering an alternative to the New York American Water’s proposal to Liberty Utility. Has not submitted.

Reinhardt said the letter to PSC did not mention much of the findings, as it was based on subsequent discussions with the town’s accounting auditor about the possibility of borrowing to pay for the transaction.

“The report provided information about the town and made a macro-scale judgment of the entire transaction,” he said. “I’m saying I can’t because of the debt situation. I can’t do it without some kind of national support,” he said.

However, Walden’s report is clear about the benefits of purchasing.

“The town’s potential acquisition of the water system was determined to be feasible for the expected tangible cost savings for the customer and the intangible cost savings and other benefits for the water system customer.” The December 15 survey concluded.

Senator Todd Kaminsky (D-Long Beach) said he was surprised to find the findings, and the Water Commission’s letter came to a completely different conclusion.

“I think American water payers are obliged to explain why the town doesn’t want to step up on their behalf, based on expert talk,” he said. “Nobody in the town tells me I have never contacted him. ” On this issue, ”including working on alternative national funding programs. “I think this requires more scrutiny and attention.”

In 2019, New York American Water agreed to sell to Liberty Utility for $ 607 million, but consumer groups and civil servants objected, and the public service committee’s required approval of the company was a public takeover. The village of Sea Cliff, also commissioned by Walden, found the acquisition feasible for more than 4,300 New York American Water customers. The Masapequa Aqueduct has also decided that the acquisition is feasible.

“Trading with Liberty Utility is in the best interests of our customers,” said Linda Dimena, president of New York American Water, in a statement, and the tax cuts the company pays are the best way to make water more affordable. Added.

According to a Hempstead study, even in the worst-case scenario where a water customer makes a so-called payment to the town instead of taxes, the customer can see savings while gaining other benefits from public water.

Beyond rate mitigation, “intangible benefits may be realized by town ownership of water systems, including better financial transparency and accountability, synergies and cost savings through local leadership.” The study found.

The newly established municipal water district technically does not have to pay property taxes, but creates payments instead of town taxes to regain the tax base lost when the water company was released. You can arrange to do so. According to a survey, the current estimated tax paid by New York American Water exceeds $ 36 million annually.

The study reported that the newly created town’s water district could “pay the same, similar, or other amount of money to the same tax authority.”

Based on the estimated $ 465 million in value of the system used in the study, the report states: “Each scenario demonstrates a positive range of customer rate reductions (savings) from a low price of $ 70 per year (full pilot) to a high of $ 383 per year (no pilot).” Customer savings. The amount will be “from 8% per year up to 43%”.

Studies show that if the town did not pay any taxes and did not pay the pilot, it could generate up to $ 50.1 million in net income annually for the payment of acquisitions and investment in the water system. Even a full pilot can earn $ 14.49 million.

“The combination of specific customer benefits from various rate easing and various qualitative benefits is sufficient to meet the” public interest “criteria required to declare that this study is feasible.” The report concluded.

Reinhardt said the letter to the state was “to inform the PSC exactly that we are not in a position to acquire it ourselves,” and Hempstead’s “state must be involved in taking over the water.” Must be. ”

He wasn’t a debt expert, but said he turned to the town’s accounting auditor to advise him on the deal. “His statement was that debt burden would be a problem for rating agencies,” he said, pushing up the cost of borrowing for other hempstead debt problems.

The acquisition of Hempstead’s water system turned out to be “feasible” despite a letter called “serious risk”

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