According to a recent study ordered by Gov. Andrew Cuomo and conducted by the state Department of Public Service, the municipalization of New York American Water’s Long Island infrastructure is not only feasible, but also in residents’ best interests.
NYAW provides water to the Bellmore-Merrick area.
“The study determined that such municipalization is both feasible and, under a variety of scenarios, in the public interest,” the DPS report reads, “even with an upfront investment of nearly $800 million for the purchase of NYAW’s assets (or a pro rata amount for parts of the system), ongoing and near-term infrastructure improvements and transaction costs.”
The study was put in motion by Cuomo in early February, and gave the DPS until April 1 to declare its results. Rory Lancman, the department’s special counsel for ratepayer protection, oversaw the study.
The DPS recommended that the State Legislature act quickly to remove the “onerous property tax burden” on NYAW’s ratepayers. Lawmakers had pushed legislation within the state budget that would provide a path for a public takeover, but it has since been removed and will be legislated separately after the budget stalled in the Assembly, according to Sen. John Brooks, a Democrat from Seaford.
If NYAW were granted an exemption from a franchise property tax, lawmakers said, more of a tax burden would be put on ratepayers of other utilities, such as National Grid.
“In virtually every other area of the state, water is not taxed at all,” Brooks said. “So, the fact that NYAW was being taxed, we were effectively subsidizing much of the Island by having a tax that no one else had to pay. It’s how you look at it: The glass is half empty or half full.”
“But I don’t think we should ever tax a natural resource that’s required to support life,” Brooks said. “There never should have been a tax on water to begin with.”
The legislation would have also established a new public authority, likely called the Nassau County Water Authority, as recommended by the DPS. The Water Authority would have the power to purchase all or parts of NYAW’s assets in the county, or obtain them through eminent domain proceedings.
If the authority is established, it could choose to operate the infrastructure itself, contract operations to established public-water providers or merge all or parts of NYAW’s assets into existing water providers.
The report advised that time is of the essence in establishing a public water authority. The state Public Service Commission is still reviewing NYAW’s proposed sale of its Long Island infrastructure to Liberty Utilities for roughly $608 million.
NYAW’s rates are also scheduled to rise as much as 26 percent on May 1.
In addition to Bellmore and Merrick, NYAW serves Wantagh, Seaford and other select areas in the Town of Hempstead and Massapequa. It also serves the Sea Cliff Water District, which includes Sea Cliff and Glen Head, as well as parts of Glenwood Landing, Glen Cove, Old Brookville and Roslyn Harbor.
“This is a comprehensive report,” NYAW President Lynda DiMenna said. “As always, our number one priority is our customers, and we will be reviewing the details of the report to understand the impact on them. We are gratified to see that the governor’s press release and the report acknowledges what we have been saying for years: that the special franchise tax is overly burdensome for New York American Water customers, and tax reform is key to providing affordability for our customers.”
State Sen. Jim Gaughran, a Democrat from Northport whose district includes Sea Cliff Water District communities, also pushed for the legislation to be adopted in the budget, along with Brooks.
“We haven’t given up on anything,” Brooks said. “I believe the creation of a water authority is the right thing to do.”
Cuomo has maintained that a public water authority should encompass all of Nassau County. A Nassau County Water Authority, Gaughran said, could work similarly to the Suffolk County Water Authority, which he chaired from 2010 until he was elected to the Senate in 2018, in that it might consolidate some of the county’s smaller water districts in the future. This could also be a crucial step toward a Long Island-wide water authority, he added, which could deal more effectively with water-quality issues, an aging infrastructure and the protection of underground aquifers.
“It appears that dreams really do come true,” said Agatha Nadel, a director of the public advocacy group North Shore Concerned Citizens, of the study’s findings. “I just can’t think of another issue for this community that could be solved that could be so gratifying and rewarding.”
Claudia Borecky, co-director of Merrick-based advocacy group Long Island Clean Air Water and Soil, said the creation of a Nassau County Water Authority would be “ideal.”
“That would be perfect,” said Borecky, who has been advocating for a public takeover for years. “I’m grateful for the people. If there hadn’t been such a public outcry we wouldn’t have gotten this far.”