The Lake County Board of County Commissioners met in special session on Monday, May 10, 1993 at 2:00 p.m., in the Board of County Commissioner's Meeting Room, Lake County Administration Building, Tavares, Florida. Commissioners present at the meeting were: G. Richard Swartz, Jr., Chairman; Catherine Hanson, Vice Chairman; Rhonda H. Gerber; Don Bailey; and Welton G. Cadwell. Others present were: Annette Star Lustgarten, County Attorney; Peter F. Wahl, County Manager; Ava Kronz, BCC Office Manager; Steve Hiney, Recycling Coordinator; Ron Roche, Director of Solid Waste Management Division; and Marlene S. Foran, Deputy Clerk.

SOLID WASTE/LANDFILLS

Mr. Ron Roche, Director, Solid Waste Management Division, appeared before the Board to present an update on the status of the negotiations regarding solid waste collection and recycling services in the unincorporated area of the County with Industrial Waste Service (IWS), Town & County Refuse, Inc. (T&C), and South Lake Refuse Service, Inc. (SLR). He stated that the Board gave direction to extend the negotiation time frame to May 13, 1993. Mr. Roche distributed a report and presented a slide presentation on said results of the negotiation process with the three haulers.

Mr. Roche briefly reviewed a map illustrating the exclusive geographic franchise areas for residential and commercial solid waste collection.

Mr. Roche stated that, as a result of the negotiations with the three haulers, the proposed service level for collection consist of unlimited garbage and trash service, and collection of bulk items up to three (3) cubic yards per week, at a negotiated rate of $6.75 per unit per month. Recycling will consist of once a week unlimited recycling service, at a negotiated rate of $1.50 per unit per month. The total hauler rate for collection and recycling is negotiated at a rate of $8.25. He stated that a franchise fee has been included in the contract for the purpose of handling administrative services at a tentative percentage of two (2%) percent, or a proposed rate of $0.16. The total collection rate, if hauler billed, is proposed at $8.41 per unit per month, and if County billed, is proposed at $7.66 per unit per month. He stated that County billing will be an option available to the customer who prefers to be billed on the customer's annual tax bill.

Ms. Diane Martin, The Resource Development Group, appeared before the Board and reviewed the annual rate for single family curbside service, the monthly rate for mobile home parks with curbside service, the monthly rate for commercial containerized service, and the rate comparison for commercial container service. She stated that, based on information provided by the Solid Waste Study Committee, the highest rate for individual billed accounts currently being charged for solid waste collection is $166.00 annually, and the lowest rate for solid waste collection is $131.00 annually for single family curbside service.

Ms. Martin noted that the monthly rate for rental mobile home parks with curbside service, if hauler billed, is proposed at $6.75 per unit per month; and if County billed, is proposed at $6.00 per unit per month.

Ms. Martin noted that the proposed collection rate, without recycling, is slightly lower than the rates that were presented two (2) years ago; however, under the assumption that collection was to be mandatory, the level of service has been increased for lesser dollars.

Mr. Robert Wehling, a resident of Lakeside Terrace, appeared before the Board and requested clarification on the proposed collection rate, and disposal rate per month for Lakeside Terrace, and how the proposed rates compare to the current rates being paid for solid waste collection.

Mr. Jon Roller, General Manager, Lake Square Mall, appeared before the Board and stated that he has a responsibility to create a contract that is best suited to the one hundred (100) tenants located in Lake Square Mall. He stated that he would like the ability to maintain a position of competitiveness, and maintain the opportunity to control solid waste collection costs by negotiating rates with all of the haulers in the market place.

Commr. Swartz stated that the Board gave authorization to negotiate with the haulers for both residential and commercial rates, so that one segment of solid waste did not subsidize the other. He stated that the Board's intention was to look carefully at the results of the negotiations and the impact of said results. At this time, direction was given to staff to speak with Mr. Roller regarding the pricing that he has negotiated for Lake Square Mall with the haulers in the market place.

Discussion occurred regarding the recycling efforts that are in place at Lake Square Mall through the Mall's own efforts and costs. Mr. Roller noted that the Mall's recycling effort has been a substantial advantage to the degree of approximately ten (10%) of total trash charges per year. He stated that he would not object to the County having total control of solid waste collection, allowing the large operations, such as Lake Square Mall, the ability to maintain the competitive bid approach.

