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Senator mulls state takeover of New York American Water

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For his first town hall as a state senator on Feb. 28, Jim Gaughran invited community leaders and local, state and federal lawmakers to discuss New York American Water’s history on the North Shore and possible ways to replace it with a public utility for 4,500 area ratepayers.

“The rates this company has imposed on the community are outrageous,” Gaughran, a Democrat from Northport, said. The goal of the forum, he said, was to “communicate with the public.”

Civic leaders, elected officials and residents have for the past two years condemned NYAW, ever since the state Public Service Commission approved the utility’s request for a rate increase, which is to be phased in over four years. That decision, Glen Head resident Agatha Nadel said, has hiked local water bills by more than 100 percent. “This company is exploiting an essential element to the existence of life,” she said. “If we had public water, it would be managed better at an affordable cost for all the right reasons.”

NYAW’s rate hike prompted the Village of Sea Cliff to sue the PSC. A state Department of Public Service report determined that the company intended “to deceive” state officials over tax filings, causing residents to overpay by a total of $281,000. That led to inquiries by the Nassau County district attorney, the state attorney general, the state comptroller and the federal Government Accountability Office.

“The problem is greed,” said Village Administrator Bruce Kennedy, “and everybody agrees that New York American Water must go.”

In August, former state Sen. Carl Marcellino secured an $80,000 grant to fund a feasibility study to determine whether a public entity could take over NYAW. The village’s Water Service Area Advisory Committee is currently developing a request for proposals.

At the forum, Gaughran said he would request an additional $80,000 in the state budget to increase the scope of the existing study.

Lloyd Nadel, Agatha’s husband, asked the senator if he would introduce legislation this year to authorize a public water authority for Sea Cliff. Gaughran said he would await the results of the feasibility study.

The two options for a public takeover, he explained, would be a water authority, created by state legislation, or a water district, created by a public referendum in conjunction with the Town of Oyster Bay. “Part of the feasibility study is looking at what that would cost, and how you would spread that out over many years,” Gaughran said, “because there would have to be bonding.”

Glen Head resident Lawrence Ruisi, who sat on the panel, said, “Financing a water authority would cost much less than the water bills we’re paying today.”

State Assemblyman Charles Lavine, a Democrat from Glen Cove, warned, however, that condemnations were “lengthy, expensive procedures, and would involve fairly compensating New York American Water for their assets.”

John Cane, of Sea Cliff, asked how successful other communities have been in moving from private to public water. Agatha Nadel said that three communities in California — Felton, Ojai and Monterey — assumed the assets of California American Water, and said she believed the North Shore could do the same in three to five years. Additionally, in 1985, then Assemblyman Thomas DiNapoli introduced legislation to create the Water Authority of Great Neck North, which was signed into law by Gov. Mario Cuomo.

Rob Mazzella, of Glen Head, suggested that the state enact a law prohibiting water privatization, arguing that NYAW services only a small percentage of communities statewide. “If they can’t expand in New York, I think the likelihood of our success would increase,” he said.

Gaughran said he would assess the operations of the PSC and consider legislative solutions that would force the commission to do a better job in regulating private water entities. “The problem is the PSC does not do their job,” he said.

Dan Macari, of Glen Head, asked Gaughran if Gov. Andrew Cuomo had a take on the issue, to which he replied, “I’ve requested a personal meeting . . . to bring this to his attention.”

NYAW declined to comment on the prospect of a public takeover.

The Associated Press reported in 2012 that Aqua America sold its seven New York water systems, including the Sea Cliff service area, to American Water’s New York subsidiary for roughly $39 million in cash. The deal also included $23 million in assumed debt.

In a March 4 NYAW news release, the company stated that the third phase of rate increases for its Long Island customers will begin April 1. North Shore ratepayers using 8,000 gallons per month will see a $72.85 to $74.17 increase in the third year of the hike.