Case Study

North East Solid Waste Commitee (NESWC)

In February, 1993, the Massachusetts Industrial Finance Agency issued $148,950,000 of tax-exempt bonds and $40,450,000 of taxable bonds to refund bonds issued in 1983 to fund the construction of the North Andover waste-to-energy facility, a 1,500 ton-per-day plant owned and operated by Wheelabrator Technologies, Inc. ("WTI"). PFM served as financial advisor to NESWC, a group of 23 communities which have a contractual obligation to deliver waste to the North Andover facility and to pay disposal fees in an amount sufficient to pay O&M, debt service, administrative and other costs. Present value savings exceeded 10%.

As financial advisor to NESWC, PFM assisted NESWC with negotiations with WTI regarding the term of the refinancing. PFM constructed a computer model that projected service fees to allow PFM to evaluate negotiating strategies, refunding structures, and tipping fee trajectories.

PFM has been serving as a team member for the past four years assisting NESWC in negotiating with Wheelabrator. The negotiations have explored municipal purchase of the facility from Wheelabrator, contract extension, contract restructurings and risk shifting and funding of a mandated retrofit of the facility with scrubber baghouses to meet the Clean Air Requirements. Negotiations concluded in March 1999 and the municipalities have agreed to pay $17 million of retrofit costs originally proposed at $65 million. Cost increases were lowered by approximately $35 per ton.

PFM also was retained as an expert witness to assist in arbitration matters related to the retrofit.