With a Sept. 30 deadline for submission of design plans to the Department of Environmental Conservation just weeks away, the Water Pollution Control District and the Village of Great Neck's sewer department have still not signed an intermunicipal agreement to either combine their two respective plants by expanding the borders of the district or by working out a deal for the district to treat the village's sewage by contract.

At the Aug. 19 village board meeting, Mayor Ralph Kreitzman spelled out the timeline of the work toward an agreement. He said that on July 3, the village and the district had a "productive" meeting with all parties coming away confidant that negotiations were on track. The village's attorney, Steve Limmer, was asked to draw up a draft agreement, which was sent to the district on July 15. Two weeks went by without a response from the district.

In the meantime, according to commissioner Deena Lesser, district representatives had spoken with the Department of State and had been advised that a merger would take too long to complete and in the interest of timeliness, a contract to treat the village's flow would be more prudent...a merger could take place afterward.

On Aug. 14, village officials and district commissioners met to go over the draft agreement line by line. According to Mayor Kreitzman, there were few issues and "certainly nothing like a deal breaker." He stated that he expected the next day's meeting, Aug. 20, to go well.

But, not so fast.

On Aug. 21, this reporter attended the district's weekly meeting and it emerged that an old and very sticky issue that had been set aside, had been resurrected.

The issue is "equalization." Some parties have called it an "initiation" fee and others have called it "extortion." Here is how it would work and how it has been determined. The village would pay the district an equalization fee of $5.6 million "payable upon the execution and delivery of the agreement." The district has computed the fee by multiplying the sum of the appraised value of the district's land, which has a current market value, according to their appraiser, of $17 million and the district's fund balance of $1.6 million by 30 percent.

At the commissioner's meeting, resident Leon Korobow argued strenuously against bringing "equalization" back to the bargaining table. He said that the assets the village brings to the deal is the expanded tax base, the residents being served, which will lead to an economy of scale that will bring down the cost of treatment for everyone, whether already served by the district or not. He added that many of the assets of the district have already been depreciated and will not be used in the new, upgraded plant.

He went on to point out that a new resident purchasing a home in the district's service area is not charged an initiation fee to bring them up to the level of payments made in the past by his next door neighbor.

Further, he concluded that "bureaucratic wrangling" over the district's assets and lack of an agreement in a timely fashion might throw away the low or interest free bonding from the New York State Environmental Facilities Corporation, a public benefit corporation. The corporation provides up to a 50 percent interest rate discount to municipalities for environmental projects.

"You might end up losing millions in debt service if the interest rates go up as expected after the presidential election," warned Mr. Korobow.

Commission chairperson Jane Rebhuhn stated that they would take his comments under advisement.

At the commissioners' weekly board meeting on Aug. 28, the district commissioners, Jane Rebhuhn (who participated via conference call from her vacation), Deena Lesser and Jerry Lansberg had not made a decision about whether they would insist on an equalization payment from the village. However, at the May 2008 meeting held by Supervisor Jon Kaiman, Town of North Hempstead, the district had stated that village resident's rates would go down on average by $245. That calculation obviously did not include the cost for equalization.

If the district and the village do not meet deadlines set by the DEC for reducing nitrogen output into Manhasset Bay, the state may charge penalties of up to $1.6 million for the first year.