DALLAS - Voters in Andrews County on May 9 will weigh in on $75 million of general obligation debt to build a low-level radioactive waste disposal site in the sparsely populated West Texas county.
Waste Control Specialists Inc. plans to sell the county $75 million of assets and then lease them back to cover principal and interest on the debt if the referendum is approved. WCS also will deposit $75 million of stock of its parent company, Valhi Inc., into an escrow account, and pledge all of Valhi's NYSE-listed stock to back the facility.
"We'll make it very certain the county will never be on the hook for these bonds," WCS chief executive William J. Lindquist says in a video posted on the social-networking Web site Facebook that was created by the company in support of the bond election.
WCS spokesman Chuck McDonald said the company also will reimburse the county for the costs of the election and put $6.3 million annually into an escrow account to provide debt service on the bonds.
"WCS has spent about $140 million over the past five years into getting to this point," McDonald said. "With all that's happened to the markets of late, it would be extremely difficult to do traditional financing for this project and one of the only viable options was to go this municipal bond approach."
In January, the Texas Commission on Environmental Quality approved the company's application to construct the plant.
The commission's Andrea Morrow said the facility would be the first of its type built in Texas.
Nuclear Regulatory Commission spokesman Dave McIntyre said there is currently three low-level radioactive waste sites in the country, but added that the Texas plant "would be the first in an awful long time."
Construction will take about 13 months and McDonald expects work to begin in June, if the referendum passes. He said if the election doesn't pass the facility will be delayed indefinitely.
"The impetus for asking the county to issue bonds was that if we don't do it this way now, it'll be delayed until the market comes back and we can get traditional financing," he said. "But it's not clear when or if that'll happen."
McDonald said Andrews County will receive 5% of the gross revenue of the facility, which is estimated to be roughly $10 million to $15 million annually once the plant is fully operational.
The current annual tax revenue of the county is about $13 million, according to McDonald.
Andrews County rarely issues bonds, has no debt outstanding, and isn't rated by the major credit agencies.
The county has hired First Southwest Co. as financial adviser for the bond election and possible debt issuance. Fulbright & Jaworski LLP will serve as bond counsel.
"WCS and the citizens of Andrews and Lea counties and the Permian Basin have been waiting for this for many years," chief executive Lindquist said upon receiving the license from the environmental commission. "The state of Texas will now be able to meet its obligations to the power plants, hospitals, universities, research institutes and other industrial generators in the Texas Compact to permanently dispose of their low-level radioactive waste."
The NRC defines low-level radioactive waste as items that have "become contaminated with radioactive material or have become radioactive through exposure to neutron radiation."
Those items often include "contaminated protective shoe covers and clothing, wiping rags, mops, filters, reactor-water treatment residues, equipments and tools, luminous dials, medical tubes, swabs, injection needles, syringes, and laboratory animal carcasses and tissues," according to the NRC.
