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Car inspectors have until today to pay $8,000 or quit business
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Repair shops that want to stay in the state auto inspection program have until today to pay about $8,000 for new emissions testing equipment they'll receive in four months.
If they don't pay, starting Wednesday they won't be allowed to reinspect vehicles that have failed state-required inspections.
"Nobody's got that kind of money lying around. They usually finance such a purchase," said Sal Risalvato, executive director of the N.J. Gasoline, Convenience and Automotive Association.
The state last year awarded a contract for the emissions equipment to Parsons Commercial Technology, the California company whose exclusive contract with the state a decade ago caused long lines at state inspection stations and a temporary suspension of the program.
This $286 million Parsons contract allows the company to demand that the state's nearly 1,400 private re-inspection stations pay in full ahead of time for unknown equipment from one of its suppliers, SGS Testcom.
"They have not even manufactured this equipment yet. The first beta tests will be in September," Risalvato said Monday. "They're basically asking us to finance their operation, and we can't get the money."
He said lenders are reluctant to provide credit for the equipment purchase because Parsons is only bonding for 10 percent of the cost. If the equipment turned out to be useless, repair shops would be left holding the bag.
Risalvato said that when the shops told the state they couldn't arrange financing, Parsons came up with a source of financing: IMM Leasing of Fort Lee. The only problem is that IMM would charge 30 percent interest.
"We can get a better deal from the mob," he said.
Mike Baxter, owner-operator of Brennan's Auto Repair in Egg Harbor Township, said he expedited a check last week to keep his re-inspection business.
"It was either get out or stay in. My customers expect it, so I just paid it," Baxter said.
He said he prefers not to borrow or lease anyway, but chafed at having to pay in full for equipment to be determined and delivered much later.
"It's the government's way. You have to do it. If you or I tried to to that, we'd get smacked down," he said.
The state has said that the shops have known for two years they would need new equipment, and knew for a year how much it would cost.
Risalvato said that is true, but the shops have only discovered as the deadline approaches the onerous terms of the regulatory requirement.
He said he thinks Parsons is trying to reduce the number of private re-inspection shops so that more people have to use its services, bringing it more money from the state.
"The state pays Parsons $22 for every inspection it does," he said.
He said the association's members are scrambling to come up with the $8,000 by today - using their credit cards, borrowing from savings for college, asking relatives, "scraping the money from wherever they can scrape."
He said he thinks many shops won't be able to afford it and will exit the program.
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Posted in Business on Tuesday, June 30, 2009 3:10 am
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