Mr. Marvin Batt, Lake Griffin Isles, appeared before the Board and stated that he has negotiated solid waste collection for Lake Griffin Isles and Picciola Landing with Industrial Waste Services, noting that their collection fee for twice a week curbside pick-up, is $8.00 per unit per month, which is negotiated yearly with the hauler.

Mr. Harold Green, representing the Lake Griffin Harbor Homeowners' Association, appeared before the Board and stated that Lake Griffin Harbor has a contract with Town & Country Refuse, Inc. for twice a week curbside solid waste collection. He noted that they are currently paying $12.00 per unit per month, which is collected monthly from each unit. He expressed concern with the lack of competition, if their choice of hauler is taken away.

Mr. Robert Murphy, a resident of Lakeside Terrace, appeared before the Board and stated that it is his understanding that certain mobile home parks will be exempt from coming into the County system and requested clarification on this issue.

Commr. Swartz stated that the Solid Waste Study Committee recommendation to the Board was to allow any association, whether a mobile home park, conventionally constructed, rental or ownership, remain with the hauler that the association currently contracts with for solid waste collection. The rates negotiated were categorized into those who had ownership of the lot versus those who did not have ownership, and the Board will be addressing this issue.

Mr. Murphy stated that, under the contract with the hauler that currently provides solid waste collection for Lakeside Terrace, dwellings that are not occupied do not pay for solid waste collection. He stated that it was his understanding that the proposed County program will require all residents to pay for solid waste collection whether the dwelling is occupied or not occupied.

Mr. Basil Hart, South Lake Refuse Service, Inc., appeared before the Board and stated that South Lake Refuse Service negotiated rates with the understanding that everyone would be billed as they are currently being billed. He stated that, if it is the direction of the Board to bill only during the time that the dwellings are occupied, consideration should be given regarding a start-up fee to cover administrative costs.

Discussion occurred regarding mobile home parks that have residents that are on premises for only six months of the year; at which time, Mr. Roche stated that the proposed contract does not require associations, with a current contract with a hauler, to be billed any differently than the method that they are currently being billed. He suggested that consideration be given to an administrative fee to cover the haulers' costs for those who go on and off service frequently.

Mr. Lewis Stone, Attorney, representing Industrial Waste Service, appeared before the Board and stated that it was Industrial Waste Service's understanding that the County would bill once a year based on a full year service and; therefore, IWS would also bill based on a full year service.

Mr. Kyle Adams, Town & Country Refuse, Inc., appeared before the Board and expressed concern that approximately half of Town & Country's projected customers are mobile home communities, and said communities have significant yard waste during the summer, at a time when a large number of the dwellings are not occupied, which was taken into consideration at the time the current rates were negotiated. He stated that it was Town & Country's understanding that the negotiations were for exclusive, non-mandatory service, and that the concept of switching service on and off was discussed during the negotiation process and Town & Country's interpretation was that communities where yards were managed in an association, would pay for full year solid waste collection service.

Mr. Sanford Minkoff, Attorney, representing Town & Country Refuse, Inc., appeared before the Board to address the issue of full year solid waste collection service and stated that there is no one to assess in rental mobile home parks other than the park owner, and if the intent was to have the disposal charge charged to the residence, the monthly bill would still have to be sent, and collected, to said residence, because the Board cannot file any assessments against the tenants, which leads to the assumption that it is going to be full year service. He further stated that the contract excludes rental mobile home parks, and specifically states that rental mobile home parks are treated like a regular residence.

At this time, Mr. Murphy requested clarification on exclusive, non-mandatory language.

Discussion occurred regarding the two (2%) percent franchise fee. Mr. Roche explained that the franchise fee is a customary fee that is charged by most cities and counties as a mechanism for administratively funding the program in regard to collection complaints, field investigations, and disputes between the hauler and customer. He noted that the two (2%) percent franchise fee is a tentative percentage.

Commr. Swartz noted that the three (3) alternatives before the Board are to remain with a non-exclusive, non-mandatory program, negotiate rates with the three commercial and residential franchise haulers, or to go out for bid for solid waste collection. He suggested that direction be given to staff regarding the path the Board wishes to continue.

