An auditing firm agrees with county officials that a lease agreement for the proposed waste-to-energy incinerator does not make the county responsible for the bond financing that pays for it.
But the incinerator opponent who prompted the assessment is not satisfied.
County commissioners sought the expert opinion of SB & Co. to address questions from Matt Seubert, who said the commissioners were inadvertently entering into a capital lease agreement, which would make the county ultimately responsible for the $400 million or more bond financing the Northeast Maryland Waste Disposal Authority expects to use.
The approximately $500 million project to burn trash to make energy is to be managed by the authority and operated by Wheelabrator Technologies.
Seubert and Bruce Holstein are two opponents who said the contract to operate the trash-burning facility contains hidden expenses and responsibilities. Many opponents find fault with the environmental protections built in and the financing details.
A letter from SB & Co. stated that, based on what it was told about the contract, the lease would not make the county responsible for the bond debt because the long-term agreement is an operating lease or a service agreement, not a capital lease, which involves ownership of the facility.
Though Seubert, a retired certified public accountant, said initially that he would expect SB & Co. to give an accurate response, he and Holstein disagreed Thursday with the company's statement that the contract has "no mention of a guarantee or other credit by the county on the bonds."
SB & Co. may not have all the information it needed to respond fully, Seubert said.
"They admit they haven't reviewed all the agreements," he wrote in email. "I also don't trust that what the county provided them is accurate.
"No rating agency would favorably rate revenue bonds based on an unpredictable revenue source, in this case electricity, without the backing of the government's taxing authority, or credit."
The county's ability to tack service charges on property tax bills is what guarantees the debt repayment, according to Seubert and Holstein, a retired government accountant.
Revenue projections, environmental regulations, construction costs and interest rates have changed since the county signed the contract three years ago. All the financial assumptions will be reexamined by commissioners before proceeding with the project, according to Michael Marschner, the county's special projects manager.
The Maryland Department of the Environment is taking public comment until May 20 on the three permits the authority will need to get started on the incinerator. Once the permits are issued, the county will review the financial details of the contract, commissioners said.