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Asset Divestiture

January 18, 2012

Currently there are in excess of 450 local public authorities and the number grows monthly. Many have proven effective at promoting economic development and local infrastructure; others have faltered. The unresolved question is how do you undo a public authority and roll its function back into conventional local government or privatize the operation?

The issue surfaced again last week, when it was reported that three counties that with some fanfare formed a regional garbage disposal authority in 1989 were exploring whether to sell the authority’s operations to a private company.

The Montgomery-Otsego-Schoharie Solid Waste Management Authority was intended, at its inception, to centralize garbage transfer and disposal at reduced costs.  The reality is that almost since its creation, it has required millions of dollars in public subsidies. Legislation allowing the Authority to divest its assets is pending.  Given the frequency in which Authority dissolution may be warranted in the future, a generic statute setting forth a process for asset divestiture and debt assumption merits consideration.

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