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Op-ed: CES garbage or food for thought?

This news story was published on January 14, 2012.
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by Otis Lewis

North Iowa better wake up!

$35 million dollars and 50 jobs are great sales tools!   Extend the life span of the North Iowa Landfill by 5 fold?  CES don’t know that, no one does.

The “extending the life 5 fold of the landfill” statement should tell you that CES is not telling the truth.  They will say anything to get this “untested” scheme pushed through.

Here are some additional facts of the matter, and what all of North Iowans better think about before they jump off the deep end.  Toxins and air pollution should not be the only concern.

The CES management and promoters are going to make significant money just building it.  The outcome is not quite as important to them, as they would have you believe.

I don’t know when the people of North Iowa are going to figure out that the CES developers, by just building this facility will stand to make significant money, upfront.  They borrow the money from investors; pay themselves UPFRONT doing the project and promise/hope to make it successful.  The usual fee is between 10% and 20% managing/building, the project to fruition.  Even 5% of 35 million is a paltry $1,750,000.00 for just doing the deal.  Management fees they call them.

If it isn’t successful, they cut and run with their already earned big bucks.

Is there not a thinker in the crowd?

In my professional career I have seen this scheme pulled dozens of times (one kind of project or another) in many unsuspecting towns USA.  You have no safeguards built into this project to protect you from the “just doing the deal” and “we are taking all the risks” part of the contract.

If this project does not perform to bring in a profit on their proposed pro-forma for there investors, during bankruptcy and after, there will be years of litigation and down line expenses to the North Iowa Landfill and surrounding communities after it closes down.  The demands by attorneys will be un-ending and usually costly.   Higher landfill fees, taxes, ECT.

You need to listen to your gut on this one.

If you don’t believe me just ask all the investors/farmers that got burned in the local Bio-Diesel plant sitting idle on old highway 106 now known as 19th street or 255th ST.

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22 Responses to Op-ed: CES garbage or food for thought?

  1. randy Reply Report comment

    January 16, 2012 at 11:07 am

    Notice how Observer, who must have watched a whole lot of Mr. Wizard shows when they were on tv is now suddenly an expert on business too? Only problem is a real businessman would not have skipped the question on viewing the financials. That was the point of the whole question. Is it not true that viewing financials are key to any business venture? I do not know many “successful” business men that don’t check out the financials of a deal before entering into it, no matter if it is a year or 20 years. In the “real world” banks require your financials. Please stop with the propaganda, it is getting old.

    • Observer Reply Report comment

      January 17, 2012 at 11:55 pm

      Financial disclosure is key, IF you are a lender or investor.

      Case example: During a ten year span, the DM&E Railroad did not produce a single financial while they bid to build a new rail line in S.Dakota. Only the few lenders knew for sure what went on in the company as it was privately held. Even the Surface Transportation Board was not fully apprised because there was no need to know. And even if there was disclosure to the STB, it was redacted by a motion for protective order.

      I am not a business professional, but have researched dealings over the years with different industries. If CES decides it is in their interest to disclose to a board, there are ways to protect it’s interests via some protective order.

      If LNI seeks financial protection, it should ask for some sort of performance bond in the contract.

      I offer no propaganda. I just try to counter the scare tactics in this particular case. Most of what I write is common sense, some personal observation. This is not a first time for me in supporting an industry. I was on board early on with the ethanol plants proposed for our area as well. But that came only after a lot of research and conversations with some people involved.

      What I have read thus far in this whole process with CES, is the same as the tribulations a company faced trying to build an ethanol plant in Conoy Township, PA. The tactics used here by opponents of CES are exactly the same as those involved in Conoy.

      And for the record Randy, I never watch Television.

      • Anonymous Reply Report comment

        February 13, 2012 at 11:18 pm

        Observer, for the record the subsidized ethanol industry is a governmental mandated boondoggle.

        If you were on the board that researched that into existence, all you did was make a bad situation worse.

        To come up with the notion that you would use a food source to correct a supply and demand problem with gasoline has been a dismal failure while making food more expensive.

