Karen Goldner has revealed why she doesn’t think Earth First would cut it as the city’s garbage vender, via FWP.

Karen Goldner on October 8th, 2009 8:51 am

The successful vendor will have to provide a $3 million performance bond, which theoretically covers about 4 months worth of service. That is not to say that such an abrupt transition would be desirable in any way, but we do require such a bond.

[...]

I do think that it is unwise to think that fuel prices won’t go up over the next 7 years. But more significant than the fuel issue, which is speculative, is the fact that the vendor needs to have about 2 months worth of operating cash available in order to handle the accounts receivable from the City.

We pay in a couple of weeks, but the contractor will begin incurring expenses in mid-December when they hire their crews for training and their trucks arrive, and then they will make weekly or bi-weekly payroll, truck payments, etc. in December and January, and they don’t bill the City until Feb. 1 for January services. We take a week or two to review the bill, cut the check, etc., and the contractor has to be able to finance that time period – LIKE ANY OTHER BUSINESS. We pay promptly, but we don’t pay weekly, and we shouldn’t have to. Based on the numbers provided BY EARTH FIRST, the company can’t cash flow that time period.

I’m not sure what their plan is, exactly, but it looks to me that by Valentine’s Day they will be in big trouble, regardless of fuel prices. I would like to think differently but when I ask EF for a business plan I am directed to extremely sketchy information that does not make me feel more secure.

Her complete comment is here.

Hat’s off to Karen for actually looking at their business plan. Based on this comment, maybe that’s why Jerry Henry no owns part of the company.

I think this may be the end of Earth First controversy. Mayor Tom dodged a bullet.

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