Mr. Murphy suggested that the Board be very cautious with the figures before them and not put too great an emphasis on saving money. He noted that the costs being presented at this time will be inflated with time.

Mr. Roche stated that there is an automatic price adjustment in the proposed contract which will indicate a price increase or decrease based on an established Refuse Rate Index (RRI). He stated that he would provide the Board with a RRI/CPI (Consumer Price Index) sheet.

Commr. Swartz informed the Board that, on May 13, 1993, an update on information pertaining to the negotiated prices for solid waste collection will be provided to the Solid Waste Study Committee.

Discussion occurred regarding the initial direction from the Board to exclude residential groups that have a current collection contract, and the direction that the negotiations have taken regarding exemption only to those residential groups who own their own lots as opposed to rental properties.

Mr. Minkoff informed the Board that Town & Country was told during the negotiation process that there would no longer be limited haul permits for rental mobile home parks to haul their own garbage.

Mr. Roche provided clarification that the group exempted at this time, are individually owned lots, that are bill through a single association for solid waste collection; and, for disposal, are assessed under the County's assessment program and billed per owner.

Mr. Dan Gordon, Hawthorne Mobile Home Park, appeared before the Board and expressed concern that the proposed solid waste collection plan is taking away the free market, and suggested that commercial operations be allowed to contract with their choice of hauler.

Mr. Louis Stone, Attorney, representing Industrial Waste Service, appeared before the Board and stated that Industrial Waste Service is concerned with the rules that are being changed, the potential of significant variables being altered, and that the numbers may no longer be suitable at the time the contracts are finalized, if the variables have been changed.

Discussion continued regarding exempted residential groups who own their own lots, have contracts with a hauler at this time, and are located in one franchise area but are contracting with a hauler from another franchise area. Ms. Martin noted that there are approximately eighteen Homeowners' Associations in unincorporated Lake County, and only four or five of those associations are located outside of their franchise area. She further noted that, at this time, the contract is set for voluntary collection. Significant changes in the numbers will not be a basis for renegotiation with the haulers in the future; however, a contract changed, such as mandatory collection, would be a basis for renegotiations with the haulers.

Ms. Martin further stated that, based on a ten (10%) percent sample which was performed, and based on the rates that are available, seven out of eight mobile home parks will have a lower fee under the proposed solid waste collection program. She stated that, under the current proposal, a Homeowner's Association that has an existing one unit contract would remain under their existing hauler, and their existing contract, until they choose to discontinue that contract.

Commr. Swartz stated that the direction to staff is to continue as outlined in the presentation this date, and to obtain additional data from the mobile home parks, Homeowner's Associations, and from the haulers regarding current accounts.

RECESS & REASSEMBLY

At 4:05 p.m., the Chairman announced that the Board would recess for five minutes, and reconvene at 4:10 p.m. for a Bond Refinancing Presentation.

ACCOUNTS ALLOWED/BUDGETS/COUNTY MANAGER

Commr. Swartz announced that the presentation this date was designed as an update regarding the recommendations and considerations of the Lake County Ad Hoc Financing Advisory Committee, and will be presented to the Board at the May 18, 1993 Board of County Commissioners' regular meeting. He noted that Mr. Dan Eastwood, Vice Chairman of the Ad Hoc Financing Advisory Committee, was present in the audience.

Mr. Ric Patterson, Public Financial Management, Inc., the County's financial advisory, appeared before the Board and distributed a booklet containing the Ad Hoc Financing Advisory Committee's recommendations and considerations relating to Fixed Rate Conversion of $70,000,000 Adjustable Tender Resource Recovery Industrial Development Revenue Bonds, and $9,000,000 Taxable Mandatory Tender Industrial Development Revenue Bonds.

Mr. Patterson stated that the Board appointed the Ad Hoc Financing Advisory Committee to review the appropriateness of converting the debt on the County's Resource Recovery Bonds from the Variable Rate Mode to the Fixed Rate Mode, and to provide citizen input into this decision making process.