        I would not be puffing my chest up about being an expert on any kind of new industry with that kind of a record!

        Now you are pushing this BS. You just lost all your credibility!

  2. Watchdog Reply Report comment

    January 15, 2012 at 6:42 pm

    It is my hope that the members on the Landfill board have better judgement then the Mayor and Mason City Council does.

    Getting financials is routine when contemplating entering into this kind of scheme.

    This is a very risky venture at best.

  3. randy Reply Report comment

    January 15, 2012 at 3:20 pm

    Who would ever go into a long term committment with a business partner for possibly 20 years without seeing their (CES) financials? Does anyone want to try and defend that as a good business practice? I call that reckless.

    • Observer Reply Report comment

      January 15, 2012 at 7:50 pm

      Without question, any bank or lender would want as long a term possible to take the risk out of the investment.

      If you were to open a plant that made soda, you think for a moment anyone would lend you the money you need if there was a guarantee of only 5 years of water? Maybe we will extend that contract for water another five years, maybe six months.

      Businesses operate on long term to be able to pay off investments in machinery, land, and operating funds.

      How about all home lenders only give you a five year contract to pay off? Maybe they will extend it, maybe they will not.

      That is how the real world operates.

  4. Larry Reply Report comment

    January 15, 2012 at 1:54 pm

    There is nothing wrong with making an honest profit. It is what most people go into business for. But, they offer a decent product at a decent price with good service and then should make a profit. These guys go into this type of business venture with the idea they are going to get rich and they don’t care who they cheat or hurt doing it. It’s just like the CEO who cuts people in the last quarter of the year to guarantee his bonus even though the workload says you need all of your people. They always do it in the 4th quarter just before Christmas so it will drive all salary’s and benefits to the bottom line. Then they pat themselves on the back saying what good managers they are and they could care less about the employee’s and their family’s that no longer have insurance and income. It happens all the time.

    • Anonymous Reply Report comment

      February 13, 2012 at 11:10 pm

      Well, Ces sure wasn’t making a ‘honest’ profit!

  5. sandy Reply Report comment

    January 14, 2012 at 5:01 pm

    I will mention this again. Do you really want someone going through your garbage? Think about it bank statements, medical records, just to mention couple of things. Yes again I say you may use a shredder but what about businesses that may miss something. CES has said from the beginning people will be sorting the garbage. Who will be responsible if something does get out that is private?

    • Observer Reply Report comment

      January 14, 2012 at 5:51 pm

      Most folks now a days do not put anything sensitive in trash. Without people sorting at CES, I have seen quite a few people, especially downtown going through trash cans. While it may for other reasons, who can really say for sure?

      I like to burn, never leaves my fingers.

    • anonymous Reply Report comment

      January 14, 2012 at 9:59 pm

      Observer, you should be careful with the burning. Incomplete combustion will lead to dioxin discharge and white paper that is bleached (especially recycled paper) is more likely to emit dioxins. The do-good ladies of Mason City will be on your butt if you aren’t careful! 😉

  6. Larry Reply Report comment

    January 14, 2012 at 2:03 pm

    Observer-I think you are blinded by your own opinion and have missed the whole point of the letter. I have been in the manufacturing business over 45 years and have seen this happen over and over again. They are in it for the money and that is all. Whatever it takes for them to get rich is all that matters. They will bail in a heartbeat when the time is right. And yes, the Bio-diesel plant is under new ownership but how lond dis it sit and how much money did the original investors lose and who made money on it?? Someone did.

    • Observer Reply Report comment

      January 14, 2012 at 2:07 pm

      I don’t have the facts on that. A review of Bankruptcy Court records would be key in answering.

    • Anonymous Reply Report comment

      January 14, 2012 at 10:00 pm

      Larry, what is wrong with making a profit?

  7. Observer Reply Report comment

    January 14, 2012 at 12:42 pm

    The letter is defective on it’s face. I willl start with the fact that the Bio-Diesel plant is being upgraded and set to open with new owners.

    Next, there is no sufficient evidence that this is a chess game with management fees and so-forth.

