By Robert Field
According to 2012 financial information posted on the web site of the Lancaster County Solid Waste Management Authority web site, its earnings last year amounted to approximately $6.5 million and net worth came to around $145 million.
This suggests a solvent, well managed authority, one that the people of Lancaster can rely upon for the current tasks at hand.
But it is very different situation when a company with these assets and earnings endeavor to acquire another by floating bonds that approximate its current net worth along with the annual obligations to pay finance fees, interests and debt reduction payments that might come close to last years earning.
If there continues to be be big losses due to break downs or if anticipate earnings from the new investment don’t materialize, the LCSWMA could soon drown in red ink. That would lead to much higher trash collection costs for those living in Lancaster County.
This helps to explain why Moody’s rating service has threatened to reduce LCSWMA’s bond rating by two points if it moves ahead with the acquisition.
This is not to say that CEO James Warner may not be on to something. There are times when a situation is so propitious that boldness is in order. However, Warner is dealing with other people’s money. And his prime responsibility is to those in Lancaster County.
Indications are that he has neither sought professional, third party expert engineering studies to evaluate the condition of the plant and its future prospects, nor environmental studies to weigh the legal exposures now and later of the stored ash residue, nor has he sought an independent financial feasibility audit and study.
Rather he has relied on in-house studies and forecasts from a contractor who will profit mightily if the project moves ahead and, as a result, the contractor collects much or all of the $21 million from the Harrisburg Authority which it has long been owed.
Boldness has its place. But not predicated on hubris, rashness, and gambling.
More on this and other concerns will soon will be forthcoming from Bill Keisling.