Mr. Patterson gave a review of the background of this project and stated that the County issued $70 Million in Tax-Exempt Debt and $9 Million in Taxable Debt, in November 1988, to finance the incinerator. He stated that the debt was issued in a Variable Rate Mode, and the County has chosen to remain in the Variable Rate Mode. He noted that, while the bonds are in the Variable Rate Mode, they are secured by Letter of Credit which provides credit and liquidity. The Letter of Credit, which is in place currently, is scheduled to expire in November 1993, noting that there is an extension provision, which may allow automatic extension to November 1995. He stated that the Letter of Credit will require to be extended, replaced, or renegotiated by November 1993, if the Bonds are to remain in a Variable Rate Mode. The Letter of Credit that is currently in place calls for the County to pay eighty (80) basis points per year on the face amount of the Letter of Credit, which is a very attractive rate under current market conditions. The County has the opportunity to "Lock In" favorable fixed rates by converting the bonds to a Fixed Rate Mode.

Mr. Patterson stated that the first overview, that was examined by the Ad Hoc Financing Advisory Committee, was the Variable Rate Debt versus the Fixed Rate Debt. He presented the advantages and the disadvantages of a Variable Rate Debt and a Fixed Rate Debt, noting that the advantages of a Variable Rate Debt are lower interest rates at any given point in time, and more liquidity than a Fixed Rate Debt. He stated that the disadvantages of a Variable Rate Debt are that they are subject to interest rate risk; require Letter of Credit for credit and/or liquidity support; uncertainty in budgeting annual debt service requirements; and a potential adverse credit impact.

Mr. Patterson explained that the advantages of a Fixed Rate Debt are the disadvantages of a Variable Rate Debt, noting that said advantages are no interest rate risk; insurer is allowed to "Lock-In" favorable long term interest rates; no Letter of Credit requirement; certainty in budgeting annual debt service requirements; debt service can be structured; and no potential adverse credit impact. He further noted that the disadvantages to a Fixed Rate Debt are the advantages of the Variable Rate Debt.

Mr. Patterson stated that there are derivative products in the market that allow methods of minimizing the impact of flipping to Fixed Interest Rates. He stated that, if the County chooses to convert from a Variable to a Fixed Interest Rate, it will immediately pay a higher interest expense.

Mr. Patterson stated that the Ad Hoc Financing Advisory Committee reviewed credit enhancements and looked at various methods of obtaining the best fixed rate available in the market. Assuming a fixed rate conversion, the Ad Hoc Financing Advisory Committee considered using either a Letter of Credit or Bond Insurance to enhance the credit and, hopefully, buy a better fixed interest rate. He stated that, with either a Letter of Credit or Bond Insurance, the County would pay a fee to the provider of that credit enhancement, noting, in exchange for paying said fee, that entity would secure the debt. The debt would be rated based on the long term rating of said entity. In the case of Bond Insurance, the rating would be a AAA rating; in the case of a Letter of Credit, the rating would be the rating for that Letter of Credit pay. He stated that it would be difficult to obtain Municipal Bond Insurance due to Private Party Risk, and more difficult to obtain cost effective Bond Insurance due to flow control issues nationally and in the State of Florida.

Mr. Patterson stated that the Ad Hoc Financing Advisory Committee reviewed a number of scenarios for Variable Interest Rates and Fixed Interest Rates and noted that the 20-Year Effective Rate for Variable Interest Rates is 6.86%, and under current market conditions, Fixed Rate financing could be completed at 6.43% - 7.09%. He noted that the range of 6.43% - 7.09% reflects the best estimate of current interest rates; however, could change significantly over the two to three month period that it would take to convert the debt from Variable to Fixed Rate Mode. He noted that Fixed Rate financing assumes a BBB Credit Rating or an Unrated Issue.

Mr. Patterson stated that the five scenarios selected by the Ad Hoc Financing Advisory Committee for final economic analysis included Variable Rate Financing at 20-Year Average Interest Rate; Fixed Rate Scenario 1: BBB Credit Rating, Level Annual Debt Service; Fixed Rate Scenario 2: BBB Credit Rating, Escalating or "Ramped" Annual Debt Service; Fixed Rate Scenario 3: Unrated Issue, Level Annual Debt Service; and Fixed Rate Scenario 4: Unrated Issue, Escalating Annual Debt Service. He noted that the summary of the results of the economic analysis compares the Fixed Rate Scenario to the Variable Rate Scenario for each of the four scenarios examined. He stated that the greatest savings occurs under Fixed Rate Scenario 1 and Scenario 3, with significant savings under Scenario 2.

