$700m asking price in Nassau sewer bid

The suburban New York community has named a price tag for its sewer system and is planning to find a private investor. Industry interest is high.

Nassau County is asking for $700 million in private capital to finance a public-private partnership (PPP) that would let the Long Island, New York suburban enclave hand over control of its sewer system.

Thirteen entities have responded so far, confirmed Katie Grilli-Robles, press secretary for county executive Edward Mangano. It was Mangano, put in charge in 2010, who initiated the would-be PPP.

Grilli-Robles stressed the county did not formally request a $700 million offer, noting Nassau is basing the dollar amount on market feedback.

She went on to explain Mangano will next meet with the Nassau Interim Finance Authority, the county oversight board, before moving forward with a procurement process.

Nassau issued a request for information (RFI) in June for a financier after putting United Water in charge of operating wastewater management for the county. Nassau has counted on New Jersey-based United, the second-largest US water outsourcing provider by revenue with $328 million in 2011, as well as adviser Morgan Stanley to guide its hunt for a private investor.

Wall Street firm Morgan Stanley appointed managing director Perry Offutt to advise Nassau. Offutt led Akron, Ohio, in a previous water privatisation effort. Nassau contracted Morgan Stanley for $5 million.

Morgan Stanley and Offutt had determined a prospective PPP would have a 50-year concession agreement. A potential investor would also have to shell out a $60 million base fee to United Water.

Despite a median income of $92,000 and its close commute to Manhattan, Nassau County has battled to keep out of bankruptcy for the better part of the past decade.

Regardless, Mangano has faced fierce opposition to privatising wastewater management in Nassau amid criticism that a PPP would not provide a long-term solution to fiscal woe.

The county has heralded its one-million-user sewer system as a local monopoly, capable of generating $120 million annually.