Massapequa Water makes formal offer for former NYAW territory

The Massapequa Water District has made a formal bid to take over part of the service territory formerly controlled by New York American Water, according to an official working on the plan.

The offer made for the approximately 5,800 customers and infrastructure in East Massapequa represents the second major milestone in the water district’s aim to take over a sector of the business that New York American Water sold to Liberty Utilities in January.

Earlier this year, the district initiated formal talks to start the process, setting ground rules as part of a potential sale. Part of the agreement with the state included a promise by Liberty to negotiate in good faith if one or more Nassau entities sought to purchase segments of the system.

Stan Carey, former superintendent for the Massapequa Water District, who is now a consultant working on the buyout for the district, said the offer was acknowledged by Liberty though it is likely to be a starting point for negotiations. He said Liberty has been cooperative.

“I would have to say they’ve been very responsive so far and they seem to be open to negotiating with us,” he said, though he cautioned negotiations were in the earliest phases.

The district’s opening offer of $12.3 million is below the $21 million Massapequa Water estimated in a 2020 feasibility study it would ultimately pay for the service area, and lower than the estimated $26 million expected to be borrowed to fund the purchase, including upgrades. The district said it could lower rates for about 80% of former NYAW customers in East Massapequa though the buyout. Carey said the initial offer was based on a figure released by New York American Water during its sale, which was approved by the Public Service Commission. 

“We were required to put a starting negotiating point in the [formal] offer,” he said. “We used the same number that New York American Water provided to the PSC, which was lowball number representing net book value as part of the sale to complete the sale.”

The next step would be for Liberty to make a counteroffer. A spokeswoman for Liberty declined to comment.

Liberty as part of its agreement with the PSC that paved the way for the purchase of New York American Water agreed to negotiate in good faith with new water authorities set up in Nassau to potentially take portions of the service area public on the north and south shores. New authority boards have been set up in both districts, and the North Shore Water Authority will hold its first public meeting later this month, Carey said.

The May 25 meeting will be held at the North Shore High School Library at 7 p.m., he said. 

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.