Nassau County considers wastewater P3

The New York county is seeking a financial advisor as it mulls a concession agreement for its sewer system.

Long Island’s Nassau County has issued a Request for Proposals (RFP) as it seeks to hire a financial advisory firm that will assist the local government in a potential wastewater P3 project.

“The P3 transaction may consist of the concession, lease, or other similar arrangement involving the system, including but not limited to, a public-private partnership,” the county states in the RFP.

According to the RFP, the preferred bidder will be awarded a two-year contract, which the county will have the option of extending by an additional year. The financial advisor’s tasks will include conducting a review of the sewage system in connection with the potential P3 transaction, assisting the county in defining objectives, performing valuation analyses and helping the county structure, plan and negotiate the deal.

Should the county decide to proceed with the P3 transaction, it will follow a two-step process, first issuing a Request for Qualifications (RFQ)  and then an RFP. The county will require at least three qualified proposers to be shortlisted for negotiations. The preferred bidder will have to make an upfront payment of $600 million that the county will use to pay down outstanding debt.

The county had thought about doing this back in late 2011,” Eric Naughton, Nassau's deputy county executive for finance, told Infrastructure Investor in a phone interview on Tuesday. “This is actually the third time the county is issuing a formal RFP […] but it's the first time we have the momentum and support of the board to actually move forward with this RFP process,” he said, referring to the Financial Control Board that has to approve the county’s contracts.

Suez Water Long Island currently operates and manages the system under a 20-year contract that expires in 2035. “They would continue to be the operator for whoever chooses to be the concessionaire,” Naughton said.

In addition to making an upfront payment, the concessionaire would also be required to invest in the system, although the size of the investment is not yet determined. The county has three sewage treatment plants with a total capacity of 147.5 million gallons per day. It has 57 sewage pump stations, 3,000 miles of sewers and about 300,000 individual service connections that serve a population of about 1 million people.

“We’ve done some other PPPs in other arenas like our bus system and our inmate healthcare system as well but nothing of this magnitude,” Nassau County’s budget director Roseann D’Alleva commented. “The revenue required to sustain and operate this system as it is, is approximately $160 million.”