Let's Kick The Tires

When buying a used car, it's called "kicking the tires" and when buying a business, it's called "due diligence". Our Public Service District (PSD) wants to buy a business-the Snowshoe Sewer Company. It has been reported that J. D. Morgan, Director of Business Development for Snowshoe, has said that "the wholly-owned subsidiary of Snowshoe Water & Sewer operates every year at a substantial loss, and I'm talking a large, 6-digit loss." As a county, I think we need to kick the tires of this deal to be sure we are not getting a lemon, or another Howes Leather Company hand-off of unending problems.

I believe that the County Commission has a duty of oversight and superintendence to the PSD and all its created boards. I also think that as a County, we all have an important stake in the actions of the PSD. At this point, I am not for or against this proposal, but I want every single card in this game played face-up.

Here are some of my concerns:

1. In business, it is always prudent to get objective advice. The engineering analysis of the Snowshoe Sewer System, its present condition and cost of repair, was done by Thrasher Engineering. Does the payment to Thrasher Engineering of nearly $1,000,000.00, which depends upon the PSD purchase of Snowshoe Sewer, appear to you to be a conflict of interest? In a situation such as this, I believe even the appearance of impropriety or conflict of interest should be avoided. I think its the duty of the PSD to get an entirely new objective engineering appraisal of the infrastructure with a true cost in today's dollars to rehabilitate the system; otherwise we aren't even kicking the tires.
2. The transfer is "as is where is". This means that you get what you see and you are responsible for everything after the sale, just like a used car. Now in this deal, there is a "save harmless" clause but it relates only to claims existing which were filed prior to the transfer. Claims filed after the transfer would become the responsibility of the PSD even if the cause of the claim, such as a sewer infrastructure defect, existed prior to transfer. Also, the indemnity by Snowshoe to save the PSD harmless for personal injury, negligence, property damage and death omits liability for causes relating to the condition of the system transferred to the PSD. Therefore, the PSD is lable for any and all problems filed after transfer relating to the condition of the system before transfer. Do you consider that a meaningful guarantee? Would you buy a used car with that promise?
3. Many customers of Snowshoe water do not have individual meters. Enforcement of the sharply higher rates, which will necessarily follow the transfer to the PSD, can not be collected by the standard means of turning off water to sewer customers. Also, the PSD needs to know the status of any fee payment delinquencies to Snowshoe Sewer? Why is Snowshoe Sewer doing poorly financially? Is the PSD wise to take on a business in which collection of rate fees may be difficult?
4. There are several outstanding DEP violations which have been asserted against Snowshoe Sewer. Would these be transferred against the PSD when it takes over the system? Do any present violations raise to the level of wanton or willful conduct? How will the PSD be able to rectify the cause of these violations when Snowshoe was unable to do so? Satisfaction of the penalties is not amelioration of the causes. Forgiveness of Snowshoe is not forgiveness of the PSD.
5. What is the projected cost to the PSD to "extend sewer mains to serve new customers" at Snowshoe which will be the duty and burden of the PSD? What is the projected mainline extension cost spoken of in the transfer agreement?
6. What position have the customers taken in the proposed transfer; they are ultimately responsible to pay all costs from increased sewer rates.

Is the PSD assuming a dangerous risk of being saddled with a sewage operation that is simply just not working and not profitable? Is it realistic for the PSD to think that taking over this operation, at this stage, will cause anything but further debt? Do you think it would be reasonable for the PSD to require that Snowshoe fix the sewer system at its expense before it accepts this liability? I believe that taking over the Snowshoe Sewer System and retrofitting it with the latest technology in real partnership with Snowshoe, as to the ultimate costs, may be a solution to the eminent domain and environmental problems. Is the PSD ready to abandon the Slatyfork regional plant fiasco?

It is time for everyone to rethink this project, look at all the facts, good and bad, and to have the PSD act openly. The days of secret executive sessions must come to an end; remember, it is a PUBLIC Service District. This project must be a true partnership in which all parties, Snowshoe, the PSD and the community, equally carry the financial burden and share equally in the benefit.