Mr. Patterson stated that the Ad Hoc Financing Advisory Committee's primary recommendations were to proceed with conversion to Fixed Rate financing at the earliest opportunity to take advantage of current interest rates; develop a Fixed Rate Debt Service structure, which maximizes the use of Level Annual Debt Service; and to the maximum extent possible, use available revenues, rather than additional debt, to fund future solid waste system capital requirements. He stated that additional recommendations were to work with rating agencies to obtain the highest possible credit rating; work with bond insurers to try to obtain cost effective bond insurance; develop fixed rate debt service structure, which minimizes rate shock in early years; work with the County to develop parameters for Fixed Rate Conversion; and to convert to Fixed Rate only if those parameters can be satisfied.

Commr. Hanson questioned if data was available regarding the estimated savings accomplished by remaining in the Variable Rate Mode, to which Mr. Patterson responded that, to derive an estimated savings accomplished by remaining in the Variable Rate Mode, an assumption would have to be made as to when you would have converted the debt to Fixed Rate.

Commr. Swartz stated that the difference between what the effective interest rate has been in the Variable Rate Mode and what the County actually budgeted at 6.27%, was $1.8 Million in savings. He further stated that, even though the majority of the Ad Hoc Financing Advisory Committee voted to recommend conversion, they recognized that the Board would request Public Financial Management and the County's investment banking firm to put together a set of parameters. He stated that the Ad Hoc Financing Advisory Committee also indicated that, even though their direction was primarily toward conversion, they did recommend that the Board continue to meet necessary requirements for the Letter of Credit should the decision be made not to convert.

Mr. Dan W. Eastwood, Jr., Vice Chairman, Ad Hoc Financing Advisory Committee, appeared before the Board and distributed a letter, dated May 10, 1993, addressed to Commr. Swartz, regarding the Bond Refinancing Minority Report and an analysis sheet of the Resource Recovery Bonds Monthly Debt Service for the Fiscal Year ended September 30, 1993. Mr. Eastwood stated that the analysis sheet indicates that the County currently enjoys a savings of over $11.00 per ton difference in the Variable Rate versus the Fixed Rate, due to the current low short term rates currently available. He stated that the analysis reflects a blended year-to-date rate in the amount of 2.23%. He further stated that the minority position of the Ad Hoc Financing Advisory Committee recommended an amendment to cap any long term issue at seven (7%) percent.

Mr. Eastwood stated that the minority position of the Ad Hoc Financing Advisory Committee was to remain in the Variable Rate Mode for two (2) years, enjoy the savings of the Variable Rate Mode, and allow for the waste flow controversy to settle down. He further stated that this critical two (2) year period would give the County and Ogden Martin Systems of Lake, Inc. time to level out the waste flow into a more predicable pattern of tons and cash flow; give the County time to resolve any long term ash landfill questions; get the current unstable flow control legal climate resolved to permit the purchase of Bond Insurance; and avoid the related high cost "Call" features of an unrated or marginal credit, which limits future options to the County to refinance the issue.

Mr. Patterson stated that Public Financial Management and Payne Webber will work to refine the numbers; review the type of structure that would fit the recommendation of the Ad Hoc Financing Advisory Committee, and work with the County to develop the criteria to determine whether it would be feasible to continue to proceed with a Fixed Rate Issue or if the focus should be on extending the Letter of Credit.

At this time, the Board scheduled a presentation of the recommendations and considerations of the Lake County Ad Hoc Financing Advisory Committee, by Public Financial Management, Inc., at the regular Board of County Commissioners' meeting on May 18, 1993, at 11:00 p.m. It was noted that the Ad Hoc Financing Advisory Committee members would be notified of said meeting.

Commr. Hanson reiterated the request that staff provide an analysis, for the Board's review, showing the estimated savings accomplished by remaining in a Variable Rate Mode rather than converting to a Fixed Rate Mode at some point in time prior to this date.

There being no further business to be brought to the attention of the Board, the meeting adjourned at 5:20 p.m.

G. RICHARD SWARTZ, JR., CHAIRMAN

ATTEST:

JAMES C. WATKINS, CLERK

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