    Next, while this scheme per se has not been tested, other types of plants that take MSW and convert it to energy do extend the expected lives of the landfills they replace. If the ratio of raw MSW to char is 5:1, then indeed, it would be five fold. I guess I need to make it more simple, elsewise the comments will fly.

    If five pounds of MSW goes into the process, and only one pound of char remains, that is a 5:1 ratio. The char would be the only thing going into the landfill where before 5 pounds of MSW went directly into the landfill.

    Finally, the mention of toxins and air pollution, is hardly founded. Why? Because of the design of the plant and the science behind it (in past comments, I have proved that out – no need to rehash it).

    • Anonymous Reply Report comment

      January 14, 2012 at 12:51 pm

      Observer, your comments are also faulty. You assume everything that goes into the landfill can go through the pyrolitic process. It can’t. The amount of char generated will also vary, depending on the composition of the MSW. Both CES and the Landfill’s consultant have said there is significant variations in the composition of the MSW tied to the time of year. I wonder if CES is trying to get their agreement with LNI done as quickly as possible so that they can test winter waste which will have much lower C and D waste and landscaping waste.

    • Observer Reply Report comment

      January 14, 2012 at 2:06 pm

      Yes, there are a number of things that cannot go through the process. Biggest of all, is hazardous materials. Others include recyclables that will be sorted out. What does that leave? Well Landscaping waste sure can be taken in, it is organic.

      Also, in my example, I specifically used the measurement pound, and not volume. The density of materials varies greatly, yet the weight, no matter the density is constant. And since very dense materials (metals mostly which cannot be chemically altered to char with just heat) is being taken out for recycling, what remains will have the same average density.

      Next, after reading your comment, I examined the contents of four businesses trash for myself. Nothing other than landscaping material could be considered seasonal.

      Think about these three materials; cardboard, wood, and leaves. If you took a pound of each material, heated them in a vacuum to 800°f, after a period of time, what products would remain? Gas and char. Would the combined weight change? No.

      So seasonal differences do not make a difference on the weight being inputted into the process.

    • Anonymous Reply Report comment

      January 14, 2012 at 9:56 pm

      Observer, you might want to talk to the folks at CES then. They can explain about how certain materials that are not considered hazardous waste such as PVC pipe cannot be put through a pyrolitic process. They can also explain to you about how the energy value of substances vary. A pound of wood will yield less syngas than a pound of tire. There are differences in waste. People tend to eat more fruits and vegetables during the summer months. They buy more merchandise packed in cardboard and paper in December. Call Joe or Rod. They can clue you in.

    • Observer Reply Report comment

      January 15, 2012 at 8:01 pm

      I was not at all speaking towards energy content, but the statement in the letter which says: “Extend the life span of the North Iowa Landfill by 5 fold? CES don’t know that, no one does.”

      That is why the measure I used was weight. The landfill goes by weight and so does the proposed CES contract.

  8. Charlie Reply Report comment

    January 14, 2012 at 12:39 pm

    “Here are some additional facts of the matter…” And then what followed was typical conjecture, innuendo, and falsehoods.

  9. sandy Reply Report comment

    January 14, 2012 at 10:39 am

    I have heard more than 1 city council person say, “if it doesn’t work were not out anything”. I agree what you are saying here. The reason (just my opinion) they want this plant is not for the new jobs as much as a feather in there cap come re-election time. Brent from EDC has been here a year in Feb. and he has brought nothing to this town for jobs oh except the deal with Harley Davidson which many are wondering how that went down. I have nothing personal against Brent this is just business he has got to be worried about his job. If he goes another year and doesn’t bring anything how long will he have his job? What is the most upsetting about this and so many other things that go on with the city council is most don’t really care how the citizens feel it is about what THEY want. I am hoping with the new council members some of this will change.

  10. Larry Reply Report comment

    January 14, 2012 at 10:36 am

    Great article. Finally someone who makes sense without all the emotion. This happens ever day in this country and they get away with it. If this happens with CES do you think out local leaders who now support the project will finally come out against it and admit they were wrong. I doubt it and don’t hold your breath.