Phoenix Management Company owns and provides management services for several shopping centers. After five years with the company, Mike Moyer was recently promoted to the position of manager of X-Town, an 18- store mall on the outskirts of a downtown area. When he accepted the assignment, Mike was told that he would hold the position for only a couple of years because X-Town would likely be torn down to make way for a new sports stadium. Mike was also told that if he did well in this assignment, he would be in line for heading one of the company’s new 200-store operations that were currently in the planning stage.
While reviewing X-Town’s financial records for the past few years, Mike observed that last year’s oil consumption was up by 8 percent, even though the number of heating degree days was down by 4 percent. Somewhat curious, Mike uncovered the following information:
X-Town is heated by forced-air oil heat. The furnace is five years old and has been well maintained.
Fuel oil is kept in four 5,000-gallon underground oil tanks. The oil tanks were installed 25 years ago.
Replacing the tanks would cost $80,000. If pollution was found, cleanup costs could go as high as $2,000,000, depending on how much oil had leaked into the ground and how far it had spread.
Replacing the tanks would add more congestion to X-Town’s parking situation.
What should Mike do?