U.S. Water News Online
NEW YORK -- Mayor Rudolph Giuliani has suffered another setback in his effort to sell New York City's water and sewer system to a public authority.
In a unanimous decision, four judges from the appellate division of the state Supreme Court ruled that the proposed sale would violate state law by raising rates for those who pay water and sewer bills and imposing an "unconstitutional tax," particularly for residents of Westchester County who tap into the city's system.
The judges also ruled that the mayor's proposal "failed to take the requisite hard look" at the potential environmental effects of selling the system, including the impact on the city's 19 upstate reservoirs, its treatment plants, and thousands of miles of tunnels, pipelines, and sewers.
The ruling upheld one issued in March by Acting Justice Jane Solomon of the state Supreme Court in Manhattan, but it also went further in ruling against the legality of the sale. It represented another victory for the city's comptroller, Alan Hevesi, who used his authority to authorize the sale of bonds to block the water-system sale last year, prompting the mayor to sue.
The mayor had proposed selling the waterworks to the new York City Water Board, an agency created by the state to operate the water and sewer system. The plan would have raised $2.3 billion in cash -- by selling bonds through the related Water Finance Authority -- with $1 billion used for four years of construction projects.
The inability to proceed jeopardizes $1 billion of the $16 billion the city plans to spend on capital construction projects in the next four years, said local officials -- $600 million in the fiscal year starting July 1.
That could force the city to make more cuts in the capital budget, only a few weeks after the major and city council touted their plan to provide an infusion of cash for school repairs.
First Deputy Mayor Peter Powers and the mayor's office were considering whether to appeal. He said the city could find other ways to raise capital funds, possibly through an agency Giuliani has proposed creating in order to sidestep the state's debt limit.
"There's a whole panoply of options that we can look at," Powers said.
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