Mayor Kills Wendover Gas Company Bailout

West Wendover Mayor Donnie Anderson thwarted at least temporarily the city’s takeover of the financially trouble Wendover Gas Company by making a half a dozen phone calls.

With the item on the agenda calling for the immediate takeover of the company on an emergency basis, Andersen along with councilman Izzy Gutierrez, his only political ally on the council called over a half a dozen local and regional propane suppliers to determine if private enterprise could come to the rescue rather than the publicly funded city takeover.

“I saw this as kind of a back door effort by some to buy the gas company,” Andersen said. “And I also wanted to see that if there really was a crisis coming and the city was the only option. We must have made at least a half a dozen if not more phone calls and every single company we contacted said they were willing and able to supply Wendover Gas Company customers should it go bankrupt.”

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The agenda item:

*b. Discussion and Possible Decision to Provide Appropriate Authorization and Conditions for the City of West Wendover to Exercise Its Police Powers for the Health, Safety and Welfare of its 

Citizens in the Event of a Crisis/Emergency Shortfall in the Delivery of Propane Gas Between October 16, 2012 and April 2, 2013 to the Citizens of West Wendover as it Relates to the Operating Limitations of Wendover Gas Company, and Other Matters Appropriately Related Thereto .

After Andersen and Gutierrez presented their findings to the council the item was tabled but not before harsh words were exchanged between Andersen Wendover Gas Company owner Nancy Green and councilmen Johnny Gorum and Emily carter.

Both Gorum and Carter have pushed for the city bailout of the Wendover Gas company, estimated to cost between $2 million to $2.5 million. Andersen has vigorously opposed the idea, going so far to veto a feasibility study earlier this year. The veto was overridden but the mayor made his point clear.

“I don’t like to see any local business fail,” he said. “But I don’t think the city should be in the business of bailing out failed companies. I sympathize with Nancy and a lot of her problem were caused in part by the city but tax payers money should not be used to bail her out. There is no crisis, if she goes under there are companies ready to come in to service her customers.”

In this meeting as well as previous ones, Green, Carter and Gorum have argued that the purchase of the gas company would then enable West Wendover to fund a spur line to the recently completely Ruby Natural Gas pipeline running near the Nevada/Idaho border and thus bring relatively cheap natural gas to Wendover.

Andersen once again repeated that he did not think it was the city’s business to build a pipeline let alone run a gas company.

“If a private corporation looks at the numbers and thinks it could make a profit that is well and good and I will support it 100 percent,” andersen said. “But I don’t see how we could justify borrowing $10 million (the estimated cost of the pipeline) to our tax payers. Does anyone know how long it would take us to pay off a $10 million loan?”

Andersen was not the only voice to raise concerns about the city’s purchase of the gas company and the natural gas pipeline project. In separate interviews with the High Desert Advocate both Steve Shute, the appointed managing trustee of Wendover Gas and industry analyst Paul Kvam questioned the workability of the plans.

“For the city to buy the gas company for $2 million is insane,” Kvam said. “Anybody could pick up its assets for maybe $10,000 next year on the courthouse steps. Getting all the pipeline infrastructure for almost nothing would make the operations profitable. Then with those assets you could think about building the pipeline.”

This was the second time in two weeks that the Wendover Gas purchase hit a snag .

Earlier this month the feasibility study was put on hold by the City of West Wendover was suspended at least temporarily after research revealed that the City of Wendover, Utah has first dibs on the company’s property.

In 1995 shortly after Wendover Gas won approval to lay gas lines in West Wendover and began to move its base of operations from Wendover, Utah then Wendover, UT Mayor Brenda Morgan pushed through an ordinance that gave the town the right of ‘first refusal’ to buy the assets of the company should Wendover Gas ever fold.

Reportedly upset at the loss of tax revenue generated from the gas company, Morgan conditioned her city’s approval to the move on that issue.

Wendover Gas owner and the city of West Wendover agreed to the condition and now that condition may come back to haunt them.

Green appeared before the Wendover City Council Wednesday to request that the condition be waived. But although sympathetic to her plight Wendover, Utah may set some new conditions before they waive the old one.

According to Mayor Mike Crawford he would not be opposed to granting a waiver but would urge his council to consider asking for some guarantees that would control the price of propane charged to Wendover, Utah customers.

In Wednesday meeting the Wendover, Utah City Council put three conditions to granting a waiver.

a) Wendover, Utah would have right of purchase of the gas pipeline system running through town.

b) Wendover, Utah would still be able to assess franchise fees on who ever bought the gas company.

c) Wendover, Utah customers would be charged the lowest price charged to West Wendover customers.

“We think these are reasonable request and will protect the interests of Wendover,” Crawford said Wednesday. ‘We do not want to get into the gas business but we have to protect our residents and our businesses.

According to Crawford the reason behind the best possible price condition was that if West Wendover did but the gas company it could use the power of pricing to encourage growth in West Wendover at the expense of Wendover, Utah.

While the conditions may seem reasonable in Wendover, Utah they may raise more than an eye brow in Wendover, Nevada. Nevada customers would b charged on a sliding scale where the price they pay for gas is at lest partly determined by the volume of gas bought.

If Wendover, Utah residential customers are given the same price per gallon as a casino controversy is certain to ensue.

Already the purchase is controversial, just to get the feasibility study approved the council had to over ride the Mayor’s veto.

In that meeting the council voted to accept the appraisal numbers for the gas company and spend up to $18,000 for a feasibility study on whether the City of West Wendover could operate the financially distressed company for a profit.

According to Anderson the ‘high’ valuation for Wendover Gas was estimated to be $2.4 million.

An emergency meeting to override the veto was called for and while the vote remained the same the barb’s thrown especially between Anderson and councilwoman Emily Carter were new.

At one point Anderson implied that Carter’s was being hypocritical by supporting the study and perhaps ultimately buying the company with public money when she herself was using one of Green’s competitors for propane.

Carter countered that who she personally bought propane from was irrelevant to the discussion and that the council was only authorizing a feasibility study on whether the city should buy the company and not the purchase itself.